Demand information sharing in supply chains: the impact of lead-time and inventory to backorder cost ratio

Abstract

This paper presents a detailed analysis of the value of demand information sharing (DIS) in supply chain (SC) systems and its influence on the vital SC variables, which comprise order, shipment, inventory, backorder, and cost. The analysis is presented from the viewpoint of the whole SC system and from the detailed level of each of its actors. The paper also studies the sensitivity of the results to the changes of two of the most essential SC parameters named lead-time (LT) and inventory to backorder cost ratio (I/B-CR). The SC is represented as a beer game model (BGM). An agent-based model is developed for simulating the different scenarios of the system. The results show a considerable reduction in the total SC cost due to DIS, nevertheless, the distribution of this reduction among the SC actors is unexpectedly unequal, or even unfair. The results also show that the significance of DIS is relative to the LT and I/B-CR parameters. More specifically, the impact of the DIS is more significant as the I/B-CR increases and as the LT gets longer.