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Robust supply base management: Determining the optimal number of suppliers utilized by contractors

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  • Nam, Seong-Hyun
  • Vitton, John
  • Kurata, Hisashi
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    Abstract

    The importance of robust supply base management under demand uncertainty requires an understanding of the benefits associated with a contractor having an optimal number of suppliers. The key benefit is a reduction in a contractor's total cost of supply base management. However, few supplier-optimizing models incorporate the perspectives of both demand uncertainty and supply base management costs. The objective of this paper is twofold: (1) to investigate the dynamics between demand uncertainty and coordination; and (2) to develop a model that determines the optimal number of suppliers that a contractor should maintain in its supply base to become more flexible and maximize its profits.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 134 (2011)
    Issue (Month): 2 (December)
    Pages: 333-343

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    Handle: RePEc:eee:proeco:v:134:y:2011:i:2:p:333-343

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Demand uncertainty Optimal number of suppliers Robustness Optimal control Supply chain coordination;

    References

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    1. 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.
    2. Yossi Aviv, 2001. "The Effect of Collaborative Forecasting on Supply Chain Performance," Management Science, INFORMS, vol. 47(10), pages 1326-1343, October.
    3. Ranga V. Ramasesh & J. Keith Ord & Jack C. Hayya & Andrew Pan, 1991. "Sole Versus Dual Sourcing in Stochastic Lead-Time (s, Q) Inventory Models," Management Science, INFORMS, vol. 37(4), pages 428-443, April.
    4. 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.
    5. Kim, Bowon, 2000. "Coordinating an innovation in supply chain management," European Journal of Operational Research, Elsevier, vol. 123(3), pages 568-584, June.
    6. Kelle, P. & Silver, E. A., 1990. "Decreasing expected shortages through order splitting," Engineering Costs and Production Economics, Elsevier, vol. 19(1-3), pages 351-357, May.
    7. Sobrero, Maurizio & Roberts, Edward B., 2002. "Strategic management of supplier-manufacturer relations in new product development," Research Policy, Elsevier, vol. 31(1), pages 159-182, January.
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