Disruption Management In Supply Chain

This thesis is concerned with the disruption management in supply chain environment and two types of disruptions are studied: demand disruption and production cost disruption. Here, the supply chain environment is formally modeled as a one-supplier-one-retailer supply chain. The supplier produces products and sells them to the retailer at certain wholesale price, and then the retailer sells the products to customers at its retail price. In the supply chain model, it is assumed that demand is dependent on the product's retail price, i.e., the demand is a decreasing function in retail price. Mathematically, two types of price-demand relationships are considered: one is of linear and the other is of non-linear. For the two price-demand relationships, the thesis is committed to problems of demand disruption management and production cost disruption management respectively, and shows how to design new coordination policies in the disrupted supply chain model. Specifically, the thesis also studies how to make decisions in centralized fashion and how to design new policies to coordinate the changed supply chain under demand disruptions when production cost is a convex function in production quantity and the price-demand relationship is of linear.In general, the results obtained in this thesis show that no matter demand disruption or production cost disruption, the production plan may deviate from the original one, which often causes some extra cost named Deviation Cost. Therefore, the objective function for the disrupted supply chain should contain the deviation cost item as penalty due to deviation from the original plan. Also, the original plan has some robustness due to existence of deviation cost. In view of the degree of disruption in both cases of demand and production cost disruptions, the optimal solutions corresponding to the disruption supply chain have the same structure and can be categorized as four cases. When the supplier and the retailer are both independent decision-makers, the disrupted supply chain can be coordinated by similar all-unit wholesale quantity discount (AWQD) policies and capacitated linear pricing (C LP) policies, no matter the price-demand relationship is of linear or non-linear and no matterdemand disruptions or production cost disruptions.Based on the pioneering work by Qi, Bard and Yu, in the concrete, four problems are studied in the thesis. (1) Demand disruption for non-linear price-demand relationship with constant unit production cost; (2) Demand disruption for linear price-demand relationship with convex production cost function; (3) Production cost disruption for linear price-demand relationship; (4) Production cost disruption for non-linear price-demand relationship. In additional, the comparison with no consideration in the disrupted supply chain is made, and numerical illustrations are also given.The thesis is consistent of four chapters. In Chapter 1, supply chain management and disruption management are introduced. Formally, the basic ideas, research framework, mathematical model and some related concepts in disruption management are introduced. Then the related literature is thoroughly reviewed, and the state of the art in this issue is discussed. Chapter 2 is devoted to the problem of demand disruption management. We obtain optimal decisions in centralized decision-making fashion and proper supply chain coordination policies in decentralized decision-making fashion, and then give some numerical examples to illustrate the results to show the importance of disruption management. Chapter 3 investigates the problem of production cost disruption management. Also, we obtain optimal decisions in centralized decision-making fashion and proper supply chain coordination policies in decentralized decision-making fashion. Some numerical examples are also presented to illustrate the results. The thesis is concluded in Chapter 4 with some further researches.