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Facing market disruptions: values of elastic logistics in service supply chains

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  • Tsan-Ming Choi

Abstract

Market disruptions are commonly seen nowadays which directly affect demand. However, in logistics service supply chains, service capacity suppliers and service providers usually have to prepare logistics-service-capacity before demand is known. In this paper, we explore a logistics service supply chain with which the logistics-service provider (LP) has to decide the quantity of capacity to reserve to satisfy future demand in the upcoming season, which depends on whether market disruption occurs or not. The optimal capacity planning policy is determined and the impacts brought by the chance of market disruption are uncovered. Then, we consider the scenario with ‘elastic logistics’ in which capacity can be adjusted after the market state is known. We analytically establish the corresponding optimal dynamic policy and prove that it helps to stop the ripple effect from appearing. We explore the value of elastic logistics and propose conditions and measures to achieve Pareto improvement in the supply chain upon the adoption of elastic logistics. We extend the analysis to the case with the risk-averse LP and uncover that our qualitative findings remain robust, irrespective of the LP’s risk attitude.

Suggested Citation

  • Tsan-Ming Choi, 2021. "Facing market disruptions: values of elastic logistics in service supply chains," International Journal of Production Research, Taylor & Francis Journals, vol. 59(1), pages 286-300, January.
    • Handle: RePEc:taf:tprsxx:v:59:y:2021:i:1:p:286-300
    DOI: 10.1080/00207543.2020.1722861
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    Cited by:

    1. Siqin, Tana & Choi, Tsan-Ming & Chung, Sai-Ho, 2022. "Optimal E-tailing channel structure and service contracting in the platform era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    2. Zhou, Yanju & Che, Yuan, 2021. "Research on Government Logistics Subsidies for Poverty Alleviation with Non-uniform Distribution of Consumers," Omega, Elsevier, vol. 104(C).
    3. Fang Dong & Chengdong Shi & Weitong Yu, 2022. "Coordinated Decision-Making in Embedded Supply Chain from a Sustainable Development Perspective," Sustainability, MDPI, vol. 15(1), pages 1-19, December.
    4. Guangsheng Zhang & Xiao Wang & Yanling Wang & Jiayun Kang, 2022. "Research on the Resilient Evolutionary Game of Logistics Service Supply Chain with Government Participation," Mathematics, MDPI, vol. 10(4), pages 1-18, February.
    5. Xu, Yuqiu & Wang, Jia & Cao, Kaiying, 2023. "Logistics mode strategy of firms selling fresh products on e-commerce platforms with private brand introduction," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    6. Cao, Kaiying & Guo, Qiang & Xu, Yuqiu, 2023. "Information sharing and carbon reduction strategies with extreme weather in the platform economy," International Journal of Production Economics, Elsevier, vol. 255(C).
    7. Dass, Mayukh & Reshadi, Mehrnoosh & Li, Yuewu, 2023. "An exploration of ripple effects of advertising among major suppliers in a supply chain network," Journal of Business Research, Elsevier, vol. 169(C).
    8. Liu, Ming & Lin, Tao & Chu, Feng & Ding, Yueyu & Zheng, Feifeng & Chu, Chengbin, 2023. "Bi-objective optimization for supply chain ripple effect management under disruption risks with supplier actions," International Journal of Production Economics, Elsevier, vol. 265(C).

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