Enterprise IT service downtime cost and risk transfer in a supply chain
Shaun S. Wang (wangsx@sustech.edu.cn) and
Ulrik Franke (ulrik.franke@ri.se)
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Shaun S. Wang: Nanyang Technological University
Ulrik Franke: RISE Research Institutes of Sweden
Operations Management Research, 2020, vol. 13, issue 1, No 8, 94-108
Abstract:
Abstract In this paper we present an economic model for analyzing enterprise IT service downtime cost, first on a standalone basis and then in a supply chain setting. With a baseline probability model of Poisson arrival frequency with random downtime duration, we analyze optimal production of a firm’s investments in reducing frequency and duration of downtime, and corresponding premiums for insuring against downtime cost. We also present a model for the spillover effect of downtime for interconnected firms in a supply chain, and discuss how third-party insurance coverage can help enterprises to internalize the externalities of spillover effects on the supply chain.
Keywords: Enterprise IT service; Downtime cost; Supply chain (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:opmare:v:13:y:2020:i:1:d:10.1007_s12063-020-00148-x
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DOI: 10.1007/s12063-020-00148-x
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