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Strategies for customer service level protection under multi-echelon supply chain disruption risk

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  • Schmitt, Amanda J.
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    Abstract

    We model a multi-echelon system where disruptions can occur at any stage and evaluate multiple strategies for protecting customer service if a disruption should occur. The strategies considered take advantage of the network itself and include satisfying demand from an alternate location in the network, procuring material or transportation from an alternate source or route, and holding strategic inventory reserves throughout the network. Unmet demand is modeled using a mix of backordering and lost sales. We conduct numerical analysis and provide recommendations on selecting strategic mitigation methods to diminish the impact of disruptions on customer service. We demonstrate that the greatest service level improvements can be made by providing both proactive inventory placement to cover short disruptions or the start of long disruptions, and reactive back-up methods to help the supply chain recover after long or permanent disruptions.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

    Volume (Year): 45 (2011)
    Issue (Month): 8 (September)
    Pages: 1266-1283

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    Handle: RePEc:eee:transb:v:45:y:2011:i:8:p:1266-1283

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    Related research

    Keywords: Supply chain disruptions Multi-echelon inventory management Risk mitigation Partial lost sales;

    References

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    1. Schmitt, Amanda J. & Snyder, Lawrence V. & Shen, Zuo-Jun Max, 2010. "Inventory systems with stochastic demand and supply: Properties and approximations," European Journal of Operational Research, Elsevier, vol. 206(2), pages 313-328, October.
    2. Ramesh Bollapragada & Uday S. Rao & Jun Zhang, 2004. "Managing Inventory and Supply Performance in Assembly Systems with Random Supply Capacity and Demand," Management Science, INFORMS, vol. 50(12), pages 1729-1743, December.
    3. Chu, Peter & Yang, Kuo-Lung & Liang, Shing-Ko & Niu, Thomas, 2004. "Note on inventory model with a mixture of back orders and lost sales," European Journal of Operational Research, Elsevier, vol. 159(2), pages 470-475, December.
    4. Brian Tomlin, 2006. "On the Value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks," Management Science, INFORMS, vol. 52(5), pages 639-657, May.
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    Cited by:
    1. Ivanov, Dmitry & Sokolov, Boris, 2013. "Control and system-theoretic identification of the supply chain dynamics domain for planning, analysis and adaptation of performance under uncertainty," European Journal of Operational Research, Elsevier, vol. 224(2), pages 313-323.
    2. Rika Ampuh Hadiguna, 2012. "Decision support framework for risk assessment of sustainable supply chain," International Journal of Logistics Economics and Globalisation, Inderscience Enterprises Ltd, vol. 4(1/2), pages 35-54.
    3. Sawik, Tadeusz, 2013. "Selection of resilient supply portfolio under disruption risks," Omega, Elsevier, vol. 41(2), pages 259-269.

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