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Conference Paper: Disruption and Rerouting in Supply Chain Networks
Title | Disruption and Rerouting in Supply Chain Networks |
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Authors | |
Issue Date | 2021 |
Citation | 2021 The Institute for Operations Research and the Management Sciences (INFORMS) Annual Meeting, Virtual Meeting, Anaheim, CA, USA, 24-27 October 2021 How to Cite? |
Abstract | We study systemic risk in a supply chain network where firms are connected through purchase orders. Firms can be hit by cost or demand shocks, possibly leading to defaults. These shocks propagate through the supply chain network via input-output linkages between buyers and suppliers. Firms endogenously take contingency plans to mitigate the impact generated from disruptions. We show
that, as long as firms have large initial equity buffers, network fragility is low if both buyer and supplier diversification is low. We argue that horizontal mergers may lead to a more fragile network if firms have small initial equity buffers. We find that a single sourcing strategy is beneficial for a firm only if the default
probability of the firm's supplier is low. Otherwise, a multiple sourcing strategy is ex-post most cost effective for a firm.
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Description | Technical Session VTC29: Risk and Technology in Financial Services |
Persistent Identifier | http://hdl.handle.net/10722/312464 |
DC Field | Value | Language |
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dc.contributor.author | Chen, PC | - |
dc.contributor.author | Capponi, A | - |
dc.contributor.author | Birge, JR | - |
dc.date.accessioned | 2022-04-27T02:27:43Z | - |
dc.date.available | 2022-04-27T02:27:43Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | 2021 The Institute for Operations Research and the Management Sciences (INFORMS) Annual Meeting, Virtual Meeting, Anaheim, CA, USA, 24-27 October 2021 | - |
dc.identifier.uri | http://hdl.handle.net/10722/312464 | - |
dc.description | Technical Session VTC29: Risk and Technology in Financial Services | - |
dc.description.abstract | We study systemic risk in a supply chain network where firms are connected through purchase orders. Firms can be hit by cost or demand shocks, possibly leading to defaults. These shocks propagate through the supply chain network via input-output linkages between buyers and suppliers. Firms endogenously take contingency plans to mitigate the impact generated from disruptions. We show that, as long as firms have large initial equity buffers, network fragility is low if both buyer and supplier diversification is low. We argue that horizontal mergers may lead to a more fragile network if firms have small initial equity buffers. We find that a single sourcing strategy is beneficial for a firm only if the default probability of the firm's supplier is low. Otherwise, a multiple sourcing strategy is ex-post most cost effective for a firm. | - |
dc.language | eng | - |
dc.relation.ispartof | INFORMS 2021 Annual Meeting | - |
dc.title | Disruption and Rerouting in Supply Chain Networks | - |
dc.type | Conference_Paper | - |
dc.identifier.email | Chen, PC: pcchen@hku.hk | - |
dc.identifier.authority | Chen, PC=rp02220 | - |
dc.identifier.hkuros | 330204 | - |