Scenario-based Supply Chain Disruptions Management Framework-A Quantitative Approach

Syed MITHUN ALI, Koichi NAKADE
2014 Innovation and Supply Chain Management  
In the competitive business environment, there exist high levels of interactions between components/agents of a supply chain. However, these interactions are further amplified by uncertain events caused by natural and man-made actions. The two common modes of disruptions are supply and demand disruption in practice. The supply chain of an enterprise is highly sensitive to supply and demand disruption. In this work, we thus integrate supply and demand disruptions and a mathematical optimization
more » ... pproach is proposed to formulate a scenario-based supply chain disruptions management framework. The model presented in this paper makes an attempt to determine the ordering portfolio to the selected set of suppliers in a pre-disruption and post-disruption situation using a scenario-based approach. However, the model tries to capture quality performance of the suppliers, along with delivery performance of the outside suppliers an enterprise asks for as a whole. We minimize the sum of purchasing cost from local supplier and the expected cost in the event of disruptions. The demand and the fraction of order supplied by the outside suppliers are assumed to be normal probability distribution with mean value and associated standard deviation. In a disruption scenario, the discrete values of demand and order fraction are taken from random number generation. GAMS-CPLEX 24.1.3 software is used to solve the model. The proposed model could provide an effective tool to actively react to disruptions that could happen in the supply chain of an enterprise. The application of the proposed framework is illustrated through a hypothetical case study.
doi:10.14327/iscm.8.81 fatcat:5oziyo3szbewpiwvjfypl2e5zy