Designing safety space in a supply chain to handle system-wide disruptions

Designing safety space in a supply chain to handle system-wide disruptions

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Article ID: iaor20082165
Country: United States
Volume: 54
Issue: 3
Start Page Number: 258
End Page Number: 264
Publication Date: Apr 2007
Journal: Naval Research Logistics
Authors: ,
Keywords: transportation: water, supply & supply chains, distribution
Abstract:

In some supply chains serious disruptions are system wide. This happens during periods of severe weather, as when storms cause shuttle tankers serving oil platforms in the North Sea to stop movements of crude oil, barges are frozen in the Mississippi, or all airplanes are grounded after a blizzard. Other notable instances of system-wide disruption happened after the attack on the World Trade Center when all aircraft were grounded and the natural gas and crude-oil pipelines were tangled by hurricanes in 2005. We model a situation where shutting down supply facilities is very difficult and expensive because of excessive inventory buildup from an inability to move out the production. We present a planning model that balances the cost of spare capacity versus shutting down production when planning for disruptions. The model uses an assignment model embedded in a simulation.

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