The effect of manufacturing response time on mitigating the demand risk and facility disruption

Abstract

Nowadays, supply chains are exposed to various risks such as natural disasters and demand uncertainty which cause the flow of the materials and information to be disrupted. The objective of this paper is to investigate the role of Reconfigurable Manufacturing System (RMS) responsiveness in harnessing supply chain disruptions and changes in demand. We consider a two echelon supply chain consisting of production and warehouse stage. A multi period mixed integer programming tool is developed to generate supply chain configurations defining the capacities and inventory levels for a predetermined planning horizon. The resulting supply chain configuration is then simulated with subject to random demand and disruption scenarios resulting in the need for production capacity increase. The performance of different supply chain configurations is compared to identify supply chain design strategies. The results show that there is an optimum mix of RMS and Dedicated Manufacturing System (DMS) which minimizes total system costs. Allocating a small portion of Reconfigurable capacity results in an effective way for handling disruptions.