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Effect of Continuity Rate on Multistage Logistic Network Optimization under Disruption Risk

  • Rusman, Muhammad ;
  • Shimizu, Yoshiaki
  • Received : 2013.01.31
  • Accepted : 2013.05.29
  • Published : 2013.06.30

Abstract

Modern companies have been facing devastating impacts from unexpected events such as demand uncertainties, natural disasters, and terrorist attacks due to the increasing global supply chain complexity. This paper proposes a multi stage logistic network model under disruption risk. To formulate the problem practically, we consider the effect of continuity rate, which is defined as a percentage of ability of the facility to provide backup allocation to customers in the abnormal situation and affect the investments and operational costs. Then we vary the fixed charge for opening facilities and the operational cost according to the continuity rate. The operational level of the company decreases below the normal condition when disruption occurs. The backup source after the disrup-tion is recovered not only as soon as possible, but also as much as possible. This is a concept of the business continuity plan to reduce the recovery time objective such a continuity rate will affect the investments and op-erational costs. Through numerical experiments, we have shown the proposed idea is capable of designing a resilient logistic network available for business continuity management/plan.

Keywords

Disruption Risk;Mixed-Integer Programming;Resilient Logistic Network;Continuity Rate

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