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On the value of response time characteristics in robust design of supply flow

Alireza Ebrahim Nejad (Department of Mechanical and Industrial Engineering, Concordia University, Montréal, Canada)
Onur Kuzgunkaya (Department of Mechanical and Industrial Engineering, Concordia University, Montréal, Canada)

Journal of Manufacturing Technology Management

ISSN: 1741-038X

Article publication date: 2 March 2015

Abstract

Purpose

The purpose of this paper is to provide a decision-making tool achieving robust supply flow by incorporating strategic stock and contingent sourcing in mitigating minor and major disruptions.

Design/methodology/approach

The authors consider a firm with two suppliers where the main supplier is cost-effective but prone to disruptions and the back-up supplier is reliable but expensive due to built-in volume flexibility. In order to incorporate the randomness associated with disruptions and the available capacity during response time in the decision-making stage, the authors present a multi-stage robust optimization (RO) model. The design problem is to determine optimal strategic stock level and response speed of volume-flexible back-up supplier in order to achieve a robust supply flow.

Findings

The results show that the quality of optimal solution is improved by considering the randomness associated with available capacity. In addition, incorporating congestion effects allows identifying the appropriate level of supply chain responsiveness, thus improving the overall performance.

Originality/value

The novelty of the proposed model is the consideration of both strategic stock and volume flexibility in maintaining a robust supply performance while incorporating response capability and congestion effects.

Keywords

Acknowledgements

The authors thank the two anonymous reviewers for their valuable comments. This research was partially supported by the Accelerate Grant of MITACS Canada No. IT01923. Their support is highly acknowledged.

Citation

Ebrahim Nejad, A. and Kuzgunkaya, O. (2015), "On the value of response time characteristics in robust design of supply flow", Journal of Manufacturing Technology Management, Vol. 26 No. 2, pp. 213-230. https://doi.org/10.1108/JMTM-12-2013-0178

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited