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Coordination with a backup supplier through buy-back contract under supply disruption

Author

Listed:
  • Hou, Jing
  • Zeng, Amy Z.
  • Zhao, Lindu

Abstract

This paper studies a buy-back contract between a buyer and a backup supplier when the buyer's main supplier experiences disruptions. The expected profit functions and the optimal decisions of the contract players are derived through a sequential optimization process. The common properties of the contract as well as the differences under the demand uncertainty and the main supplier's recurrent supply uncertainty are explored through comparative studies and numerical examples. The study contributes to the literature by providing a better understanding of the impacts of demand and supply uncertainties and by shedding insights on the value of a backup supply.

Suggested Citation

  • Hou, Jing & Zeng, Amy Z. & Zhao, Lindu, 2010. "Coordination with a backup supplier through buy-back contract under supply disruption," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(6), pages 881-895, November.
  • Handle: RePEc:eee:transe:v:46:y:2010:i:6:p:881-895
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    Citations

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    Cited by:

    1. Li, Guo & Zhang, Lijun & Guan, Xu & Zheng, Junjun, 2016. "Impact of decision sequence on reliability enhancement with supply disruption risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 90(C), pages 25-38.
    2. Meena, P.L. & Sarmah, S.P. & Sarkar, A., 2011. "Sourcing decisions under risks of catastrophic event disruptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 1058-1074.
    3. Ji, Xiang & Sun, Jiasen & Wang, Zebin, 2017. "Turn bad into good: Using transshipment-before-buyback for disruptions of stochastic demand," International Journal of Production Economics, Elsevier, vol. 185(C), pages 150-161.
    4. Sawik, Tadeusz, 2016. "Integrated supply, production and distribution scheduling under disruption risks," Omega, Elsevier, vol. 62(C), pages 131-144.
    5. Rongfang Yan & Bin Lu & Jianjun Wu, 2016. "Contract Coordination Strategy of Supply Chain with Substitution under Supply Disruption and Stochastic Demand," Sustainability, MDPI, Open Access Journal, vol. 8(7), pages 1-17, July.
    6. Yang, Yuefeng & Xu, Xuerong, 2015. "Post-disaster grain supply chain resilience with government aid," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 139-159.
    7. Cao, Erbao & Wan, Can & Lai, Mingyong, 2013. "Coordination of a supply chain with one manufacturer and multiple competing retailers under simultaneous demand and cost disruptions," International Journal of Production Economics, Elsevier, vol. 141(1), pages 425-433.
    8. Guertler, Benjamin & Spinler, Stefan, 2015. "Supply risk interrelationships and the derivation of key supply risk indicators," Technological Forecasting and Social Change, Elsevier, vol. 92(C), pages 224-236.
    9. Kamalahmadi, Masoud & Parast, Mahour Mellat, 2017. "An assessment of supply chain disruption mitigation strategies," International Journal of Production Economics, Elsevier, vol. 184(C), pages 210-230.
    10. Meena, P.L. & Sarmah, S.P., 2013. "Multiple sourcing under supplier failure risk and quantity discount: A genetic algorithm approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 50(C), pages 84-97.
    11. Guertler, Benjamin & Spinler, Stefan, 2015. "When does operational risk cause supply chain enterprises to tip? A simulation of intra-organizational dynamics," Omega, Elsevier, vol. 57(PA), pages 54-69.
    12. Zhen, Xueping & Li, Yongjian & Cai, Gangshu (George) & Shi, Dan, 2016. "Transportation disruption risk management: business interruption insurance and backup transportation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 90(C), pages 51-68.
    13. Torabi, S.A. & Baghersad, M. & Mansouri, S.A., 2015. "Resilient supplier selection and order allocation under operational and disruption risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 79(C), pages 22-48.
    14. Faiza Hamdi & Ahmed Ghorbel & Faouzi Masmoudi & Lionel Dupont, 0. "Optimization of a supply portfolio in the context of supply chain risk management: literature review," Journal of Intelligent Manufacturing, Springer, vol. 0, pages 1-26.
    15. Chen, Kebing & Xiao, Tiaojun, 2015. "Outsourcing strategy and production disruption of supply chain with demand and capacity allocation uncertainties," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 243-257.
    16. Zeng, Amy Z. & Xia, Yu, 2015. "Building a mutually beneficial partnership to ensure backup supply," Omega, Elsevier, vol. 52(C), pages 77-91.
    17. repec:eee:proeco:v:191:y:2017:i:c:p:335-350 is not listed on IDEAS

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