Title: Selection and protection of suppliers in a supply chain with disruption risks

Authors: Tadeusz Sawik

Addresses: Department of Operations Research and Information Technology, AGH University of Science and Technology, Al.Mickiewicza 30, 30-059 Kraków, Poland

Abstract: The selection and protection of part suppliers and order quantity allocation under disruption risks are considered. The decision maker needs to select and protect suppliers against disruptions and to allocate order quantity among the selected suppliers and the inventory among the protected suppliers to minimise total cost of supplier protection, inventory holding, ordering, purchasing and shortage of parts and to mitigate the impact of disruption risks. A portfolio approach and bi-objective stochastic mixed integer programming with conditional value-at-risk are applied to control the risk of worst-case cost. Numerical examples are presented and some computational results are reported.

Keywords: supplier selection; supplier protection; conditional value-at-risk; CVaR; disruption risks; stochastic mixed integer programming; multi-objective optimisation; part suppliers; order quantity allocation; inventory holding; purchasing; parts shortage.

DOI: 10.1504/IJLSM.2013.053763

International Journal of Logistics Systems and Management, 2013 Vol.15 No.2/3, pp.143 - 159

Published online: 27 Sep 2013 *

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