Procurement Decisions And Production Capacity Considering Supply Chain Risks Investment Decision

Risk is common in the supply chain.Although managers are familiar with common risks such as supply disruptions and uncertain demand,new risks are still emerging.These risks may affect managers’ strategic decisions and require them to adopt new risk management strategies for risk management.Continuing to use old strategies to address these emerging risks may be ineffective or even counterproductive.The global chip shortage is one of the main issues currently affecting various fields,including automobiles,consumer electronics,medical devices,and military systems.The reasons for the shortage include various factors such as the epidemic,weather,supply chain disruptions,and equipment downtime.The chip industry in China has also been affected by global chip shortages,mainly manifested in supply chain disruptions,material shortages,and insufficient production capacity.Especially in the field of high-end chips,China still relies on imported chips,facing certain risks and challenges.In this environment,it is particularly important to build a supply chain with the ability to cope with risks and improve the resilience of China’s chip supply chain.How will the purchaser make procurement decisions when facing risks caused by suppliers,and how will chip manufacturers make capacity investment decisions when facing risks authorized by government regulations.Therefore,the research in this article has very important theoretical and practical significance for solving these problems.(1)This article first constructs a procurement decision model to study the differences between the optimal and actual procurement strategies of buyers under the risk of responsibility breach caused by suppliers and the risk of traditional supply interruption.By comparing the significant and non significant differences in buyer procurement behavior under two types of risk,the impact of the risk composition that leads to the differences was further explored.(2)This study also conducted additional analysis on the actual profits of different procurement strategies,introducing cognitive and emotional factors related to the adoption of this strategy,and studying how buyers will exclusively purchase from risk-free suppliers based on these factors.(3)In this article,the author will also shift the focus of research from the risks caused by suppliers to the risks of government regulation.By studying how they affect the capacity investment decisions of manufacturers in the supply chain,the author will analyze the impact of relevant regulatory regulations on the production capacity investment decisions of chip manufacturers and their service levels.The research results indicate that under the risk of supply interruption and breach of responsibility,buyers’ procurement decisions do differ in terms of diversity and probability of selecting the best supplier.(1)When the supplier is a less risky choice,buyers facing the risk of breach of responsibility are more likely to exclusively purchase from the supplier that maximizes profits.(2)When the likelihood of supply interruption or breach of responsibility increases,buyers will find it advantageous to change their total order quantity and their source of supply.(3)When facing random bans,manufacturers tend to consider establishing overseas production capacity when the transshipment demand satisfaction scheme is more profitable than the overseas demand satisfaction scheme.(4)When there is no such supervision and authorization,concentrating all domestic capabilities is the best solution.(5)When facing priority requirements,it is more advantageous to shift production capacity investment strategies from concentration to diversification only when the population of domestic countries is larger than that of overseas countries.These findings provide a more comprehensive dimension of thinking for enterprise managers when making relevant strategic decisions,which is beneficial for enterprises to enhance their supply chain resilience,thus enabling them to respond more calmly to risks and further improve their market competitiveness.