Research on Retailers' Ordering Strategies Considering Customer Behavior Responses Under the Risk of Supply Disruption

Abstract

 On the basis of considering a two-level supply chain consisting of a retailer and two suppliers, the expected profit model under the single-source and dual-source procurement patterns of the retailer was constructed to explore the impact of supply disruption risk on the retailer's choice of suppliers, and then to obtain the optimal ordering strategy and the expected profit of the retailer under different conditions. Results show that: (1) Retailers' ordering strategies are influenced by a variety of factors, such as the risk of supply disruption, the selling price of goods, the retailer's out-of-stock costs, option contract prices, and execution prices. That is, retailers are more inclined to adopt a dual-source sourcing strategy when option prices and strike prices decrease or when selling prices and out-of-stock costs increase. (2) Retailers would choose to single source from risk suppliers rather than option suppliers in order to maximize profits. (3) When the risk of supply interruption increases, the expected profit of retailers would decrease. Although the use of option contracts can withstand certain interruption risks, adding option suppliers is not always better than purchasing from risk suppliers alone.