Information increment and information value in supply chains

Information plays the most important role in supply chain management. In this paper, concepts of information increment (Delta I) and value of information (VOI) are introduced; then, the relationship between them is analyzed. Information increment is defined as the status cognition change compared with the real status. An opinion is then presented that Delta I and VOI are strongly and positively correlated. For supply chain applications, a general analysis framework with a common ordering policy, APIOBPCS, is established to reveal the functioning mechanism of information. Capacity constraints are introduced into the analysis for improving the practicability of the ordering policy models. The proposed opinion is proved through simulation experiments.