Information Sharing in a Multi-Stage Supply Chain Under ARMA Demand

Avi Giloni
Yeshiva University

We consider a multi-stage supply chain with a retailer that observes
ARMA(p,q) demand. We assume that each supply chain player uses an
order-up-to-policy. We provide a closed form characterization of each
player's order process, which depicts how demand propagates in a
multi-stage supply chain. This characterization differs depending upon
whether the player's demand is invertible with respect to the shocks
observed by the player at the previous stage of the supply chain. We show
that information sharing is always valuable to a player when its demand is
not invertible with respect to the shocks observed by the player at the
previous stage of the supply chain. We demonstrate that the value of
information sharing can be unbounded.