Evaluating Retailer´s Performance Based on Sharing Supplier´s Capacity Information

In a two-echelon supply chain system with one retailer and one manufacturer, the mathematical model of retailer´s inventory level and operation cost by sharing the manufacturer ´s supply capacity information on time is constructed when the market demand refers to AR(1) model. Based on the order-up-to S level policy, without sharing supplier´s capacity information and with sharing supplier´s capacity information, the inventory holding and shortages costs are discussed. Supplier´s capacity information sharing leads to increased information flows, reduced uncertainty, and a more coordination supply chain. The analyses show that the reductions of retailer´s average inventory and average costs are substantial with the capacity information sharing.