Study On Manufacture's Quantity Flexibility Purchasing Strategy Under Random Yield

With the globalization of supply chains and lean production development, as a means of participating in market competition, after dozens of years of exploration and development, supply chain management has been achieved fruitful results in many companies. On the one hand, supply chain management improves the efficiency and saves the cost in the procurement, production, marketing and other aspects of enterprises. On the other hand, with the supply chain network structure and the external environment are increasing more complex, supply chains become more and more fragile, the occurrence of all types of emergencies, such as natural disasters, power failures, terrorist attacks and so on, making the companies facing more and more supply risks. Supply uncertainty has become one of the key factor affecting the manufacturing production system success. In response to production fluctuations and risk events, it is important for the manufacturers to implement an effective prevention and response strategies for their development.In the process of supply chain management, manufacturers not only face the risk of supply, but also random demand due to the consumer preferences uncertainty and market competition. Uncertainty of market demand will cause logistics and production decision-making uncertainty in supply chain. In order to respond to uncertain market demand in time, companies have to maintain a certain amount of inventory resulting in higher storage costs, thereby the stocks will bring the risk of funds extrusion or goods depreciation. But lowering inventory levels may reduce the level of customer service and the risk of the production system. With the advancement of science and technology and product diversification, manufacturers need to work out the optimal response strategies when facing external competition in uncertain demand environment. Reducing the uncertainty of demand and meeting the downstream needs become an important economic activity for many manufacturing companies.Based on the complex nature of the supply chain structure, This paper studies that the manufacturer sourcing and ordering strategies under determined uncertainty demand, providing manufacturers with emergency and preventive measures from a quantitative point of view, also for the supply chain management decision support. First, we analyze the risk of supply disruption and stochastic demand faced by manufacturers and the response measures, considering a decentralized supply chain consisting of two suppliers and one buyer. The major supplier provides products at cheaper price but its yield is uncertain, while the other offers the quantity flexibility contract and guarantees availability of the quantity but at expensive price. Then discuss the manufacturer's purchasing strategy, analyze the structural property of the buyer's optimal ordering strategy and derive the conditions under which the buyer should use sole-sourcing or dual-sourcing strategy. The results show that the higher risk of supply and demand have reduced the manufacturer's expected profit, but have different effects on manufacturers ordering decisions. Increasing flexibility may decrease obtained quantity for quantity flexibility supplier and benefit its rival instead. As for the risky supplier, improving the mean of its yield doesn't necessarily increase its obtained quantity but lowering the variance of its yield does when buyer chooses dual sourcing strategy. At last, we analyze the impact of some key factors on the optimal strategy by numerical simulation, including uncertain demand, random yield price and costs and other factors.