Title: Mitigating the risk of supply disruptions: a case study

Authors: U.V. Manoj, Milind Dawande, Divakar Rajamani, Chelliah Sriskandarajah

Addresses: ETID Department, Texas A&M University, USA. ' School of Management, University of Texas at Dallas, USA. ' School of Management, University of Texas at Dallas, USA. ' School of Management, University of Texas at Dallas, USA

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.

Keywords: risk mitigation; supply chain disruption; overseas suppliers; payment contracts; supply chain management; SCM; risk management; case study; telephone manufacture; sourcing policies; trade-offs; risk-inventory cost; expected loss.

DOI: 10.1504/IJOR.2009.025004

International Journal of Operational Research, 2009 Vol.5 No.2, pp.131 - 151

Published online: 06 May 2009 *

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