@article{Hosoda2024, title = "Global dual sourcing: ARMA(1,1) market demand and its decomposition", pages = "50-65", year = "2024", volume = "4", note = "Pre-prints of the 23rd International Working Seminar of Production Economics, 14th-18th February, Innsbruck, AUSTRIA", url = "https://www.researchgate.net/publication/378157751_Global_dual_sourcing_ARMA11_demand_and_its_decomposition", author = "Hosoda, T. and Disney, S.M. and Gaalman, G.C.J.", abstract="We consider the case of reshoring, where a global firm takes back a portion of its low-cost offshore supply to be produced in nearshore factory in order to establish a dual sourcing supply chain equipped with both low cost and responsiveness. We first establish the performance benchmark of a single (nearshore or offshore) supplier model. In the dual sourcing setting, a firm decomposes the first order auto-regressive moving average, ARMA(1,1), market demand process into two parts: one for the nearshore source and one for the offshore source. Order-up-to policies determine the order quantities for both sources. We show how to reduce inventory costs in the dual-sourcing case to a level identical to the near-shore single-source case. Furthermore, if certain conditions are met, the nearshore manufacturing cost reduces in the offshore lead-time. This suggests low-cost and low-emission transport modes should be utilized (slow steaming vessels which are both low cost and environmentally friendly, but may endure longer offshore lead-times come to mind), breaking the trade-off between economic and environmental performance." }