Inoperability input‐output modeling (IIM) of disruptions to supply chain networks

Abstract

Abstract In this paper, the Inoperability Input‐Output Model (IIM) is deployed for assessing the impacts of disruptive events on supply chain networks under an unsafe environment. The IIM for supply chain networks has been proposed, based on the original IIM used in macro‐economics. A new method called the OWA (Ordered Weighted Averaging) Operator has been formulated to evaluate the interdependency matrix, a key component of the IIM. Similar to the capability of the basic IIM to describe the propagation impacts of disruptions to macroeconomic systems, the IIM for supply chain networks is capable of describing the propagation effects of disruptions to interdependent supply chain components. IIM assesses the impacts of disruptions to supply chain networks with “inoperability” and “economic losses” metrics, which can provide helpful insights for risk management of supply chain networks. An example supply chain network is used to illustrate the application of IIM for systemic risk assessment of supply chains under an unsafe environment. A risk mitigation strategy by increasing the number of suppliers has been considered to reduce the adverse effects caused by the supply reduction of the single secondary supplier in the example supply chain network. In addition, a simulation model integrated with Monte Carlo simulation method has been developed to validate the accuracy of the IIM for supply chain. The example shows that the application of IIM can provide useful guidance toward supply chain risk management or mitigation strategies and it could also be used to test the effectiveness of these strategies. © 2009 Wiley Periodicals, Inc. Syst Eng

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