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Retailer’s Emergency Ordering Policy When Facing an Impending Supply Disruption

Author

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  • Jingfu Huang

    (School of Management Science, Qufu Normal University, Rizhao 276826, China)

  • Gaoke Wu

    (School of Management Science, Qufu Normal University, Rizhao 276826, China)

  • Yiju Wang

    (School of Management Science, Qufu Normal University, Rizhao 276826, China)

Abstract

Supply disruption is a common phenomenon in business activities. For the case where the supply disruption is predictable, the retailer should make an emergency procurement beforehand to decrease the inventory cost. For the scenario such that the happening time of the supply disruption obeys a certain common probability distribution but the ending time of the supply disruption is deterministic, based on minimizing the inventory cost and under two possible procurement strategies, we establish an emergency procurement optimization model. By considering the model solution in all cases, we establish a closed-form solution to the optimization model and provide an optimal emergency procurement policy to the retailer. Some numerical experiments are made to test the validity of the model and the effect of the involved parameters on the emergency procurement policy.

Suggested Citation

  • Jingfu Huang & Gaoke Wu & Yiju Wang, 2021. "Retailer’s Emergency Ordering Policy When Facing an Impending Supply Disruption," Sustainability, MDPI, vol. 13(13), pages 1-21, June.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:13:p:7041-:d:580346
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    References listed on IDEAS

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    Cited by:

    1. Xiaodan Jin & Hong Zhou, 2022. "Incentives to Enhance Production Reliability against Disruption: Cost-Sharing vs. Penalty," Sustainability, MDPI, vol. 14(15), pages 1-18, July.

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