Risk Management in Supply Chain Design and Operations

Northwestern University, Evanston IL

Investigators

Abstract

This research will address issues related to risk management in supply chains. Risks include disruptions (natural disasters, labor disputes, supplier business failures, and terrorism), delays, system risks, forecasting risks, intellectual property risks, procurement risks, inventory risks and capacity risks. Risk mitigation measures often result in increases in planning/forecasting costs, on-going costs, or risk recovery costs. The research project will develop optimization-based multi-objective models to support risk mitigation planning in supply chains. An important focus area will be the interaction between different risks and mitigation strategies. Mitigating one risk may increase the exposure to another risk. The project will also examine mitigation strategies that best address a combination of risks without significantly adding to costs. If successful, this project will enhance the ability of a firm or government agency to determine a supply chain risk mitigation strategy in the face of multiple risks. The taxonomy will enable planners to identify and categorize a broad variety of risks. It will also provide planners with an initial menu of risk mitigation approaches that are broadly applicable to the primary risks being faced. The optimization model(s) will facilitate the exploration of specific strategies and plans to mitigate risks accounting for the broad range of objectives faced by industrial and governmental supply chain planners. The proposed work will also enhance our ability to solve complex multi-objective optimization problems in the face of uncertain inputs and conditions.