The optimal number of suppliers considering the new-added profit and the risk of supplier failures

Many manufacturers take great advantages by reducing supply base which increases the profit of chosen suppliers by increased order quantity and in turn inspires suppliers to increase investment. Some manufacturers even use single supply sourcing. However the supply failures also increase with much less suppliers due to more dependent on the suppliers. This paper takes into consideration both advantage and failure risk to find out the optimal number of suppliers and to decide the factors that play role in making decision of the optimal number of suppliers.