A System Dynamics Simulation on International Dual-Source Procurement Strategy under the Influence of Tariff and Supplier Reliability

Under the premise of stochastic market demand, this paper studies the decision-making problem of dual source procurement from a foreign supplier with low purchase price but poor stability and a domestic supplier with high purchase price but good stability. First, we establish a benchmark system dynamics model considering dual source procurement. we consider a manufacturer, a foreign supplier and domestic supplier in this supply chain model, and solve the optimal decisions and profit of manufacturer under different reliability of foreign suppliers. Second, we consider tariff factor in the benchmark model, and two different models are compared. The simulation results reveal the influence of tariff on the whole supply chain, which is helpful for enterprises to conduct domestic and foreign dual source purchasing.