Selection of Resilient Multi-Tier Supply Portfolio

Tadeusz Sawik

Chapter Chapter 13 in Supply Chain Disruption Management, 2020, pp 367-400 from Springer

Abstract: Abstract A multi-portfolio approach and a scenario-based stochastic mixed integer program is developed for selection of resilient supply portfolio in a multi-tier supply chain under disruption risks. The resilience of the supply chain is achieved by selection of primary supply portfolio and by pre-positioning of risk mitigation inventory of parts at different tiers that will hedge against all disruption scenarios. Simultaneously for each disruption scenario recovery and transshipment portfolios are determined and decisions on usage the pre-positioned inventory are made. The objective of the risk-neutral decision-making is to minimize expected cost or maximize expected service level, while for the risk-averse decision-making, minimization of CVaR of cost or maximization of CVaR of service level are the two alternative objectives. Some properties of optimal solutions, derived from the proposed model provide additional managerial insights. The findings also indicate that the developed portfolio approach with an embedded network flow structure has led to computationally efficient mixed integer program with a very strong LP relaxation. The major managerial insights are summarized at the end of this chapter.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-3-030-44814-1_13

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DOI: 10.1007/978-3-030-44814-1_13

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