Resilient Supply Chain Network Design: An Overview of Optimization Models

Abstract

AbstractRecent disruptive events have revealed the vulnerability of today’s global supply chains and put supply chain resilience into focus. This chapter presents an overview of the literature on optimization models for resilient supply chain network design. We categorize the models first based on proactive and reactive resilience strategies. Then, two sections are dedicated to covering different risk treatment approaches and commonly considered objective functions, respectively. Following a discussion of the research gap and to provide additional insights into modeling aspects concerning risk treatment and mitigation strategies, a bi-objective two-stage stochastic capacitated facility location model is presented. It is used to design a responsive and resilient network which is robust against facility disruptions and demand fluctuations. Different levels of fortification investments in facilities and the option of inventory sharing are considered as resilience strategies, and the conditional value-at-risk is employed as a risk measure. The latter allows to incorporate various risk preferences of decision-makers. To analyze the trade-off relationship between the concurrent goals of resilience and responsiveness, the model is applied to two test cases. The computational study shows the importance of considering random events already in the planning phase and how different risk mitigation strategies can be combined.