Backup Sourcing Decisions for Coping with Supply Disruptions under Long-Term Horizons

Table 2

Major results of dual sourcing.

Properties	Results
The impact of disruption risks	Larger disruption probability increases both the buyer’s optimal base-stock level and expected cost.
	Under small disruption risks, the buyer allocates more orders to the backup supplier as disruption risks increase.; The backup supplier would decrease its output flexibility to obtain larger order.	Under large disruption risks, the buyer prefers to order less from the backup supplier and stock more inventory as disruption probability increases.; The backup supplier would increase its output flexibility.
The impact of backup output flexibility	Under small disruption risks, larger output flexibility leads to smaller order proportion to the backup supplier.	Under large disruption risks, the buyer’s optimal order proportion to the backup supplier becomes a concave function of the supplier’s output flexibility.
	The impact of output flexibility is very limited when supply disruption risk is very small or too large.