A recovery mechanism for a two echelon supply chain system under supply disruption

Supply chains are becoming increasingly competitive in order to meet customer demands. The task of optimizing highly evolved supply chains is not easy, especially when it is particularly sensitive to unexpected disruption. This paper presents a newly developed real-time recovery mechanism for a two stage serial supply chain system, consisting of one manufacturer and one retailer, where the production is disrupted for a given period of time during the production up time. The model is capable of determining the recovery schedule for the manufacturer and the retailer, and ensuring that the total relevant costs are minimized, while seeking to recover the original schedule by the end of the recovery time window. The model was solved using an efficient heuristic developed in this paper, which performed well in giving quality solutions within reasonable time. It can be shown that the optimal recovery schedule is dependent on the shortage cost parameters, as well as on the extent of the disruption. The presented model is useful to assist decision makers to take a pro-active approach for maintaining business continuity in the event of a disruption in the supply chain system.

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