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Dual Sourcing Procurement Decisions Considering Collaborativeand Armslength Suppliers


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Dual Sourcing Procurement Decisions Considering Collaborativeand Armslength Suppliers
WEN Yuan 12 YE Qing 1
1.School of Economics and Management,Tsinghua University,Beijing 100084,China; 2.Guangxi Branch of China Development Bank,Nanning 530028,China
collaborative suppliersarmslength suppliersdual sourcingprocurementdemand updates
To analyze the correlations of demand and supply reliabilities and the effects of demand updates on procurement decisions,a twostage dual sourcing framework is built considering that a manufacturer can order from collaborative and armslength suppliers.The existence and uniqueness of the optimal procurement decision are proved by analyzing a threedimension Hessian matrix,and the optimal solution is derived.The research results show that the procurement decisions of manufacturers obey a rule of correlated marginal analysis;the fluctuations of demand and supply reliabilities have notable impacts on the procurement decisions,and their correlations reduce the manufacturers’ expected profits;riskneutral manufacturers may procure from collaborative suppliers even though they have higher wholesale prices,so as to avoid missing potential sales opportunities.


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