Speed versus reliability trade-offs in supplier selection

Jianli Hu and Charles L. Munson

International Journal of Procurement Management, 2007, vol. 1, issue 1/2, 238-259

Abstract: In many industries, order fulfillment speed is the most important competitive weapon for manufacturers. As such, supplier reliability and speed are crucial factors for success. In this paper, we explore the trade-offs among reliability, speed and price when selecting suppliers. We compare the costs of four types of suppliers categorised by their lead time and reliability characteristics: (1) slow and unreliable, (2) slow and reliable, (3) fast and unreliable, and (4) fast and reliable. Analytically, we perform a series of pairwise comparisons of these supplier types under both deterministic and stochastic demand environments. We follow that up with numerical sensitivity analysis that suggests when each of the four may become dominant based on changes in purchase price, demand uncertainty and required cycle service level. Finally, we suggest implications from this research for buyers and suppliers and for firms interested in pursuing tailored dual-sourcing strategies.

Keywords: purchasing; supplier selection; lead times; inventory; computational analysis; procurement management; supplier reliability; order fulfillment speed; purchase price; demand uncertainty; cycle service levels. (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.inderscience.com/link.php?id=15364 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijpman:v:1:y:2007:i:1/2:p:238-259

Access Statistics for this article

More articles in International Journal of Procurement Management from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().