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Using anticipatory orders to manage disruption risk over a short product life cycle

Chopra, S., Glinskiy, V. & Lücker, F. ORCID: 0000-0003-4930-9773 (2024). Using anticipatory orders to manage disruption risk over a short product life cycle. European Journal of Operational Research, doi: 10.1016/j.ejor.2024.05.040

Abstract

We study the impact of supply disruptions on sourcing strategies when product life cycles are short and future demand depends on current sales. We introduce the concept of order policies with anticipatory orders where some or all of orders with the unreliable supplier in future periods are moved to an earlier period. Using a 2-period model, we show that despite incurring additional holding cost when inventory is carried to a future period, anticipatory orders from the unreliable supplier are valuable when dealing with disruption risk when future demand depends on current sales. We find that anticipatory orders are less pronounced when future demand is more independent of current sales. We show that anticipatory orders from the unreliable supplier continue to be optimal for a range of disruption probabilities even when we include a responsive and reliable supplier.

Publication Type: Article
Additional Information: © 2024. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords: Disruption, risk mitigation strategies, supply chain, demand sales dependence
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments: Bayes Business School
Bayes Business School > Management
SWORD Depositor:
[thumbnail of Managing_disruption_risk_when_supply_drives_demand - 2024-05-31T093225.620.pdf] Text - Accepted Version
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