Modeling a Severe Supply Chain Disruption and Post-Disaster Decision Making with Application to the Japanese Earthquake and Tsunami
MacKenzie, Cameron A.
Santos, Joost R.
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Modern supply chains are increasingly vulnerable to disruptions, and a disruption in one part of the world can cause supply diffi culties for companies around the globe. This paper develops a model of severe supply chain disruptions in which several suppliers su ffer from disabled production facilities and firms that purchase goods from those suppliers may consequently suff er a supply shortage. Suppliers and firms can choose disruption management strategies to maintain operations. A supplier with a disabled facility may choose to move production to an alternate facility, and a rm encountering a supply shortage may be able to use inventory or buy supplies from an alternate supplier. The supplier's and rm's optimal decisions are expressed in terms of model parameters such as the cost of each strategy, the chances of losing business, and the probability of facilities reopening. The model is applied to a simulation based on the 2011 Japanese earthquake and tsunami, which closed several facilities of key suppliers in the automobile industry and caused supply difficulties for both Japanese and U.S. automakers.
IIE Transactions, 46(12), 1243-1260. Author's accepted manuscript||The article of record may be found at http://dx.doi.org/10.1080/0740817X.2013.876241
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