Revisiting the benefit of information sharing for every day low price products
Abstract
Using a real-life data set, the benefit of sharing the market sales information has been investigated in a setting where a theoretical model argues that there is no benefit of information sharing. A set of real Electronic Point Of Sales (EPOS) data and the orders that were placed by a retailer to a supplier was used. We have focused on products that operate under an everyday low price strategy. To measure the benefit for the second echelon player, the square root of the SSPE (Sum of Squared Prediction Errors) is used. It is revealed that the second echelon player can reduce its SSPE by about 8-19% by exploiting the shared EPOS data. Furthermore, it is suggested that the noise element that is originally contained in the EPOS series is a major source of the benefit of information sharing.