The Effect of Partial Information Sharing in a Two-Level Supply Chain

Huy Chhaing and Eiji Takeda
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Huy Chhaing: Graduate School of Economics, Osaka University
Eiji Takeda: Graduate School of Economics, Osaka University

No 04-02, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: In many supply chains, the variance of orders may be considerably larger than that of sales, and this distortion tends to increase as one moves up a supply chain, this is known as "Bullwhip Effect". The Bullwhip phenomenon has recognized in many diverse markets. Procter & Gamble found that the diaper orders issued by the distributors have a degree of variability that cannot be explained by consumer demand fluctuations (Lee, Padamanabhan and Wang 1997a). Lee, Padamanabhan and Wang (1997a, b) developed a framework for explaining this phenomenon. Lee, So, and Tang (2000) showed that, within the context of a two-level supply chain consisting of single manufacturer and single retailer with AR(1) end demand, the manufacturer would benefit when the retailer shared its demand information. This paper considers the eRect of partial information sharing, within the framework of Lee, So and Tang, in one manufacturer and n retailers model, focusing on the variance of the manufacturer's "demand" (the retailers' order quantity).

Keywords: Supply Chain Management; Information Sharing; Inventory (search for similar items in EconPapers)
JEL-codes: C61 M11 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2004-02
New Economics Papers: this item is included in nep-tra
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