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Robust supply base management: Determining the optimal number of suppliers utilized by contractors

Authors
Journal
International Journal of Production Economics
0925-5273
Publisher
Elsevier
Publication Date
Volume
134
Issue
2
Identifiers
DOI: 10.1016/j.ijpe.2009.11.010
Keywords
  • Demand Uncertainty
  • Optimal Number Of Suppliers
  • Robustness
  • Optimal Control
  • Supply Chain Coordination

Abstract

Abstract The importance of robust supply base management under demand uncertainty requires an understanding of the benefits associated with a contractor having an optimal number of suppliers. The key benefit is a reduction in a contractor's total cost of supply base management. However, few supplier-optimizing models incorporate the perspectives of both demand uncertainty and supply base management costs. The objective of this paper is twofold: (1) to investigate the dynamics between demand uncertainty and coordination; and (2) to develop a model that determines the optimal number of suppliers that a contractor should maintain in its supply base to become more flexible and maximize its profits.

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