strategy model
... We study the value of sharing these data in a model with one supplier, N identical retailers, and stationary stochastic consumer demand. ... This model provides a reasonable representation of supply chains selling an established product under constant pricing conditions. ... Section 3 outlines the model, and §4 describes how to select inventory policies with traditional information sharing. ... In our model shared information is exploited for both uses: better supplier replenishments and better allocations to the retailers. ... In our model, as in the other studies mentioned, it is assumed that information is always shared truthfully. ... In the other papers, as in our model, the supplier is the only source of inventory. ... (1999) and Aviv and Federgruen (1998) allow for limited supplier capacity, whereas capacity is unrestricted in our model and in the other papers. ... However, Graves (1999) studies a similar model, with the exception that there is no outside inventory source, and concludes that information sharing provides no benefit to the supply chain. ... 2 The impact on the supply chain’s cost would be lower because information sharing in their model has no impact on the retailer’s costs. ... There are many studies that investigate a supply chain model with one supplier, N retailers, stochastic consumer demand, and batch ordering. ... Anand and Mendelson (1997) study a one-period model in which retailers possess some local information that cannot be shared with either a central agent or other retailers. In our full information model all relevant information can be shared with the central agent (i. ... Chen and Zheng (1994) develop a lower bound over all feasible policies for a multiple retailer model. ... Model Firm 0 is the supplier and firms [1, N] are identical retailers. ... Lower Bound This section develops for this model a lower bound for supply chain costs that is independent of the level of information sharing. ... Their model is somewhat different: There are no order quantity restrictions and they include explicit ordering costs. ... However, since their model does not include minimum order quantities, they are able to explicitly evaluate each component’s lower bound. ... One is that information technology reduces order processing times, which we model as a reduction in Lr. ... We model that as a reduction in Qr, because a firm can justify more frequent ordering with lower order processing costs. ... Although our model is representative of many actual supply chains, we recognize that our conclusion is limited to the setting we consider. In particular, in our model demand is known, the retailers are identical, there exists only a single source for inventory, there are no capacity constraints, there are no incentive conflicts among the supply chain’s firms, and firms choose rational ordering policies. ... We study a model with identical retailers for two reasons. ... In fact, Aviv and Federgruen (1998) obtain comparable results to ours in a model with nonidentical retailers. ... Hence, imposing a capacity constraint on the supplier would probably lower the value of information in our model. ... A multiechelon inventory model with fixed replenishment intervals. ... A single-item inventory model for a nonstationary demand process.