Impact Of Supply Disruptions Research Articles

Electricity Procurement Strategies under Supply Disruption and Price Fluctuation

Improving the reliability of electricity supply is closely related to the national industrial economy and people’s livelihood. When procuring electricity, the large consumer faces the risk of insufficient electricity supply. Such insufficiency may be caused by the supply disruption of the upstream electricity generator and the fluctuation of electricity prices in the electricity pool. We establish an expected cost model for the large consumer and a revenue model for the electricity generator by introducing robustness and opportunity functions to analyse the impact of supply disruption and price fluctuation on both members. Then, we obtain the optimal reliability level and subsidy rate. Our analytical results reveal the following points: (1) During an electricity price fluctuation, the sufficient and necessary condition for the large consumer to expect high robustness of his own decision‐making is to pay a high cost. (2) The high uncertainty of electricity price leads to less revenue for the electricity generator; thus, the electricity generator should perform well in price forecasting. (3) Without disruption risk, the electricity generator is reliable. Furthermore, the electricity pool is unreliable from the perspective of price. However, the electricity supply of the electricity generator is no longer reliable when considering disruption risk, whereas the electricity pool is reliable because the large consumer is tolerant of price fluctuation under this circumstance. Moreover, the impacts of market uncertainty and players’ attributes on the optimal strategies are explored.

Proactive disruption impact assessment in manufacturing supply networks

ABSTRACT Companies are increasingly exposed to the risk profile of their supply network and managing this risk is gaining in importance in a tightly interconnected global and competitive business environment. More frequent and more severe supply disruptions have led to a growing interest in assessing their potential consequences. Therefore, in this paper four supply disruption indicators are derived to proactively assess the potential financial impact of supply disruptions. The stochastic nature of potential supply disruptions is modelled by adopting a Monte-Carlo and Value-at-Risk simulation approach: Quantitative, objective data and qualitative, subjective estimates by managers are combined to improve proactive risk-related decision-making at a company level. The developed methodology for deriving the supply disruption indicators is applied to a case study in a German manufacturing company in order to quantitatively assess differences in the disruption risk structures of various supply relations. The results of the study show that a Value-at-Risk approach based on Monte-Carlo simulation can be effectively adopted to assist supply managers in proactively identifying suitable risk mitigation strategies.

Modelling and assessment of the impact of supply disruption and cost of recovery using system dynamics approach

Shorter product life cycles and customisation have exposed the hidden problems in the supply chain. Supply disruptions, caused due any sudden event, is one of the major concerns of the manufacturing industry. This paper focuses on the impact of non-availability of parts from a supplier due to unpredictable events and the cost of recovery from such disruption. System dynamics approach is used to model the interactions between the variables required to maintain the availability of parts. In this model, time to restore operations, time to find alternate suppliers, inventory consumption till restoration, safety stock availability and backlogs are considered. This model was then used to assess disruption impact on inventory, lead time and recovery costs using iThink software. Assessment of supply disruption for all the procured parts will help the company to recognise and take proactive steps, such as identifying alternate suppliers, making engineering changes and modifying the manufacturing processes.

Dynamic generic and brand advertising decisions under supply disruption

Enterprise captures market share from competitors through brand advertising and increases consumer demand for this category of products through general advertising. In this paper, considering a supply chain with a manufacturer who is responsible for generic advertising and a retailer who undertakes brand advertising, a Stackelberg differential game-theoretic model is established to examine the impact of supply disruption faced by the manufacturer on the optimal decision-making and profits of supply chain members. When the supply of raw materials is disrupted, the optimal advertising strategies and advertising subsidy scheme designed for the initially estimated product sales need to be revised. The key to solving this problem is to explicitly consider possible deviation profit margins of supply chain members and total market demand for products caused by changes in the original product supply. Considering that the deviations of the profit margins and the total market demand are arbitrary, we analytically derive several propositions and obtain the optimal advertising strategies and the advertising subsidy scheme before and after the supply disruption. Then, we explore the impact of supply disruption through numerical analysis and provide management insights that are helpful for managers to re-design the advertising strategies and advertising subsidy schemes under supply disruption.

Dynamic criticality of by-products used in thin-film photovoltaic technologies by 2050

Thin film photovoltaic technologies are playing an increasingly important role in the transition to a low carbon economy. Their extensive deployment will require large amounts of raw materials, especially those of companion metals. Concerns about whether the availability of materials will impede the development of low-carbon technologies have led to growing research in resource criticality. However, previous studies on criticality generally provide only static assessment models and pay little attention to the difference between base metals and companion metals. This article makes an attempt to dynamically evaluate the long-term criticalities of companion metals at a global level by combining the supply risk and impact of supply disruption. The results highlight germanium and indium as the elements with the highest criticality; tellurium and selenium exhibit a relatively moderate criticality while gallium and cadmium show very low criticality. The findings will offer proper guidance for stakeholders to address supply shortages in advance and encourage thin film technologies development. Priority measures for high criticality materials are discussed to alleviate the supply disruption potential, such as strategic stockpiling, implementing fixed-price contracts, increasing by-product recovery and secondary supply, material substitution and strengthening global mining.

Novel Approach of Quantifying Energy Security in Terms of Economic, Environmental and Supply Risk Factors

The rising global demand of energy and political instability has raised the issue of energy security more than ever before. Depleting reservoirs and environmental degradation encourage policy makers to review intended action plans for sustainable energy generation. Fluctuating oil prices and unforeseen political events has emerges a need of secure supplies policies. This study will incorporate three key integrated energy dimensions in terms of cost to evaluate the total exposure. Affordability, acceptability and availability of adequate supply are the factors to evaluate for sustainable economic growth, potential environmental harm and social stability. Energy experts and policy makers around the globe are looking for the effective tool to measure the impact of supply disruption on energy generation process. High level of security incurred extra cost; However opportunity loss due to supply disruption has never been evaluated in terms of monitory unit. This study will focus on the evaluation of potential loss cause due to unavailability of supplies for power generation system. Holistic approach will be applied to measure the combine impact of fuels specifically used in power generation process. Besides the traditional approach of unit power generation cost this paper encompasses other cost parameters which indirectly affects the cost of generation in the form of carbon tax penalty and the excessive cost of secure and reliable power generation resources.

