Title:
Sharing Information to Manage Perishables (ed.2)
Sharing Information to Manage Perishables (ed.2)
Author(s)
Ferguson, Mark E.
Ketzenberg, Michael E.
Ketzenberg, Michael E.
Advisor(s)
Editor(s)
Collections
Supplementary to
Permanent Link
Abstract
We address the value of information (VOI) sharing in the context of a two echelon,
serial supply chain with one retailer and one supplier that provides a single perishable
product to consumers. We evaluate information sharing under two supply chain structures
where the retailer shares it inventory level and replenishment policy with the supplier. In the
first structure, referred to as Decentralized Information Sharing, both facilities make their
own profit-maximizing replenishment decisions. In the second structure, referred to as
Centralized Control, the replenishment decisions are coordinated. The latter supply chain
structure corresponds to the industry practices of company owned stores or vendor managed
inventory. We measure the VOI as the marginal improvement in expected profits that a
supply chain achieves relative to the case when no information is shared. Key assumptions
of our model include stochastic demand, lost sales, and fixed order quantities. We establish
the importance of information sharing in the supply chain and identify conditions under
which relatively substantial benefits are realized. As opposed to previous work on the VOI,
the major benefit of information sharing in our setting is driven by the suppliers ability to
provide the retailer with fresher product. By isolating the benefit by firm, we show that
sharing information is not always Pareto improving for both supply chain partners in the
decentralized setting.
Sponsor
Date Issued
2005-08
Extent
286893 bytes
Resource Type
Text
Resource Subtype
Working Paper