TY - BOOK

T1 - Tales of a so(u)rcerer : optimal sourcing decisions under alternative capacitated suppliers and general cost structures

AU - Alp, O.

AU - Tan, T.

PY - 2010

Y1 - 2010

N2 - Most companies must procure items necessary for their businesses from out-
side sources, where there are typically a number of competing suppliers with varying cost
structures, price schemes, and capacities. This situation poses some interesting research
questions from the outlook of different parties in the supply chain. We consider this problem from the perspective of (i) the party that needs to outsource, (ii) the party that is willing to serve as the source, and (iii) the party that has in-house capability to spare. We allow for stochastic demand, capacitated facilities (in-house and suppliers'), and general structures for all relevant cost components. Some simpler versions of this problem are shown to be NP-hard in the literature. We make use of a novel dynamic programming model with pseudo-polynomial complexity to address all three perspectives by solving the corresponding problems to optimality. Our modeling approach also lets us analyze different aspects of the problem environment such as pricing schemes and channel coordination issues. We derive several managerial insights, some of which are counter to collective intuition.

AB - Most companies must procure items necessary for their businesses from out-
side sources, where there are typically a number of competing suppliers with varying cost
structures, price schemes, and capacities. This situation poses some interesting research
questions from the outlook of different parties in the supply chain. We consider this problem from the perspective of (i) the party that needs to outsource, (ii) the party that is willing to serve as the source, and (iii) the party that has in-house capability to spare. We allow for stochastic demand, capacitated facilities (in-house and suppliers'), and general structures for all relevant cost components. Some simpler versions of this problem are shown to be NP-hard in the literature. We make use of a novel dynamic programming model with pseudo-polynomial complexity to address all three perspectives by solving the corresponding problems to optimality. Our modeling approach also lets us analyze different aspects of the problem environment such as pricing schemes and channel coordination issues. We derive several managerial insights, some of which are counter to collective intuition.

M3 - Report

SN - 978-90-386-2239-2

T3 - BETA publicatie : working papers

BT - Tales of a so(u)rcerer : optimal sourcing decisions under alternative capacitated suppliers and general cost structures

PB - Technische Universiteit Eindhoven

CY - Eindhoven

ER -