Strategic Sourcing Under Severe Disruption Risk: Learning Failures and Under-Diversification Bias

References

• Alicke K , Azcue X , Barriball E (2020) Supply chain recovery in coronavirus times–plan for now and the future. Accessed July 9, 2020, https://www.mckinsey.com/business-functions/operations/our-insights/supply-chain-recovery-in-coronavirus-times-plan-for-now-and-the-future.Google Scholar
• Barron G , Erev I (2003) Small feedback-based decisions and their limited correspondence to description based decisions. J. Behav. Decision Making 16(3):215–233.Crossref, Google Scholar
• Bolton G , Katok E (2008) Learning by doing in the newsvendor problem: A laboratory investigation of the role of experience and feedback. Manufacturing Service Oper. Management 10(3):519–538.Link, Google Scholar
• Chaturvedi A , Martínez-de Albéniz V (2011) Optimal procurement design in the presence of supply risk. Manufacturing Service Oper. Management 13(2):227–243.Link, Google Scholar
• Chen Y , Su X , Zhao X (2012) Modeling bounded rationality in capacity allocation games with the quantal response equilibrium. Management Sci. 58(10):1952–1962.Link, Google Scholar
• Choi T , Krause D (2006) The supply base and its complexity: Implications for transaction costs, risks, responsiveness, and innovation. J. Oper. Management 24(5):637–652.Crossref, Google Scholar
• Dada M , Petruzzi NC , Schwarz LB (2007) A newsvendor’s procurement problem when suppliers are unreliable. Manufacturing Service Oper. Management 9(1):9–32.Link, Google Scholar
• Economist, The (2010) The machine that ran too hot: Toyota’s overstretched supply chain. The Economist (February 25), https://www.economist.com/business/2010/02/25/the-machine-that-ran-too-hot.Google Scholar
• Erev I , Haruvy E (2013) Learning and the economics of small decisions. Kagel J, Roth A, eds. The Handbook of Experimental Economics, vol. 2 (Princeton University Press, Princeton, NJ).Google Scholar
• Erev I , Roth A (2014) Maximization, learning, and economic behavior. Proc. Natl. Acad. Sci. USA 111(suppl 3):10818–10825.Crossref, Google Scholar
• Erev I , Ert E , Roth A (2010) A choice prediction competition for market entry games: An introduction. Games 1(2):117–136.Crossref, Google Scholar
• Federgruen A , Zipkin P (1986) An inventory model with limited production capacity and uncertain demands. ii. The discounted-cost criterion. Math. Oper. Res. 11(2):208–215.Link, Google Scholar
• Fields D , Craighead C , Ketchen DJ (2015) Not too much–not too little: Fostering a ”goldilocks” procurement strategy. Supply Chain Management Rev 19(2):46–51.Google Scholar
• Fischbacher U (2007) z-tree: Zurich toolbox for ready-made economic experiments. Experiment. Econom. 10(2):171–178.Crossref, Google Scholar
• Friedman D , Sunder S (1994) Experimental Methods: A Primer for Economists (Cambridge University Press, Cambridge, UK). Crossref, Google Scholar
• Gans N , Knox G , Rachel C (2007) Simple models of discrete choice and their performance in bandit experiments. Manufacturing Service Oper. Management 9(4):383–408.Link, Google Scholar
• Gilmore D (2012) Global supply chain news: Toyota taking massive effort to reduce its supply chain risk in Japan. Accessed June 18, 2018, www.scdigest.com/ontarget/12-03-07-2.php?cid=5576.Google Scholar
• Gurnani H , Ramachandran K , Ray S , Xia Y (2014) Ordering behavior under supply risk: An experimental investigation. Manufacturing Service Oper. Management 16(1):61–75.Link, Google Scholar
• Hendricks K , Singhal V (2003) The effect of supply chain glitches on shareholder wealth. J. Oper. Management 21(5):501–522.Crossref, Google Scholar
• Hertwig R , Barron G , Weber E , Erev I (2004) Decisions from experience and the effect of rare events in risky choice. Psych. Sci. 15(8):534–539.Crossref, Google Scholar
• Huang T , Allon G , Bassamboo A (2013) Bounded rationality in service systems. Manufacturing Service Oper. Management 15(2):263–279.Link, Google Scholar
• Kagel J , Roth A , eds. (2013) The Handbook of Experimental Economics , vol. 2 (Princeton University Press, Princeton, NJ).Google Scholar
• Kahneman D , Tversky A (1979) Prospect theory: An analysis of decision under risk. Econometrica 47(2):263–291.Crossref, Google Scholar
