[1] Li Shanshan, He Yong,. Dynamic mitigation strategy for stock-outbased on joint compensation and procurement [J]. Journal of Southeast University (English Edition), 2019, 35 (4): 509-515. [doi:10.3969/j.issn.1003-7985.2019.04.014]

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Dynamic mitigation strategy for stock-outbased on joint compensation and procurement()

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Journal of Southeast University (English Edition)[ISSN:1003-7985/CN:32-1325/N]

Volumn:

35

Issue:

2019 4

Page:

509-515

Research Field:

Economy and Management

Publishing date:

2019-12-30

Info

Title:

Dynamic mitigation strategy for stock-outbased on joint compensation and procurement

Author(s):

Li Shanshan;  He Yong

School of Economics and Management, Southeast University, Nanjing 211189, China

Keywords:

emergency sourcing;  compensating;  supply disruption;  reactive strategy

PACS:

F253.4

DOI:

10.3969/j.issn.1003-7985.2019.04.014

Abstract:

Combining compensating customers and emergency sourcing, a type of dynamic mitigation strategy is proposed to deal with supply disruptions. When a stock-out occurs, the retailer can control backorders by the compensation level, and meet demand through an emergency source along with a high price. The unsatisfied customers decide to backorder or quit orders depending on the compensation level, the waiting time, and the customers’ patience. By dynamically capturing customers’ post-disruption reactions, an optimal control model is formulated to minimize the cost incurred by the supply disruption. Solving the model, the optimal reactive strategy is proposed in six patterns: a pure sourcing, a pure compensation, a mixed policy, a mixed policy-pure sourcing, a mixed policy-pure compensation, and a pure compensation-mixed policy, mainly depending on the compensation cost, the disruption length, and the customers’ patience. The strategies analytically indicate how to properly change the compensation level and sourcing quantity as the disruption continues. The conditions for effectively using each strategy are provided as well.

References:

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Memo

Memo:

Biographies: Li Shanshan(1984—), female, graduate; He Yong(corresponding author), male, doctor, professor, hy@seu.edu.cn.
Foundation items: The National Natural Science Foundation of China(No.71771053, 71371003), the Key Research and Development Plan(Modern Agriculture)of Jiangsu Province(No.BE2018385), the Fundamental Research Funds for the Central Universities.
Citation: Li Shanshan, He Yong. Dynamic mitigation strategy for stock-out based on joint compensation and procurement[J].Journal of Southeast University(English Edition), 2019, 35(4):509-515.DOI:10.3969/j.issn.1003-7985.2019.04.014.

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