Effect of supply disruption on inventory policy

This research examines a two-stage supply chain that comprises a supplier who is subject to stochastic disruption and a retailer who has to deal with supply disruption by holding inventory. Under a periodic-review base-stock inventory policy, the main objectives of this study are to determine the optimal inventory policy in the presence of stochastic supply disruption so as to minimise the total inventory cost as well as to analyse the impact of supply disruption on the optimal inventory policy. In this research, the length of a supply disruption is modelled as a continuous random variable, distinguishing it from previous research which modelled the length of a supply disruption as a discrete random variable that receives values only as multiples of the length of a review period. Numerical experiments have been conducted to illustrate the applicability of the proposed inventory model and to examine the effects of various input parameters on the optimal inventory policy. Furthermore, compared with the optimal inventory policy derived when the length of a supply disruption is considered as a multiple of the length of a review period, the proposed inventory model in this research can help derive a more precise optimal inventory policy. [Received: 13 February 2017; Revised: 7 December 2017; Accepted: 17 October 2018]

How to evaluate raw material vulnerability - An overview

Companies, economies and technologies are vulnerable to supply disruptions or price peaks of specific raw materials. Multiple research groups worldwide have proposed methodologies for determining the criticality of raw materials, including assessments on the vulnerability to supply restrictions. These raw material vulnerability assessments use manifold indicators but are not consistent concerning their selection, calculation, interpretation and weighting. Their indicators estimate a raw material’s economic importance or its significance for a strategic goal, or they inform regarding the impact of supply disruptions. Here, we provide an overview of 18 vulnerability assessments in 16 recent criticality studies. Our results reveal 18 different vulnerability indicators, among which a set of six indicators is frequently used and therefore might be recommended for decision makers. The range of possible vulnerability assessment results is exemplified by evaluations of the transition metal copper and the rare earth neodymium. Our overview can serve as a starting point for future raw material criticality assessments concerning the selection of vulnerability indicators and appropriate calculation and weighting methods.

Simulation Modeling for Analysis of a (Q, r) Inventory System under Supply Disruption and Customer Differentiation with Partial Backordering

We have modeled a new (Q, r) inventory system which involves a single product, a supplier, and a retailer with customer differentiation under continuous review inventory policy. The supplier provides the retailer with all requirements, and the retailer sells products to the customers. The supplying process is randomly subject to disruptions. Partial backordering is applied when a stock out occurs, and customer can select either to leave the system without purchasing or to backorder products. The customers are categorized into two main classes regarding to their backordering probabilities. The main contribution of this paper is including the customer differentiation in the inventory model. We used simulation technique to verify the impact of supply disruptions and customer differentiation and carried out sensitivity analysis. To test the performance of the model, we have compared our model to one from the latest related research. As the results show, the average of total annual cost of the (Q, r) inventory system is lower than that of the previously developed models such as (r, T) inventory systems.

Canadian Oil Security And the Impact of Supply Disruptions

Abstract This paper examines Canada's role as an industrialized energy-intensive consuming nation in the western world. It focuses on Canada's attitude toward the restricted utilization of its petroleum resources, petroleum being the country's main single source of energy. It examines the political wisdom and the corporate and national economics of Canada's "buy cheap and sell high" oil import/export policy and it attempts to solve, in at least a semi-quantitative way. the "risk/payoff/loss" equation of the international oil poker table at which Canada is but a four- percenter. In attempting to grapple with this complex subject, the paper first reviews Canada's role as a special member of the Organization for Economic Co-operation and Development (DECO) and the objectives of the OECD which unite the industrial nations of the western world. It then specifically considers:the pattern of energy demand and supply in the OECD community and the international petroleum trade which results from these interrelations;the results of previous supply disruptions in the unstable, but oil-rich, OPEC block which feeds the DEOD nations with oil, and the impact of such disruptions on Canada;the possibility, nature and magnitude of future oil supply disruptions, the resultant scenario, and the impact that they would have on Canada in both physical and economic terms having regard to existing and potential back-up sources of oil supplies. Finally, the paper attempts to quantify the real cost/ price economics of international integrated producer/ refiners operating in Eastern Canada, for the purpose of determining the profit incentive driving such companies to maintain the status-quo; it also provides the basis of a fundamental benefit/cost study of Canada's oil import policy, without which scrutiny of the "N.O.P." becomes an entirely qualitative exercise (to be presented in Part II). The paper suggests that the security of Canada's imported oil supplies is diminishing with time due to the current near capacity situation of the aging U.S. and Venezuelan oil industries. It also develops as a basic theme Canada's obligations to the OECD community and the premise of sharing remaining supplies among the energy-hungry DECD countries in times of oil supply disruptions. Because of this concept, the paper notes that a supply disruption amounting to some 20 per cent of OECD demand would be magnified to have double that effect on Eastern Canada. The paper concludes that Canada is pursuing a policy on oil imports which both jeopardizes the economic security of Eastern Canadians, through exposing them to a growing uninsured oil supply risk and runs against the public interest of Canadians as a whole from a national cost/benefit point of view. The authors recommend that Canada should take a much closer and more sophisticated look at the changing situation in, view of their preliminary findings. They also suggest that a connection to domestic sources of supply could provide coverage of the security risk noted.