Emergency decision-making model of suppliers with updating information in cases of sudden accidents

In view of uncertainties caused by sudden accidents (SAs) and affecting retailers' demand in many districts, it is difficult for suppliers to determine when and how many products to procure/produce. Considering a supply chain consisting of two types of competing suppliers and multi-retailer, this work studies the suppliers' optimal emergency procurement/production decision (EPD) with information updating. Firstly, a probability evolution model with information updating to describe the probability of the retailers' procurement behaviour and the occurrence probability of supply disruption (SD) is inferred. Secondly, suppliers' EPDs regarding retailers' procurement behaviour and occurrence probability of SD are discussed and a real-time updated emergency decision-making model (EDM) is proposed based on Stackelberg game and Bayesian inference. Thirdly, the value of information updating and the critical factors that affect the suppliers' optimal EPD are quantitatively analysed. Numerical examples are finally provided to verify the EDM. Results indicate that information is the premise and foundation for the suppliers to deal with SA effectively; suppliers can easily determine when and how many products to procure/produce based on the proposed EDM; it is demonstrated that for any chosen supplier strategy, there exists a corresponding optimal procurement/production quantity for the suppliers that maximises the expected profits. Moreover, the suppliers' EPD with information updating is affected by cost parameters, with the rank of information collection cost coefficient, unit procurement/production cost, unit sales price, unit holding cost and unit shortage cost, from apparently to slightly.

Automated summary

This study focuses on the suppliers' optimal emergency procurement/production decision (EPD) with information updating in the event of sudden accidents (SAs). The research proposes a real-time updated emergency decision-making model (EDM) based on Stackelberg game and Bayesian inference, and quantitatively analyzes the value of information updating and critical factors affecting the suppliers' optimal EPD. Results show that information is crucial for effective decision-making, and the proposed model helps suppliers determine when and how many products to procure/produce to maximize profits. The cost parameters significantly impact the suppliers' EPD with information updating.