Dealing With Supply Disruption Under Demand Uncertainty

In recent years, all types of emergencies have occurred frequently, which have caused severe supply disruptions from time to time and have brought enormous economic and social losses to the involved enterprises and supply chain networks. The unexpected events which lead to supply disruption incidents are a class of sudden, random and uncontrollable events. They seldom happen, however, they will cause huge and fatal damages once they happen. At the same time, customers’demand has become more and more personalized and diversified along with the increasing globalization of markets and fierce competition. These trends will undoubtedly lead to demand uncertainty and pose more challenging requirements on supply chain management. Therefore, there is an urgent need for experts and scholars to conduct further studies on the development of emergency response strategies to make the involved supply chains from supply disruptions return to normal operations quickly in order to meet customer demand and to maintain competitive market advantages.In the above contexts, the theoretic framework of supply chain disruptions and the construction of supply disruptions models under uncertain demand are very necessary. This paper conducts researches mainly from two aspects:it proposes supply chain disruptions theoretical framework including analysis of the supply chain thinking and coping strategies from the macro and overall perspective; it studies a specific supply disruption problem with node failure and recovery, which includes emergency strategies and modeling methodologies from the perspective of mathematical modeling and optimization.The significances of this research can be summarized into two parts:one is to develop the theory of supply chain disruptions; the other is to provide theoretic guidance to supply chain industrial practices. Generally this paper follows the "step by step" progressive research idea. To be specific it completes the following four major research aspects:(1) From the macro and holistic perspective, it proposes a theoretic analysis framework of supply chain disruptions, and it also gives the coping strategies based on pre-defensive strategy and post-emergency response strategy. This part will lay a solid foundation for the follow-up studies.(2) It builds a mathematical model for the supply chain planning problem under demand uncertainty. The approach of scenario based analysis is employed to model uncertain demand. The model allows products shortage and its objective is to maximize supply chain expected profit. The complexity of the model is also analyzed.(3) Regarding a kind of supply disruption with node failure and recovery, this study proposes an emergency response tactic based on alternative suppliers, repair of failed suppliers and re-planning strategy. On the basis of this tactic, this paper formulates the model, and obtains the optimal supply chain plans and contingency plans.(4) This paper conducts a case study to validate the applicability and effectiveness of both models. It employs Ilog Cplex optimization software to solve the model and discusses the optimized outcome in detail. The impacts of some parameters on supply chain plans and performances are also analyzed.At the end of the paper, the main findings and conclusions, innovative points and limitations and required work for further research are summarized.