Research On Risk Transfer Of Manufacturer And Risk-sharing Strategies In Supply Chain With Business Disruption Risk

Globalization,outsourcing,the pursuit of efficiency makes the supply chain more and more complex.In recent years,the frequent occurrence of unexpected events leads to disruption of production and operation of enterprises,and even results in paralysis of global supply chain,so the supply chain disruption management has received wide attention in the industry and academia.In practice,a variety of operations and risk management tools are applied to manage and treat disruption risk,such as multi-sourcing,emergency(backup)production or sourcing,inventory management,insurance etc..In addition,as the competition between supply chains intensifies,cooperating between enterprises in supply chain to cope with the disruption risk has become a trend.Under this background,considering the manufacturer's production recovery,capital constraints and bank's risk attitudes,thisdissertation uses game theory,operations research,insurance,finance and other theories and methods to study how the manufacturer purchases business interruption insurance and trade credit insurance to transfer operation interruption risk,and how the retailer in supply chain use financing assistance and cost sharing incentive to share disruption risk with the manufacturer.Finally,strategy selection problem is investigated from the manufacturer and the retailer's perspective.This dissertation also discuss how to achieve supply chain coordination through quantity-discount contract with non-delivery penalty in the presence of disruption risk.Specifically,this dissertationmainly studies the following contents:1)Research on insurance purchase and financing in the presence of business disruptionFirst,purchasing business interruption insurance to transfer profit loss risk from production disruption is studied.After a disruption,the manufacturer exerts efforts to recover production and may use backup production,while the insurance company compensates the profit loss of the manufacturer based on BI insurance policy.Considering the uncertainty of the production cost in the recovery process,a model with a production recovery and insurance compensation is established to investigate four strategies,namely,basic strategy(no BI insurance),BI insurance strategy(purchasing BI insurance),backup production strategy(backup production),and mixed strategy(integration of BI insurance and backup production).The manufacturer's decisions of insurance purchase,production recovery and backup production are characterized before the strategy preference is analyzed.Our study finds that the manufacturer does not purchase the BI insurance if the probability of a disruption is lower than the premium rate.The BI insurance strategy is the best one if the goal of the manufacturer is to minimize the recovery time.However,if the manufacturer seeks the minimum profit loss,the mixed strategy dominates all other three strategies.The use of BI insurance does always result in a high effort level,which indicates that BI insurance and ex post operational measures are complements.Backup production reduces the manufacturer's profit loss but slows down the production recovery.Second,the manufacturer who allows customers to delay payment for goods already delivered purchases trade credit insurance to transfer and reduce capital disruption risk and borrows money from a bank to accommodate the capital constraint problem.The Stackelberg game and loss-averse theory are used to investigate the optimal insurance coverage and total sales of the manufacturer.Subsequently,the interest rate decision of the bank under different risk-averse situations is also characterized.The study find that the interest rate set by a loss-averse bank is equal to or greater than that given by a risk-neutral bank.The use of trade credit insurance can help the manufacturer expand sales and dramatically reduce its default risk.Both the bank and the manufacturer are better off due to the use of trade credit insurance,but contrary to what one might expect,the bank prefers giving a higher interest rate to the manufacturer when the premium rate is in a reasonable region,which indicates that the manufacturer cannot use the insurance to negotiate better financing terms.2)Research on prevention investment and cost sharing in the presence of business disruptionThe manufacturer can invest in prevention to reduce the impact of disruption on capacity and can exert effort to recover capacity destroyed by disruption,while the retailer may offer cost sharing incentive in two ways: sharing prevention investment,which is called prevention investment incentive,or sharing capacity recovery cost,which is called capacity recovery incentive.After investigating the manufacturer's prevention investment decision and capacity recovery decision as well as the retailer's cost sharing rate decision under different cost sharing incentive strategies,we find that comparing with the situation where there is no any incentive,prevention investment incentive can enhance the profits of both the manufacturer and the retailer,but the capacity recovery incentive may just benefit the manufacturer.If the capacity recovery coefficient is very low,in most cases the manufacturer and the retailer have different incentive preferences;if the capacity recovery coefficient is high,in most situations prevention investment incentive is a win-win strategy.3)Research on financial assistance and supply chain coordination in the presence of business disruptionAs part of the procurement contract,the buyer can set up a penalty term,preventing the profit loss caused by the supplier's delivery shortage.Once a supply disruption happens,if the manufacturer who exerts efforts to recover his production suffers from capital constraint,the buyer can offer financial assistance to the supplier by loaning money to the supplier.we study the manufacturer and the retailer's optimal decisions,as well as the supply chain coordination problem,and find that when the supplier has sufficient capital,demanding a penalty for the supply shortage is effective in ensuring the supplier to resume production.However,when the supplier is capital constrained,using a single penalty term is not effective;instead,the buyer can manipulate a mixed strategy by demanding a penalty on any supply shortage and at the same time offering financial assistance to the supplier.Supply chain can be coordinated by setting non-delivery penalty.Furthermore,the optimal delivery quantity and unit penalty under centralized decision-making are less than that under decentralized decision-making.