This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Zhu, K. Articles by Thonemann, U. W. Search for Related Content

Modeling the Benefits of Sharing Future Demand Information

Department of Industrial Engineering and Engineering Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong
Institute of Supply Chain Management, University of Münster, D-48143 Münster, Germany
kzhu{at}ust.hk
ulrich.thonemann{at}uni-muenster.de

We analyze how sharing of future demand information (FDI) can help companies to lower cost. FDI is imperfect information on the customer demands of the upcoming period. We consider a supply chain with a single retailer and multiple customers, where customer demands are normally distributed and correlated. The retailer faces two decisions: With which customers should information be shared and how much should be ordered? We model the problem as a two-stage dynamic program, develop an optimal solution approach, and provide structural insights into the optimal extent of FDI sharing. We show that information cost and demand correlation are important factors for determining the optimal extent of FDI sharing. For a simplified version of the problem where only a single customer is contacted, we analyze how the optimal solution is affected by nonidentically distributed or nonuniformly correlated demands.

Subject classifications: Forecasting; Inventory/production; Information systems.
History: Received December 1999; revision received April 2001; accepted March 2002.

This article has been cited by other articles:

				J.-P. Gayon, S. Benjaafar, and F. de Vericourt Using Imperfect Advance Demand Information in Production-Inventory Systems with Multiple Customer Classes MSOM, January 1, 2009; 11(1): 128 - 143. [Abstract] [PDF]

				T. Wang and B. L. Toktay Inventory Management with Advance Demand Information and Flexible Delivery Management Science, April 1, 2008; 54(4): 716 - 732. [Abstract] [PDF]