Supply chain networks with global outsourcing and quick-response production under demand and cost uncertainty

Zugang Liu, Anna Nagurney

Research output: Contribution to journalArticlepeer-review

45 Scopus citations

Abstract

This paper develops a modeling and computational framework for supply chain networks with global outsourcing and quick-response production under demand and cost uncertainty. Our model considers multiple off-shore suppliers, multiple manufacturers, and multiple demand markets. Using variational inequality theory, we formulate the governing equilibrium conditions of the competing decision-makers (the manufacturers) who are faced with two-stage stochastic programming problems but who also have to cooperate with the other decision-makers (the off-shore suppliers). Our theoretical and analytical results shed light on the value of outsourcing from novel real option perspectives. Moreover, our simulation studies reveal important managerial insights regarding how demand and cost uncertainty affects the profits, the risks, as well as the global outsourcing and quick-production decisions of supply chain firms under competition.

Original languageEnglish (US)
Pages (from-to)251-289
Number of pages39
JournalAnnals of Operations Research
Volume208
Issue number1
DOIs
StatePublished - Sep 1 2013

All Science Journal Classification (ASJC) codes

  • Decision Sciences(all)
  • Management Science and Operations Research

Fingerprint Dive into the research topics of 'Supply chain networks with global outsourcing and quick-response production under demand and cost uncertainty'. Together they form a unique fingerprint.

Cite this