Optimising the Preparedness Capacity of Enterprise Resilience Using Mathematical Programming

Abstract

In today’s volatile business arena, companies need to be resilient to deal with the unexpected. One of the main pillars of enterprise resilience is the capacity to anticipate, prevent and prepare in advance for disruptions. From this perspective, the paper proposes a mixed-integer linear programming (MILP) model for optimising preparedness capacity. Based on the proposed reference framework for enterprise resilience enhancement, the MILP optimises the activation of preventive actions to reduce proneness to disruption. To do so, the objective function minimizes the sum of the annual expected cost of disruptive events after implementing preventive actions and the annual cost of such actions. Moreover, the algorithm includes a constraint capping the investment in preventive actions and an attenuation formula to deal with the joint savings produced by the activation of two or more preventive actions on the same disruptive event. The management and business rationale for proposing the MILP approach is to keep it as simple and comprehensible as possible so that it does not require highly mathematically skilled personnel, thus allowing top managers at enterprises of any size to apply it effortlessly. Finally, a real pilot case study was performed to validate the mathematical formulation.

La resiliencia empresarial, elemento indispensable para micro y pequeñas empresas ante la pandemia COVID-19

“…Sin embargo, como señalan sus autores, las particularidades específicas de la industria pueden requerir la definición de métricas más especializadas. La propuesta más reciente para medir la RE es la generada por Sanchis Gisbert (2017) y Sanchis et al (2020), quienes proponen un modelo de programación lineal de enteros mixtos (MILP, por sus siglas en inglés) para optimizar la capacidad de preparación de la empresa ante eventos disruptivos. El MILP optimiza la activación de acciones preventivas para reducir la propensión a las interrupciones, para ello la función objetivo minimiza la suma del costo anual esperado de eventos disruptivos luego de implementar acciones preventivas y el costo anual de dichas acciones.…”

“…Además, es necesario tener presente que la resiliencia considera tres elementos básicos: persistencia, adaptabilidad y transformación (Folke et al, 2010). Uno de los pilares principales de la RE es la capacidad de anticipar, prevenir y prepararse con anticipación para las interrupciones (Sanchis et al, 2020).…”

Mathematical Modeling for Financial Analysis of an Enterprise: Motivating of Not Open Innovation

“…At the same time, an important problem is not only to predict the overall trend of the organization's development but also to anticipate less repetitive events. For example, the works of Sanchis, R.; Duran-Heras, A., Poler, R. [20], as well as Cerna, S., Guyeux, C., Royer, G., Chevallier, C., Plumerel, G. are devoted to solving the problem of creating tools that allow predicting possible failures in the sustainable operation of an enterprise [21] and Vasilieva, T. Jurgilewicz, O., Poliakh, S., Tvaronavičien ė, M., Gidzik, P. [22], Hilkevics, S.; Semakina, V. [23]. In [20], a mathematical model of mixed linear integer programming was proposed to optimize the potential of readiness for non-standard situations.…”

Model Based Analysis of Innovation in Sustainable Supply Chains

“…Some authors also highlight that companies apply risk-mitigation practices that could be assimilated to SOI practices [69]. These risk-mitigation practices can be linked to the concept of resilience, and various approaches have been proposed to select the most suitable set of innovation-based riskmitigation initiatives to enhance the firm's "readiness capacity" [70].…”