{"id":448,"date":"2016-07-13T13:00:52","date_gmt":"2016-07-13T18:00:52","guid":{"rendered":"http:\/\/blogs.uww.edu\/prasad\/?page_id=448"},"modified":"2016-07-13T13:00:52","modified_gmt":"2016-07-13T18:00:52","slug":"transportations-role-in-sole-versus-dual-sourcing-decision","status":"publish","type":"page","link":"https:\/\/blogs.uww.edu\/prasad\/teaching\/independent-study\/transportations-role-in-sole-versus-dual-sourcing-decision\/","title":{"rendered":"Transportation\u2019s role\u00a0 in sole- versus dual-sourcing decision"},"content":{"rendered":"

John E. Tyworth and Alex Ruiz-Torres<\/p>\n

International Journal of Physical Distribution & Logistics Management<\/h2>\n

2000, Vol. 30, No. 2, p. 128-144<\/p>\n

 <\/p>\n

1)\u00a0\u00a0\u00a0\u00a0\u00a0 Introduction<\/p>\n

    \n
  1. a) Sole-Supplier partnerships<\/li>\n
  2. i) Support JIT<\/li>\n
  3. ii) Facilitate quick response<\/li>\n
  4. b) Multiple-Supplier partnerships<\/li>\n
  5. i) Promotes competitive bidding<\/li>\n
  6. ii) Reduces risk of nonperformance<\/li>\n<\/ol>\n

    iii)\u00a0\u00a0\u00a0\u00a0 Can improve lead-time by splitting orders<\/p>\n

    (1)\u00a0\u00a0 Shipping costs increase disproportionately as the size of shipment decreases<\/p>\n

      \n
    1. c) The role of transportation<\/li>\n
    2. i) How does the treatment of transportation affect the decision?<\/li>\n
    3. ii) When is dual sourcing likely to be a viable policy from a total logistics cost perspective?<\/li>\n<\/ol>\n

      2)\u00a0\u00a0\u00a0\u00a0\u00a0 Methodology<\/p>\n

        \n
      1. a) Setting<\/li>\n
      2. i) Two suppliers at different locations<\/li>\n
      3. ii) One buyer<\/li>\n
      4. b) Cost of placing an order<\/li>\n
      5. i) Preparing specifications<\/li>\n
      6. ii) Obtaining letters of credit<\/li>\n<\/ol>\n

        iii)\u00a0\u00a0\u00a0\u00a0 Complying with import restrictions<\/p>\n

          \n
        1. iv) Foreign exchange controls<\/li>\n
        2. v) Quality inspections<\/li>\n
        3. c) Transportation cost per unit<\/li>\n
        4. i) A rational function of fixed cost per shipment on a particular lane over quantity<\/li>\n
        5. ii) Generate rates over a realistic range of quantities for a lane and then fit a curve having some functional form to the rate data<\/li>\n<\/ol>\n

          3)\u00a0\u00a0\u00a0\u00a0\u00a0 Computational Experiments<\/p>\n

            \n
          1. a) 42 experiments to examine the effect of transportation cost on the decision<\/li>\n
          2. b) Design variables<\/li>\n
          3. i) Supplier price<\/li>\n
          4. ii) Annual volume<\/li>\n<\/ol>\n

            iii)\u00a0\u00a0\u00a0\u00a0 Length and reliability of lead times<\/p>\n

              \n
            1. iv) Length of supplies lines<\/li>\n
            2. c) Results<\/li>\n
            3. i) General<\/li>\n<\/ol>\n

              (1)\u00a0\u00a0 Favorable payoffs for dual sourcing in all 54 experiments<\/p>\n

              (2)\u00a0\u00a0 Some false positives of Type I errors<\/p>\n

              (3)\u00a0\u00a0 For shorter distances, lower prices and more reliable lead times reduce the relative importance of inventory cost elements<\/p>\n

              (4)\u00a0\u00a0 For longer distances increased importance of transportation costs<\/p>\n

                \n
              1. ii) Clear patters emerge<\/li>\n<\/ol>\n

                (1)\u00a0\u00a0 Payoff from dual sourcing decreases as lead time becomes shorter and less reliable<\/p>\n

                (2)\u00a0\u00a0 Payoff increases for all levels of lead times and distance when supplier price is increased<\/p>\n

                (3)\u00a0\u00a0 Annual volume of traffic increases the payoff from dual sourcing<\/p>\n

                4)\u00a0\u00a0\u00a0\u00a0\u00a0 Conclusions \/ Key points<\/p>\n

                  \n
                1. a) Evidence factors procurement from two sources when lead times are unreliable<\/li>\n
                2. b) Transportation cost plays a pivotal role in the decision to procure from two sources<\/li>\n
                3. c) The payoff from dual sourcing is sensitive to annual demand, lead time performance, supplier prices and line-haul distance<\/li>\n
                4. d) When confronted with lone and unreliable lead times, managers should view dual sourcing only as a short-term tactic that may reduce costs<\/li>\n<\/ol>\n

                   <\/p>\n

                   <\/p>\n

                   <\/p>\n

                   <\/p>\n

                   <\/p>\n","protected":false},"excerpt":{"rendered":"

                  John E. Tyworth and Alex Ruiz-Torres International Journal of Physical Distribution & Logistics Management 2000, Vol. 30, No. 2, p. 128-144   1)\u00a0\u00a0\u00a0\u00a0\u00a0 Introduction a) Sole-Supplier partnerships i) Support JIT ii) Facilitate quick response b) Multiple-Supplier partnerships i) Promotes competitive bidding ii) Reduces risk of nonperformance iii)\u00a0\u00a0\u00a0\u00a0 Can improve lead-time by splitting orders (1)\u00a0\u00a0 Shipping […]<\/p>\n","protected":false},"author":3916,"featured_media":0,"parent":118,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"class_list":["post-448","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/users\/3916"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/comments?post=448"}],"version-history":[{"count":1,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/448\/revisions"}],"predecessor-version":[{"id":449,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/448\/revisions\/449"}],"up":[{"embeddable":true,"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/pages\/118"}],"wp:attachment":[{"href":"https:\/\/blogs.uww.edu\/prasad\/wp-json\/wp\/v2\/media?parent=448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}