Modelling and simulation of information sharing and production control strategies in supply chains

The value of information sharing and the effect of production control strategies on the performance of supply chains have been separately studied. In this paper we examine the effect of various system policies (factors) on the performance of a multistage supply chain. We consider three models: a pull system with and without information sharing, and a centralized push system with information sharing. Factors studied include demand distribution, shortage penalty to holding cost ratio at the retailers, ratio of capacity to overtime costs at the manufacturer, and demand pattern. A mathematical model for service levels guides the setting of parameters. Discrete event simulation is used to allow study of a four echelon system. We estimate the supply chain cost and variance reductions due to the use of informaticn and determine when a push system is most beneficial.