Dual Sourcing Strategy in Mass Customized Manufacturing

This paper studies dual sourcing strategy in mass customized manufacturing for two differentiable products. The supplier's collaboration is represented by two stages game to optimize price and capacity decision and the buyer-suppliers collaboration is represented by joining the profit optimization. In order to mitigate the demand uncertainty effect, the long term decision is taken into consideration. The results show that it is possible to the suppliers to involve at higher level of cooperation by considering rewards and punishment from the buyer, which means it is possible to apply outsourcing to strategic items. The final part of the paper concludes the results and outlines future research directions.