A prediction-based supply chain recovery strategy under disruption risks

Abstract

ABSTRACT This paper proposes a prediction-based product change recovery strategy for the SC (supply chain) under long-term disruptions. A real-world case composed of multi-period planning and dynamic customer demand is considered. First, to forecast dynamic customer demand, a data-based demand predictive method with feedback errors is designed. Second, to schedule procurement and production in advance, based on the predicted demand, the selection of the supply portfolio is transformed into a bi-objective mixed integer programming problem incorporating product change. Furthermore, goods allocation and customer order fulfillment strategy is also designed to finish the transportation of goods and delivery of customer orders. To systematically synthesise and address the problems aforementioned, a three-stage heuristic method is further developed. Finally, a case study is presented to substantiate the reliability of the proposed strategy via an actual SC model of Dongsheng Electronics Co., Ltd. Based on the results obtained after one month, the proposed disruption recovery strategy can reduce the unit product cost and improve the service level, which outperforms the original method adopted by Dongsheng. Additionally, sensitivity analysis of unit product change cost is conducted to reveal the effect of different unit product change costs on SC performance.