Optimal Supply Diversification Strategy under Supply Disruption
Joint Authors
Source
Mathematical Problems in Engineering
Issue
Vol. 2020, Issue 2020 (31 Dec. 2020), pp.1-18, 18 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2020-08-13
Country of Publication
Egypt
No. of Pages
18
Main Subjects
Abstract EN
When a disruption caused by human or environmental accident occurs in production systems, it may cause a shortage of the supply, and thus the buyers’ procurement behaviors will be influenced.
This paper studies a supply chain comprised of a buyer and two types of suppliers: one is cheap but unreliable and the other is reliable but expensive.
If there is a major disruption, the unreliable supplier may not be able to fully satisfy the buyer’s order, despite the fact that it exerts additional effort to rebuild capacity; at the same time, the reliable supplier cannot fulfill extra orders from the buyer due to capacity constraints.
In this way, the buyer should strategically allocate its order between the two types of suppliers by offering different contracts at the very beginning, and then the unreliable supplier chooses its optimal restoration effort according to the contract if a disruption occurs.
The model is built based on the real-life cases such as Walmart and Apple such that it is the buyer who determines the wholesale price of the unreliable supplier’s products.
The results show the optimal contracts provided by the buyer under different circumstances, which aims to help managers design their contracts under disruption risks to maximize the company’s profit.
American Psychological Association (APA)
Luo, Xiaomeng& Ren, Jia. 2020. Optimal Supply Diversification Strategy under Supply Disruption. Mathematical Problems in Engineering،Vol. 2020, no. 2020, pp.1-18.
https://search.emarefa.net/detail/BIM-1201534
Modern Language Association (MLA)
Luo, Xiaomeng& Ren, Jia. Optimal Supply Diversification Strategy under Supply Disruption. Mathematical Problems in Engineering No. 2020 (2020), pp.1-18.
https://search.emarefa.net/detail/BIM-1201534
American Medical Association (AMA)
Luo, Xiaomeng& Ren, Jia. Optimal Supply Diversification Strategy under Supply Disruption. Mathematical Problems in Engineering. 2020. Vol. 2020, no. 2020, pp.1-18.
https://search.emarefa.net/detail/BIM-1201534
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1201534