Dual sourcing strategy in mass customized manufacturing

Abstract

This paper studies dual sourcing strategy in mass customized manufacturing for two differentiable products. The supplier's collaboration is represented by two stages game to optimize price and capacity decision and the buyer-suppliers collaboration is represented by joining the profit optimization. In order to mitigate the demand uncertainty effect, the long term decision is taken into consideration. The results show that it is possible to the suppliers to involve at higher level of cooperation by considering rewards and punishment from the buyer, which means it is possible to apply outsourcing to strategic items. The final part of the paper concludes the results and outlines future research directions.

Enhancing Supply Chain Efficiency: A Two-Stage Model for Evaluating Multiple Sourcing and Extra Procurement Strategy Optimization

“…The adoption of multiple sourcing brings several advantages, including decreased supply chain risk, enhanced quality, and cost-efficiency (Burke [26]; Yohanes [27]). When confronted with high demand uncertainty, dual or multiple sourcing often emerges as the preferred strategy (Burke [26]).…”

“…When confronted with high demand uncertainty, dual or multiple sourcing often emerges as the preferred strategy (Burke [26]). Nevertheless, this approach also introduces challenges, such as heightened coordination complexities and increased costs (Yohanes [27]). The optimal sourcing strategy hinges on factors like product attributes, supplier characteristics, and the priorities of the company (Agarwal [28]).…”