Dynamic Supply Risk Management with Signal-Based Forecast, Multi-Sourcing, and Discretionary Selling

• 成果类型: Article
• 署名作者: Gao, Long; Yang, Nan; Zhang, Renyu; Luo, Ting
• 署名单位: University of California System; University of California Riverside; University of Miami; New York University; NYU Shanghai; California State University System; California State University Fullerton
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12695
• 发表日期: 2017
• 页码: 1399-1415
• 关键词: supply risk management; signal-based supply forecast; Multi-Sourcing; discretionary selling

摘要

We examine the critical role of advance supply signalssuch as suppliers' financial health and production viabilityin dynamic supply risk management. The firm operates an inventory system with multiple demand classes and multiple suppliers. The sales are discretionary and the suppliers are susceptible to both systematic and operational risks. We develop a hierarchical Markov model that captures the essential features of advance supply signals, and integrate it with procurement and selling decisions. We characterize the optimal procurement and selling policy, and the strategic relationship between signal-based forecast, multi-sourcing, and discretionary selling. We show that higher demand heterogeneity may reduce the value of discretionary selling, and that the mean value-based forecast may outperform the stationary distribution-based forecast. This work advances our understanding on when and how to use advance supply signals in dynamic risk management. Future supply risk erodes profitability but enhances the marginal value of current inventory. A signal of future supply shortage raises both base stock and demand rationing levels, thereby boosting the current production and tightening the current sales. Signal-based dynamic forecast effectively guides the firm's procurement and selling decisions. Its value critically depends on supply volatility and scarcity. Ignoring advance supply signals can result in misleading recommendations and severe losses. Signal-based dynamic supply forecast should be used when: (a) supply uncertainty is substantial, (b) supply-demand ratio is moderate, (c) forecast precision is high, and (d) supplier heterogeneity is high.