Dual Sourcing Strategy for High-Tech Manufacturer Under Supply Risk and Capacity Constraint

Zeng, Nengmin; He, Qing

doi:10.1109/access.2019.2896118

Cited by 8 publications

(7 citation statements)

References 25 publications

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“…It is set that each unit of the final product requires one unit of procurement raw materials. The number of products put into the market by the manufacturer is the purchase amount Q, and the total demand in the downstream market is D. The relationship between the unit sales price p and the total market demand D satisfies the inverse demand function p d = D − Q [28,29]. If there is a supply interruption, the supplier's supply quantity to the manufacturer is q i (i = 0, 1, 2, 3).…”

Section: Problem Descriptionmentioning

confidence: 99%

“…(5) When the manufacturer adopts the emergency supplier strategy, it will carry out dual-source procurement to the two upstream suppliers and set the manufacturer's unit purchase price w 2 for the emergency supplier. At this time, the original supplier will also increase its wholesale price to the same quotation as the emergency supplier; that is, the manufacturer's unit purchase price for the original supplier is also w 2 [29].…”

Section: Model Assumptionsmentioning

confidence: 99%

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Research on the Manufacturer’s Strategies under Different Supply Interruption Risk Based on Supply Chain Resilience

Ji,

Hong

2024

Sustainability

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In order to study the selection of coping strategies for the manufacturer facing different supply interruption risks, this paper constructs a supply chain consisting of one manufacturer and one supplier and uses no-taking coping strategies as the benchmark model to analyze the resilience of supply chain formed by the manufacturer’s adoption of penalty mechanism, emergency supplier mechanism, and strategic investment mechanism. The research shows that in the face of various levels of supply interruption risk, the manufacturer adopting a strategic investment mechanism will achieve high resilience, enabling the manufacturer and supplier to achieve mutual benefit and win-win results. In some cases of high interruption risk, the manufacturer adopting an emergency supplier mechanism can achieve higher chain resilience compared with not taking emergency measures, but its ability to improve supply chain resilience is weaker than that of a strategic investment mechanism. The penalty mechanism is applicable to situations where some interruption risk is characterized by low risk, and in such cases, both the penalty mechanism and the strategic investment mechanism can enhance the resilience of the supply chain.

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Section: Problem Descriptionmentioning

confidence: 99%

Section: Model Assumptionsmentioning

confidence: 99%

Research on the Manufacturer’s Strategies under Different Supply Interruption Risk Based on Supply Chain Resilience

Ji,

Hong

2024

Sustainability

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“…However, the supply of the supplier is unreliable due to various potential factors such as natural disasters, terrorist attacks, technical failures, and worker strikes, etc. This unreliability is reflected in the disruption risk; thus, as with previous studies (e.g., [27], [28], [29]), we assume that the supplier's fulfillment rate  follows the distribution (0, 1), i.e., where 0 1 a  . Note that a is the probability of successful delivery by the supplier; then, similar to previous studies (e.g., [27], [28], [29]), we define a as the reliability of the supplier.…”

Section: A Model Descriptionmentioning

confidence: 99%

“…This unreliability is reflected in the disruption risk; thus, as with previous studies (e.g., [27], [28], [29]), we assume that the supplier's fulfillment rate  follows the distribution (0, 1), i.e., where 0 1 a  . Note that a is the probability of successful delivery by the supplier; then, similar to previous studies (e.g., [27], [28], [29]), we define a as the reliability of the supplier. As a result, the quantity actually supplied by the supplier is r Q  , and the retailer needs to pay r Q w…”

