Chapter 8. Dual-sourcing, dual-mode dynamic stochastic inventory models

We review academic research on dual-sourcing (or dual-mode) dynamic stochastic inventory models, which study the replenishment of inventory from two sources (or two transportation modes) in the presence of demand uncertainty. The classic assumption, also adopted here, is that the two sources (modes) differ by replenishment lead times and costs. We cover both discrete- and continuous-time models. A feature distinguishing our review from others is that ours is more technically detailed and provides self-contained proofs of several fundamental results in the dual-sourcing literature. We also highlight theory advanced recently by using asymptotic analysis.