The Importance of Decoupling Recurrent and Disruption Risks in a Supply Chain

نویسندگان

  • Sunil Chopra
  • Gilles Reinhardt
  • Usha Mohan
چکیده

This paper focuses on the importance of decoupling recurrent supply risk and disruption risk when planning appropriate mitigation strategies. We show that bundling the two uncertainties leads a manager to underutilize a reliable source while over utilizing a cheaper but less reliable supplier. As in Dada, Petruzzi and Schwarz [6], we show that increasing quantity from a cheaper but less reliable source is an effective risk mitigation strategy if most of the supply risk growth comes from an increase in recurrent uncertainty. In contrast, we show that a firm should order more from a reliable source and less from a cheaper but less reliable source if most of the supply risk growth comes from an increase in disruption probability.

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تاریخ انتشار 2006