Dual-source procurement strategies for manufacturers with supply disruption risks

The dual-source procurement strategy does not necessarily reduce the cost of manufacturers under supply disruption risks. This paper differs from studies on the use of a backup supplier by manufactures; it focuses on the impact of inventory status, the recovery situation of production capacity, and the degree of supply disruption using the dual-source procurement strategy when supply disruption occurs. We analyze different degrees of supply disruption situations, and then establish the manufacturer's profit functions in different situations. We further demonstrate the impact of each decision variable through numerical examples using the dual-source procurement strategy. This study provides a theoretical basis for the manufacturer's decision on whether and how to use the dual-source procurement strategy given varying degrees of supply disruption risks.