Scenario-based simulation for supply chain risk management

Global supply chain (SC) relations are complex. SC members must manage negative impacts on operations from increasingly frequent SC risks (SCRs) from fire, earthquakes, etc. Actually, SCs tend to distribute suppliers and production to mitigate impacts from localized SCRs. However, such distribution limits merits of scale economies. We developed an SCR simulator by modelling SCs and SCRs. Merits of scale economies are incorporated into the SC model to develop a scenario-based simulator. This simulator calculates the influence of an SCR on an SC. We analyze the relation between SCR distribution and merits of scale economies using several SCR scenarios.