Two-way information exchange in two-level supply chain

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.