Sourcing Decision in a Multi-Period Model under Demand and Supply Uncertainty

Sourcing Decision in a Multi-Period Model under Demand and Supply Uncertainty

Shantanu Shankar Bagchi (IBS Hyderabad, Hyderabad, India) and Sourabh Bhattacharya (Institute of Management Technology, Hyderabad, India)
DOI: 10.4018/ijisscm.2014100104
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Determining the optimum number of suppliers and the optimum quantities to order from each of them is a critical problem for any supply chain. This paper has mathematically arrived at conditions to identify the appropriate sourcing strategy in a multi-period scenario for a stochastic supply and a stochastic demand environment. It has also obtained the total order quantity, optimum number of suppliers and order allocation to each of the suppliers under both uncertain demand and supply in the multiple-period context. Through a numerical analysis this work could bring interesting managerial insights about the sourcing strategies.
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2. Literature Review

In this paper, the main objective is to build a framework to address the problem of supplier sourcing in the presence of demand and supply uncertainty when multiple supplier option is available. Hence the relevant literature in this context can be divided into three loose categories. The first category would address how the researchers have modeled the presence of multiple suppliers in the classical profit-maximization or cost minimization framework. The second category would help us in modeling the uncertainty in supply by addressing the random yield problem. The last category would consist of the relevant studies which have been done in the context of multi-period scenario.

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