A Fuzzy Dynamic Inoperability Input- Output Model for Strategic Risk Management in Global Production Networks

Strategic decision making in Global Production Networks (GPNs) is quite challenging, especially due to the unavailability of precise quantitative knowledge, variety of relevant risk factors that need to be considered and the interdependencies that can exist between multiple partners across the globe. In this paper, a risk evaluation method for GPNs based on a novel Fuzzy Dynamic Inoperability Input Output Model (Fuzzy DIIM) is proposed. A fuzzy multi-criteria approach is developed to determine interdependencies between nodes in a GPN using experts’ knowledge. An efficient and accurate method based on fuzzy interval calculus in the Fuzzy DIIM is proposed. The risk evaluation method takes into account various risk scenarios relevant to the GPN and likelihoods of their occurrences. A 1 Corresponding author. Telephone: +44 24 77659181 Email addresses: [email protected] (A. Niknejad), [email protected] (D. Petrovic) 2 © 2016. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/ case of beverage production from food industry is used to showcase the application of the proposed risk evaluation method. It is demonstrated how it can be used for strategic decision making by evaluating alternative GPNs.