 Designing a supply chain resilient to major disruptions and supply/demand interruptionsArmin Jabbarzadeh, Behnam Fahimnia, Jiuh-Biing Sheu and Hani Shahmoradi Moghadam Transportation Research Part B: Methodological, 2016, vol. 94, issue C, 121-149 Abstract: Global supply chains are more than ever under threat of major disruptions caused by devastating natural and man-made disasters as well as recurrent interruptions caused by variations in supply and demand. This paper presents a hybrid robust-stochastic optimization model and a Lagrangian relaxation solution method for designing a supply chain resilient to (1) supply/demand interruptions and (2) facility disruptions whose risk of occurrence and magnitude of impact can be mitigated through fortification investments. We study a realistic problem where a disruption can cause either a complete facility shutdown or a reduced supply capacity. The probability of disruption occurrence is expressed as a function of facility fortification investment for hedging against potential disruptions in the presence of certain budgetary constraints. Computational experiments and thorough sensitivity analyses are completed using some of the existing widely-used datasets. The performance of the proposed model is also examined using a Monte Carlo simulation method. To explore the practical application of the proposed model and methodology, a real world case example is discussed which addresses mitigating the risk of facility fires in an actual oil production company. Our analysis and investigation focuses on exploring the extent to which supply chain design decisions are influenced by factors such as facility fortification strategies, a decision maker's conservatism degree, demand fluctuations, supply capacity variations, and budgetary constraints. Keywords: Supply chain network design; Risk; Disruption; Interruption; Uncertainty; Reliability; Robust optimization; Stochastic optimization; Monte Carlo simulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:transb:v:94:y:2016:i:c:p:121-149 Ordering information: This journal article can be ordered from DOI: 10.1016/j.trb.2016.09.004 Access Statistics for this article Transportation Research Part B: Methodological is currently edited by Fred Mannering More articles in Transportation Research Part B: Methodological from Elsevier |
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