Abstract
ABSTRACT Manufacturers will adopt different strategies to deal with the occurrence of supply disruptions. In this paper, we conduct an analytical game-theoretical study to consider a supply chain with two suppliers (a reliable supplier and an unreliable supplier) and two manufacturers (manufacturers 1 and 2). Manufacturer 2 only orders products from the reliable supplier (Supplier R), while Manufacturer 1 can choose one of the two purchasing strategies: ‘contingent dual sourcing’ or ‘stable dual sourcing’. We study the optimal purchasing strategy of Manufacturer 1 and Supplier R under supply disruptions and competition. We find that Manufacturer 1 prefers the ‘stable dual sourcing’ strategy only if the proportion of order quantity from the unreliable supplier and the potential market size are relatively large, and Supplier R prefers the ‘contingent dual sourcing’ strategy only if the proportion of order quantity from the unreliable supplier is large, the potential market size and disruption probability is not too large.
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