Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons
This paper studies a buyer’s inventory control problem under a long-term horizon. The buyer has one major supplier that is prone to disruption risks and one backup supplier with higher wholesale price. Two kinds of sourcing methods are available for the buyer: single sourcing with/without contingent...
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| Format: | Article |
| Language: | English |
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Wiley
2016-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2016/6716058 |
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| _version_ | 1832556444288811008 |
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| author | Jing Hou Lijun Sun |
| author_facet | Jing Hou Lijun Sun |
| author_sort | Jing Hou |
| collection | DOAJ |
| description | This paper studies a buyer’s inventory control problem under a long-term horizon. The buyer has one major supplier that is prone to disruption risks and one backup supplier with higher wholesale price. Two kinds of sourcing methods are available for the buyer: single sourcing with/without contingent supply and dual sourcing. In contingent sourcing, the backup supplier is capacitated and/or has yield uncertainty, whereas in dual sourcing the backup supplier has an incentive to offer output flexibility during disrupted periods. The buyer’s expected cost functions and the optimal base-stock levels using each sourcing method under long-term horizon are obtained, respectively. The effects of three risk parameters, disruption probability, contingent capacity or uncertainty, and backup flexibility, are examined using comparative studies and numerical computations. Four sourcing methods, namely, single sourcing with contingent supply, dual sourcing, and single sourcing from either of the two suppliers, are also compared. These findings can be used as a valuable guideline for companies to select an appropriate sourcing strategy under supply disruption risks. |
| format | Article |
| id | doaj-art-ed7d876aed53426ca597dd106b61fd9a |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2016-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-ed7d876aed53426ca597dd106b61fd9a2025-02-03T05:45:25ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2016-01-01201610.1155/2016/67160586716058Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term HorizonsJing Hou0Lijun Sun1School of Business, Hohai University, Nanjing, Jiangsu 211100, ChinaInstitute of Systems Engineering, Faculty of Management and Economics, Dalian University of Technology, Dalian, Liaoning 116023, ChinaThis paper studies a buyer’s inventory control problem under a long-term horizon. The buyer has one major supplier that is prone to disruption risks and one backup supplier with higher wholesale price. Two kinds of sourcing methods are available for the buyer: single sourcing with/without contingent supply and dual sourcing. In contingent sourcing, the backup supplier is capacitated and/or has yield uncertainty, whereas in dual sourcing the backup supplier has an incentive to offer output flexibility during disrupted periods. The buyer’s expected cost functions and the optimal base-stock levels using each sourcing method under long-term horizon are obtained, respectively. The effects of three risk parameters, disruption probability, contingent capacity or uncertainty, and backup flexibility, are examined using comparative studies and numerical computations. Four sourcing methods, namely, single sourcing with contingent supply, dual sourcing, and single sourcing from either of the two suppliers, are also compared. These findings can be used as a valuable guideline for companies to select an appropriate sourcing strategy under supply disruption risks.http://dx.doi.org/10.1155/2016/6716058 |
| spellingShingle | Jing Hou Lijun Sun Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons Discrete Dynamics in Nature and Society |
| title | Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons |
| title_full | Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons |
| title_fullStr | Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons |
| title_full_unstemmed | Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons |
| title_short | Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons |
| title_sort | backup sourcing decisions for coping with supply disruptions under long term horizons |
| url | http://dx.doi.org/10.1155/2016/6716058 |
| work_keys_str_mv | AT jinghou backupsourcingdecisionsforcopingwithsupplydisruptionsunderlongtermhorizons AT lijunsun backupsourcingdecisionsforcopingwithsupplydisruptionsunderlongtermhorizons |