Impact of information errors on supply chain performance

Jin Kyung Kwak, Srinagesh Gavirneni

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

This study investigates how information errors affect supply chain performance when a retailer and a supplier share the end-customer demand information. An Enterprise Resource Planning (ERP) system, often used to share information in a supply chain, is not perfect and often contains erroneous information. Companies contemplating the use of ERP systems must evaluate the benefit of using them despite the existence of errors in the system. Our study quantifies the impact of information errors by comparing the supplier costs with and without errors. Our analytical and computational results indicate that the detrimental impact of errors outweighs the beneficial impact of information sharing when the variance of information errors exceeds the variance of end-customer demands. Therefore, when that happens, it is best to operate as if the information is not available. Finally, if it is possible to expend effort and reduce information errors, we present an analytical model for determining the optimal level of investment.

Original languageEnglish
Pages (from-to)288-298
Number of pages11
JournalJournal of the Operational Research Society
Volume66
Issue number2
DOIs
StatePublished - 8 Feb 2015

Keywords

  • information errors
  • information sharing
  • inventory control
  • supply chain management

Fingerprint

Dive into the research topics of 'Impact of information errors on supply chain performance'. Together they form a unique fingerprint.

Cite this