Defense-Critical Supply Chain Networks and Risk Management with the Inclusion of Labor: Dynamics and Quantification of Performance and the Ranking of Nodes and Links

The efficient and effective performance of defense-critical supply chain networks is essential to both national and global security. Disruptions to supply chains, heightened in the COVID-10 pandemic, and now further exacerbated because of growing geopolitical and other risks, as well as Russia’s war against Ukraine, have garnered the attention of decision-makers and policymakers, including those in the defense sector. In the chapter, a rigorous methodological framework is presented for defense-critical supply chain networks in the form of a defense supply chain network economy that captures the behavior of defense firms, which care about revenues as well as risk, and which includes the important labor resources and associated constraints. Variational inequality theory is used to provide alternative formulations of the governing Nash equilibrium conditions, with a dynamic model counterpart used for the construction of an easy-to-implement algorithm that yields closed-form expressions at each iteration of the defense product path flows and the Lagrange multipliers associated with the bounds on labor hours available on supply chain links. A defense supply chain network efficiency/performance measure is proposed as an associated importance indicator for supply chain network components. A resilience measure is also given that quantifies the resilience of the defense supply chain network economy to disruptions in labor. The modeling and algorithmic framework, as well as the measures proposed, is then illustrated via numerical examples.