A recovery model for a supply chain system with multiple suppliers subject to supply disruption

The study of a real-time procurement and production mechanism for a multi-stage supply chain system with multiple suppliers subject to an unexpected disruption is presented in this paper. Specifically, a mathematical model is developed for the problem of optimizing replenishment and production decisions for each node after a supply disruption occurrence. The system considered in this research is a three stage supply chain system that consists of three suppliers, one manufacturer and one retailer. The problem that will be considered is an instance of the class of inventory management problems under disruptions with a finite horizon. The solution approach will utilize a heuristic that we have developed in previous works. In addition, an experiment was conducted to study the effects of disruption on the system using predefined scenarios, where supplier prioritization of disruption mitigation strategies was explored. Various disruption scenarios were predefined by combining different disruption locations, as well as different combinations of suppliers. It can be shown that supply disruption at the suppliers with higher inventory holding costs causes higher recovery costs for the overall system. Therefore, it is important for the manufacturer to focus on the suppliers with higher holding cost when planning appropriate strategies for risk management. This optimization study has enabled an increased understanding of the impacts of random disruption events on the total system behaviour, as well as determining priorities in risk mitigation efforts