ABSTRACT
The COVID-19 pandemic has illustrated the unprecedented challenges of ensuring the continuity of operations in a supply chain as suppliers' and their suppliers stop producing due the spread of infection, leading to a degradation of downstream customer service levels in a ripple effect. In this paper, we contextualize a dynamic approach and propose an optimal control model for supply chain reconfiguration and ripple effect analysis integrated with an epidemic dynamics model. We provide supply chain managers with the optimal choice over a planning horizon among subsets of interchangeable suppliers and corresponding orders; this will maximize demand satisfaction given their prices, lead times, exposure to infection, and upstream suppliers' risk exposure. Numerical illustrations show that our prescriptive forward-looking model can help reconfigure a supply chain and mitigate the ripple effect due to reduced production because of suppliers' infected workers. A risk aversion factor incorporates a measure of supplier risk exposure at the upstream echelons. We examine three scenarios: (a) infection limits the capacity of suppliers, (b) the pandemic recedes but not at the same pace for all suppliers, and (c) infection waves affect the capacity of some suppliers, while others are in a recovery phase. We illustrate through a case study how our model can be immediately deployed in manufacturing or retail supply chains since the data are readily accessible from suppliers and health authorities. This work opens new avenues for prescriptive models in operations management and the study of viable supply chains by combining optimal control and epidemiological models.
ABSTRACT
The COVID-19 pandemic wreaks havoc in supply chains by reducing the production capacity of some essential suppliers, closure of production facilities or the absence of infected workers. In this paper, we present three decision support models for a plant manager to help in deciding on (a) the level of protection of the workforce against the spread of the virus in the absence of regional protection measures, (b) on the duration of the protection, and (c) the level of protection of the workforce with regional protection measures enforced by health authorities. These decision models are based on a SIS epidemiological model which takes into account the possibility that a worker can infect others but also that even when recovered can be infected again. The first and third models prescribe how, in time, the protection effort in terms of prophylactic measures must be deployed. The second model extends the first one as it also determines the length the protection effort must be deployed. The proposed models have been applied to the case of a meat processing plant that must satisfy the demand of a large-scale retailer. Clearly, to achieve production targets and satisfy customers' demand, plants in this labor-intensive industry rely on the number of healthy workers and the service level of suppliers. Our results indicate that these models provide managers with the tools to understand and measure the impact of an infection on production and the corresponding cost. Along the way, this work illustrates the ripple effect as suppliers affected by the pandemic are unable to fulfill the processing plant requirements and so the retailer's orders. Our findings provide normative guidance for supply chain decision support systems under risk of pandemic induced disruptions using a quantitative model-based approach.
