/Information Exchange in the Supply Chain

Information Exchange in the Supply Chain

Jayashankar M. Swaminathan, Norman Sadeh-Koniecpol and Stephen Smith
Tech. Report, CMU-RI-TR-95-36, Robotics Institute, Carnegie Mellon University, October, 1995

Download Publication (PDF)

Copyright notice: This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author’s copyright. These works may not be reposted without the explicit permission of the copyright holder.


In recent years, manufacturers have taken initiatives to integrate information within their supply chains in order to provide quick response to customer needs. In this paper, we study the influence of sharing supplier capacity information (such as availiable-to-promise (ATP)) on the performance of a supply chain. We consider a supply chain in which a manufacturer orders raw materials from two alternative suppliers differing in cost and capacity. We first derive the optimal inventory policy for the manufacturer under stochastic demand. Subsequently, using simulation, we compare different information sharing scenarios. Among other results our study shows that, while information sharing is beneficial to overall supply chain performance, in can be detrimental to individual entities in the supply chain. We find that when supplier adoption costs of the information system are negligible, the more expensive supplier makes less profits under information sharing. However, it is forced to share information. When adoption costs are substantial, our results indicate that it is better for the manufacturer to have information links with fewer suppliers (a subset of potential suppliers).

BibTeX Reference
author = {Jayashankar M. Swaminathan and Norman Sadeh-Koniecpol and Stephen Smith},
title = {Information Exchange in the Supply Chain},
year = {1995},
month = {October},
institution = {Carnegie Mellon University},
address = {Pittsburgh, PA},
number = {CMU-RI-TR-95-36},
keywords = {supply chain, stochastic demand, supply uncertainty, available-to-promise (ATP) information, inter-organizational system (IOS) adoption},