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Examining The Impact Of Disruption, Supplier Quality And Knowledge Transfer: Recommended Strategies For Meeting Demand And Supplier Development, Rebecca E. Clemons

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I investigate the effect of supply-chain disruption on a firm's decisions on investment in quality, and on ordering decisions, when there is a choice between suppliers, and a variable rate of knowledge transfer. I find that supply-chain disruption has a negative effect on profit, which can be mitigated by appropriate policies for order allocation and supplier development. When the probability of disruption is high, the firm should seek alternative sources of supply (even if they have lower levels of quality). Under certain conditions, the firm can improve its profit by investing in quality improvement efforts at the alternative supplier. I …