OPTIMAL SOURCING UNDER PRICE UNCERTAINTY USING PORTFOLIO OPTIMIZATION APPROACH

摘要

Optimal sourcing under price uncertainty is a relatively less researched area in analytical supply chain literature. One of the key decisions in optimal sourcing is deciding the share of alternative suppliers or sourcing arrangements in order to maximize the overall value. We propose a model for deciding optimal patterns of sourcing across "deterministiccontractual" and "stochastic-open market" arrangements while accounting for buyer's varied cost disutility pattern over the PLC. We demonstrate the application of the model and discuss the normative insights and strategic implications of the results.