Investigators: Dr. Jun Zhang
Research areas (max. 3): Supply chain risk management, simulation optimization
RESEARCH STATEMENT
Supply chains risks, such as machine breakdown, natural disaster and terrorism attacks, can cause huge loss to all the partners inside the supply chains and even to the whole society. Designing a robust system to reduce the loss caused by the supply chain risk is essential for the health of the supply chain. The research first models the risk mathematically. And then, optimal control policies are evaluated based on the risk model for the entire supply chain in order to reduce the total operation costs.
RESEARCH METHODS
Jump diffusion process is used to model the supply chain risk. Simulated annealing is applied to determine the optimal dynamic inventory control policy and production planning policy in order to reduce the total operation costs.
CONCLUSIONS
The research results show that the traditional inventory control policy is not optimal if the supply chain faces the risk. Proposed method reduced the operation costs when supply chain risk is existent.