Selection of Primary and Recovery Supply and Demand Portfolios and Scheduling

Tadeusz Sawik

Chapter Chapter 10 in Supply Chain Disruption Management Using Stochastic Mixed Integer Programming, 2018, pp 271-311 from Springer

Abstract: Abstract A new portfolio approach and MIP formulations with an embedded network flow problem are developed for selection of primary and recovery suppliers and assembly plants in the presence of supply chain disruption risks. Unlike most of reported research on supply chain disruption management a disruptive event is assumed to impact both a primary supplier of parts and the buyer’s firm primary assembly plant. Then the firm may choose alternate (recovery) suppliers and move production to alternate (recovery) plants along with transshipment of parts from the impacted primary plant to the recovery plants. The resulting allocation of unfulfilled demand for parts among recovery suppliers and unfulfilled demand for products among recovery assembly plants determines recovery supply and demand portfolio, respectively. The selection of supply and demand portfolios is determined simultaneously with production scheduling in assembly plantsProduction scheduling . An integrated decision-making approach with the perfect information about the potential future disruption scenarios is compared with a hierarchical approach with no such information available ahead of time. The best-case and worst-case analysis indicates that for the hierarchical approach the best-case and worst-case disruption scenarios are, respectively subsets and supersets of the corresponding scenarios for the integrated approach. The findings also indicate that when all primary suppliers are completely shutdown, a single sourcing recovery supply portfolio is usually selected, while multiple recovery plants may be selected, even if all primary plants are shutdown. The proposed portfolio approach along with a MIP model that accounts for both time and cost of recovery may prove to be a flexible and efficient tool for supply chain disruption management.

Keywords: Portfolio Demand; Recovery Supply; Provisional Recovery; Disruption Scenarios; Supply Chain Disruption Management (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/978-3-319-58823-0_10

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