Contingency Design for Reliability in a Supply Chain

In this paper, the authors propose a reliability based design optimization approach for optimal inventory design in emergency operation, considering reliability target. In this context, the reliability of an inventory system is defined as the probability that the available inventory level meets all population demand during crisis period. Inventory support for emergency operations is complicated by uncertainties of demands and duration of crisis period. The inventory system is considered as a structure that undergoes an external load represented by the demand of population during crisis period. Moreover, the supply chain resists to this load by its strength represented by the quantity of products available at the distribution center. Reliability based design optimization approach is proposed to perform an optimal design of inventory system in emergency operation without making any particular assumption on distribution of population demand and duration crisis period. The simulation software SIMIO is used to validate the proposed method by conducing simulation analysis using several examples with different distributions of population demand and duration crisis period. The results indicate clearly that the proposed method gives an optimal design with reliability much closer to target value.