Uncertainty propagation in a supply chain or supply network

• Supply-side uncertainty in an SC/SN with a multi-echelon supply process is investigated.
• In this SC/SN the phenomenon of uncertainty propagation is introduced and quantified.
• Reliable flow plan against the propagation of demand and supply side uncertainties is presented.
• Problems are formulated and solved as mixed integer nonlinear mathematical models.

A supply chain is characterized by uncertain demands (demand-side uncertainty) and uncertainties associated with the performances of the production facilities (supply-side uncertainty). In this paper, a method is proposed to plan production in a supply chain with a multi-echelon supply process with unreliable production facilities working in markets with uncertain demand. In such a system it is necessary to consider the global and cumulative effects on the performance of the entire supply chain. We introduce the salient features of uncertainty propagation in supply chains and demonstrate their impact quantitatively using a test problem from the automotive industry.