Entropy assessment of supply chain disruption

Olatunde Amoo Durowoju, Hing Kai Chan, Xiaojun Wang

Research output: Journal PublicationReview articlepeer-review

36 Citations (Scopus)

Abstract

Purpose - Manufacturing organizations and networks are heavily dependent on the flow of information within and across organization boundaries. A disruption in information flow might interrupt the operations of the organization and make management even more difficult. The purpose of this paper is to incorporate information theory approach to investigate the perturbation introduced into a manufacturing organization as a result of disruption in the flow of critical information needed in manufacturing operations. Design/methodology/approach - This study proposes the use of entropy theory to assess the level of risk introduced by different sources of perturbation into the material flow stream and the use of discrete event simulation to investigate the impact of the resulting disruption on collaborating members. Findings - The result of the analysis carried out on the effect of system failure on supply chain performance revealed that the retailer experiences the most uncertainty in the supply chain while the holding cost constitutes the most unpredictable cost measure when a system failure breach occurs. For the manufacturer and wholesaler, the holding cost is responsible for most of the uncertainty in predicting the impact of the threat on inventory management cost, while the backlog cost holds the highest complexity level for the retailer. Practical implications - Once this methodology is well developed for use in industrial networks, it can serve as a risk assessment, risk monitoring and risk prediction tool. The paper also calls for a proactive approach to disruption risk management. Originality/value - This paper proposes a novel approach to assess the impact of information disruption, using entropy theory coupled with simulation methodology.

Original languageEnglish
Pages (from-to)998-1014
Number of pages17
JournalJournal of Manufacturing Technology Management
Volume23
Issue number8
DOIs
Publication statusPublished - 2012
Externally publishedYes

Keywords

  • Costs
  • Entropy assessment
  • Information technology
  • Manufacturing industries
  • Operational complexity
  • Operations and production management
  • Operations cost
  • Perturbation
  • Risk impact assessment
  • Simulation
  • Supply chain disruption
  • Supply chain management

ASJC Scopus subject areas

  • Software
  • Control and Systems Engineering
  • Computer Science Applications
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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