Managing the supply disruption risk: option contract or order commitment contract?

Xue, Kelei; Li, Yongjian; Zhen, Xueping; Wang, Wen

doi:10.1007/s10479-018-3007-8

Cited by 20 publications

(15 citation statements)

References 46 publications

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“…In a globalized world, where the flow of products and / or services of many organizations have an international reach, it is essential to be able to manage the risk or at least (Xue et al, 2020), to have plans that mitigate (He & Yang, 2018) to a greater or lesser extent the potential risks to which one can Face any organization (Schauer et al, 2019). The configuration and coordination analyzes can be used as a foundation for further research in the context of integrating manufacturing network and supply chain theory (Rudberg & Olhager, 2003).…”

Section: Introductionmentioning

confidence: 99%

Risk management methodology in the supply chain: a case study applied

Hermoso-Orzáez

Garzón-Moreno

2021

Ann Oper Res

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This work provides a general risk management procedure applied to synchronized supply chains. After conducting a literature review and taking the international standard ISO 28000 and ISO 31000 as a reference. The most important steps that enable organizations to carry out supply chain risk management are described. Steps such as defining the context, identifying and analyzing risks or avoiding them, controlling them and mitigating them are some of the main points of this work. On the other hand, we carried out a practical case in which the execution of this procedure is carried out in a real supply chain located in the city of Jaén. In this specific case study, the most important risks and those that require early treatment will be discussed. In addition, a series of suggestions and ideas will be established, by way of conclusions, that allow said organization to improve the results that we have obtained in risk management.

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Section: Introductionmentioning

confidence: 99%

Risk management methodology in the supply chain: a case study applied

Hermoso-Orzáez

Garzón-Moreno

2021

Ann Oper Res

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“…Unlike their study, this work explores the situation where a third-party emergency source is non-existent and the emergency procurement price is uncertain. Recently, Xue et al [34] also explored how to mitigate the supply disruption risk through contract selection. However, they do not consider the uncertainty of emergency procurement price and the firm's two ordering opportunities.…”

Section: Literature Reviewmentioning

confidence: 99%

“…When disruption occurs, no products are delivered to the firm; otherwise, all the ordering of the firm will be satisfied. This "all-or-nothing" type of disruption is widely used in the operations management field [6,10,20,25,[32][33][34][35]39].…”

Section: Model Descriptionsmentioning

confidence: 99%

“…To achieve more managerial insights, the authors conduct numerical simulation to compare the two types of strategies. 6) presented in Section 3 and previous literature in the area (refer to [33][34][35]). The authors also conduct numerical experiments with other combinations of parameters, the results of which show that the main conclusions and analytical results in this study are robust.…”

Section: Comparisonsmentioning

confidence: 99%

“…Looking at Figure 33, with the increase in the market demand variability, the firm is more likely to choose the OP strategy with the increase of the disruption risk. This is mainly because the OP strategy can help to mitigate both the supply risk and demand risk [34]. Moreover, a higher market demand variability can impel the supplier to cooperate with the firm, even if the disruption risk is relatively high.…”

Section: Firm's Strategy Selection Decisionmentioning

confidence: 99%

See 2 more Smart Citations

Managing Procurement for a Firm with Two Ordering Opportunities under Supply Disruption Risk

Xue¹,

Ya²,

Feng³

2018

Sustainability

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Supply disruption is a common phenomenon in industry, which brings destructive effects to downstream firms and damages the sustainability of the supply chain. To mitigate the supply disruption risk, the authors investigate two types of procurement strategies for a firm with two ordering opportunities. Through establishing Stackelberg game models, the authors drive the supplier’s optimal production, and the firm’s optimal procurement and replenishment strategies under the option purchase (OP) strategy and the procurement commitment (PC) strategy, respectively. The findings show that, under both types of strategies, the firm’s procurement follows a “threshold” principle. Moreover, the firm’s procurement quantity can be represented by two newsvendor solutions. A lower option price or option exercise price benefits the firm, while it damages the supplier. The supplier benefits from a higher mean value (MV) of emergency procurement price and the firm benefits from a lower market demand variability. Counter-intuitively, a lower MV of the emergency procurement price is not always beneficial to the firm. A higher market demand variability could be beneficial to the supplier under the PC strategy. The firm should first choose the PC strategy and then change to the OP strategy as the disruption risk increases.

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