High-tech manufacturers frequently suffer from supply risk and capacity constraint. This paper considers a manufacturer who procures a type of high-tech component from two suppliers with asymmetric costs, capacities, and reliabilities, where the low-cost supplier has low reliability. One supplier is selected as a primary supplier and another as a backup supplier. The manufacturer places regular order to the primary supplier and determines backup order quantity from the backup supplier after random yield realization of the primary supplier. By d...
