Supply Chain Disruptions Preparedness Measures Using a Dynamic Model
Supply chain risk management has recently seen extensive research efforts, but questions such as “How should a firm plan for each type of disruption?” and “What are the strategies and the total cost incurred by the firm if a disruption occurs?” continue to deserve attention. This chapter analyzes different disruption cases by considering the impacts of disruptions at a supplier, a firm’s warehouse, and at the firm’s production facility. The firm can prepare for each type of disruption by buying from an alternate supplier, holding more inventory, or holding inventory at a different warehouse. The Wagner-Whitin model is used to solve the optimal ordering strategy for each type of disruption. Since the type of disruption is uncertain, we assign probabilities for each disruption and use the Wagner-Whitin model to find the order policy that minimizes the firm’s expected cost.
- Hopp WJ, Iravani SMR, Liu Z (2009) Strategic risk from supply chain disruptions. Working paper. Department of Industrial Engineering and Management Sciences, Northwestern University. Retrieved from http://webuser.bus.umich.edu/whopp/working%20papers/Strategic%20Risk%20from%20Supply%20Chain%20Disruptions.pdf
- Hopp, W. J., & Spearman, M. L. (2008). Factory physics (3rd ed.). Boston, MA: McGraw-Hill.Google Scholar
- MacKenzie CA, Barker K, Grant FH (2012) Evaluating the consequences of an inland waterway port closure with a dynamic multiregional interdependence model. IEEE Transactions on Systems, Man, and Cybernetics—Part A: Systems and Humans, 42(2), 359–370.Google Scholar
- Sheffi, Y. (2005). The resilient enterprise: Overcoming vulnerability for competitive advantage. Cambridge: The MIT Press.Google Scholar
- Snyder LV, Scaparra MP, Daskin MS, Church RL (2006) Planning for disruptions in supply chain networks. Tutorials in Operations Research, 234–257.Google Scholar