Design of global supply chain network with operational risks

Facility location decisions play a vital role in the strategic design of the global supply chain. Global supply chains are vulnerable towards different types of risks factor that causes disturbance in the allocation of certain goods at the required place and time, and with the required quality and quantity. This paper presents a model of the multi-stage global supply chain network problem incorporating a set of risk factors (such as: late shipment, exchange rates, quality problems, logistics and transportation breakdown, and production risks), their expected values and probability of their occurrence, and associated additional cost. Different scenarios are considered to demonstrate the applicability of the model. Optimal decisions regarding the facility locations and inter-echelon quantity flows in the global supply chain are based on initial information for the risk factors. Further, if any change in the expected value of risk factor has occurred, the inter-echelons shifting take place to minimize the overall cost of the supply chain.

[1]  Arnd Huchzermeier.  Global manufacturing strategy planning under exchange rate uncertainty , 1991 .

[2]  Arnd Huchzermeier,et al.  Valuing Operational Flexibility Under Exchange Rate Risk , 1996, Oper. Res..

[3]  Felix T.S. Chan,et al.  Study on suppliers’ flexibility in supply chains: is real-time control necessary? , 2009 .

[4]  M. Christopher,et al.  An Integrated Model for the Design of Agile Supply Chains. , 2001 .

[5]  Gao Zi-You,et al.  A bi-level programming model and solution algorithm for the location of logistics distribution centers , 2008 .

[6]  R. Handfield,et al.  An empirically derived agenda of critical research issues for managing supply-chain disruptions , 2005 .

[7]  Jennifer Blackhurst,et al.  Methodology for supply chain disruption analysis , 2007 .

[8]  Hau L. Lee,et al.  Mitigating supply chain risk through improved confidence , 2004 .

[9]  Mark S. Daskin,et al.  Strategic facility location: A review , 1998, Eur. J. Oper. Res..

[10]  Francisco Barahona,et al.  Plant location with minimum inventory , 1998, Math. Program..

[11]  T. F. Burgess,et al.  Modelling a complex supply chain: understanding the effect of simplified assumptions , 2005 .

[12]  S. Chopra,et al.  Supply Chain Management: Strategy, Planning & Operation , 2007 .

[13]  Chun-Wei R. Lin,et al.  Dynamic allocation of uncertain supply for the perishable commodity supply chain , 2003 .

[14]  Christopher S. Tang.  Perspectives in supply chain risk management , 2006 .

[15]  H. Walker,et al.  Risk in supply networks , 2003 .

[16]  James R. Evans,et al.  Blending OR/MS, Judgment, and GIS: Restructuring P&G's Supply Chain , 1997 .

[17]  S. T. Enns,et al.  Evaluating the effects of capacity constraints and demand patterns on supply chain replenishment strategies , 2006 .

[18]  H. Peck.  Reconciling supply chain vulnerability, risk and supply chain management , 2006 .

[19]  Nalin Kulatilaka,et al.  Options Thinking and Platform Investments: Investing in Opportunity , 1994 .

[20]  David L. Levy.  International Sourcing and Supply Chain Stability , 1995 .

[21]  Robert J. Vokurka,et al.  Delphi study on supply chain flexibility , 2005 .

[22]  Terry L. Esper,et al.  Supply Chain Management Strategy , 2010 .

[23]  Kaj Holmberg,et al.  Exact solution methods for uncapacitated location problems with convex transportation costs , 1999, Eur. J. Oper. Res..

[24]  Andreas Norrman,et al.  Ericsson’s Proactive Supply Chain Risk Management-approach After a Serious Supplier Accident , 2004 .

[25]  Terry P. Harrison,et al.  Global Supply Chain Management at Digital Equipment Corporation , 1995 .