BUS606: Operations and Supply Chain Management

The process of risk assessment and ranking of the supply chain can be done in 6 steps as follows.

7.1 The First Stage 

In this stage, a comprehensive questionnaire on supply chain risk breakdown structure (SCRBS) and 34 main risk of (R1 to R34) in Table 1 is shown as the third level risks and also 14 evaluation criteria (Table 1) were designed on the basis of the experts' group decision-making techniques in the form of several experts during several meetings.

7.2 The Second Stage 

After collecting the questionnaires to assess the agreement between the experts and, if necessary, delete or re-survey, internal correlation coefficient (ICC) calculated and according to Cronbach's alpha values obtained for comments. If alpha is greater than 0.7 shows good correlation and agreement among experts, if the value of alpha is between 0.7 and 0.5, indicating moderate agreement and if it is less than 0.5 weak correlation and coherence comments show that in this case, if necessary, re-survey will be carried out. The following comments assembly is done by using the mean.

7.3 The Third Stage

In this stage, primary criterion in accordance with the standards of risk management, the initial assessment is done. According to the criteria of likelihood of risk and the impact of risk on the main objectives of the project (chain), including timing, cost, quality, performance, and range of activities and different parts of the chain can be identified an primary index risk (PIR), for each risk (Connection 9).

$\mathrm{PIR}=\sum\left[\mathrm{W}_{\mathrm{i}}\left(\mathrm{P} \times \mathrm{I}_{\mathrm{i}}\right)\right]$                  (9)

P is the probability and I₁ to I₄ are impact of the risk on time, cost, quality, and range of the chain and also, W₁ to W₄ is weighs the importance of effective risk criteria in order of the time, cost, quality, and within the chain, which is determined according to experts and the sum of the weights is equal to one. PIR index for each of the 34 risks is obtained. In this stage use of this index may provide a preliminary ranking of risks. Can be seen that a simple definition and primary of the risk (probability × impact risk) lies in PIR index, but in addition to this advantage, the impact risk areas has been extended to four standard "time, cost, quality, and range" with different weights.

7.4 The Fourth Stage

As mentioned earlier, the use of conventional indicators of likelihood and effect, result alone does not provide a comprehensive, reliable, and credible result, so in this study, nine other complementary measures have been proposed to compensate for the shortage. At this stage experts on the 9 secondary indicators (additional) for each of the 34 risks considered and in order to the use of linear assignment method for evaluating and ranking the risks final, decision matrix with 34 rows of 340 elements (major risks) and 10 columns (primary and secondary indexes) is formed.

7.5 The Fifth Stage

At this stage weight of each of these parameters (W₁ to W₁₀) is calculated. As mentioned, in some Multiple Attribute Decision Making methods such as linear assignment criteria used to determine the relative importance of an effective and necessary step in the process of problem solving that in this study, the combination of experts and Shannon entropy method used for extraction and determination of the coefficients of the variables.

7.6 The Sixth Stage

At this stage risk rating of 34 (R1 to R34) on the basis of 10 indicators (including indicators and indices PIR SIR1 to SIR9), using linear assignment is done.

Table 1. Hierarchical structure of supply chain risks in 3 levels (including the main risk 34)

Table 2. Risk evaluation criteria (criteria primary including 5 and 9 additional criteria, a total of 14 criteria)