• Kalkanci B (2017) Supply risk mitigation via supplier diversification and improvement: An experimental evaluation. Preprint, submitted July 31, https://dx.doi.org/10.2139/ssrn.3011383.Google Scholar
• Kleindorfer P , Saad G (2005) Managing disruption risks in supply chains. Prod. Oper. Management 14(1):53–68.Crossref, Google Scholar
• Kremer M , Minner S , Van Wassenhove L (2010) Do random errors explain newsvendor behavior? Manufacturing Service Oper. Management 12(4):673–681.Link, Google Scholar
• Kubota Y (2016) Japan earthquakes rattle Toyota’s vulnerable supply chain. Wall Street Journal (April 18), www.wsj.com/articles/japan-earthquakes-rattle-toyotas-supply-chain-1460986805.Google Scholar
• Loomes G , Moffatt PG , Sugden R (2002) A microeconometric test of alternative stochastic theories of risky choice. J. Risk Uncertainty 24(2):103–130.Crossref, Google Scholar
• Manuj I , Mentzer J (2008) Global supply chain risk management strategies. Internat. J. Physical Distribution Logistics Management 38(3):192–223.Crossref, Google Scholar
• Maslach D , Branzei O , Rerup C , Zbaracki M (2018) Noise as signal in learning from rare events. Organ. Sci. 29(2):225–246.Link, Google Scholar
• Material Handling & Logistics (2011) Consolidating the supply base is a supply chain priority. Accessed August 10, 2018, www.mhlnews.com/global-supply-chain/consolidating-supply-base-supply-chain-priority.Google Scholar
• Nevo I , Erev I (2012) On surprise, change, and the effect of recent outcomes. Frontiers Psych, ePub ahead of print February 21, https://doi.org/10.3389/fpsyg.2012.00024.Crossref, Google Scholar
• Nishiguchi T , Beaudet A (1998) The Toyota group and the Aisin fire. MIT Sloan Management Rev. 40(1):49.Google Scholar
• Norrman A , Jansson U (2004) Ericsson’s proactive supply chain risk management approach after a serious sub-supplier accident. Internat. J. Physical Distribution Logistics Management 34(5):434–456.Crossref, Google Scholar
• Schuh C , Raudabaugh J , Kromoser R , Strohmer M , Triplat A , Pearce J (2017) The Purchasing Chessboard (Springer, New York).Google Scholar
• Schweinsberg C (2012) Toyota says toll from earthquake cost ¥ 70 billion in fiscal 2012. Accessed August 3, 2018, www.wardsauto.com/industry/toyota-says-toll-earthquake-cost-70-billion-fiscal-2012.Google Scholar
• Schweitzer M , Cachon G (2000) Decision bias in the newsvendor problem with a known demand distribution: Experimental evidence. Management Sci. 46(3):404–420.Link, Google Scholar
• Shafran A (2011) Self-protection against repeated low probability risks. J. Risk Uncertainty 42(3):263–285.Crossref, Google Scholar
• Shih W (2020) Is it time to rethink globalized supply chains? Accessed March 20, 2020, https://sloanreview.mit.edu/article/is-it-time-to-rethink-globalized-supply-chains/.Google Scholar
• Su X (2008) Bounded rationality in newsvendor models. Manufacturing Service Oper. Management 10(4):566–589.Link, Google Scholar
• Tang C (2006) Perspectives in supply chain risk management. Internat. J. Production Econom. 103(2):451–488.Crossref, Google Scholar
• Thaler R (1999) Mental accounting matters. J. Behav. Decision Making 12(3):183–206.Crossref, Google Scholar
• Tomlin B (2006) On the value of mitigation and contingency strategies for managing supply chain disruption risks. Management Sci. 52(5):639–657.Link, Google Scholar
• Tomlin B , Wang Y 2011. Operational strategies for managing supply chain disruption risk. Kouvelis P, ed. The Handbook of Integrated Risk Management in Global Supply Chains (John Wiley & Sons, Hoboken, NJ), 79–101.Google Scholar
• Tong J , Feiler D (2016) A behavioral model of forecasting: Naïve statistics on mental samples. Management Sci. 63(11):3609–3627.Link, Google Scholar
• Trent R , Monczka R (1998) Purchasing and supply management: trends and changes throughout the 1990s. Internat. J Purchasing Materials Management 34(3):2–11.Google Scholar
• Yan X (2018) On “sourcing decisions with stochastic supplier reliability and stochastic demand.” Production Oper. Management 27(2):265–268.Crossref, Google Scholar
• Yano C , Lee H (1995) Lot sizing with random yields: A review. Oper. Res. 43(2):311–334.Link, Google Scholar