Reconfiguration of manufacturing supply chains considering outsourcing decisions and supply chain risks

Abstract

In order to stay responsive to evolving customer demands and to meet the need for greater product customizations, many manufacturing enterprises are recognizing the need to quickly reconfigure their manufacturing systems and supply chains. Making reconfiguration decisions requires a system-level optimization that involves many factors such as manufacturing tasks, outsourcing decisions, supply chain configurations, as well as risks. This paper proposes a graph-based cost model to optimize the configuration of manufacturing supply chain networks to support reconfiguration decision-making. An optimization model is formulated to minimize the total cost of the manufacturing enterprise with the consideration of operating cost and reconfiguration cost. To effectively quantify the reconfiguration cost, a graph-based cost model is developed to characterize the relationship between the graphical similarity of two supply chain networks and the reconfiguration cost. Outsourcing decisions and supply chain risks are also considered in the proposed model. A case study on a supply chain for laptop computer assembly is presented to demonstrate the effectiveness of the proposed method.