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Note: Dual sourcing with nonidentical suppliers
Author(s) -
Ramasesh Ranga V.,
Ord J. Keith,
Hayya Jack C.
Publication year - 1993
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/1520-6750(199303)40:2<279::aid-nav3220400210>3.0.co;2-w
Subject(s) - dual (grammatical number) , economic shortage , lead time , constant (computer programming) , order (exchange) , range (aeronautics) , econometrics , holding cost , unit (ring theory) , lead (geology) , operations research , computer science , economics , operations management , mathematics , art , linguistics , philosophy , materials science , literature , mathematics education , finance , geomorphology , government (linguistics) , composite material , programming language , geology
We analyze a dual‐sourcing inventory model with exponential lead times and constant unit demand in which the order quantity is split in some proportion between two sources of supply. Unlike earlier studies, we do not require that the two sources be identical in terms of the lead‐time parameters or the supply prices. We compare the expected total annual costs for the two‐source and the traditional single‐source models over a wide range of parameter values. We confirm the findings of earlier studies that, under stochastic lead times, dual sourcing yields savings in holding and shortage costs that could outweigh the incremental ordering costs. With this more general model, we demonstrate that savings from dual sourcing are possible even where the mean or the variability of the second source is higher. © 1993 John Wiley & Sons, Inc.