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

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

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.

Tango Jona
Tangokurs Rapperswil-Jona

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