Global Dual Sourcing and Order Smoothing: The Impact of Capacity and Lead Times

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Global Dual Sourcing and Order Smoothing: The Impact of Capacity and Lead Times

A decades of offshoring production across the world, companies are rethinking their global networks. Local sourcing is receiving more attention, but it remains challenging to balance the offshore sourcing cost advantage against the increased inventories, because of its longer lead time, and against the cost and (volume) flexibility of each source’s capacity. To guide strategic allocation in thi...

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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) ...

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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) ...

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ژورنال

عنوان ژورنال: Management Science

سال: 2015

ISSN: 0025-1909,1526-5501

DOI: 10.1287/mnsc.2014.1992