Simulation Applications to Structural Dynamics in Service and Manufacturing Supply Chain Risk Management

Abstract

Facility disruption impact on supply chain performance is studied using the example of outsourced academic journal publishing services affected by recent floods in Chennai. A discrete event simulation model is used to identify the performance impact of facility disruptions for the primary vendor. Eighteen scenarios are analyzed in terms of different disruption durations, sourcing strategies and demand patterns. Sensitivity analysis is performed for several input parameters to illustrate the model’s behavior. The analysis allows identification of the optimal sourcing strategy depending on a combination of factors: duration of disruptions, demand patterns and sourcing costs. The results indicate that higher performance can be observed by increasing the dual sourcing component as disruption durations increase. The results have some major implications. First, the analysis can be used to identify the patterns “disruption duration – sourcing strategy” with the lowest performance decrease in order to employ the most efficient reactive sourcing strategy. Second, it becomes possible to identify the most preferable (in terms of sales or efficiency) proactive and reactive sourcing strategies and compare the impacts of different patterns “demand – disruption duration – sourcing strategy” according to multiple performance dimensions.