Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 2 (2014), No. 2, Pages 1-15

DOI: 10.12735/jfe.v2i2p01

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Assessing Supply Chain Risk with Few Compulsory Subcontractors

Dror Parnes1 

1College of Business, University of South Florida, Tampa, U.S.A.


To Cite this Article     Article Views: 1065     Downloads: 580  Since January, 2015


In this study we propose a supply chain risk analytical model that incorporates three compulsory subcontractors, which are structured in a two-layer formation, while fault recognition by the monitoring chief manufacturer might be delayed. We analyze this precise production line since it simultaneously covers both a sole mandatory supplier and a second production layer, which includes two subcontractors that can partially back up each other throughout the production. This specific configuration not only can assist future investigations in building different quantitative schemes, but this formation also is rather widespread across the semiconductor industry. We therefore present a current illustrative example from this sector. In addition, we authenticate the validity of the proposed model and examine several sensitivities within through multiple numerical simulations. We find that the expected time to the next production failure is mostly sensitive to output variations within the sole supplier, and least sensitive to temporary pauses in the information flow across the supply network.

JEL Classifications: C63, D24

Keywords: supply chain risk, production disruption, compulsory subcontractors, fault recognition, chief manufacturer

To Cite this Article: Parnes, D. (2014). Assessing supply chain risk with few compulsory subcontractors. Journal of Finance and Economics, 2(2), 1-15.

Copyright © Dror Parnes

Creative Commons License
This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Assessing Supply Chain Risk with Few Compulsory Subcontractors