Reliable global supply chain network design under supply disruptions

This paper studies a reliable global supply chain (GSC) design subject to uncertain supply disruptions with underlying correlation. A two-stage distributionally robust model is developed, where the joint disruption distributions are captured by an ambiguous set under a set of known marginal disruption probabilities. The proactive strategies and recourse decisions are optimised in an integrated way, the former considering the selection of suppliers, plants, and product design solutions, while the latter including multi-source procurement. We uncover the relationship between the closed-form worst-case joint distribution and the marginal disruption probabilities by proving the supermodularity of the recourse model. Therefore, the proposed min-max-min model can be equivalently reformulated as a stochastic program. Finally, an experimental study is performed. Our approach not only saves lots of costly efforts in enhancing the visibility of GSC disruptions, but also provides a promising alternative for addressing GSC design in a complex and uncertain setting. [Received: 16 August 2022; Accepted: 3 March 2023]