Design and evaluation of global supply chain considering disruption risk

Abstract

With the rapid advancement of businesses into overseas markets in recent years, the scope of supply chain configuration is expanding globally. Supply chain disruption due to natural disasters such as the 2011 Great East Japan Earthquake and the flooding in Thailand has become a serious problem. Under the impact of these natural disasters, risk evaluation has been recognized as an important element of supply chain management. In this chapter, we consider disruption risk and develop a model by incorporating supplier decentralization that assumes a global supply chain spanning two countries and consisting of three levels: supplier, manufacturer, and customer. We assume three types of disruption of varying frequency and effectiveness, generated by random numbers by the Poisson process. We assess the global supply chain designed by verifying the effectiveness of supplier decentralization in response to disruptions.