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We study supply chain risk mitigations by incorporating expedited shipping. The firm we consider can source from two suppliers—one is unreliable while the other is perfectly reliable but more expensive. It intends to mitigate the potential risks caused by random disruptions at the unreliable supplier by adapting its risk mitigation policy based on the supplier’s disruption factors, such as the expected...
Most research on firms׳ sourcing strategies assumes that wholesale prices and reliability of suppliers are exogenous. It is of our interest to study suppliers׳ competition on both wholesale price and reliability and firms׳ corresponding optimal sourcing strategy under complete information. In particular, we study a problem in which a firm procures a single product from two suppliers, taking into account...
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