Abstract:

We develop a supply chain consisting of a primary supplier, a backup supplier, and a leading retailer, and study the selection strategy of the retailer purchasing only from the backup supplier and providing loan assistance to the primary supplier for production recovery (the loan assistance combined with backup sourcing) under supply disruption. Considering the upstream primary supplier suffers from capital shortage in production recovery, the Stackelberg game model between the primary supplier and the retailer is developed to derive the optimal decisions of the enterprises in the supply chain. The impacts of the backup supplier's wholesale price, unit production recovery cost and loan interest rate on the optimal ordering decision of the retailer are analyzed. The numerical experiments show that the combination of loan assistance and backup sourcing enhances the anti-risk ability of the retailer and reduce the negative impact of the backup supplier's wholesale price on the retailer's profit.

Key words: supply disruption, loan assistance, production recovery, backup supplier