Critical Needs Supply Chains Under Capacity and Demand Disruptions

The special issue of Transportation Research A on the theme of Network Vulnerability in Large Scale Transport Networks, edited by Michael A.P. Taylor, is now published.

Our paper, "A bi-criteria indicator to assess supply chain network performance for critical needs under capacity and demand disruptions," Patrick Qiang and Anna Nagurney, appears in this issue, which is volume 46 (5), June 2012.

This paper was also highlighted in a newsletter of  the OR Society (thanks). Patrick is a faculty member at the Graduate School of Professional Studies at Penn State University Malvern and I am at the Isenberg School at UMass Amherst.

In this paper, we developed a supply chain network model for critical needs products, which captures disruptions in capacities associated with the various supply chain activities of production, transportation, and storage, as well as those associated with the demands for the product at the various demand points. Critical needs products may be defined as those products and supplies that are essential to human health and life. Examples include food, water, medicines, and vaccines. The demand for critical needs is always present and, hence, the disruption to the production, storage, transportation/distribution, and ultimate delivery of such products can result not only in discomfort and human suffering but also in loss of life. Such supplies are essential in times of disasters and emergencies.

The objective is to minimize the total network costs, which are  generalized costs that may include the monetary, risk, time, and social costs. Two different cases of disruption scenarios are considered. In the first case, we assume that the impacts of the disruptions are mild and that the demands can be met.  In the second case, the demands cannot all be satisfied. For these two cases, we propose two individual performance indicators.
 
We showed that the governing optimality conditions can be formulated as a variational inequality problem with nice features for numerical solution.

In addition, we proposed two distinct supply chain network performance indicators for critical needs products. The first indicator considers disruptions in the link capacities but assumes that the demands for the product can be met. The second indicator captures the unsatisfied demand. We then constructed a bi-criteria supply chain network performance indicator and used it for the evaluation of distinct supply chain networks. The bi-criteria indicator allows for the comparison of the robustness of different supply chain networks under a spectrum of real-world scenarios. We illustrated the new concepts in the paper with numerical supply chain network examples in which the supply chains were subject to a spectrum of disruptions involving capacity reductions as well as demand changes.

Given that the number of disasters has been growing globally, we expect that the methodological tools introduced in this paper will be applicable in practice in disaster planning and emergency preparedness.

Thanks also to Wiley for publicizing our first critical needs supply chain network paper, which focused on design, in its Asia blog on What's New in Operations Research.

Humanitarian Logistics -- Working on the Tough Stuff

As the world marks the first anniversary of the Haiti earthquake that struck on January 12, 2010, with more than one million people there still living in tents and under tarps, I thought it important to write on how we can all learn from such catastrophic natural events and the ensuing response and reconstruction.

As an academic, I conduct research, teach, and do (tons of) professional service.

Since my general area of research is network systems, many of my topics stem from timely real-world events. Such an approach brings an immediacy to my work and also a dynamism to the classroom.

Other research topics are generated through collaborations, including those with graduate students, whose dissertations I am supervising.

Humanitarian logistics and the related theme of healthcare are two areas that I have been drawn to, beginning with the Rockefeller Foundation Conference on Humanitarian Logistics that I organized at its Bellagio Center on Lake Como in Italy.

On the website that was created for this conference, I periodically upload additional studies of ours that may be relevant and of interest to this community.

Below are some recent ones of ours.

Additional References

Supply Chain Network Design for Critical Needs with Outsourcing, Anna Nagurney, Min Yu, and Qiang Qiang, Papers in Regional Science, in press. Sustainable Supply Chain Network Design: A Multicriteria Perspective Anna Nagurney and Ladimer S. Nagurney, International Journal of Sustainable Engineering 3: (2010) pp 189-197. Multiproduct Supply Chain Network Design with Applications to Healthcare Anna Nagurney, Min Yu, and Qiang Qiang Optimal Supply Chain Network Design and Redesign at Minimal Total Cost and with Demand Satisfaction Anna Nagurney, International Journal of Production Economics 128: (2010), pp 200-208. Fragile Networks: Identifying Vulnerabilities and Synergies in an Uncertain Age Anna Nagurney and Qiang Qiang, International Transactions in Operational Research, in press. We have also completed the paper: Supply Chain Network Operations Management of a Blood Banking System with Cost and Risk Minimization, joint with two of my doctoral students, Amir Masoumi and Min Yu, which is presently under review. This latest paper is an outgrowth of specific interests of Amir Masoumi. It was particularly challenging because of the complexity of the network model, which had to capture the perishability of this time-sensitive, but life-saving, "product." This paper we plan on presenting at the POMS Conference in Reno, Nevada and at the Northeast Regional INFORMS Conference in Amherst! As for our critical needs supply chain network design paper with outsourcing, the Isenberg School has issued a press release on it, which may be accessed here.

