Study On Retailer’s Ordering Strategy Under Supply Disruption Risk

With the globalization of supply chain and development of lean production, as well as terrorism, natural disasters occur frequently, supply chain disruption probability is gradually increasing. Currently, many companies realize the enormous negative impact of supply chain disruption, and begin to explore effective measures to deal with supply chain disruption risks. This paper studies one of the major supply chain disruption risks-supply disruption risk. The supply disruption caused by emergency may bring very serious or even irreparable loss to supply chain members downstream. In order to resist risks, downstream firms must be prepared to deal with and complete all aspects of pre-and post measures, on the basis of reasonable risk factors analysis, develop and implement effective prevention and response strategy.This paper studies retailer’s sourcing strategy selection and order quantity allocation problem based on supply disruption risk, provide enterprises with emergency and preventive measures from a quantitative point of view, and also for the supply chain management decision support. First, we analyze the supply disruption risks faced by retailer and the response measures, draw two ordering patterns:emergency procurement and dual-source procurement. Then, under the circumstances of stochastic market demand, seek the optimal ordering policy from the perspective of retailer’s profit maximization, two models respectively. The policies include how to use the emergency resources under emergency mode and how to allocate orders under dual-source mode, furtherly, study ordering problem with service level constraint. At last, we compare different purchasing patterns by numerical simulation, and analyze the impact of some key factors on the optimal strategy, including disruption probability, penalty cost and service level.