Value of Sharing Production Yield Information in a Serial Supply Chain
Article first published online: 12 FEB 2009
© 2008 Production and Operations Management Society
Production and Operations Management
Volume 17, Issue 6, pages 614–625, November-December 2008
How to Cite
Choi, H.-c. P., Blocher, J. D. and Gavirneni, S. (2008), Value of Sharing Production Yield Information in a Serial Supply Chain. Production and Operations Management, 17: 614–625. doi: 10.3401/poms.1080.0068
- Issue published online: 12 FEB 2009
- Article first published online: 12 FEB 2009
- Received: August 2005; Revised: April 2007 and November 2007; Accepted: January 2008 by Jayashankar Swaminathan.
- inventory control;
- information sharing;
- random yield;
- supply chain management
New developments in corporate information technology such as enterprise resource planning systems have significantly increased the flow of information among members of supply chains. However, the benefits of sharing information can vary depending on the supply chain structure and its operational characteristics. Most of the existing research has studied the impact of sharing downstream information (e.g., a manufacturer sharing information with its suppliers). We evaluate the benefits of sharing upstream yield information (e.g., a supplier sharing information with the manufacturer) in a two-stage serial supply chain in which the supplier has multiple internal processes and is faced with uncertain output due to yield losses. We are interested in determining when the sharing of the supplier's information is most beneficial to the manufacturer. After proposing an order-up-to type heuristic policy, we perform a detailed computational study and observe that this information is most beneficial when the supplier's yield variance is high and when end-customer demand variance is low. We also find that the manufacturer's backorder-to-holding cost ratio has little, if any, impact on the usefulness of information.