Journal Name:
- Journal of Industrial Engineering and Management
| Author Name | University of Author | Faculty of Author |
|---|---|---|
Abstract (2. Language):
Purpose: Recent years have witnessed the pervasive supply disruptions and their impacts on
supply chain performance. It is significant for enterprises to adopt comprehensive measures to
cope with supply disruptions. The purpose of this study is to investigate how BI insurance
makes up the shortage of emergency supply and affect the expected profit of enterprises.
Design/methodology: This study develops the penalty cost function on the basic of the
financial costs caused by the interruption losses, introduces variables of BI insurance and
operational measures, establishes the profit model with BI insurance or not.
Findings: Through the proof and analysis, it is demonstrated that BI insurance can mitigate
the adverse effect of the increasing cost for expected profit. And this study finds that the value
of BI insurance is higher when interruption probability is lower and penalty coefficient is
higher.
Originality/value: In this study, it is investigated that the impact of business interruption (BI)
insurance on supply disruptions and its complementary value against the higher purchase cost
of emergency sourcing strategy. BI insurance is an efficient measure for supply interruption and
should be adopted correctly to play a role in managing supply disruption risk.
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