Abstract
Supply chains faces various uncertainties such as demand, manufacturing and supply uncertainties. In this study, we consider both normal demand variation and sudden change in demand as risk factors in a supply chain. Capacity is adjusted by hiring and firing workforce to mitigate the impact of demand uncertainty in consideration of cash flow. A mixed-integer linear programming model is developed and numerical experiments are conducted to investigate the impact of uncertain demand in terms of inventory level, cash flow, debt ratio, and bankruptcy. The results show that safety stock of a focal company has less effect on cash flow of suppliers in the case of normal demand variation. Also, it is observed that the sudden change in demand worsens cash flow and causes bankruptcy and high inventory level in a supply chain. The ratio of production and fixed cost has a significant impact on the performance of a supply chain.
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