Mitigating the risk of supply disruptions: a case study
Source: International Journal of Operational Research, Volume 5, Number 2, 6 May 2009 , pp. 131-151(21)
Publisher: Inderscience Publishers
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.
Document Type: Research Article
Publication date: May 6, 2009