Determining the optimal size of supply base with the consideration of risks of supply disruptions
AbstractDetermining the optimal size of the supply base has haunted managers for years. A small supply base gives rise to the risk of supply disruption, whereas a large supply base increases the fixed cost. In this paper, we consider the risks of supply disruption due to occurrence of super, semi-super, and unique events in order to formulate a model to determine the optimal size of supply base. We depict the model in a decision tree-like structure and forward a tabular method of solution that obviates the need avoids evaluation of a majority of non-optimal solutions and thus overcomes the problem of dimensionality.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Production Economics.
Volume (Year): 119 (2009)
Issue (Month): 1 (May)
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Web page: http://www.elsevier.com/locate/ijpe
Supply base Supply risk Supply disruption;
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