Coordination in a triple sourcing supply chain using a cooperative mechanism under disruption

In this study, we take into consideration a two-level supply chain consisting of a manufacturer and three suppliers under supply disruption from an unreliable supplier. The paper aims to determine optimal ordering policy for manufacturer as well as optimal pricing and production capacity for two reliable suppliers in situations where there is supply disruption and demand uncertainty for manufacturer. For this purpose, two competitive bi-level models have been developed in which the manufacturer is leader in games and reliable suppliers are followers. In these two models, reliable suppliers determine their optimal prices and production capacities in both competitive and cooperative game, respectively. Finally, in order to improve coordination among manufacturer and reliable suppliers under supply disruption, a cooperative approach among manufacturer and reliable suppliers have been developed. The obtained results indicate that cooperative approach under supply disruption, causes improvement in manufacturer's and reliable suppliers' profits. Other features of models and the optimal policies' structures have been explained through appropriate numerical problems and sensitivity analyses. (C) 2016 Elsevier Ltd. All rights reserved.