Cooperative/non-cooperative planning strategies versus sole/dual sourcing in supply chains

In this paper, we investigate four sourcing models with respect to both cooperative or non-cooperative planning strategies, and sole or dual sourcing. A two-stage supply chain is considered, which involves a single buyer and either a single or dual vendor(s). The delivery lead time is stochastic. The cost function comprises five elements: inventory holding costs for buyer and vendors, backorder costs and ordering costs for thebuyer, and setup costs for the vendors. The objective is tominimize the total system costs incurred by the buyer and the vendors. As there is no overall dominating combined strategy, a major finding is that determining the best strategy requires a detailed analysis. Furthermore, when total system costs are taken into account, dual sourcing does not appear as beneficial as sometimes claimed in the literature on lot splitting