Procurement portfolio management for resilient supply chains: Value of information for risk averse decision making
Merzifonluoglu,Yasemin
Merzifonluoglu,Yasemin
Abstract
In this study, we investigate the replenishment decisions for firms that rely on multiple sources of supplies, including regular forward contracts, option contracts, and the spot market. Our research aims to tackle the challenges arising due to supplier disruptions and the volatility of spot market prices that are correlated with these disruptions. We develop and solve multi-stage stochastic programming models that incorporate demand and supplier disruption information updates, while considering both risk neutral and risk averse (CVaR) objectives. These models assist organizations with varying risk attitudes in achieving maximum performance by optimally selecting a procurement portfolio based on the availability and quality of updated information. Through analytical solutions and extensive numerical studies, our findings offer novel insights to organizations and policymakers, empowering them to enhance their supply chain resilience during critical supply disruption situations. Therefore, this research has broader implications and aligns with the multiple sustainability objectives outlined in the Sustainable Development Goals (SDGs).
Description
Publisher Copyright: © The Author(s) 2024.
Date
2024-03
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Research Projects
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Keywords
Procurement management, Value of Information, Risk, Supply disruption, Spot markets, Option contracts, SDG 12 - Responsible Consumption and Production, SDG 17 - Partnerships for the Goals
Citation
Merzifonluoglu, Y 2024, 'Procurement portfolio management for resilient supply chains: Value of information for risk averse decision making', Annals of Operations Research. https://doi.org/10.1007/s10479-024-05918-5