A Recovery Model for an Inventory Sistem Subject to Supply Disruption and Quality Uncertainty

The risk of supply chain disruptions can occur from a variety of events that make disruptions almost inevitable. Previous studies did not consider the quality uncertainty that can be affected by supply shortages. This paper presents a disruption recovery model for a single stage production and inventory system with consideration of disruption and quality uncertainties. The inventory system may experience a variety of disruptions such as supply chain disruptions, transportation disruptions and interruptions in the quality of the product. Therefore, management must make decisions quickly and efficiently to overcome these disruptions with minimum cost possible. The disruption recovery model was developed to help managers in making the right decisions and without affecting the production when the interruptions happen. Numerical examples are used to illustrate and examine the effectiveness and benefits of the mathematical model in solving the problem of supply disruption and quality uncertainty caused by the production process. Next, the model is optimized using LINGO software. This study showed that the optimal recovery schedule obtained is dependent on the percentage of products that have quality problems as well as other cost parameters. If the percentage of damaged goods in the production increases, the overall cost for recovery will also increase dramatically. Thus, the proposed model is seen to be a very useful tool to help managers make the right decisions on the optimal recovery plan during disruption occurences.