Contingency Design for Reliability in a Supply Chain

Contingency Design for Reliability in a Supply Chain

Youcef Bereriche (Level University, Quebec, Canada) and Daoud Ait-Kadi (Level University, Quebec, Canada)
Copyright: © 2015 |Pages: 14
DOI: 10.4018/IJRCM.2015040103
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In this paper, the authors propose a reliability based design optimization approach for optimal inventory design in emergency operation, considering reliability target. In this context, the reliability of an inventory system is defined as the probability that the available inventory level meets all population demand during crisis period. Inventory support for emergency operations is complicated by uncertainties of demands and duration of crisis period. The inventory system is considered as a structure that undergoes an external load represented by the demand of population during crisis period. Moreover, the supply chain resists to this load by its strength represented by the quantity of products available at the distribution center. Reliability based design optimization approach is proposed to perform an optimal design of inventory system in emergency operation without making any particular assumption on distribution of population demand and duration crisis period. The simulation software SIMIO is used to validate the proposed method by conducing simulation analysis using several examples with different distributions of population demand and duration crisis period. The results indicate clearly that the proposed method gives an optimal design with reliability much closer to target value.
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In the current climate change context, the intensity and frequency of disasters have increased considerably. According to the Red Cross world Disasters Report (2005), the number of natural disasters has risen dramatically to an average of 707 disasters per year from 1999 to 2003 (International Federation of Red Cross and Red Crescent societies, 2005).

The World Health Organization defines a disaster as any occurrence that causes damage, destruction, ecological disruption, loss of human life, deterioration of health and health services on a scale sufficient to call for an extraordinary response from outside the affected community or area, see (WHO, 1999). The challenge of the agency responsible of crisis management is to prepare and manage relief activities in an unpredictable environment (Beamon & Kotleba, 2006).

Thomas (2002) calls a supply chain that operates in an emergency condition: a contingency logistics system. Also, he defined the logistics support as functions for contingencies that can be structured as a network of supply chains for receiving, transporting, and distributing material and equipment for ensuring that “the right things are provided at the right place at the right time”.

Literature Review

The inventory management is considered as a cornerstone for the success of relief operations. In this objective, Beamon and Kotleba (2006) developed an inventory model for a pre-positioned warehouse responding to a complex humanitarian emergency. Also, Oh and Haghani (1996) proposed a model to minimise the loss of life and maximise the efficiency of the relief operations of transportation of products such as medical supplies, machinery and personnel.

In disaster situation the infrastructure for transportation of products is often unreliable. Effectively, during disaster period, some regions could be isolated for many days before authorities can manage to restore roads and thus deliver humanitarian aid. (Thomas, 2002) argued that the unreliability of inventory system in emergency situation is considered as a major obstacle to developing and maintaining supply chain. For this purpose (WHO, 1999) proposed a method to assess the reliability of existing supply chain using interference theory. To cope with this situation other researchers explored the solution to use helicopters for aid delivery (Barbarosoglu, Özdamar, & Çevik, 2002). However, many countries do not have sufficient resources to use helicopters. The other solution is providing a local distribution centers to meet the needs of population as long as the authorities are able to restore the roads as found by Strang (2014) when studying Hurricanes Katrina (2012), Isaac (2013a), Irene (2013b), and Sandy (2014).

The objective of the agency responsible of crisis management is to determine the appropriate quantity of products to keep in local distribution center in order to meet all demand of population in crisis duration with target reliability level. In this paper, both population demand and crisis duration are considered uncertain. Effectively, the duration of crisis situation could be uncertain depending on the damage caused by disaster; in the same case the demand of products of population is considered uncertain. Motivated by this problem, we propose an original idea to design an inventory system in contingency operation with respect of pre-determined reliability level.

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