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Mitigating the risk of supply disruptions: a case study

Author

Listed:
  • U.V. Manoj
  • Milind Dawande
  • Divakar Rajamani
  • Chelliah Sriskandarajah

Abstract

A Dallas-based telephone manufacturer, that imports semi-finished products from a supplier in Malaysia, wants to develop a risk mitigation plan to minimise the operational risk it may face due to supply disruptions at a US port. Disruptions at the port can render the supply unavailable for a considerable period of time, resulting in a loss of business. We analyse two sourcing policies that evaluate the trade-off between risk-inventory cost and expected loss of business from disruptions. We examine the sensitivity of the policies to the cost parameters and demonstrate how a payment contract affects the selection of a sourcing policy.

Suggested Citation

  • U.V. Manoj & Milind Dawande & Divakar Rajamani & Chelliah Sriskandarajah, 2009. "Mitigating the risk of supply disruptions: a case study," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 5(2), pages 131-151.
    • Handle: RePEc:ids:ijores:v:5:y:2009:i:2:p:131-151
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