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COST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS Free essay! Download now

Home > University > Management studies > COST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS

COST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS

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Downloads to date: N/A | Words: 7172 | Submitted: 28-Aug-2011
Spelling accuracy: 87.1% | Number of pages: 54 | Filetype: Word .doc


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COST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS essay previewCOST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS essay previewCOST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS essay preview

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In this paper, we study the benefit of information sharing and optimal stock rationing in a two-echelon supply chain system with one manufacturer and two retailers with priorities.

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COST EFFECTIVE STUDY OF INFORMATION SHARING AND OPTIMAL PRODUCTION AND RATIONING DECISIONS IN SUPPLY CHAINS

2010/2011
Summary
In this paper, we study the benefit of information sharing and optimal stock rationing in a two-echelon supply chain system with one manufacturer and two retailers with priorities. Information sharing here means the manufacturer is accessible to downstream retailers inventory level, and no information sharing means inventory level is inaccessible. Optimal stock rationing in this paper means when the order from the less important downstream retailer (the one with smaller shortfall cost) comes, the manufacturer only satisfies part of the order so as to minimize total shortfall cost. We first study the value of information sharing. More specifically, by how many percentages will the average inventory cost decrease if information is shared among manufacturer and retailers. Likewise, we also study the benefit of optimal stock rationing, namely how much will the average inventory cost be reduced if the optimal stock rationing policy is applied by the manufacturer. Moreover, we also explore the effects of factors such as order sizes from downstream retailers, demand rates ratio, traffic intensity, lost sales ratio and relative holding cost rate on the benefit of information sharing as well as stock rationing. Lastly, we study the interactive effect of rationing and information sharing. We study the benefit of information sharing on optimal rationing, namely whether information sharing assist rationing in achieving better cost saving or not. We also examine the effects of optimal rationing policy on information sharing, namely whether optimal rationing policy assists information sharing in obtaining greater benefit or not.
Based on our research results, both optimal rationing policy and information sharing could help manufacturer achieve significant cost reduction. From numerical study, we observe that, the benefit of information sharing could be as high as 32%, with an average of 16%. While the benefit of optimal stock rationing could be up to 45%, with an average of 12%. Moreover, after studying the impact of system factors, we find out that different factors could influence the benefit of information sharing and optimal stock rationing variously. Some of the factors could help information sharing or optimal stock rationing obtain higher benefit when their values are increased; other factors could only help them obtain maximum benefit when the values of factors are within a certain range. Moreover, we manage to discover the positive interactive effect of information sharing and optimal stock rationing. Based on the results of ...

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