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Sourcing under supply disruption with capacity‐constrained suppliers

Author

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  • Pritee Ray
  • Mamata Jenamani

Abstract

Purpose - The paper proposes multi‐sourcing models for optimal order allocation in newsvendor setting under supply disruption with stochastic demand where suppliers are capacity constrained. Design/methodology/approach - Mathematical models are constructed to describe the stochastic single period two echelon supply chain. We first investigate the uncapacitated suppliers’ problem. Then capacity constraint is included in the model to study the effect on sourcing decision. A numerical example and its solution are included to illustrate the solution procedure. We find the solution using traditional optimization approach, genetic algorithm and simulation optimization approach. Findings - The models capture the impact of disruption risk on optimal sourcing decision. When demand is highly uncertain the order should be place with the lowest cost suppliers in case of uncapacitated problem; whereas, it is to be appropriately split among a set of low‐cost suppliers in case of capacitated problem. Simulation optimization found to be the best solution approach for such problem. Research implications/limitations - The model is applicable for a single period short‐life cycle product. Originality/value - The models can be utilized for any number of suppliers. The numerical study illustrates the impact of probability of disruption, its consequences and cost of purchase on sourcing decisions.

Suggested Citation

  • Pritee Ray & Mamata Jenamani, 2013. "Sourcing under supply disruption with capacity‐constrained suppliers," Journal of Advances in Management Research, Emerald Group Publishing Limited, vol. 10(2), pages 192-205, August.
    • Handle: RePEc:eme:jamrpp:v:10:y:2013:i:2:p:192-205
    DOI: 10.1108/JAMR-05-2013-0032
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    Citations

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    Cited by:

    1. Ray, Pritee & Jenamani, Mamata, 2016. "Mean-variance analysis of sourcing decision under disruption risk," European Journal of Operational Research, Elsevier, vol. 250(2), pages 679-689.
    2. Pritee Ray, 2021. "Agricultural Supply Chain Risk Management Under Price and Demand Uncertainty," International Journal of System Dynamics Applications (IJSDA), IGI Global, vol. 10(2), pages 17-32, April.
    3. Md. Tarek Chowdhury & Aditi Sarkar & Sanjoy Kumar Paul & Md. Abdul Moktadir, 2022. "A case study on strategies to deal with the impacts of COVID-19 pandemic in the food and beverage industry," Operations Management Research, Springer, vol. 15(1), pages 166-178, June.

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