Development of risk based dynamic backorder replenishment planning framework using Bayesian Belief Network

Authors:
KwangSup Shin;YongWoo Shin;Ji-Hye Kwon;Suk-Ho Kang
Affiliations:
Department of Industrial Engineering, College of Engineering, Seoul National University, San 56-1, DaeHak-dong, Gwanak-gu, Seoul 151-742, Republic of Korea;Entrue Consulting Partners, LG CNS, 25F, Seoul Finance Center, 84, TaePyeong-ro 1-ga, Chung-gu, Seoul 100-768, Republic of Korea;Republic of Korea Navy, P.O. Box 602-2, Hyundong, Jinhye-si, Gyeong Sang Nam-do, Republic of Korea;Department of Industrial Engineering, College of Engineering, Seoul National University, San 56-1, DaeHak-dong, Gwanak-gu, Seoul 151-742, Republic of Korea
Venue:
Computers and Industrial Engineering
Year:
2012

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Abstract

Due to the rapid changes in circumstances of cooperates such as globalization, technical innovation and competition, inter-dependence among cooperates which compose supply chain has been intensified. This make cooperates be exposed to various risk and even a small uncertainty can disrupt the balance of whole supply chain. Therefore, in this paper, the framework to develop alternative backorder replenishment plan to minimize the total replenishment cost and expected risk cost has been devised. In order to model the relationship between risks and risk propagation, Bayesian Belief Network has been applied. Moreover, with the fast heuristic algorithm, breath first search and elementary stepwise system based reverse Dijkstra, the alternative backorder replenishment plan can be established. The numerical example shows how to apply the proposed framework and make dynamic backorder replenishment plan considering impact of risk.