This article analyzes dual sourcing decisions under stochastically dependent supply and demand uncertainty. A manufacturer faces the trade-off between investing in unreliable but high-margin offshore supply and in reliable but low-margin local supply, where the latter allows for production that...

When facing supply uncertainty caused by exogenous factors such as adverse weather conditions, firms diversify their supply sources following the wisdom of “not holding all eggs in one basket.” We study a firm that decides on investment and production levels of two unreliable but...