Supply chain management decisions, under service cost disruptions

Supply chain systems have become more vulnerable to disruptions. Once the disruptions happen, there will be a ripple effect through the supply chain. In this paper, we investigate a one-supplier-one-retaiter supply chain system which provide sservice to increase the customer demand. The unit cost of service provision variation often makes the service level different from what is planned, and then affects the production plan deviated. from the original production causing a deviation,cost. Assume the market demand is relevant to retail price and service level in a linear function, and the service cost function is quadratic. we show that how to effectively make optimal decisions to handle the service cost disruption in the centralized decision making mode. Our study results show that if the unit service cost change fluctuates in a small range, it is optimal to keep on executing the original plan.