Impacts of sharing information of demand patterns on supply chain performance

Abstract

This paper discusses impacts of sharing information about market demand patterns on supply chain performance through a simulation approach. A 3-echelon distribution supply chain consisting of retailers, distributors and a capacitated manufacturer is modelled as a multiagent system. Three demand patterns are studied, including stable, volatile and seasonal demands. Experimental results show that values of information sharing strategies is highly dependent on end-market demand patterns, supply chain echelons and performance indicators. Information sharing generally leads to reduction in inventories, but increases the risk of backlogs. This may ultimately increase the total operating costs, depending on which rate dominates: unit holding cost or unit out-of-stock cost. The result also shows that sharing information may not necessarily improve supply chain performance in a turbulent market manifested in the seasonal demand pattern. This observation is largely due to the fact that the timing parameters and variables have not been considered in our simulation study.