SSPLAXSupplier Disruption Recovery
A critical component supplier goes down for a multi-week outage. Over an eight-week recovery horizon, the team starts with 6,000 units of component safety stock and owes about 4,000 units a week of orders split across three penalty tiers — a small strategic tier, a standard tier, and a long-tail tier. Three recovery levers are available: expedited air freight (capped and premium-priced), a backup supplier that cannot ship until it qualifies in week 4, and the primary line returning in week 7. Every lever costs money; every unshipped order costs a contractual penalty.
Across the outage, which orders can we protect — and what sequence of safety stock, expedited freight, and backup sourcing minimizes total penalties plus recovery cost?
The model runs eight weekly periods. Component safety stock is a queue seeded with starting inventory that carries across weeks and drains as production consumes it. Primary and backup capacity are time-gated — primary at zero during the outage, backup at zero until it qualifies. Each tier’s weekly orders are met either by assembled product or by an explicit penalty arc priced at that tier’s contractual penalty, so minimizing total cost selects the recovery sequence and reveals which tier absorbs the shortfall.
- Safety stock drains by week 3
- Backup supplier offline until week 4
- Assembly capacity binds during recovery
Safety stock plus a single-week expedite bridge holds the two highest-penalty tiers until the backup supplier qualifies. The long-tail Tier 3 is the shock absorber: because expedited freight costs more per unit than Tier 3’s penalty, the cost-optimal plan never flies product in for it — Tier 3 slips for most of the outage and only recovers when the primary line returns.