Assessing Supply Chain Risk with Few Compulsory Subcontractors

Abstract

In this study we propose a supply chain risk analytical model that incorporates three compulsory subcontractors, which are structured in a two-layer formation, while fault recognition by the monitoring chief manufacturer might be delayed. We analyze this precise production line since it simultaneously covers both a sole mandatory supplier and a second production layer, which includes two subcontractors that can partially back up each other throughout the production. This specific configuration not only can assist future investigations in building different quantitative schemes, but this formation also is rather widespread across the semiconductor industry. We therefore present a current illustrative example from this sector. In addition, we authenticate the validity of the proposed model and examine several sensitivities within through multiple numerical simulations. We find that the expected time to the next production failure is mostly sensitive to output variations within the sole supplier, and least sensitive to temporary pauses in the information flow across the supply network.