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ABSTRACT
To deal with disruption at the supply side, the use of backup suppliers is among the commonly employed strategies. In this research, we derived a dual sourcing model using capacity reservation contracts for a supply chain consisting of a retailer, a primary supplier who may experience disruption, and a reliable backup supplier. This dual sourcing model is a reactive strategy that balances flexibility and redundancy to improve supply chain resilience. The aim of the proposed model is to help find optimal solutions for the reserved capacities of the retailer to the suppliers and the constructed capacities of the suppliers. It has been derived in this research that the above-mentioned reserved/constructed capacities exist uniquely. Sensitivity analyses were also conducted to examine the impact of contract parameters on decision variables. This research contributes to existing knowledge by providing deeper insights into the application of the capacity reservation contract to handle supply disruption.
GRAPHICAL ABSTRACT
Disclosure statement
No potential conflict of interest was reported by the author(s).
Data availability statement
The authors confirm that the data supporting the findings of this study are available within the article.
Additional information
Notes on contributors
Sidharath Joshi
Sidharath Joshi is a Doctoral student at the Department of Industrial Systems Engineering, School of Engineering and Technology, Asian Institute of Technology, Thailand. His research interests include analyzing resilience in supply chain, supply chain network design, sustainable supply chains, supply contracts, and optimization techniques.
Huynh Trung Luong
Huynh Trung Luong is a Professor in the Department of Industrial Systems Engineering, School of Engineering and Technology, Asian Institute of Technology, Thailand. He received his Doctor of Engineering (DEng) from Industrial Systems Engineering Program, Asian Institute of Technology, Thailand, in 2000. His research interests include establishment of emergency inventory policies, inventory policies for perishable products, supply chain design, measures of bullwhip effect in supply chains, availability-based and reliability-based maintenance. He has published articles in various peer reviewed international journals.