Research on the Sourcing Strategies of Firms under Supply Risk in Different Situations

供應風險下不同情景的企業採購策略研究

Student thesis: Doctoral Thesis

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Author(s)

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Detail(s)

Awarding Institution
Supervisors/Advisors
  • Biying SHOU (Supervisor)
  • Ju'e GUO (External person) (Supervisor)
  • Ye LU (Supervisor)
Award date25 May 2021

Abstract

Supply chains have considerably garnered worldwide expansion and growth over the recent decades. Though firms can benefit from the widespread use of outsourcing and global sourcing, they have to deal with increasing and intensifying supply risks. Concerning the negative consequences that arise from supply risks such as production interruption and profit shrinkage, this dissertation systematically investigates firms' sourcing strategies towards upstream suppliers in different situations: With the focus on supply characteristics of single- and multi-supplier, two risk-mitigation tools, i.e., supplier improvement and multi-sourcing, are adopted respectively. The main work and contributions are as follows.

Firstly, considering the uncertain parameters about the distribution of a supplier's random capacity, this research investigates how a firm designs the robust sourcing strategy to incentivize the supplier based on the principal-agent model. To capture the uncertain parameters, an ellipsoidal uncertainty set is adopted. Under the worst-case criterion (i.e., maximizing the firm's minimum profit), this research analytically obtains the structure of the optimal robust sourcing strategy. Specifically, we show that the optimal robust order quantity is irrelevant to parameter uncertainty and the optimal robust wholesale price becomes larger as the degree of parameter uncertainty increases. Besides, we find that the firm's profit is decreasing in the degree of parameter uncertainty, and we further establish the profit loss by comparing the firm's profits with and without parameter uncertainty. Finally, we show that our results can be generalized to a variety of settings, such as the more general uncertainty sets specified by Lp-norm. Overall, the findings of this research not only have theoretical significance for revealing the impact of parameter uncertainty on the firm's sourcing strategy and performance, but also have practical significance for guiding the firm to make robust sourcing decisions.

Secondly, considering supply dependence among different unreliable suppliers, this research investigates a firm's dynamic multisourcing problem, where the firm's objective is to minimize the total sourcing costs. To capture supply dependence, the research constructs general supply functions (including random capacity and random yield), each of which comprises the firm's order quantities and a vector of random factors. We introduce the notion of multi-dimensional upper-set monotonicity and prove that the firm's objective function is convex. Then the optimal multisourcing strategy is derived. We show that, in each period, the firm's ordering decision critically depends on its on-hand inventory level: If the inventory level is above a certain threshold, then the firm does not place orders; otherwise, the firm preferentially orders from these suppliers that have lower effective cost rates. Moreover, we examine the impact of supply dependence on the optimal multisourcing strategy. We find that, for any two selected suppliers, negative supply dependence between them can lead to larger optimal order quantities compared with the counterpart when they are positively dependent. The above findings not only have theoretical significance for revealing the impact of supply dependence on the firm's multisourcing strategy, but also have practical significance for guiding the firm to make multiple sourcing decisions simultaneously.

Finally, considering the disruption risk propagation from tier-2 suppliers and the possible overlapped structure in tier-2, this research investigates how two downstream firms design sourcing strategies to manage supply disruptions in competing multitier supply chains. To isolate the impact of the overlap, this research focuses on two supply chain configurations: The paralleled supply chain (PSC) configuration which has no overlap in tier-2; and the overlapped supply chain (OSC) configuration, in which tier-1 suppliers share common tier-2 suppliers. In each configuration, we derive the equilibrium sourcing strategies for the two firms who compete in a market based on the Cournot competition model. We show that, when the disruption probabilities of tier-2 suppliers are relatively small, both firms choose a low-price sourcing strategy to induce their tier-1 suppliers for sole sourcing; however, when the disruption probabilities of tier-2 suppliers are relatively large, both firms choose a high-price sourcing strategy to induce their tier-1 suppliers for dual sourcing. Besides, we find that conditions on the choice between the low- and high-price sourcing strategies are different in the two configurations. The firms' profits in the PSC configuration are greater than those in the OSC configuration. These findings not only have theoretical significance for revealing the impact of upper-tier supply network structure on the firm's sourcing strategy and performance, but also have practical significance for guiding the firm to make sourcing decisions in multitier supply chains.