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Dual sourcing under supply disruption with risk-averse suppliers in the sharing economy

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  • Varun Gupta
  • Dmitry Ivanov

Abstract

Giant retailers sell their store brands and (re)sell substitute national brands for manufacturers (suppliers) simultaneously, which becomes an important sourcing and selling supply chain strategy in the sharing economy era. In this paper, we develop a game-theoretic model to examine the impact of risk-averse suppliers on dual sourcing decisions under supply disruption when two substitute products are sold in a common market. We examine the impact of risk-aversion, demand volatility, and supply disruption on the supply chain profitability and pricing policies. We hypothesise and then analytically derive several propositions on the dependencies of the profitability and risk-aversion, demand volatility and pricing, and risk-aversion and pricing. We also conduct numerical analysis to explore the impact of disruption. We offer insights for managers and researchers alike by uncovering the role of supplier risk-aversion for decision-making settings with substitute products and dual sourcing when product supply may be disrupted.

Suggested Citation

  • Varun Gupta & Dmitry Ivanov, 2020. "Dual sourcing under supply disruption with risk-averse suppliers in the sharing economy," International Journal of Production Research, Taylor & Francis Journals, vol. 58(1), pages 291-307, January.
  • Handle: RePEc:taf:tprsxx:v:58:y:2020:i:1:p:291-307
    DOI: 10.1080/00207543.2019.1686189
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    Citations

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    Cited by:

    1. Gheibi, Shahryar & Fay, Scott, 2021. "The impact of supply disruption risk on a retailer’s pricing and procurement strategies in the presence of a substitute product," Journal of Retailing, Elsevier, vol. 97(3), pages 359-376.
    2. Song, Zhuzhu & Tang, Wansheng & Zhao, Ruiqing & Zhang, Guoqing, 2021. "Inventory strategy of the risk averse supplier and overconfident manufacturer with uncertain demand," International Journal of Production Economics, Elsevier, vol. 234(C).
    3. Dmitry Ivanov, 2022. "Viable supply chain model: integrating agility, resilience and sustainability perspectives—lessons from and thinking beyond the COVID-19 pandemic," Annals of Operations Research, Springer, vol. 319(1), pages 1411-1431, December.
    4. Gupta, Varun & Ivanov, Dmitry & Choi, Tsan-Ming, 2021. "Competitive pricing of substitute products under supply disruption," Omega, Elsevier, vol. 101(C).
    5. Liu, Zhongyi & Li, Mengyu & Lei, Ying & Zhai, Xin, 2022. "A joint strategy based on ordering and insurance for mitigating the effects of supply chain disruption on risk-averse firms," International Journal of Production Economics, Elsevier, vol. 244(C).
    6. Babai, M. Zied & Ivanov, Dmitry & Kwon, Oh Kang, 2023. "Optimal ordering quantity under stochastic time-dependent price and demand with a supply disruption: A solution based on the change of measure technique," Omega, Elsevier, vol. 116(C).
    7. Ivanov, Dmitry, 2020. "Predicting the impacts of epidemic outbreaks on global supply chains: A simulation-based analysis on the coronavirus outbreak (COVID-19/SARS-CoV-2) case," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    8. 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.
    9. Yuan, Xiaoyong & Bi, Gongbing & Fei, Yalei & Liu, Lindong, 2021. "Supply chain with random yield and financing," Omega, Elsevier, vol. 102(C).
    10. Nagurney, Anna, 2021. "Supply chain game theory network modeling under labor constraints: Applications to the Covid-19 pandemic," European Journal of Operational Research, Elsevier, vol. 293(3), pages 880-891.
    11. Luo, Sha & Ahiska, S. Sebnem & Fang, Shu-Cherng & King, Russell E. & Warsing, Donald P. & Wu, Shuohao, 2021. "An analysis of optimal ordering policies for a two-supplier system with disruption risk," Omega, Elsevier, vol. 105(C).
    12. Chongfeng Lan & Zhongzhen Miao & Huanyong Ji, 2021. "Strategic Analysis of Dual-Channel Green Supply Chain with an Unreliable and Competitive Supplier," Sustainability, MDPI, vol. 13(10), pages 1-22, May.
    13. Hou, Pengwen & Zhao, Yaru & Li, Yating, 2023. "Strategic analysis of supplier integration and encroachment in an outsourcing supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    14. Aldrighetti, Riccardo & Battini, Daria & Ivanov, Dmitry & Zennaro, Ilenia, 2021. "Costs of resilience and disruptions in supply chain network design models: A review and future research directions," International Journal of Production Economics, Elsevier, vol. 235(C).

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