Design of global supply chain network with operational risks

Facility location decisions play a vital role in the strategic design of the global supply chain. Global supply chains are vulnerable towards different types of risks factor that causes disturbance in the allocation of certain goods at the required place and time, and with the required quality and quantity. This paper presents a model of the multi-stage global supply chain network problem incorporating a set of risk factors (such as: late shipment, exchange rates, quality problems, logistics and transportation breakdown, and production risks), their expected values and probability of their occurrence, and associated additional cost. Different scenarios are considered to demonstrate the applicability of the model. Optimal decisions regarding the facility locations and inter-echelon quantity flows in the global supply chain are based on initial information for the risk factors. Further, if any change in the expected value of risk factor has occurred, the inter-echelons shifting take place to minimize the overall cost of the supply chain.