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Sole versus dual-sourcing under order dependent lead-times and prices [electronic resource]

Sajjadieh, M. (Mohsen) ; Sharif University of Technology

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  1. Type of Document: Article
  2. DOI: 10.1016/j.cor.2009.03.001
  3. Abstract:
  4. In this paper, we consider a dual-sourcing model with constant demand and stochastic lead times. Two suppliers may be different in terms of purchasing prices and lead-time parameters. The ordering takes place when the inventory level depletes to a reorder level, and the order is split among two suppliers. Unlike previous works in the order splitting literature, the supply lead time between vendor and buyer as well as unit purchasing prices is considered to be order quantity dependent. The proposed model finds out the optimal reorder point, order quantity and splitting proportion, using a solution procedure. Numerical results show that neglecting the relationship between ordering batch size and lead times is a shortcoming that hides one of order splitting advantages. Moreover, connecting unit prices to order quantity can decrease the percentage saving from dual sourcing compared to sole sourcing. Furthermore, sensitivity analysis shows some managerial insights
  5. Keywords:
  6. Dual sourcing ; Order splitting ; Stochastic lead times ; Supply chain management
  7. Source: Computers And Operations Research, Published in: Elsevier Journals ; Volume 36, Issue 12, December 2009, Pages 3272–3280
  8. URL: http://www.sciencedirect.com/science/article/pii/S0305054809000707