A delayed demand supply chain: Incentives for upstream players

Takamichi Hosoda and Stephen M. Disney

Omega, 2012, vol. 40, issue 4, 478-487

Abstract: We study a decentralized supply chain where only delayed market demand information is available for making replenishment decisions. The impact of this delay is quantified in a serially linked two-level supply chain where each player exploits the order-up-to replenishment policy. The market demand is assumed to be a first-order autoregressive process. It is shown that the first level of the supply chain benefits from shorter time delays; however, the benefit for the second level is quite minor at best and can sometimes even be (counter-intuitively) detrimental. We conclude that the second level does not have a strong incentive to reduce the time delays in the shared market demand information.

Keywords: Information delay; Inventory; Manufacturing; Order-up-to policy; Stochastic process; Supply chain management; Time series; RFID (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (10)

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DOI: 10.1016/j.omega.2011.09.005

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