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The value of sharing advance capacity information under “zero-full” supply capacity availability

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Author(s): Marko Jakšič | Borut Rusjan

Journal: Economic and Business Review
ISSN 1580-0466

Volume: 11;
Issue: 4;
Start page: 321;
Date: 2010;
Original page

ABSTRACT
The importance of sharing information within modern supply chains has been established by both practitioners and researchers. Accurate and timely information helps firms effectively reduce the uncertainties of a volatile and uncertain business environment. We model periodic review, single-item, stochastic demand and stochastic supply where, in a given period, supply is either available or completely unavailable. In addition, a supply chain member has the ability to obtain advance capacity information (‘ACI’) about the future supply capacity availability. We show that the optimal ordering policy is a base stock policy with the optimal base stock level being a function of future capacity availability or unavailability given through ACI. In a numerical experiment we quantify the value of ACI and provide relevant managerial insights.

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Tangokurs Rapperswil-Jona

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