Section: A Model Descriptionmentioning

confidence: 99%

Drop-Shipping and Backup-Sourcing Strategies Under the Risk of Supply Disruption

Zeng

Liu

et al. 2020

IEEE Access

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In recent years, an increasing number of e-retailers have adopted drop-shipping strategy to save logistics costs, and used backup-sourcing strategy to mitigate supply risks. However, the existing literature ignores the significant relationship between the two strategies. In this study, we develop a multistage game-theoretical model to investigate the optimal procurement decisions for an e-retailer who can activate both drop-shipping and backup-sourcing strategies. Specifically, our model considers the e-retailer sourcing some units of a product from a supplier to meet the random demand of online customers. The units of the product are held by the supplier, and then are directly shipped to the customers from the supplier side (i.e., drop-shipping strategy). However, there is disruption risk for the supplier; thus, after the randomness of the supplier is realized, the e-retailer can urgently order some units of the product from an expensive but perfectly reliable outside option (i.e., backup-sourcing strategy). We examine the optimal order decisions of the e-retailer and the optimal wholesale price decision of the supplier. Our study shows that for the retailer, the activation of both backup-sourcing and drop-shipping strategies increases its profit, and there is substitutability between the two strategies. For the supplier, the implementation of the drop-shipping (backup-sourcing) strategy increase (decreases) its profit, but the drop-shipping and backup-sourcing are complementary strategies. For the supply chain, when the logistics cost is low or high and the backupsourcing cost is low, the backup-sourcing and drop-shipping are complementary strategies, whereas in other cases, they are substitutive strategies. Our study not only brings some academic contributions to supply chain management, but also provides significant management insights for the operational practice in terms of drop-shipping and backup-sourcing.INDEX TERMS Supply Chain Management; Drop-shipping; Backup-sourcing; Supply Risk I. INTRODUCTIONA variety of emergencies, such as natural disasters, political unrest, terrorist attacks, worker strikes, technical failures, financial problems, and shortage of raw materials, etc., may pose supply disruption [1-3], [38]. Compared with traditional industries, the e-commerce industry is more vulnerable to the risk of supply disruption due to the greater globalization and looser management of supply chains [4].

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“…Demand uncertainty plays a major role in firms' pricing decisions [40], [41], while yield uncertainty might cause supply chain issues with respect to sourcing and production planning [42]- [46]. He and Zhang [47] considered a supply chain with one supplier and one retailer where the supplier's production is subject to random yield and the retailer faces uncertain demand.…”

Section: Sourcing Under Uncertain Supplymentioning

confidence: 99%

Self-Remanufacturing or Outsourcing? Hybrid Manufacturing System With Remanufacturing Options Under Yield Uncertainty

2019

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Yield uncertainty widely exists in manufacturing industries. Because of the particularities of the recovery and production processes, remanufacturing is seriously affected by the uncertainty of the production process, which also affects the remanufacturing choice of enterprises. In this paper, we focus on the case where a make-to-order type manufacturer is confronted with the strategic option of obtaining core materials by self-remanufacturing or outsourcing new cores. Through a stochastic modelling approach, a two-echelon closed-loop supply chain is constructed to capture the manufacturer's sourcing strategy and production planning by considering yield uncertainty in both the remanufacturing and production stages. We first examine the case of a deterministic recovery rate. The results show that regardless of whether the firm chooses to remanufacture or buy new core materials, the expected profit of the (re)manufacturer is always concave. Then, in the case of a random recovery rate, we show that the distribution bounds are important and play key roles in deciding the strategic option of self-remanufacturing or outsourcing. By comparing the upper and lower bounds of the recovery rate with the procurement cost of new raw material and used product, three production/sourcing strategies, namely, using remanufactured cores only, outsourcing new material only and jointly using the two materials, are investigated. The optimal procurement quantity and the optimal production input are derived to maximize the (re)manufacturer's expected profits under the three scenarios. Finally, we perform sensitivity analysis of the impact of yield uncertainty on the optimal results. The results show that when the shortage cost increases, the collection quantity increases faster than the production input, which implies that a ''bullwhip effect'' exists in the proposed two-period collection and production system. The conclusions of this paper can be applied to remanufacturing in related enterprises to provide production and procurement decision support for managers and to promote the efficiency of closed-loop supply chains.INDEX TERMS Remanufacturing, outsourcing, recovery rate, yield uncertainty.

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Dual Sourcing Strategy for High-Tech Manufacturer Under Supply Risk and Capacity Constraint

Cited by 8 publications

References 25 publications

Research on the Manufacturer’s Strategies under Different Supply Interruption Risk Based on Supply Chain Resilience

Research on the Manufacturer’s Strategies under Different Supply Interruption Risk Based on Supply Chain Resilience

Drop-Shipping and Backup-Sourcing Strategies Under the Risk of Supply Disruption

Self-Remanufacturing or Outsourcing? Hybrid Manufacturing System With Remanufacturing Options Under Yield Uncertainty

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