Eeect of Sharing Supplier Capacity Information

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 in uence of sharing supplier capacity information (available-to-promise capacity) on the performance of a supply chain. We consider a manufacturer who orders raw materials from two alternative suppliers di ering in cost and capacity. We rst derive the optimal inventory policy for the manufacturer under stochastic demand when exact capacities of the suppliers are known. Subsequently, using simulation, we compare di erent information sharing scenarios. Among other results, our simulation study shows that, while information sharing is bene cial to overall supply chain performance, it can be detrimental to individual entities. We nd when supplier adoption costs of the information system are negligible, the more expensive supplier makes less pro ts under information sharing. However, it is still bene cial to share information for that supplier. 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).