TY - JOUR
T1 - Impact of information errors on supply chain performance
AU - Kwak, Jin Kyung
AU - Gavirneni, Srinagesh
N1 - Publisher Copyright:
© 2015 Operational Research Society Ltd.
PY - 2015/2/8
Y1 - 2015/2/8
N2 - 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.
AB - 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.
KW - information errors
KW - information sharing
KW - inventory control
KW - supply chain management
UR - http://www.scopus.com/inward/record.url?scp=84920545816&partnerID=8YFLogxK
U2 - 10.1057/jors.2013.175
DO - 10.1057/jors.2013.175
M3 - Article
AN - SCOPUS:84920545816
SN - 0160-5682
VL - 66
SP - 288
EP - 298
JO - Journal of the Operational Research Society
JF - Journal of the Operational Research Society
IS - 2
ER -