Supernetwork Center Associates at INFORMS in Austin, Texas

Nine of the Supernetwork Center Associates will be presenting papers at the INFORMS Annual Meeting in Austin, Texas, November 7-10, 2010 so we will be having a very special reunion.

Dr. Tina Wakolbinger of the University of Memphis will be chairing the session: Decision-Making in Nonprofit Organizations in which she will present a co-authored paper, "Collaborative Information Sharing in Humanitarian Supply Chains." In that session, my doctoral student, Min Yu, will present a paper co-authored with Dr. Patrick Qiang of Pennsylvania State University Malvern and me entitled, " Supply Chain Network Design for Critical Needs with Outsourcing." This paper is now in press in Papers in Regional Science.

Dr. Jose Cruz of the University of Connecticut will be chairing the session: Sustainable and Responsible Supply Chain Management in which he will deliver the paper, "Mitigating Global Supply Chain Risks through Corporate Social Responsibility." In the same session, Dr. Zugang Liu of Pennsylvania State University at Hazleton will speak on, "Consumer Environmental Awareness and Competition in Two-Stage Supply Chains," co-authored with Dr. Cruz and Dr. Trisha Woolley (now Anderson).

Dr. Woolley Anderson will present the paper, co-authored with me, "Environmental and Cost Synergy in Supply Chain Network Integration in Mergers and Acquisitions." This paper was published in Sustainable Energy and Transportation Systems, Proceedings of the 19th International Conference on Multiple Criteria Decision Making, Lecture Notes in Economics and Mathematical Systems, M. Ehrgott, B. Naujoks, T. Stewart, and J. Wallenius, Editors, Springer, Berlin, Germany (2010) pp 51-78.

I will be presenting, "Supply Chain Network Design under Profit Maximization and Oligopolistic Competition," in a session on Risk Management organized by Dr. Jussi Keppo and Dr. Jie Ning of the University of Michigan. This paper was published recently in the journal Transportation Research E.

Dr. Patrick Qiang will present our joint paper, "A Bi-criteria Measure to Assess Supply Chain Network Performance for Critical Needs," in the session on Disruptive Event Management.

And Dr. Dmytro Matsypura will be traveling all the way from Sydney, Australia, where he holds the position of tenured lecturer at the University of Sydney to present the co-authored paper, "Margining Option Portfolios by Offsets with Two, Three, and Four Legs" in a Financial Engineering session.

In addition, Center Associate Dr. Padma Ramanujam of SAS Inc. will also be joining us at INFORMS in Austin, Texas.

I will be posting our presentations, as they become available, on the Visuals Page of the Supernetworks Center website.

Talks on Supply Chain Design, Earmarks for Humanitarian Operations, and Supply Disruptions Are Now Online

I am delighted to announce that the presentations in the session that I organized for the 2010 Computational Management Science conference that took place recently in Vienna, Austria are now online.

The talks cover such important and timely topics as supply chain network design for critical needs products, earmarks for humanitarian operations for disaster relief, and vulnerability and disruptions in supply chain networks. The talks are in pdf format and are downloadable.

I thank the invited speakers for their contributions.

Photos from the conference are available here.

The Supply Chain Network Design for Critical Needs with Outsourcing Paper is Now Published Online

Our paper, "Supply Chain Network Design for Critical Needs with Outsourcing," has now been made available online by the publisher, John Wiley & Sons, in the journal Papers in Regional Science.

With the number of disasters growing over the past decade as well as the number of people affected by disasters, the design of supply chain networks for critical needs products, such as water, food, and medicines, is of paramount importance. Such problems are uniquely challenging since the needs of the affected population should be met as closely as possible with the undersupply of food, water, and medicines, leading to loss of life. At the same time, the oversupply of products may also carry costs, due to unnecessary waste and even, possibly, environmental damage.

In fact, the United Nations is reporting in today's New York Times that the horrific floods in Pakistan are resulting in severe shortages of such critical needs supplies as food and water.

In our paper, we developed a mathematical model that allows for the optimal design of such supply chain networks at minimal total cost and with the satisfaction of the product demands at the demand points, as closely as possible.

Research on which this paper was based, which was conducted also by Professor Patrick Qiang and my doctoral student, Min Yu, was inspired by the Humanitarian Logistics: Networks for Africa Conference that I organized at the Rockefeller Foundation's Bellagio Center on Lake Como. The Rockefeller Foundation and this workshop are acknowledged in the paper. We also thank Professor Manfred Fischer of the Vienna University of Business and Economics for his support. Professor Fischer was my host in Vienna in March 2009 when I delivered the lecture, "Synergies and Vulnerabilities of Supply Chain Networks in a Global Economy."

2010 Computational Management Science Conference in Vienna, Austria

I am preparing my talks for the 2010 International Conference in Computational Management Science, which will take place in glorious Vienna, Austria, July 28-30, at the University of Vienna. I am very much looking forward to this conference.

