Managing flexibility in supply chains: mathematical analysis of dual sourcing systems.

This article focuses on the dual-sourcing inventory management problem, a strategy where firms use two suppliers—one regular with longer lead time and lower cost, and one emergency with shorter lead time and higher cost—to enhance supply chain flexibility and modularity, especially highlighted during the COVID-19 pandemic. It reviews the historical and recent advances in management mathematics and heuristic policies, such as dual-index and Tailored Base-Surge (TBS) policies, that help approximate optimal ordering decisions despite the problem's analytical complexity. Key findings include that simple policies like TBS perform near-optimally in certain asymptotic regimes, and that optimal decisions may be robust to demand distribution misspecification, relying mainly on demand mean and variance. The article also discusses practical implications for firms in implementing multi-supplier planning systems and identifies future research directions including the integration of artificial intelligence, handling non-i.i.d. demand, and extending dual-sourcing models to multi-product and joint procurement contexts.