Information Updated Supply Chain with Service-Level Constraints

Abstract

We study a single-period two-stage service-constrained supply chain with an information update. The buyer has two purchasing instances: before and after the forecast update. The procurement cost at the second stage is uncertain at the first stage. We determine the optimal ordering policy with two service constraints (a service constraint is imposed for each procurement stage) and discuss the impact of the forecast quality. Finally, we extend our model to a multi-period problem with two ordering stages in each period.

Keywords: supply chain, information update, customer service level,dynamic programming, forecasting, signalling,

JEL Classification: C61, M11