We present formulations for the strategic design of robust and reliable supply chains with long term contracting. The inability to deliver a supply part due to unexpected events in a complex supply chain can have a significant impact on the performance of a supply chain. Reliable and robust supply chains leverage cost and risk of not obtaining a supply. Reliable chains are less likely to be disrupted, whereas robust chains still perform well in the case of disrupted supply channels. We consider an integrated inbound supply chain of a manufacturer and we embed aspects of reliability and robustness into the traditional supply chain model. We provide computational results on two instances.
Department of Mechanical and Industrial Engineering, University of Illinois at Urbana-Champaign, Urbana, IL