An Empirical Comparison of Anticipatory and Response‐Based Supply Chain Strategies

Abstract

This paper reports simulation research that empirically investigates and compares supply chain performance under varying conditions of information exchange and demand uncertainty. Specifically, the research objective is to quantitatively document the characteristics and performance impact of information exchange among supply chain entities. The findings suggest that the response‐based supply chain model consistently outperforms the anticipatory model in terms of customer service delivered under conditions of both low and high demand variation. Comparisons of inventory holdings across supply chain models demonstrate that the retailers' inventory burden is significantly lower in the response‐based scenario. The inventory savings enjoyed by retailers in the response‐based model are substantial enough to lower system‐wide inventories. In sum, the study supports the feasibility of achieving both improved service and lower inventories as a result of information sharing.