Sourcing and Bundling Decisions for Complementary Products in the Presence of Supply Disruption

Mahya  Hemmati; S.M.T.   Fatemi Ghomi; Hongyan Li

doi:10.1080/23270012.2025.2455554

Sourcing and Bundling Decisions for Complementary Products in the Presence of Supply Disruption

Mahya Hemmati, S.M.T. Fatemi Ghomi, Hongyan Li

Department of Economics and Business Economics

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

1 Citation (Scopus)

Abstract

Effective mitigation of supply disruption is a crucial issue for many retailers. Although prior studies of supply disruption mainly focused on the sale of a single product, the bundling of products is one of the important marketing tools that significantly impact businesses’ profitability. In this study, we investigate a retailer who uses a dual-sourcing strategy for complementary products. The problem is formulated under different selling strategies, i.e., separate selling, pure bundling, and mixed bundling. In each strategy, the concavity of the objective function is explored, and a solution algorithm is proposed. The results show that pure bundling is more sensitive to supply disruption than mixed bundling and separate selling. Actually, under pure bundling, the retailer transfers its sourcing strategy from dual to single sourcing even under a low probability of supply disruption. Furthermore, when bundle price elasticity is high, separate selling outperforms bundling and mixed bundling.

Original language	English
Journal	Journal of Management Analytics
Volume	12
Issue	1
Pages (from-to)	46-86
Number of pages	41
DOIs	https://doi.org/10.1080/23270012.2025.2455554
Publication status	Published - 2025

Keywords

bundling
complementary products
dual-sourcing
pricing
supply disruption

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Cite this

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title = "Sourcing and Bundling Decisions for Complementary Products in the Presence of Supply Disruption",

abstract = "Effective mitigation of supply disruption is a crucial issue for many retailers. Although prior studies of supply disruption mainly focused on the sale of a single product, the bundling of products is one of the important marketing tools that significantly impact businesses{\textquoteright} profitability. In this study, we investigate a retailer who uses a dual-sourcing strategy for complementary products. The problem is formulated under different selling strategies, i.e., separate selling, pure bundling, and mixed bundling. In each strategy, the concavity of the objective function is explored, and a solution algorithm is proposed. The results show that pure bundling is more sensitive to supply disruption than mixed bundling and separate selling. Actually, under pure bundling, the retailer transfers its sourcing strategy from dual to single sourcing even under a low probability of supply disruption. Furthermore, when bundle price elasticity is high, separate selling outperforms bundling and mixed bundling.",

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Sourcing and Bundling Decisions for Complementary Products in the Presence of Supply Disruption. / Hemmati, Mahya; Fatemi Ghomi, S.M.T. ; Li, Hongyan.
In: Journal of Management Analytics, Vol. 12, No. 1, 2025, p. 46-86.

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

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AU - Fatemi Ghomi, S.M.T.

AU - Li, Hongyan

PY - 2025

Y1 - 2025

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AB - Effective mitigation of supply disruption is a crucial issue for many retailers. Although prior studies of supply disruption mainly focused on the sale of a single product, the bundling of products is one of the important marketing tools that significantly impact businesses’ profitability. In this study, we investigate a retailer who uses a dual-sourcing strategy for complementary products. The problem is formulated under different selling strategies, i.e., separate selling, pure bundling, and mixed bundling. In each strategy, the concavity of the objective function is explored, and a solution algorithm is proposed. The results show that pure bundling is more sensitive to supply disruption than mixed bundling and separate selling. Actually, under pure bundling, the retailer transfers its sourcing strategy from dual to single sourcing even under a low probability of supply disruption. Furthermore, when bundle price elasticity is high, separate selling outperforms bundling and mixed bundling.

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Sourcing and Bundling Decisions for Complementary Products in the Presence of Supply Disruption

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Keywords

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