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Responsive contingency planning in supply risk management by considering congestion effects

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  • Ebrahim Nejad, Alireza
  • Niroomand, Iman
  • Kuzgunkaya, Onur

Abstract

Contingency rerouting is known as a cost-effective risk management strategy for major disruptions such as earthquakes and natural disasters. The objective of this paper is to develop a decision-making tool to determine the appropriate response speed of a volume-flexible backup supplier to improve the supply chain responsiveness. We propose a mixed integer programming (MIP)-based capacity planning tool which generates the contingency plan of the supply chain subject to random disruptions. In order to make an accurate decision, the impact of critical operational characteristics such as response time and congestion are considered in a disruption scenario. The appropriate response speed is selected through a decision tree analysis by minimizing the expected supply chain costs. The selection is made with respect to three different attitudes of the decision maker towards risk. In order to evaluate the impact of the different failure and recovery probabilities over the selection process, a sensitivity analysis is presented. The results show that considering congestion is especially critical for risk-neutral decision makers in mitigating against disruptions.

Suggested Citation

  • Ebrahim Nejad, Alireza & Niroomand, Iman & Kuzgunkaya, Onur, 2014. "Responsive contingency planning in supply risk management by considering congestion effects," Omega, Elsevier, vol. 48(C), pages 19-35.
    • Handle: RePEc:eee:jomega:v:48:y:2014:i:c:p:19-35
    DOI: 10.1016/j.omega.2014.03.002
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    References listed on IDEAS

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    Cited by:

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    3. Faiza Hamdi & Ahmed Ghorbel & Faouzi Masmoudi & Lionel Dupont, 2018. "Optimization of a supply portfolio in the context of supply chain risk management: literature review," Journal of Intelligent Manufacturing, Springer, vol. 29(4), pages 763-788, April.
    4. Parajuli, Anubhuti & Kuzgunkaya, Onur & Vidyarthi, Navneet, 2021. "The impact of congestion on protection decisions in supply networks under disruptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    5. Parajuli, Anubhuti & Kuzgunkaya, Onur & Vidyarthi, Navneet, 2017. "Responsive contingency planning of capacitated supply networks under disruption risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 102(C), pages 13-37.
    6. Huang, He & Xu, Hongyan, 2015. "Dual sourcing and backup production: Coexistence versus exclusivity," Omega, Elsevier, vol. 57(PA), pages 22-33.
    7. Behzadi, Golnar & O’Sullivan, Michael Justin & Olsen, Tava Lennon & Zhang, Abraham, 2018. "Agribusiness supply chain risk management: A review of quantitative decision models," Omega, Elsevier, vol. 79(C), pages 21-42.
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