Mitigating supply disruption with a backup supplier under uncertain demand: competition vs. cooperation

Tulika Chakraborty, Satyaveer S. Chauhan and Mustapha Ouhimmou

International Journal of Production Research, 2020, vol. 58, issue 12, 3618-3649

Abstract: In case of supply disruption following major disasters, many supply chains tend to break down due to stock-outs and take a long time to recover. However, by keeping emergency sources of supply, some supply chains continue to function smoothly even after a major disaster. In this work, using a game-theoretic-framework, we consider a two-suppliers-one-retailer supply chain with price-dependent stochastic demand in which suppliers are prone to disruption. To investigate the impact of supply disruption we consider two models: SC model, in which the retailer does not maintain any emergency sources of supply against any supply disruption, and SCB model, in which the retailer maintains a backup supplier to mitigate the impact of supply disruption. We mainly focus on the pricing strategies of the suppliers and the mitigating strategies of the retailer under supply and demand uncertainty. We address two coordinating mechanisms to enhance supply chain performance. Our results indicate that in the presence of supply disruption, even with lower probabilities, the retailer would always prefer to take the advantage of a backup supplier and the optimal reserve quantity increases with disruption probabilities. We further investigate the scenario in which the suppliers would always prefer to cooperate with each other.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2019.1633025 (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:taf:tprsxx:v:58:y:2020:i:12:p:3618-3649

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2019.1633025

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().