Modeling flexibility strategies to mitigate supply risks in a supply chain: A Two-Stage Stochastic Programming

This paper studies flexibility strategies in relation to the risks in a supply chain environment. Having reviewed related literature, the paper identifies six major classes of the risks together with nine flexibilitystrategy categories. This classification initiates the idea for using appropriate flexibility strategies to mitigaterisks concerned. We formulate a two-stage stochastic program for a supply chain with regard to supply risk. This model allows for the use of flexibility strategies to reduce the magnitude of mentioned risk. Flexibility strategies used in the model are supply via multiple suppliers and supply via flexible supply contracts

Keywords:

Supply chain , flexibility , risk , two-stage stochastic program