Evaluating Vulnerability of Supply Chain Networks to Capacity Reduction

Abstract

The available studies on vulnerability evaluation of Supply Chain Networks (SCNs) oversimplify the availability of entities during disruptive events by classifying them into only two categories of “operational” and “not operational.” Yet, the literature has remained relatively silent on vulnerability analysis of SCNs in the case of capacity reduction. To sidestep this shortcoming, this paper develops an entropy-based method to quantify the vulnerability of SCNs to capacity reduction. This is achieved by measuring the flexibility inherent within the layout of SCNs, both at local and global levels. By performing simulation and sensitivity analyses, this paper predicts the impact of capacity reductions on the performance of SCNs. The results of our study favor the fact that incorporating more backups and increasing the capacity of various entities in the network reduces vulnerability and enhances the robustness of SCNs. The findings of this research may assist operations and supply chain managers in identifying the sensitive areas of SCNs, in turn facilitating the development of an effective risk management strategy to respond to disruptive events.