Besides giving the invited keynote talk, "Supply Chain Networks: Challenges and Opportunities from Analysis to Design," I will also be presenting, "Supply Chain Network Design for Critical Needs with Outsourcing," which is based on the paper forthcoming in the journal, Papers in Regional Science, with my doctoral student, Min Yu, and Professor Qiang "Patrick" Qiang of Pennsylvania State University in Malvern.

The latter presentation will be given in the invited session: Supply Chains, Transportation and Networks that I organized. Other presenters in this session and their papers are:

Mr. Thomas Seyffertitiz of the Vienna University of Economics and Business (the largest business school in Europe) will be speaking on "Vulnerability and Disruption Analysis in Supply Chain Networks: A Layered Network Perspective;"

Professor Tina Wakolbinger of the Fogelman College of Business and Economics at the University of Memphis in Tennessee, will deliver the talk, "An Analysis of Impacts Associated with Earmarked Private Donations for Disaster Relief," which is based on joint work with Professor Fuminori Toyasaki of York University in Canada, and

Professor Patrizia Daniele of the Department of Mathematics and Computer Science at the University of Catania in Italy will present: "Supply Chain Networks and Infinite Dimensional Duality Theory."

The list of invited keynote speakers can be found here.

The program with accepted talks and schedule can be downloaded here.

Supply Chain Network Design for Critical Needs at NetSci2010

I will be at MIT for the NetSci2010 Conference over the next couple of days and will be presenting the paper, "Supply Chain Network Design for Critical Needs with Outsourcing." The paper has been accepted for publication in the journal, Papers in Regional Science. The presentation may be downloaded here. I will be going with one of my doctoral students, Min Yu, who is a co-author with me of the paper, along with Dr. Qiang "Patrick" Qiang.

The conference should be very interesting and the venue of the Media Lab should be perfect. I am looking forward to seeing many colleagues there.

Will be Speaking on Supply Chain Network Design for Critical Needs at NetSci2010

The NetSci2010 Conference will be taking place next week at the Media Lab at MIT, which is a gorgeous venue. I will be delivering the paper: Supply Chain Network Design for Critical Needs with Outsourcing, which is joint work with Dr. Patrick Qiang and my doctoral student, Min Yu.

The abstract of the paper is below:

Abstract: In this paper we consider the design of supply chain networks in the case of critical needs as may occur, for example, in disasters, emergencies, pending epidemics, and attacks affecting national security. By "critical needs" we mean products that are essential to the survival of the population, which can include, for example, vaccines, medicine, food, water, etc., depending upon the particular application. "Critical" implies that the demand for the product should be met as nearly as possible since otherwise there may be additional loss of life.

The model that we develop captures a single organization, such as the government or a major health organization or corporation that seeks to "produce" the product at several possible manufacturing plants, have it stored, if need be, and distributed to the demand points. We assume that the organization is aware of the total costs associated with the various operational supply chain network activities, knows the existing capacities of the links, and is interested in identifying the additional capacity outlays, the production amounts, and shipment values so that the demand is satisfied with associated penalties if the demand is not met (as well as penalties with oversupply, which are expected to be lower). In addition, the organization has the option of outsourcing the production/storage/delivery of the critical product at a fixed/negotiated price and with the capacities of those entities being fixed and known. The solution of the model provides the optimal capacity enhancements and volumes of product flows so as to minimize the total cost, which we assume to be a generalized cost, and can include time, subject to the demands being satisfied, as nearly as possible, under demand uncertainty.

Earthquake in Haiti and Critical Needs

The worst earthquake in two centuries hit Haiti, the poorest country in the western hemisphere, yesterday. The pain, suffering, and devastation are horrific. This natural disaster is creating havoc for humanitarian operations because of the destruction of much of the infrastructure, such as roads and hospitals, in the capital, which was the hardest hit. Interestingly, the World Food Program had stockpiled food supplies in Haiti in preparation for disasters, with hurricanes, being the most expected ones. It is now also airlifting food supplies. Haiti is on an island which is also home to the Dominican Republic.

Exactly one year ago, my daughter and her classmates at the Bement School in Deerfield, Massachusetts were packing up to go on their trip to the Dominican Republic to help out in an orphanage. This year's 9th grade class at Bement is also scheduled in early February to travel there. The airport in Santo Domingo in the Dominican Republic is now being utilized to assist in Haiti's recovery. Last year, with excitement and nervous anticipation, I let my daughter travel there on a community service mission, which deeply affected all those who took part. I wonder whether this year's trip will take place given the extreme seriousness of the disaster in Haiti. She had, this past weekend, completed a huge photo montage of memories from last year's trip to the Dominican Republic that a teacher was going to deliver to the orphanage. I, in the meantime, was busy working on a research paper with a co-author on the assessment of supply chain performance in the case of disasters (an ironically timely topic) for submission to a special issue of a journal on transportation network vulnerability.

Our hearts and prayers go out to all those affected by this earthquake.