Mitigating transportation disruptions in a supply chain: a cost-effective strategy

Abstract

Transportation disruptions can be damaging to a supply chain because goods may not arrive on time and this jeopardises the service level to the customers. While supply chain disruptions have gained significant attention from scholars, little has been done to explore these disruptions in the context of transportation. The study described in this paper aims to address disruptions occurring in the transportation of goods from a plant to a distribution centre. We modelled this real case to obtain insights on the effectiveness of different strategies to mitigate transportation disruptions. We evaluated four mitigation strategies and compared the outcomes in terms of service level and total costs: (1) the risk acceptance strategy, (2) the redundant stock strategy, (3) the flexible route strategy, and (4) the redundant-flexibility strategy. The results suggest that the best strategy differs depending on the budget that managers are willing to deploy to improve the service level. The simulation experiments and the use of the Incremental Cost Effectiveness Ratio (ICER) would be instrumental in helping decision makers in selecting the best disruption mitigation strategies where the best option would likely be different under varying circumstances.

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