Coordination in a multiple producers-distributor supply chain and the value of information

This paper analyses coordination and the value of information in a decentralised multiple-producers-distributor supply chain. The impact of sharing two vital pieces of information of this supply chain-(i) production capacity and (ii) resource constraints - is examined with an example from a coal supply chain. The different components of decentralised supply chain coordination are identified. The 'value of information' is computed using a decentralised approach which is developed based on an iterative Lagrangian relaxation algorithm. Results and analysis based on extensive computational experiments with different models which have different levels of information-sharing are presented. As the results show, information-sharing significantly contributes to the strengthening of coordination in a decentralised supply chain. The resource constraint information is found to have higher impact than the production capacity information. The paper concludes with a few ideas to extend and generalise this work.