×

Selection of a dynamic supply portfolio in make-to-order environment with risks. (English) Zbl 1202.90166

Summary: The problem of a multi-period supplier selection and order allocation in make-to-order environment in the presence of supply chain disruption and delay risks is considered. Given a set of customer orders for finished products, the decision maker needs to decide from which supplier and when to purchase product-specific parts required for each customer order to meet customer requested due date at a low cost and to mitigate the impact of supply chain risks. The selection of suppliers and the allocation of orders over time is based on price and quality of purchased parts and reliability of supplies. For selection of dynamic supply portfolio a mixed integer programming approach is proposed to incorporate risk that uses conditional value-at-risk via scenario analysis. In the scenario analysis, the low-probability and high-impact supply disruptions are combined with the high probability and low impact supply delays. The proposed approach is capable of optimizing the dynamic supply portfolio by calculating value-at-risk of cost per part and minimizing expected worst-case cost per part simultaneously. Numerical examples are presented and some computational results are reported.

MSC:

90B50 Management decision making, including multiple objectives
91B30 Risk theory, insurance (MSC2010)
90C11 Mixed integer programming
90B06 Transportation, logistics and supply chain management
PDFBibTeX XMLCite
Full Text: DOI

References:

[1] Tang, C. S., Perspectives in supply chain risk management, International Journal of Production Economics, 103, 451-488 (2006)
[2] Norrman, A.; Jansson, U., Ericsson’s proactive risk management approach after a serious sub-supplier accident, International Journal of Physical Distribution and Logistics Management, 34, 5, 434-456 (2004)
[3] Sheffi, Y., The resilient enterprise (2005), MIT Press: MIT Press Cambridge, MA
[4] Kleindorfer, P. R.; Saad, G. H., Managing disruption risks in supply chains, Production and Operations Management, 4, 1, 53-68 (2005)
[5] Oke, A.; Gopalakrishnan, M., Managing disruptions in supply chains: a case study of a retail supply chain, International Journal of Production Economics, 118, 168-174 (2009)
[6] Kasilingam, R. G.; Lee, C. P., Selection of vendors—a mixed-integer programming approach, Computers and Industrial Engineering, 31, 347-350 (1996)
[7] Wu, D.; Olson, D. L., Supply chain risk, simulation, and vendor selection, International Journal of Production Economics, 114, 646-655 (2008)
[8] Berger, P. D.; Gerstenfeld, A.; Zeng, A. Z., How many suppliers are best? A decision-analysis approach, Omega: The International Journal of Management Science, 32, 1, 9-15 (2004)
[9] Ruiz-Torres, A. J.; Farzad, M., The optimal number of suppliers considering the costs of individual supplier failures, Omega: The International Journal of Management Science, 35, 1, 104-115 (2007)
[10] Berger, P. D.; Zeng, A. Z., Single versus multiple sourcing in the presence of risks, Journal of the Operational Research Society, 57, 3, 250-261 (2006) · Zbl 1089.90031
[11] Yu, H.; Zeng, A. Z.; Zhao, L., Single or dual sourcing: decision-making in the presence of supply chain disruption risks, Omega: The International Journal of Management Science, 37, 788-800 (2009)
[12] Li L, Zabinsky ZB. Incorporating uncertainty into a supplier selection problem. International Journal of Production Economics 2009; doi:10.1016/j.ijpe.2009.11.007; Li L, Zabinsky ZB. Incorporating uncertainty into a supplier selection problem. International Journal of Production Economics 2009; doi:10.1016/j.ijpe.2009.11.007
[13] Aissaoui, N.; Haouari, M.; Hassini, E., Supplier selection and order lot sizing modeling: a review, Computers & Operations Research, 34, 3516-3540 (2007) · Zbl 1128.90033
[14] Akinc, U., Selecting a set of vendors in a manufacturing environment, Journal of Operations Management, 11, 107-122 (1993)
[15] Murthy, N. N.; Soni, S.; Ghosh, S., A framework for facilitating sourcing and allocation decisions for make-to-order items, Decision Sciences, 35, 237-259 (2004)
[16] Sawik, T., A cyclic versus flexible approach to materials ordering in make-to-order assembly, Mathematical and Computer Modelling, 42, 279-290 (2005) · Zbl 1090.90108
[17] Sawik, T., Single vs. multiple objective supplier selection in a make-to-order environment, Omega: The International Journal of Management Science, 38, 3-4, 203-212 (2010)
[18] Sawik, T., Selection of supply portfolio under disruption risks, Omega: The International Journal of Management Science, 39, 194-208 (2011)
[19] Yue, J.; Xia, Y.; Tran, T., Selecting sourcing partners for a make-to-order supply chain, Omega: The International Journal of Management Science, 38, 3-4, 136-144 (2010)
[20] Basnet, C.; Leung, J. M.Y., Inventory lot-sizing with supplier selection, Computers & Operations Research, 32, 1-14 (2005) · Zbl 1076.90002
[21] Xia, W.; Wu, Z., Supplier selection with multiple criteria in volume discount environments, Omega: The International Journal of Management Science, 35, 494-504 (2007)
[22] Demirtas, E. A.; Ustun, O., An integrated multiobjective decision making process for supplier selection and order allocation, Omega: The International Journal of Management Science, 36, 76-90 (2008)
[23] Ustun, O.; Demirtas, E. A., An integrated multi-objective decision making process for multi-period lot sizing with supplier selection, Omega: The International Journal of Management Science, 36, 509-521 (2008)
[24] Che, Z. H.; Wang, H. S., Supplier selection and supply quantity allocation of common and non-common parts with multiple criteria under multiple products, Computers and Industrial Engineering, 55, 110-133 (2008)
[25] Uryasev, S., Conditional value-at-risk: optimization algorithms and applications, Financial Engineering News, 14, 2, 1-5 (2000) · Zbl 0991.90093
[26] Rockafellar, R. T.; Uryasev, S., Optimization of conditional value-at-risk, The Journal of Risk, 2, 3, 21-41 (2000)
[27] Rockafellar, R. T.; Uryasev, S., Conditional value-at-risk for general loss distributions, Journal of Banking and Finance, 26, 7, 1443-1471 (2002)
[28] Gotoh, J.; Takano, Y., Newsvendor solutions via conditional value-at-risk minimization, European Journal of Operational Research, 179, 1, 80-96 (2007) · Zbl 1275.90057
[29] Chahar, K.; Taaffe, K., Risk averse demand selection with all-or-nothing orders, Omega. The International Journal of Management Science, 37, 5, 996-1006 (2009)
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.