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Rationalization Of The Supplier Base In The Presence Of Yield Uncertainty

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  • NARENDRA AGRAWAL
  • STEVEN NAHMIAS

Abstract

An important aspect of supply chain management is the optimal configuration of the supplier base. We develop a model to determine optimal lot sizes and the optimal number of suppliers when the yield of the product delivered from each supplier is random. While small orders from a large number of suppliers can reduce yield uncertainty, fixed costs associated with each supplier provide a penalty for having too many suppliers. This is the key tradeoff addressed by our model. We look at the cases when the suppliers are identical as well as nonidentical.

Suggested Citation

  • Narendra Agrawal & Steven Nahmias, 1997. "Rationalization Of The Supplier Base In The Presence Of Yield Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 291-308, September.
    • Handle: RePEc:bla:popmgt:v:6:y:1997:i:3:p:291-308
    DOI: 10.1111/j.1937-5956.1997.tb00432.x
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    References listed on IDEAS

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