Two-way information exchange in two-level supply chain

Abstract

The objective of the present study is to model and analyzing a two-level supply chain with reverse information exchange in which the manufacturer and the retailer are aware of the status of each other's stocks. To take advantages of this method of information exchange, manufacturers and retailers change their stock policies from traditional base-stock policy to a state-dependent two-level base-stock policy. Then, they change their ordering policy according to the other side's stock availability. Applying the mentioned method reduces the total cost of system as well as decreasing the average amount of manufacturer's inventory and improving the waiting time of walk-in customers.