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On metrics for supply chain resilience

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  • Behzadi, Golnar
  • O’Sullivan, Michael Justin
  • Olsen, Tava Lennon

Abstract

Resilience, defined as the ability to recover quickly and effectively from a disruption, is critically important for supply chains. Yet, it has not been quantified as frequently as supply chain robustness. In this paper we review the existing metrics for supply chain resilience and introduce a new metric, titled the net present value of the loss of profit (NPV-LP). We test these metrics on a small supply chain problem consisting of one supply and one demand node for a perishable good over a multi-period horizon with a possible port shut-down. We use a stochastic programming formulation of the problem. We show how the different metrics cause different investment decisions for the supply chain, and hence why it is important to carefully pick the correct metric when modeling supply chain resilience.

Suggested Citation

  • Behzadi, Golnar & O’Sullivan, Michael Justin & Olsen, Tava Lennon, 2020. "On metrics for supply chain resilience," European Journal of Operational Research, Elsevier, vol. 287(1), pages 145-158.
    • Handle: RePEc:eee:ejores:v:287:y:2020:i:1:p:145-158
    DOI: 10.1016/j.ejor.2020.04.040
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