2 x SITE paper development workshops. Stephen: Global Dual Sourcing Under Correlated Demand. Sarah: The dynamics of social enterprise partnerships: sticking points for UK social enterprises.
SITE (Science, Innovation, Technology, and Entrepreneurship)
|Speaker:||Sarah Bailey and Stephen Disney|
|Date: ||Wednesday 8 January 2020|
|Location: ||Streatham Court B|
We study a global dual sourcing supply chain setting under correlated auto-regressive, AR(1), demand. We consider three cases: a) off-shoring all demand to a global supplier with a long lead time, b) near-shoring all demand to a local factory with unit lead times or c) dual sourcing where 80\% of demand is satisfied from the global supplier and the remainder is satisfied by the local supplier. We obtain closed-form expressions for the variances of the replenishment orders and the inventory levels maintained by the three scenarios which we use to obtain exact cost expressions under normally distributed error terms in the AR(1) demand process. Our analysis shows that there exists an opportunity to near-shore a proportion of demand at a local factory despite unit purchasing costs being lower at the off-shore supplier. This intriguing benefit originates from the short lead time allowing one to maintain tighter control over inventory levels.