Supply chain reliability modelling

Background : Today it is virtually impossible to operate alone on the international level in the logistics business. This promotes the establishment and devel opment of new integrated business entities - logist ic operators. However, such cooperation within a supply chain creates also many problems related to the supply chain reliabil ity as well as the optimization of the supplies planning. The aim of this paper was to develop and formulate the mathematical model and algorithms to find the o ptimum plan of supplies by using economic criterion and the model for the probability evaluating of non-failure opera tion of supply chain. Methods : The mathematical model and algorithms to find the optimum plan of supplies were developed and formulated by using economic criterion and the model for the prob ability evaluating of non-failure operation of supp ly chain. Results and conclusions : The problem of ensuring failure-free performance of goods supply channel analyzed in the paper is characteristic of distributed network systems that make active use of business process outsourcing tec hnologies. The complex planning problem occurring in such systems that req uires taking into account the consumer's requiremen ts for failure-free performance in terms of supply volumes and correctness can be reduced to a relatively simple linear pr ogramming problem through logical analysis of the structures. The seq uence of the operations, which should be taken into account during the process of the supply planning with the supplier's functional reliability, was presented. Today it is virtually impossible to operate single- handedly on the international level in the logistic s business. This promotes establishment and development of new integrated business entities - logistic operators who actively use business process outsour cing in supply management - in the global market for logistic services. The advantages of such outso urcing in supply chain (SC) management are obvious, and demand for this technology in the matu re US and European markets is steadily growing. At the same time, efficiency of this technology lar gely depends on confidence and coordination in relations and operations of all supply chain partne r companies. Economic vulnerability of such entitie s lies in the risk of SC disruptions at the boundarie s of functional areas. Such disruptions cause breac hes of contractual obligations related to supply timeli ness (JIT - Just in Time), sequence (JIS - Just in Sequence) and completeness (capacity, JIC - Just in Capacity), and can be viewed as SC failures. The economic impact of such failures is usually substan tial both for the focus company and for the partner companies. This is what makes transition from quali tative analysis of SC risks in the context of class ic risk management to quantitative analysis based on t he general systems reliability theory models and methods so relevant. The need for quantitative eval uation of SC risks has already been recognized by major logistic companies, manifesting itself in wid er standardization of requirements for supply quality and reliability both for the purposes of at tracting new customers and establishing specificati ons to be met by suppliers of goods and services (Table s 1, 2). Ensuring supply reliability is becoming on e of the highest priorities in modern day logistics.