Study On Manufacture’s Procurement Strategy Selection Under Supply Disruption Risk

With the globalization of supply chain and development of lean production, the supply chain has been extended in both time and space. However, due to the large network structure and complex external environment, as well as human error accidents and natural disasters occur frequently, supply chain disruption probability is gradually increasing. Supply disruption is a major risk in supply chain risk management, it will stop the operation of supply chain and cause serious loss of member enterprises in supply chain, it is of great significance for enterprises to develop and implement effective guard strategy of supply disruption risk.This paper studies manufacture’s procurement strategy selection under supply disruption risk, dual-source procurement strategy including risky dual-source procurement strategy and mixed dual-source procurement strategy in this paper.Firstly, based on single-source, the effectiveness of the two different dual-source procurement strategies on responding to supply disruption risk is analyzed. It compares the optimal ordering decision and expected profit of the manufacturer in the three procurement strategies and analyzes the factors influencing manufacturer’s choice of procurement strategy. Then, the paper builds decision-making models to study on choosing single-source or dual-source procurement strategy under supply disruption risk.When it studies on choosing single-source or mixed dual-source procurement strategy, the effect that price variation and supply disruption have on demand are considered, it obtains the manufacturer expected profit functions by constructing the decision-making model, and the critical values of the key factors influencing manufacturer’s choice are identified.When studying on choosing single-source or risky dual-source procurement strategy, it considers some uncertainties such as shortage cost, supply disruption ratio, the possibility of replenishment and whether to choose it, etc. The uncertainty factors’ probability distribution function is specified, and then it uses Monte Carlo simulation to received statistical characteristics of manufacturer’s expected profit, and identifies the impact of the most important parameters on the differential benefits of the two procurement strategies, so as to represent a valid support for decision-making process.