Single sourcing vs. double sourcing: a simulation approach for supplier selection

The paper presents a simulation approach to the supplier selection problem. Specifically, the aim of the model is to compare a scenario where a company exploits only one supplier (single sourcing) with a double sourcing option. In the case of double sourcing, the second supplier has a higher reliability compared to the first one, meaning that it is always able to deliver the product required within a defined lead time; however, products are supplied at a higher price, thus generating higher costs for the company. Under both scenarios, it is hypothesized that the company adopts an Economic Order Interval (EOI) reorder policy. Overall, the study is articulated into two steps and has the final aim to compare the single sourcing and double sourcing strategies, to assess the economic profitability of those solutions depending on the operating conditions of the company. Related results will provide companies with some economic benchmark for pondering purchasing options.