Comparative analysis reveals how AI affects operational decisions and profits in supply chains, indicating implications for manufacturers and retailers.
This study examines how artificial intelligence (AI) adoption by manufacturers or retailers impacts operational decisions and expected profits in a two-tier supply chain. Through the newsvendor framework, we analyze three scenarios: no adoption (N), manufacturer adoption (MA), and retailer adoption (RA). Our findings indicate that AI adoption contributes to enhancing service levels and order quantities. However, the adopting party does not always secure higher profits, as benefits are partially transferred to the non-adopting counterpart through free-riding effects. By comparison, we observe that manufacturer adoption is preferable when its cost-saving advantages exceed the demand-enhancing advantages of retailer adoption, and vice versa. Furthermore, we explore the impact of stockout on the effectiveness of AI adoption. Our results show that optimal order quantities increase with the intelligence level of AI, while the presence of stockout costs weakens this relationship. Interestingly, stockout costs reduce the positive effect of AI adoption on manufacturers’ profits but amplify its benefits for retailers. Finally, we examine the scenario where both the manufacturer and the retailer adopt AI (MRA) and find that simultaneous adoption is not necessarily a better choice.
No takes yet. Share an insight, caveat, or question.
(102719) et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: