Strategic sourcing for short lifecycle products

Sourcing has moved from being a required function of every company to a source of competitive advantage. The first two parts of this dissertation develop optimal sourcing strategies for short-lifecycle products. In particular, we want to understand when sourcing parts from multiple vendors can outperform strategies that source from one vendor. We define a hybrid sourcing strategy as one that switches vendors over the course of the product lifecycle. We consider an environment where one component can be sourced from two vendors which offer similar parts with different costs and lead-times. One vendor supplies a cheaper part that must be bought far in advance of actual demand while the second vendor is more expensive but can immediately supply the part.; The first part of the dissertation considers the case where there is just one buying opportunity for the cheaper part; this could correspond to a life-time buying opportunity or a product with projected demand close to the cheaper supplier's minimum order quantity. If there are no fixed costs associated with either vendor, we find that a hybrid sourcing strategy outperforms either single-sourcing strategy. If there are fixed costs associated with the vendors, a three-phase diagram denotes the boundaries for the optimal hybrid and single-source policies.; The second part of the dissertation allows for up to two orders from the cheaper vendor. We model this problem as a two-stage stochastic program. A seven-parameter policy dictates the optimal order policy for the cheaper part, while the timing of the potential second order is found by line search.; The third part of the dissertation examines the classic buyback paper by Pasternack (1985) in the presence of incremental cost at the retailer. Under an unlimited return policy at a predetermined buyback price, we propose a Stackelberg model where the manufacturer leads by setting the buyback price and production quantity while the retailer follows by choosing the order quantity. We investigate cases where the manufacturer has full, no and asymmetric information about the retailer's cost. Our proposed solution in the asymmetric information case performs closely to the full information case.