The impact of item substitutions on production-distribution networks for supply chains

This study investigates the effects of various factors relevant to item substitution strategy on two-echelon production-distribution networks in decentralized supply chains. The item substitution strategy replaces preset items with alternatives to fulfill customer demands. The independent factors for the substitution strategy include substitution scope and available options. The moderators for the strategy include the dual sourcing strategy, substitution amount, and the echelons of the production-distribution network. The results of the experiment show that the item substitution strategy modulated by three moderators improved supply chain profit compared to cases where the strategy was not used. (C) 2010 Elsevier Ltd. All rights reserved.