Emergency Procurement Based on Supply Disruptions: Single-Sourcing or Dual-Sourcing

ABSTRACT

Recent years have witness the pervasive supply disruptions and their impacts on supply chain performance. We investigate single or dual sourcing emergency model with partial supply disruptions. Introducing the concept of disruption proportion and delivery allocation, we first explore partial interrupted proportion of main supplier and delivery proportion of backup supplier. Under partial disruption, we then examine the expected profit of the manufacturer for single sourcing and multiple sourcing based on different disruption risk. Furthermore, we demonstrated the impact of delivery proportion between major supplier and backup supplier on emergency procurement strategy of the manufacturer. Finally we demonstrate the impact of delivery proportion between major supplier and backup supplier on manufacturer’s emergency procurement strategy. Numerical examples show that the manufacturers should choose the best procurement strategy to maximize expected profit in different situations.

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