Umeå University's logo

umu.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Fragmentation of production amplifies systemic risks from extreme events in supply-chain networks
Umeå University, Faculty of Science and Technology, Department of Mathematics and Mathematical Statistics. Evolution and Ecology Program, International Institute for Applied System Analysis, Laxenburg, Austria.ORCID iD: 0000-0001-9862-816x
2020 (English)In: PLOS ONE, E-ISSN 1932-6203, Vol. 15, no 12, article id e0244196Article in journal (Refereed) Published
Abstract [en]

Climatic and other extreme events threaten the globalized economy, which relies on increasingly complex and specialized supply-chain networks. Disasters generate (i) direct economic losses due to reduced production in the locations where they occur, and (ii) to indirect losses from the supply shortages and demand changes that cascade along the supply chains. Firms can use inventories to reduce their risk of shortages. Since firms are interconnected through the supply chain, the level of inventory hold by one firm influences the risk of shortages of the others. Such interdependencies lead to systemic risks in supply chain networks. We introduce a stylized model of complex supply-chain networks in which firms adjust their inventory to maximize profit. We analyze the resulting risks and inventory patterns using evolutionary game theory. We report the following findings. Inventories significantly reduce disruption cascades and indirect losses at the expense of a moderate increase in direct losses. The more fragmented a supply chain is, the less beneficial it is for individual firms to maintain inventories, resulting in higher systemic risks. One way to mitigate such systemic risks is to prescribe inventory sizes to individual firms—a measure that could, for instance, be fostered by insurers. We found that prescribing firm-specific inventory sizes based on their position in the supply chain mitigates systemic risk more effectively than setting the same inventory requirements for all firms.

Place, publisher, year, edition, pages
Public Library of Science , 2020. Vol. 15, no 12, article id e0244196
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-178961DOI: 10.1371/journal.pone.0244196ISI: 000603611900008PubMedID: 33370350Scopus ID: 2-s2.0-85098911647OAI: oai:DiVA.org:umu-178961DiVA, id: diva2:1527889
Available from: 2021-02-12 Created: 2021-02-12 Last updated: 2023-03-24Bibliographically approved

Open Access in DiVA

fulltext(1341 kB)104 downloads
File information
File name FULLTEXT01.pdfFile size 1341 kBChecksum SHA-512
30458b22bf8cb150388f3ab9d5b4125d099fd1039e9b06c2acac93223244b2241d9cc1cf7ba5d288727d8c3ed05a35792660e4652e2545251729249ef0b76c02
Type fulltextMimetype application/pdf

Other links

Publisher's full textPubMedScopus

Authority records

Brännström, Åke

Search in DiVA

By author/editor
Brännström, Åke
By organisation
Department of Mathematics and Mathematical Statistics
In the same journal
PLOS ONE
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 104 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

doi
pubmed
urn-nbn

Altmetric score

doi
pubmed
urn-nbn
Total: 240 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf