Joint Decisions of Components Replacement and Spare Parts Ordering Considering Different Supplied Product Quality

In addition to equipment maintenance decisions, spare parts ordering decisions from different suppliers play a key role in reducing related costs (e.g., maintenance, inventory and ordering costs). Since suppliers may use different production technologies and materials, spare parts (or products) from different suppliers can be different in quality. Nevertheless, in recent studies, the quality of spare parts is rarely considered to incorporate both equipment maintenance and spare parts ordering. In this paper, we investigate the joint optimization of condition-based maintenance and spare parts provisioning policy under two suppliers with different product quality. We formulate a sequential-decision problem with a Markov decision process and consequently obtain an optimal maintenance and ordering policy by an exact value iteration algorithm. To improve computation efficiency, based on the principle of sequential optimization, we develop heuristic methods. Extensive numerical experiments are conducted to assess the overall performance of the developed heuristic methods. Compared to the optimal method, results showed that the average cost gap is about 2% and computation time is reduced by 94% on average under the proposed heuristic method. Note to Practitioners—This paper is motivated by the observation that automobile industries tried to integrate emergency suppliers from which spare parts have different quality into maintenance schedules to avoid stockout and reduce equipment failure during the Covid-19 pandemic. Specifically, the article focuses on balancing the trade-offs between condition-based maintenance and inventory management from two suppliers with different lead times and spare parts quality for multi-unit systems. On the one hand, effective maintenance scheduling relies on spare parts for replacement to ensure the stability of production. On the other hand, inventory management needs to select the supplier with appropriate lead time and product quality to reduce the ordering cost and avoid stockout based on the degradation states of equipment. The joint optimization of these two aspects serves to reduce the total maintenance and ordering cost. Nevertheless, most existing research aims to optimize them separately. In this paper, we formulate the joint decision problem considering the two aspects based on a Markov decision process. We obtain an optimal maintenance and ordering policy by an exact value iteration algorithm and present heuristics to improve the computation efficiency when the system contains multiple machines. Practitioners can implement the proposed methodology to make condition-based maintenance and inventory management when spare parts with different qualities are ordered from two suppliers. To balance cost and computational efficiency, it is suggested to implement the optimal policy by an exact value iteration algorithm when the number of machines is small in the system and use the heuristic methods when the number of machines is large (i.e., usually larger than 3). IEEE

Sourcing decisions with uncertain time-dependent supply from an unreliable supplier

Recently, an increasing number of companies have encountered random production disruptions due to the COVID-19 pandemic. In this study, we investigate a two-stage supply chain in which a retailer can order products from a low-price ("cheap”) unreliable supplier (who may be subject to an uncertain production disruption and partially deliver the order) and an "expensive” reliable supplier at Stage 1 and a more "expensive” backup supplier at Stage 2. If the disruption happens, only the products that were produced before the disruption time can be obtained from the unreliable supplier. It is found that in the case with imperfect demand information updating, the unreliable supplier is always used while the reliable supplier can be abandoned. The time-dependent supply property of the unreliable supplier reduces the retailer's willingness of adopting the dual sourcing strategy at Stage 1, compared with the scenario with all-or-nothing supply. Different from the case with imperfect demand information updating, either the reliable or unreliable supplier can be abandoned in the case with perfect demand information updating. We derive the optimal ordering decisions and the conditions where single sourcing or dual sourcing is adopted at Stage 1. We conduct numerical experiments motivated by the sourcing problem of 3M Company in the US during the COVID-19 and observe that the unreliable supplier is more preferable when the demand uncertainty before or after the emergency order is higher. Interestingly, the retailer tends to order more from the unreliable supplier when the production disruption probability is larger in some cases. © 2022 The Author(s)

Sourcing Decisions with Uncertain Time-Dependent Supply from an Unreliable Supplier

Recently, an increasing number of companies have encountered random production disruptions due to the COVID-19 pandemic. In this study, we investigate a two-stage supply chain in which a retailer can order products from a low-price (“cheap”) unreliable supplier (who may be subject to an uncertain production disruption and partially deliver the order) and an “expensive” reliable supplier at Stage 1 and a more “expensive” backup supplier at Stage 2. If the disruption happens, only the products that were produced before the disruption time can be obtained from the unreliable supplier. It is found that in the case with imperfect demand information updating, the unreliable supplier is always used while the reliable supplier can be abandoned. The time-dependent supply property of the unreliable supplier reduces the retailer's willingness of adopting the dual sourcing strategy at Stage 1, compared with the scenario with all-or-nothing supply. Different from the case with imperfect demand information updating, either the reliable or unreliable supplier can be abandoned in the case with perfect demand information updating. We derive the optimal ordering decisions and the conditions where single sourcing or dual sourcing is adopted at Stage 1. We conduct numerical experiments motivated by the sourcing problem of 3M Company in the US during the COVID-19 and observe that the unreliable supplier is more preferable when the demand uncertainty before or after the emergency order is higher. Interestingly, the retailer tends to order more from the unreliable supplier when the production disruption probability is larger in some cases.

Reshoring by small firms: dual sourcing strategies and local subcontracting in value chains

This article assesses how the reshoring of manufacturing activities by micro and small enterprises (MSEs) affects the performances of co-located subcontracting networks and the reconfiguration of global value chains (GVCs). We utilize quantitative microdata of Italian MSEs operating in the clothing and footwear industries during the 2008-2015 period. Empirically MSE reshoring does not have a significant impact on domestic subcontractors' birth rates and survival chances, whereas it is positively associated with their productivity growth. Most MSEs in our sample adopt a dual sourcing strategy, expanding their global production networks while preserving their local supply base. Local and global production networks are not two alternative paradigms of industrial organization;they can be complementary and mutually reinforce each other.

Optimal Product Substitution and Dual Sourcing Strategy considering Reliability of Production Lines.

Most of the supply chain literature assumes that product substitution is an effective method to mitigate supply chain disruptions and that all production lines either survive or are disrupted together. Such assumptions, however, may not hold in the real world: (1) when there is a shortfall of all products, product substitution may be inadequate unless it is paired with other strategies such as dual sourcing; and (2) production lines do not survive forever and may fail. To relax such assumptions, this paper therefore investigates the situations that the manufacturer may optimize substitution policy and dual sourcing policy to cope with supply chain disruptions. The paper obtains and compares the optimal policies for both deterministic and stochastic demands. A real-world case is also studied to verify the effectiveness of the proposed model.