A Simulation-Based Process of Consensus Building on Procurement Plan under Disruption Risk in Multi-tier Supply Chain

Abstract

In this paper, the author proposes a consensus building process of procurement plans in a multi-tier supply chain. In the multi-tier supply chain, risk and cost involved in the retailer's procurement plan depend on risk and cost involved in the supplier's procurement plan to another supplier. If the retailer wants to mitigate the risk, the supplier also need to plan procurement to mitigate the risks. However, there is a trade-off relationship between the risk and the cost. The supplier cannot always mitigate the risk due to the limitation of the budget for risk mitigation, which requires that the retailer and the suppliers have to build consensus on procurement planning. In order to support the procurement planning, the author proposes a consensus building process with the support of the simulator for a multi-tier supply chain. Based on risk and cost obtained by the simulation, the retailer and the suppliers determine acceptable values of the risk and the cost iteratively.