A Dual Sourcing Strategy:

Single sourcing versus dual sourcing under conditions of learning

This paper considers a buyer who has to decide whether to select a single or two sources of supply for a homogeneous product. The production processes of the suppliers are subject to learning effects, which reduce the production costs and increase the production capacities of the suppliers. This, in turn, enables the suppliers to reduce the sales price, which results in lower acquisition costs ...

The Mexico-China Sourcing Game: Teaching Global Dual Sourcing

W describe a three-hour class on global dual sourcing built around a game that demonstrates the challenges in making operational decisions, and transfers recent academic insights to the classroom. Student teams manage a firm with access to a responsive but expensive supply source (Mexico) and a cheap but remote source (China). Each team must determine a sourcing strategy to satisfy random deman...

Optimal Dual Sourcing Strategy with Capacity Constraint and Fixed Bilateral Adjustment Costs

This paper studies a finite horizon, single product, periodic review inventory system with two supply nodes. Supply nodes are differentiated by their fixed and variable costs, delivery lead times, as well as constraints on the order sizes. The buyer faces interesting tradeoffs: Procuring from one of the supplier, referred to “onshore supplier”, involves a high variable cost but a shorter delive...

Strategic IT Resources and Sourcing Strategy

Global Dual Sourcing and Order Smoothing

Motivated by the recent trend of offshoring manufacturing facilities to seek lower production cost, while keeping some costly local facilities to better respond to changes in market demand, this paper studies a dual sourcing policy and characterizes the average sourcing allocation. We consider the total landed cost from origin (combining a cheap but slow source and a fast but expensive source) ...