Abstract: The stability of production/inventory control system is an important indicator in supply chain management, and demand information sharing (DIS) mechanism has been widely adapted in managerial section. However, research on DIS stability boundaries and conditions is by far very limited. Based on control engineering, a DIS two-echelon supply chain dynamic model was established. The stability boundary of the system parameters was derived analytically, and then verified by simulations. The results show that system stability can be improved by appropriate parameter settings. For stepwise customer demand input, the effects of system parameters to system dynamic responses including order rate, inventory level and work-in-process were analyzed. Valuable insights into dynamic behavior of supply chain systems are obtained, and then managerial strategies are proposed.