The value of information sharing within a supply chain has been
analyzed extensively in prior research. Bulk of the literature has
investigated the case in which the supply chain manufactures and
distributes a single product to customers. However, the ability to
satisfy heterogeneous customer preferences by providing more
product variety is a critical success factor in retailing [18], andmodern
supply chains often manufacture and distribute multiple varieties
of a product [10]. Recognizing this, Ganesh et al. [11] studied
the impact of demand substitution on the value of information sharing
when a supply chain distributes multiple varieties of a product.
That is, when a variety that a customer is looking for is unavailable,
the customer may buy another variety of the same product. They
showed that demand substitution diminishes the value of information
sharing.
consumer demand. Schemes such as Collaborative Forecasting and
Replenishment (CFAR) facilitate sharing of both long-term and shortterm
demand forecasts between manufacturers and retailers.
Replenishment Program (CRP) and Vendor Managed Inventory
(VMI) are efforts in this direction. The savings in inventory holding and
shortage costs to Campbell Soup Company and its retailers because of
CRP have been documented in [8,21]. Information sharing often improves
the accuracy of demand forecasts, which enables a better price
structure, improved production scheduling, and better management of
consumer demand. Schemes such as Collaborative Forecasting and
Replenishment (CFAR) facilitate sharing of both long-term and shortterm
demand forecasts between manufacturers and retailers.