Evaluating Supply Chain Resilience During Pandemic Using Agent-based Simulation

TL;DR

This paper introduces an agent-based simulation model combining epidemiological and economic factors to evaluate supply chain resilience strategies during pandemics, providing insights for better preparedness and decision-making.

Contribution

It presents a novel integrated simulation framework and machine learning approach to identify near-optimal supply chain resilience strategies amid pandemic uncertainties.

Findings

Balanced resilience strategies outperform extreme ones in various scenarios.

Supply chain resilience strategies are sensitive to initial pandemic and economic conditions.

Machine learning can effectively estimate near-optimal resilience strategies for firms.

Abstract

Recent pandemics have highlighted vulnerabilities in our global economic systems, especially supply chains. Possible future pandemic raises a dilemma for businesses owners between short-term profitability and long-term supply chain resilience planning. In this study, we propose a novel agent-based simulation model integrating extended Susceptible-Infected-Recovered (SIR) epidemiological model and supply and demand economic model to evaluate supply chain resilience strategies during pandemics. Using this model, we explore a range of supply chain resilience strategies under pandemic scenarios using in silico experiments. We find that a balanced approach to supply chain resilience performs better in both pandemic and non-pandemic times compared to extreme strategies, highlighting the importance of preparedness in the form of a better supply chain resilience. However, our analysis shows that the exact supply chain resilience strategy is hard to obtain for each firm and is relatively sensitive to the exact profile of the pandemic and economic state at the beginning of the pandemic. As such, we used a machine learning model that uses the agent-based simulation to estimate a near-optimal supply chain resilience strategy for a firm. The proposed model offers insights for policymakers and businesses to enhance supply chain resilience in the face of future pandemics, contributing to understanding the trade-offs between short-term gains and long-term sustainability in supply chain management before and during pandemics.