Optimal Dual Sourcing Decisions for Assembly Supply Chain with Different Production Scale Expansion Flexibilities

CHEN Chong-ping; CHEN Zhi-ming

PDF(1112 KB)

Journal of Beijing Jiaotong University（Social Sciences Edition） ›› 2023, Vol. 22 ›› Issue (1) : 102-113.

Material Flow Studies

Optimal Dual Sourcing Decisions for Assembly Supply Chain with Different Production Scale Expansion Flexibilities

CHEN Chong-ping¹, CHEN Zhi-ming²

Author information +

History +

Abstract

Production scale expansion flexibility is a vital factor in determining whether the supply chain upstream can satisfy the downstream order. This paper considers the dual sourcing problem of a supply chain comprised of one assembler and two suppliers. Based on the modified Newsvendor model incorporating yield uncertainty and production scale expansion flexibility， the profit functions of assembler and suppliers are established respectively. With the goal of profit maximization， the optimal order quantities for assembler and productions quantities for suppliers are derived by Stackelberg game， and then the sensitivity analysis is conducted on the lot-sizing decisions and profits. It is found that the order quantity is correlated negatively with the production instability， that is， the assembler tends to allocate more orders to the stabler supplier. There exists a threshold instability， which turns the correlation between production quantity and production instability from negative to positive. The production quantity and order quantity are both correlated positively with the production scale expansion flexibility， meaning that the assembler should build its supply chain in the area with high production scale expansion flexibility. When building the initial capacity， the supplier should consider the relative size between overproduction probability and production scale expansion flexibility. If the former is larger than the latter， a large-scale production line should be built， otherwise， choose a small-scale production line.

Key words

dual sourcing / production scale expansion flexibility / random yield / random demand / supply chain management

Cite this article

EndNote

Ris (Procite)

Bibtex

Download Citations

CHEN Chong-ping, CHEN Zhi-ming. Optimal Dual Sourcing Decisions for Assembly Supply Chain with Different Production Scale Expansion Flexibilities[J]. Journal of Beijing Jiaotong University（Social Sciences Edition）. 2023, 22(1): 102-113

References

1 VEERARAGHAVAN S， SCHELLER-WOLF A. Now or later： A simple policy for effective dual sourcing in capacitated systems［J］. Operations Research， 2008， 56（4）： 850－864.
2 SHIN H， BENTON W C， JUN M. Quantifying suppliers’ product quality and delivery performance： A sourcing policy decision model［J］. Computers & Operations Research， 2009， 36（8）： 2462－2471.
3 IAKOVOU E， VLACHOS D， XANTHOPOULOS A. A stochastic inventory management model for a dual sourcing supply chain with disruptions［J］. International Journal of Systems Science， 2010， 41（3）： 315－324.
4 INDERFURTH K， KELLE P， KLEBER R. Dual sourcing using capacity reservation and spot market： Optimal procurement policy and heuristic parameter determination［J］. European Journal of Operational Research， 2013， 225（2）： 298－309.
5 JAKSIC M， FRANSOO J C. Dual sourcing in the age of near-shoring： trading off stochastic capacity limitations and long lead times［J］. European Journal of Operational Research， 2018， 267（1）： 150－161.
6 SUN J， MIEGHEM J V . Robust Dual Sourcing Inventory Management： Optimality of Capped Dual Index Policies and Smoothing［J］. Manufacturing & Service Operations Management， 2019， 21（4）： 912－931.
7 BOUTE R N ， DISNEY S M ， GIJSBRECHTS J ， et al. Dual Sourcing and Smoothing under Non-Stationary Demand Time Series： Re-shoring with SpeedFactories［J］. Management Science， 2022， 68（2）： 809－1589.
8 徐永锋. 不同采购模式下的配套部件采购策略［J］. 系统管理学报，2018，27（6）：1176－1183.
9 YANG Z， AYDIN G， BABICH V， et al. Using a dual-sourcing option in the presence of asymmetric information about supplier reliability： Competition vs. diversification［J］. Manufacturing & Service Operations Management， 2012， 14（2）： 202－217.
10 YU H， ZENG A Z， ZHAO L. Single or dual sourcing： decision-making in the presence of supply chain disruption risks［J］. Omega， 2009， 37（4）： 788－800.
11 SAWIK T. Joint supplier selection and scheduling of customer orders under disruption risks： Single vs. dual sourcing［J］. Omega， 2014， 43（43）： 83－95.
12 XANTHOPOULOS A， VLACHOS D， IAKOVOU E. Optimal newsvendor policies for dual-sourcing supply chains： A disruption risk management framework［J］. Computers & Operations Research， 2012， 39（2）： 350－357.
13 徐鸿雁，黄河，曾能民.存在信息更新时的双源采购和后备生产结合策略研究［J］.中国管理科学，2018， 26（2）：33－45.
14 陈崇萍，陈志祥.供应商产出随机与供应中断下的双源采购决策［J］.中国管理科学，2019，27（6）： 113－122.
15 LUCKER F， SEIFERT R W. Building up resilience in a pharmaceutical supply chain through inventory， dual sourcing and agility capacity［J］. Omega， 2017， 73： 114－124.
16 HAZRA J， MAHADEVAN B. Impact of supply base heterogeneity in electronic markets［J］. European Journal of Operational Research， 2006， 174（3）： 1580－1594.