Supply chain disruption recovery strategies for measuring profitability and resilience in supply and demand disruption scenarios

Abstract

This paper examines the recovery of a three-level manufacturing supply chain under supply and demand disruptions. The paper proposes new combined recovery strategies, which aim to cope with interruption by adjusting the supply chain structure and material flows. This study integrates both supply chain performance and supply chain capability dimensions. We develop a bi-criteria mixed integer linear programming model with profit and resilience maximization as the objective. The model combines supply-side supply expansion, manufacturer capacity impairment, and demand regulation on the demand side. In a numerical example, we find that a “reciprocal disruption overlay” occurs when supply and demand disruptions, but the supply chain still loses some profit. The results suggest that the combined recovery strategies reduce profit loss and increase supply chain resilience. Furthermore, the strategies are also the optimal recovery strategies under unilateral disruptions. This model facilitates the coordination of a disrupted supply chain and can help managers decide on the best recovery plan.