Minimizing downside risks for global sourcing under price-sensitive stochastic demand, exchange rate uncertainties, and supplier capacity constraints

In this paper, a methodology for minimizing downside risks in relationship to the supplier base, supplier capacities, purchase-order-quantity, purchase-order-time, and selling-price is presented. Specific purchasing and selling strategies to minimize downside risks when suppliers have limited capacities is offered. Numerical analyses are used to demonstrate the profound impact on risks due to the increases in the potential supplier base, together with the effects of purchasing price trends and the impact factor of selling price to the demand.