Date of Award

August 2016

Degree Type


Degree Name

Doctor of Philosophy (PhD)


Supply Chain Management


Burak Kazaz

Subject Categories



In this dissertation, we study the sourcing policies of global corporations and determine the key drivers of the procurement decisions under different types of uncertainties.

The first essay explores the impact of exchange-rate and demand uncertainty on sourcing decisions of a multinational firm which engages in global sourcing through capacity reservation contracts. The focus of this essay is cost, which is known to be the main driver of global sourcing practices. We investigate the impact of cost uncertainty caused by exchange-rate fluctuations on procurement decisions, and identify the conditions that result in single and dual sourcing policies. Our analysis indicates that although cost is an order qualifier when exchange rate is considered deterministic, lower expected sourcing cost is neither necessary nor sufficient to source from a supplier under exchange-rate uncertainty.

The second essay examines sourcing and pricing decisions of an agricultural processor encountering yield uncertainty of the agricultural input required for its offered specialty product and the price uncertainty of the competing commercial product. We show that uncertainty gives rise to a conservative sourcing policy which would never emerge in a deterministic setting.

While both studies highlight the significant impact of uncertainty on the business decisions and performance, they demonstrate that the effect of uncertainty may take opposite directions contingent upon the business environment and the type of uncertainty. The operational environment studied in the first essay, provides an opportunity for the firm to benefit from exchange-rate fluctuations, whereas the variation in supply and the market price of the competing product are shown to diminish the firm’s expected profit in the agricultural setting studied in the second essay. Demonstrating the opposing behavior under different forms of uncertainty, this study recommends managers to think deeply about the impact of uncertainty on their businesses. It also provides various forms of prescriptions to mitigate risk and operate effectively under each uncertainty.


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