Optimal Product Substitution and Dual Sourcing Strategy considering Reliability of Production Lines

Di Wu, Min Gong, Rui Peng, Xiangbin Yan and Shaomin Wu

Reliability Engineering and System Safety, 2020, vol. 202, issue C

Abstract: Most of the supply chain literature assumes that product substitution is an effective method to mitigate supply chain disruptions and that all production lines either survive or are disrupted together. Such assumptions, however, may not hold in the real world: (1) when there is a shortfall of all products, product substitution may be inadequate unless it is paired with other strategies such as dual sourcing; and (2) production lines do not survive forever and may fail. To relax such assumptions, this paper therefore investigates the situations that the manufacturer may optimize substitution policy and dual sourcing policy to cope with supply chain disruptions. The paper obtains and compares the optimal policies for both deterministic and stochastic demands. A real-world case is also studied to verify the effectiveness of the proposed model.

Keywords: Reliability; dual sourcing; random supply failures; production lines; product substitution; supply chain disruption (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reensy:v:202:y:2020:i:c:s095183202030538x

DOI: 10.1016/j.ress.2020.107037

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