Mathematical modeling demonstrates reduced reorder levels under dual simultaneous sourcing, suggesting lower safety stock requirements without increasing stock-out risks.
This paper helps practitioners to compute the mean and variance of the lead time demand distribution when two suppliers are used simultaneously to replenish stock of a single item. The lead times of each supplier are assumed to be normally distributed and two replenishment orders are placed, one with each supplier, at the same time. The results indicate that the reorder level required to give a specific probability of no stock-out during replenishment is lower when using two suppliers simultaneously. Tables have also been prepared to help practitioners determine the minimum sizes of replenishment orders when two suppliers are used and replenishment orders are placed at the same time.
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Sculli et al. (1981) studied this question.
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