Supplier diversification under binomial yield

Fadıloğlu, Mehmet Murat; Berk, Emre; Gürbüz, Mustafa

doi:10.1016/j.orl.2008.05.008

Cited by 21 publications

(6 citation statements)

References 15 publications

(19 reference statements)

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“…The fact that buyers end up effectively paying for the long-term contracted supplier capacity and its cost rather than the short-term delivered output is because of the high specific investment incurred by suppliers and inability for the buyer to switch to other suppliers once the supplier relationship is established. Such an assumption is not uncommon in the random yield literature (see Babich et al 2007, Fadiloglu et al 2008 and is equivalent to the more general payment scheme used by Wang et al (2010). 1 After the critical components are delivered by the suppliers, additional value-added activities of further processing or reselling nature are taken by the buyers at unit cost c.…”

Section: The Modelmentioning

confidence: 99%

Supplier Diversification Strategies in the Presence of Yield Uncertainty and Buyer Competition

Tang

Kouvelis

2011

M&SOM

177

119

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T he benefits of supplier diversification are well established for price-taking firms. In this paper, we investigate the benefits from supplier diversification for dual-sourcing duopolists. We consider a two-echelon supply chain in which suppliers sell components to buyers who produce and sell substitutable products. The suppliers' output processes are uncertain and modeled as having a proportional random yield. Buyers engage in a quantity-based Cournot competition. We find that an increase in supplier correlation leads to more correlated buyers' outputs and a decrease in their profits. In the presence of end-market competition, dual sourcing still brings value by reducing the inefficiency caused by random yield: Namely, when the suppliers' yield processes are strongly negatively correlated, dual sourcing increases the expected market output and improves the firms' profits over sole sourcing. However, unlike a monopolist firm, a duopolist does not necessarily allocate its supplier orders to minimize output variability. We generalize the main results to a two-stage order-quantityoutput-quantity game and to one with asymmetric suppliers.

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Section: The Modelmentioning

confidence: 99%

Supplier Diversification Strategies in the Presence of Yield Uncertainty and Buyer Competition

Tang

Kouvelis

2011

M&SOM

177

119

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“…The supply uncertainty in our model has a binomial structure, a more appropriate choice in personnel staffing settings. Binomial yield models are a relative rarity in the stochastic yield literature, perhaps due to their limited analytical tractability (Gerchak and Henig (1994), Grosfeld-Nir and Gerchak (2004), Fadiloglu et al (2008)). Most importantly, our analysis is the first one to introduce and analyze endogenous stochastic yields.…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

“Nursevendor Problem”: Personnel Staffing in the Presence of Endogenous Absenteeism

2013

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The problem of determining nurse staffing levels in a hospital environment is a complex task due to variable patient census levels and uncertain service capacity caused by nurse absenteeism. In this paper we combine an empirical investigation of the factors affecting nurse absenteeism rates with an analytical treatment of nurse staffing decisions using a novel variant of the newsvendor model. Using data from the emergency department of a large urban hospital, we find that absenteeism rates are consistent with nurses exhibiting an aversion to higher levels of anticipated workload. Using our empirical findings we analyze a single-period nurse staffing problem considering both the case of constant absenteeism rate (exogenous absenteeism) as well as an absenteeism rate which is a function of the number of scheduled nurses (endogenous absenteeism).We provide characterizations of the optimal staffing levels in both situations and show that the failure to incorporate absenteeism as an endogenous effect results in understaffing.

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“…They present the conditions under which selecting two sources with distinct yield distributions is preferable to single sourcing. Fadıloğlu et al [12] analyze a multiple supplier binomial yield problem in an EOQ setting and show that diversification is not always preferable. Yan and Wang [29] extend Fadıloğlu et al's problem to the case of general random yield.…”

Section: Introductionmentioning

confidence: 99%

Supplier selection problem for a retailer under random yield

Yan

Wang

2014

Journal of Industrial and Production Engineering

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Using a simple one-period model of a supply chain with one retailer and multiple risky suppliers, this paper studies questions of supplier selection and ordering policies among firms. A supplier is said to be unreliable when the quantity of goods effectively delivered by that supplier cannot correspond exactly to the order quantity. The question facing the retailer is to determine how many suppliers to contract and how much to order from each contracted supplier. We not only present the structural properties of the optimal ordering policy, but also analyze the effect of random yield and fixed ordering cost on the optimal policy and the retailer's profit.

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Supplier diversification under binomial yield

Cited by 21 publications

References 15 publications

Supplier Diversification Strategies in the Presence of Yield Uncertainty and Buyer Competition

Supplier Diversification Strategies in the Presence of Yield Uncertainty and Buyer Competition

“Nursevendor Problem”: Personnel Staffing in the Presence of Endogenous Absenteeism

Supplier selection problem for a retailer under random yield

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