MT498 Unit 8 Risk and Resilience Assessment Example

Days to Survive Against Days to Recover: An MT498 Unit 8 Risk and Resilience Assessment for Lowry Filter

[Student Name]

Purdue University Global

MT498: Bachelor's Capstone in Supply Chain Management

Unit 8 Risk and Resilience Assessment

[Instructor Name]

[Date]

Lowry Filter Company, its suppliers, sites and every figure are composite; the sources cited are real.

Method

Two measures are used throughout. Time to survive is the number of days a node's stock lets the network keep serving customers after a link fails. Time to recover is the number of days until the failed link returns to normal. Simchi-Levi et al. (2014) proposed ranking disruptions by comparing these two clocks, and the assessment follows them: the gap between recovery and survival, not the size or drama of the event, sets the priority. Disruptions are chosen from the redesigned network map, one for each type of node and lane, rather than from headlines. Each is worked the same way: likely duration, days of cover at that point, the gap between them, the cost of riding it out and a mitigation. Sheffi (2005) found that companies tend to prepare for vivid, rare events while overlooking ordinary ones, such as a supplier's equipment failure, that happen more often and last longer. Working every node by the same two clocks is meant to correct that bias, so that a plain-looking lane gets the same scrutiny as a dramatic one.

The Busiest Lane

About 4.1 truckloads a week leave the Groveport site for the five home-center distribution centers, the network's heaviest lane after the redesign. If a highway closure forced a detour of about 85 miles on each trip, the extra miles at $2.40 would cost about $834 a week. If the regular carrier could not cover the detour, a backup carrier at a 14 percent spot premium would add about $357 a week. Neither opens a stock gap, because the distribution centers hold their own inventory and deliveries continue, only more expensively. A two-week closure costs under $2,400.

The Quiet Lane That Matters

Only about 77.6 truckloads of standard media a year run from the Hickory mill to Ohio, a small lane on the map, yet one mill supplies all of the company's standard media, for both plants. Mill outages from a fire, a major equipment failure or a flood typically take weeks to repair; the assessment uses 35 days, based on the mill's own account of its last major repair. Against that, Ohio holds 21 days of media and Salina 14. The gaps are 14 days in Ohio and 21 in Kansas, during which lines would stop.

The smallest lane on the map carries the largest gap in the network.

An Ohio Site Outage

If the Groveport site were out for eight weeks, Salina would make all 650,000 cases on a third shift. Its three remaining lines, running three shifts over a 50-week year, can make about 756,000 cases, so the full volume would use about 86 percent of capacity. Salina needs about six days to staff a third shift, and the Ohio site's finished stock and the stock in transit cover about 17 days, so no gap opens. The cost is a third-shift premium and the old trailer run east for eight weeks of eastern volume, about $135,800 per event.

This mutual backup is the redesign's largest resilience gain, and it deserves plain credit. Today's network has one plant; a twelve-week Salina outage would run against 36 days of stock in the pipeline, leaving a 48-day gap and about 85,479 cases unmade. After the redesign, either plant can carry the whole network while the other recovers.

The Port

Since the Unit 6 seminar, the design already absorbs an eleven-week Baltimore closure: five weeks of premium media held in Groveport plus a standing Norfolk booking leave no gap, for roughly $3,850 a year.

Pricing the Mill Fix

Two mitigations for the mill are priced. The first raises media buffers to 35 days at both plants. That adds about 29,800 cases' worth of materials, worth about $548,000, which at the 22 percent carrying rate costs about $120,641 a year, and it covers only outages up to 35 days. The second qualifies a second standard media mill and splits orders between the two. Qualification, including test runs and filter certification, costs about $68,000 once, and the second mill's higher price adds about $59,800 a year. Sheffi and Rice (2005) distinguish redundancy, holding extra stock, from flexibility, having more than one way to supply, and note that flexibility often protects against longer disruptions at lower cost. The assessment recommends the second mill: it costs half as much each year and protects against outages of any length.

What Is Not Covered

Cyber attacks on the order system, a carrier bankruptcy and a strike at either plant are acknowledged but not modeled; each can be framed as a node losing capacity for a set number of days and worked the same way when the company has duration estimates. The single-mill exposure exists under every option, including today's network, so its fix is reported separately rather than charged to the Ohio design.

References

Sheffi, Y. (2005). The resilient enterprise: Overcoming vulnerability for competitive advantage. MIT Press.

Sheffi, Y., & Rice, J. B., Jr. (2005). A supply chain view of the resilient enterprise. MIT Sloan Management Review, 47(1), 41-48.

Simchi-Levi, D., Schmidt, W., & Wei, Y. (2014). From superstorms to factory fires: Managing unpredictable supply-chain disruptions. Harvard Business Review, 92(1/2), 96-101.