Journal
TRANSPORTATION RESEARCH PART B-METHODOLOGICAL
Volume 45, Issue 8, Pages 1266-1283Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.trb.2011.02.008
Keywords
Supply chain disruptions; Multi-echelon inventory management; Risk mitigation; Partial lost sales
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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. (C) 2011 Elsevier Ltd. All rights reserved.
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