Sustainable Investment in a Supply Chain in the Big Data Era: An Information Updating Approach

Yanping Cheng, Yunjuan Kuang, Xiutian Shi and Ciwei Dong
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Yanping Cheng: Library, Central China Normal University, Wuhan 430079, China
Yunjuan Kuang: Department of Logistics and Maritime Studies, Faculty of Business, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China
Xiutian Shi: School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China
Ciwei Dong: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China

Sustainability, 2018, vol. 10, issue 2, 1-18

Abstract: We are now living in the big data era, where firms can improve their decision makings by adopting big data technology to utilize mass information. To explore the effects of the big data technology, we build an analytical model to study the sustainable investment in a supply chain, consisting of one manufacturer and one retailer, by using Bayesian information updating approach. We derive the optimal sustainable investment level for the manufacturer and the optimal order quantity for the retailer. Comparing the results with and without the big data technology, we find that whether the manufacturer should make more sustainable investment when the retailer adopts the big data technology depends on the service level at the retailer side. Interestingly, it is not always optimal for the retailer to adopt the big data technology. We identify the conditions under which the manufacturer and retailer are better off with the big data technology. In addition, we investigate the impact of the number of observations regarding the market information and find that the optimal decisions and profits increase in the number of the observations, if and only if the service level is low.

Keywords: sustainable investment; information updating; big data; supply chain management (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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