Risk and cost analysis in supply chain structure with simulation

In a global business environment, effective supply chain management (SCM) is becoming more and more important for companies to remain competitive. Most traditional SCM researches focus on improving performance of supply chain. However, owing to existence of uncertainty or unpredictable events, some supply chains often suffer systemic damages and risks. Therefore, it is critical to account for risk while designing supply chain structures so that they perform well even after an unexpected event has occurred. In this paper, we present a planning model that balances the severity of damage and cost control when planning for risk, and then build a simulation flow for this model. Simulation and analysis of a simplified example from a company is used to demonstrate the effectiveness of the above model. © 2009 IEEE.