Global dual sourcing and order smoothing: Nonstationary Demand and Product Life Cycle

INFORMS Annual Conference, 22nd-25th October, Houston, USA.

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Abstract

Companies often experience non-stationary demand as products evolve over their life cycle. We investigate a tractable families of single and dual sourcing policies tailored to such demand environment. We adopt a conventional discrete time inventory model with a linear control rule that smooths orders and allows an exact analytical analysis of an easy to implement dual sourcing policy.