Ordering policies for a dual sourcing supply chain with disruption risks
Abstract: The main purpose of
this article is to explore the trade-off between ordering policies and
disruption risks in a dual-sourcing network under specific (or not) service
level constraints, assuming that both supply channels are susceptible to
disruption risks.
Design/methodology/approach: Stochastic newsvendor models are presented
under both the unconstrained and fill rate constraint cases. The models can be
applicable for different types of disruptions related among others to the
supply of raw materials, the production process, and the distribution system,
as well as security breaches and natural disasters.
Findings: Through the model, we obtain some important managerial insights
and evaluate the value of contingency strategies in managing uncertain supply
chains.
Originality/value: This paper attempts to combine explicitly disruption
management with risk aversion issues for a two-stage supply chain with two
unreliable suppliers.
Keywords: ordering policies,
disruption risks, two-stage supply chain, dual sourcing, risk aversion,
stochastic model
Author: Jingjing Zhu,
Shaochuan Fu
Journal Code: jptindustrigg130074
