Dual sourcing and backup production: Coexistence versus exclusivity

Huang, He; Xu, Honggang

doi:10.1016/j.omega.2015.04.008

Cited by 35 publications

(13 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The next stream of literature relates to manage the supply chain and mitigate supply chain risks. Huang et al [31] examined the strategic use of dual-sourcing and backup supply options in a two-stage dynamic programming model for one period to mitigate supply risk. Li et al [32] combined a penalty term in writing contracts with the provision of financial assistance was carrot and stick used by a manufacturer to deal with supply disruption.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Order Policies for Dual-Sourcing Supply Chains under Random Supply Disruption

Yan

Kou

2019

Sustainability

View full text Add to dashboard Cite

In this paper, we investigate inventory and order strategies of a two-echelon supply chain, which is composed of two unreliable suppliers that are subject to random disruption. We develop the gross weighted profit benchmark model and the service level constrained model of the supply chain, respectively. We derive the retailer's optimal order quantity and analyze the retailer' optimal order policy and also obtain the analytical closed-form solutions. In addition, some numerical examples are provided to illustrate the effect of disruption time, disruption probability and fill rate on the optimal decisions and expected profit.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Optimal Order Policies for Dual-Sourcing Supply Chains under Random Supply Disruption

Yan

Kou

2019

Sustainability

View full text Add to dashboard Cite

show abstract

“…Yang et al [17] consider the supplier selection to either pay a penalty to the manufacturer for the shortfall or use backup production to fulfill the manufacturer's order once disruption occurs. Huang and Xu [18] investigate the coexistence and exclusivity of dual sourcing and backup production. Tomlin and Snyder [19] consider a threat advisory system in which the firm, operating a periodic-review inventory system, sources from an unreliable supplier, for which inventory is the only disruption-management tactic, and then extend their model to the situation in which the firm can source from two suppliers.…”

Section: Literature Reviewmentioning

confidence: 99%

“…For example, in February 1997, a fire in a Toyota brake-supplier plant led to a two-week shutdown of 18 Toyota plants across Japan, resulting in losses amounting to US$195 million [1]. In March 2000, lightning caused a fire that shut down the Philips semiconductor plant in Albuquerque, New Mexico, leading to a shortage of components for both Ericsson and Nokia.…”

Section: Introductionmentioning

confidence: 99%

Penalty and financial assistance in a supply chain with supply disruption

Zhen

et al. 2016

Omega

View full text Add to dashboard Cite

In a supply chain, when the supply is hit by an unexpected disruption, the supplier may face certain financial difficulty to resume normal production, causing a supply shortage as well as a loss to the manufacturer and the entire supply chain. Combining a penalty term in writing contracts with the provision of financial assistance is the-carrot and stick‖ approach used by a manufacturer to deal with supply disruption. This article investigates how the manufacturer, in a better financial situation, may use ex-ante penalty terms and ex-post financial assistance to compel the supplier to recover its production capability as much as possible. We find that, the MS (integration of financial assistance and the non-delivery penalty) is the best strategy for the manufacturer in most situations, but it is not a win-win strategy. An interesting result contrary to the conventional wisdom, is that the optimal delivery quantity for the supply chain under the centralized decision-making is less than that under the decentralized decision-making.

show abstract

“…Another method is to allow enterprises 2 Complexity to order products in advance from the backup supplier and decide whether to place an emergency order after observing the primary supplier's supply [8]. In addition, research on the coexistence of multiple suppliers and backup suppliers also exist [9]. Generally, since enterprises must consider production and procurement costs, the primary suppliers are always unreliable but the wholesale price is lower, while the backup supplier is reliable but the wholesale price is higher.…”

Section: Introductionmentioning

confidence: 99%

Procurement Strategy with Backup Sourcing under Stochastic Supply Risk

Zhang

Wang

2019

Complexity

View full text Add to dashboard Cite

Supply risk can have a negative impact on a manufacturer’s performance. Backup sourcing is one of the most commonly used strategies to mitigate the adverse consequences of supply risks. In this paper, we study a procurement strategy with backup sourcing when a manufacturer faces stochastic supply risk and demand. The optimal decisions of the players involved are investigated theoretically using the game theoretic framework, and the impacts of the key parameters, such as wholesale prices and the risk probability, are assessed numerically under supply information symmetry and asymmetry. The results illustrate that the reservation price provided by the backup supplier varies greatly under different information-sharing conditions. Reservation quantity is negatively correlated with the reservation price, which is affected by the risk probability, wholesale prices, and marginal cost of the backup supplier. We also show that given the same wholesale prices, the potential supply risk has a substantial impact on the manufacturer’s expected profit, and the performance of the manufacturer under asymmetrical supply information is not always better than that under symmetrical information. In addition, we also discuss the impact of wholesale prices on reservation price and participants’ profits based on numerical examples. The research enriches the understanding of a procurement strategy under stochastic supply risk, and the conclusions have certain management significance.

show abstract

Dual sourcing and backup production: Coexistence versus exclusivity

Cited by 35 publications

References 37 publications

Optimal Order Policies for Dual-Sourcing Supply Chains under Random Supply Disruption

Optimal Order Policies for Dual-Sourcing Supply Chains under Random Supply Disruption

Penalty and financial assistance in a supply chain with supply disruption

Procurement Strategy with Backup Sourcing under Stochastic Supply Risk

Contact Info

Product

Resources

About