Coordinating overseas and local sourcing through a capacitated expediting transportation policy

We consider an assembly system that adopts both overseas sourcing and local sourcing for different components. Local sourcing has a short and deterministic lead-time. Overseas sourcing can be divided into two stages and each stage has uncertain transportation duration. A capacitated expediting service could be adopted after first-stage transportation. In this study, we derive an optimal expediting policy for overseas sourcing and an optimal responsive sourcing policy for local sourcing. In addition, we discuss the impacts of lead-time volatility and the decision of safety lead-time, which are relevant in implementing the expediting service.