Mitigating the risk of supply disruptions: a case study

U.V. Manoj, Milind Dawande, Divakar Rajamani and Chelliah Sriskandarajah

International Journal of Operational Research, 2009, vol. 5, issue 2, 131-151

Abstract: A Dallas-based telephone manufacturer, that imports semi-finished products from a supplier in Malaysia, wants to develop a risk mitigation plan to minimise the operational risk it may face due to supply disruptions at a US port. Disruptions at the port can render the supply unavailable for a considerable period of time, resulting in a loss of business. We analyse two sourcing policies that evaluate the trade-off between risk-inventory cost and expected loss of business from disruptions. We examine the sensitivity of the policies to the cost parameters and demonstrate how a payment contract affects the selection of a sourcing policy.

Keywords: risk mitigation; supply chain disruption; overseas suppliers; payment contracts; supply chain management; SCM; risk management; case study; telephone manufacture; sourcing policies; trade-offs; risk-inventory cost; expected loss. (search for similar items in EconPapers)
Date: 2009
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