The value of information sharing in a supply chain with seasonal demand process

This paper considers a seasonal two echelon supply chain which consists of one supplier and one retailer. The external demand occurring at customer is assumed to follow a SARMA (seasonal autoregressive-moving average) process including marketing action that cannot be deduced from other parameters of the demand process. Both the supplier and the retailer employ order-up-to policy to replenish their inventory. Three levels of information sharing are given. The results for optimal inventory policies under three levels of information sharing are derived. We show that the seasonal effect has an important impact on the optimal inventory policies of the supplier under three levels of information sharing. Then, we attempt to evaluate the value of information sharing under each level in terms of inventory and expected cost. Our analysis shows that seasonal effect plays a main role on information sharing in a supply chain. Our findings also point that replenishment lead time must be less than seasonal period for improved benefits of information sharing.