Abstract
Emergency procurement strategies have attracted significant attention from academicians and practitioners with the increase of supply disruptions in the past two decades. We study a manufacturer’s contingent sourcing strategies under supply disruption and competition using Stackelberg game. We investigate a two-stage supply chain consisting of two competing manufacturers and two suppliers, where the wholesale prices offered by the two suppliers are different. Supplier 1 is unreliable and cheap, while supplier 2 is reliable and expensive, and moreover, supplier 2 has capacity limits. Manufacturer A uses a dual-sourcing, manufacturer B uses a single-sourcing. According to two manufacturers’ order sequence, we established two manufacturers' expected profit function under three scenarios. We obtain the optimal order quantities and expected profits of the two manufacturers in different scenarios, and show that supply disruption and procurement time have effect on the manufacturer's purchasing decisions.
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