Dual-sourcing procurement decisions in the presence of manufacturers’ investment in suppliers’quality defect improvement
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    Abstract:

    Considering the uncertainty in supply and demand,as well as the quality differences of purchased products from two suppliers,this paper investigates dual-sourcing decisions with defect improvement investment in suppliers’product. In this paper,a high quality ( low defect rate) supplier is set as a benchmark for quality defect improvement,and the manufacturer decides the purchasing policies based on two scenarios: ( 1) purchasing after defect improvement,( 2) simultaneously purchasing and investing in defect improvement. The differences of the two scenarios are compared. The impacts of success rate of quality defect improvement investments on the order quantities and the profit of the manufacturer are analyzed. The results indicate that when the success rate is less than 1,the profit of the manufacturer in the first scenario ( purchasing after defect improvement) is higher than that in the second scenario ( simultaneously purchasing and investing in defect improvement) . When the success rate is equal to 1,there is no difference in the manufacturer’s profits in the two scenarios.

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  • Online: April 19,2018
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