On the value of response time characteristics in robust design of supply flow
Journal of Manufacturing Technology Management
ISSN: 1741-038X
Article publication date: 2 March 2015
Abstract
Purpose
The purpose of this paper is to provide a decision-making tool achieving robust supply flow by incorporating strategic stock and contingent sourcing in mitigating minor and major disruptions.
Design/methodology/approach
The authors consider a firm with two suppliers where the main supplier is cost-effective but prone to disruptions and the back-up supplier is reliable but expensive due to built-in volume flexibility. In order to incorporate the randomness associated with disruptions and the available capacity during response time in the decision-making stage, the authors present a multi-stage robust optimization (RO) model. The design problem is to determine optimal strategic stock level and response speed of volume-flexible back-up supplier in order to achieve a robust supply flow.
Findings
The results show that the quality of optimal solution is improved by considering the randomness associated with available capacity. In addition, incorporating congestion effects allows identifying the appropriate level of supply chain responsiveness, thus improving the overall performance.
Originality/value
The novelty of the proposed model is the consideration of both strategic stock and volume flexibility in maintaining a robust supply performance while incorporating response capability and congestion effects.
Keywords
Acknowledgements
The authors thank the two anonymous reviewers for their valuable comments. This research was partially supported by the Accelerate Grant of MITACS Canada No. IT01923. Their support is highly acknowledged.
Citation
Ebrahim Nejad, A. and Kuzgunkaya, O. (2015), "On the value of response time characteristics in robust design of supply flow", Journal of Manufacturing Technology Management, Vol. 26 No. 2, pp. 213-230. https://doi.org/10.1108/JMTM-12-2013-0178
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited