Information Sharing in a Supply Chain –

Markov Decision Processes with Restricted Observations

Wenbin Wei¹, Russell E. King and Thom J. Hodgson

North Carolina State University

Department of Industrial Engineering

This research studies the information sharing in both two-stage and three-stage serial supply chains under a make-to-stock environment. The information to be shared is the inventory information of each supply chain member. In order to quantify the information value, each supply chain is examined given different information sharing schemes. Markov decision processes are used to model the supply chain, and the optimal policy given each scheme is determined with the objective of maximizing the total supply chain profit. By comparing these schemes, the information value can be identified. Negotiations on transfer costs are also investigated such that the total profit is fairly allocated among individual members.

¹SCALE Dissertation Support Award Finalist

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