A network-based impact measure for propagated losses in a supply chain network consisting of resilient components

Abstract

The topology of a supply chain network affects the impacts of disruptions in it. We formulate a network-based measure of the impact of a disruption loss in a supply chain propagating downstream from an originating node. The measure takes into account the loss profile of the originating node, the structure of the supply network, and the resilience of the network components. We obtain an analytical expression for the impact measure under a beta-distributed initial loss (generalizable to any continuous distribution supported on the interval ), under a breakthrough scenario (in which a fraction of the initial production loss reaches a focal company downstream as opposed to containment upstream or at the originating point). Furthermore, we obtain a closed-form solution for a supply chain network with a -ary tree topology; a numerical study is performed for a scale-free network and a random network. Our proposed approach enables the evaluation of potential losses for a focal company considering its supply chain network structure, which may help the company to plan or redesign a robust and resilient network in response to different types of disruptions.