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Selecting sourcing partners for a make-to-order supply chain

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Author Info

  • Yue, Jinfeng
  • Xia, Yu
  • Tran, Thuhang
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    Abstract

    Make-to-order manufacturers face an idiosyncratic and complex situation in the sourcing selection process. Although they can source from several key suppliers, each order requires custom key parts that cannot be stocked. Our research provides a decision model to facilitate the sourcing process for these manufacturers using information about their sourcing partners' cost and processing time. The manufacturer can calculate the total cost and on-time probability for all possible combinations of certified suppliers and key part allotments to obtain a sourcing portfolio with several sourcing alternatives for a desired service level. The portfolio allows the manufacturer to make trade-offs between cost and reliability to finish the job on time. Additionally, the portfolio can be obtained for a given due date or for reduced due dates in a competitive bid situation. The portfolio approach allows the manufacturer to maintain control over the sourcing selection process by partnering with sourcing members to keep costs low without losing the needed flexibility to meet customer demands.

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    Bibliographic Info

    Article provided by Elsevier in its journal Omega.

    Volume (Year): 38 (2010)
    Issue (Month): 3-4 (June)
    Pages: 136-144

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    Handle: RePEc:eee:jomega:v:38:y:2010:i:3-4:p:136-144

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    Related research

    Keywords: Sourcing partner selection Make-to-order supply chain management Portfolio Manufacturing;

    References

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    1. Xiao, Tiaojun & Qi, Xiangtong, 2008. "Price competition, cost and demand disruptions and coordination of a supply chain with one manufacturer and two competing retailers," Omega, Elsevier, vol. 36(5), pages 741-753, October.
    2. Ruiz-Torres, Alex J. & Mahmoodi, Farzad, 2006. "A supplier allocation model considering delivery failure, maintenance and supplier cycle costs," International Journal of Production Economics, Elsevier, vol. 103(2), pages 755-766, October.
    3. Yu, Haisheng & Zeng, Amy Z. & Zhao, Lindu, 2009. "Single or dual sourcing: decision-making in the presence of supply chain disruption risks," Omega, Elsevier, vol. 37(4), pages 788-800, August.
    4. Kelle, Peter & Miller, Pam Anders, 2001. "Stockout risk and order splitting," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 407-415, May.
    5. Lau, Hon-Shiang & Zhao, Long-Geng, 1993. "Optimal ordering policies with two suppliers when lead times and demands are all stochastic," European Journal of Operational Research, Elsevier, vol. 68(1), pages 120-133, July.
    6. Ruiz-Torres, Alex J. & Mahmoodi, Farzad, 2007. "The optimal number of suppliers considering the costs of individual supplier failures," Omega, Elsevier, vol. 35(1), pages 104-115, February.
    7. Hong, Jae-Dong & Hayya, Jack C., 1992. "Just-In-Time purchasing: Single or multiple sourcing?," International Journal of Production Economics, Elsevier, vol. 27(2), pages 175-181, May.
    8. Berger, Paul D. & Gerstenfeld, Arthur & Zeng, Amy Z., 2004. "How many suppliers are best? A decision-analysis approach," Omega, Elsevier, vol. 32(1), pages 9-15, February.
    9. Ryu, Si Wook & Lee, Kyung Keun, 2003. "A stochastic inventory model of dual sourced supply chain with lead-time reduction," International Journal of Production Economics, Elsevier, vol. 81(1), pages 513-524, January.
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    Citations

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    Cited by:
    1. Tunc, Huseyin & Kilic, Onur A. & Tarim, S. Armagan & Eksioglu, Burak, 2011. "The cost of using stationary inventory policies when demand is non-stationary," Omega, Elsevier, vol. 39(4), pages 410-415, August.
    2. Sawik, Tadeusz, 2011. "Selection of supply portfolio under disruption risks," Omega, Elsevier, vol. 39(2), pages 194-208, April.
    3. Olhager, Jan & Prajogo, Daniel I., 2012. "The impact of manufacturing and supply chain improvement initiatives: A survey comparing make-to-order and make-to-stock firms," Omega, Elsevier, vol. 40(2), pages 159-165, April.
    4. Balachandran, Kashi R. & Wang, Hsiao-Wen & Li, Shu-Hsing & Wang, Taychang, 2013. "In-house capability and supply chain decisions," Omega, Elsevier, vol. 41(2), pages 473-484.
    5. Li, Deng-Feng, 2011. "Linear programming approach to solve interval-valued matrix games," Omega, Elsevier, vol. 39(6), pages 655-666, December.
    6. Sawik, Tadeusz, 2014. "Joint supplier selection and scheduling of customer orders under disruption risks: Single vs. dual sourcing," Omega, Elsevier, vol. 43(C), pages 83-95.
    7. LuminiĊ£a Nicolescu & Cristina Galalae & Alexandru Voicu, 2013. "Solving a Supply Chain Management Problem to Near Optimality Using Ant Colony Optimization, in an International Context," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 15(33), pages 8-26, February.

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