BUS606: Operations and Supply Chain Management

Statistical population of this study was to evaluate the risk of the steel supply chain, different parts of a supply chain, including supply, production, and distribution are the parts for a case study in this research include: Esfahan Steel Company, affiliated companies, including companies, suppliers of raw materials (such as iron ore mines Mishdavan, Chadormalu, Sangan, Bafg, and Tabas Coal Company, Inc. mines manganese, etc.), as well as major buyers of products (cooperatives ironmongery) companies. Esfahan Steel Company located in 45 km south-west of Isfahan and its administrative work began in 1967 and is the first and largest manufacturer of structural steel and rail in the process of steel production in the integrated blast furnace with a capacity of 8.2 million tons by the end product produces a variety of steel construction and industrial. According to the program, the usage of the balance, the company produced 6.3 million tons per year will be increased. In addition to the domestic market, this company exports manufactures products to more than 23 countries in Europe, Asia, and Africa. With regard to the form of (1) evaluation and ranking of risk factors in Isfahan Steel Company as a case study in the steel supply chain, in the form of the following 5 steps:

8.1 The First Stage

Questionnaire includes 34 rows and 14 columns that line this table contain 34 main risks and the columns containing various indicators to assess the risk. (Table 2) Opinions of the experts were collected by taking advantage of group decision-making techniques such as Delphi and brainstorming techniques in 6 groups of experts, senior experts, and heads of units and various parts Steel Complex, a total of 30 individuals. The first group includes5 experts from the purchase and supply of raw materials, the second group includes four members of the commission transactions, the third group consists of 6 units Order materials, the fourth group includes consultants and laboratory, the fifth group consists of 6 members of the technical operation of the company and finally the sixth group consists of 5 members of the department of Industrial Engineering. Poll scoring in relation to each of the Heptathlon indicators for each of the risks is made based on the spectrum of the table (3).

Table 3: Spectrum rated and linguistic variables for the value of criteria for each risk

8.2 The Second Stage

After collecting the questionnaires at this stage to assess the degree of agreement Comments 6 Group of Experts in relation to any risk, using software from SPSS, ICC coefficients were calculated for each of the risks and results of Cronbach's alpha of 0.706 and 0.950 respectively and therefore shows good correlation and agreement among Opinions of the experts, it was the accumulation of comments using the average.

8.3 The Third Stage

At this stage, in order to calculate the PIR (Equation 6), the amount of W₁ to W₄, was determined based on the opinion of experts respectively, 0.35, 0.4, 0.1, and 0.15. The results is shown in the table (4), based on these indicators can be set to a preliminary ranking of the risks.

8.4 The Fourth Stage

At this stage, taking into account the Opinions of the experts on the amount of supplemental index 9 (SIR1 to SIR9) for each of the 34 risks, with the index PIR (calculated in the previous step), decision matrix consisting of 34 rows of 340 elements (the main risks) and 10 columns (primary and secondary indexes) is formed. (Table 5) 

8.5 The Fifth Stage

At this stage weight of each indicator (W₁ to W₁₀) is obtained based on a combination of expert opinion and the method of Shannon entropy (relations 1 to 5). (Table 6) Scoring spectrum of criteria to determine weights for the survey of experts on a range of variables that Heptathlon words include: Very high, high, medium high, medium, medium low, low and very low and commensurate with variable expression values, including: 1, 0.9, 0.7, 0.5, 0.3, 0.1 and zero.

8.6 The Sixth Stage

At this stage, risk rating of 34 based on 10 indices (indices and indicators PIR SIR1 to SIR9) is done using linear assignment. Stages of application of this technique are as follows:

8.6.1 The First Step

Determine the level of risk for each of the indicators in the form of a matrix (10 × 34) with its row indicates ranking and column shows the index. (Table 7)

8.6.2 The Second Step

Allocation matrix or gamma matrix $(\gamma)$, is a $34 \times 34$ square matrix that the row is risk i and column is $\mathrm{k}$ ranking. Component matrix $\gamma\left(\gamma_{i k}\right)$ is the total weight of indices with risk i in grade k. Part of this process for ranks 1 to 17 in the table (8) is provided.

8.6.3 The Third Step

Calculate the optimal solution (final ranking) using linear programming through the following model:

$\operatorname{Max} Z=\sum\limits_{\mathrm{i}=1 \mathrm{k}=1}^{34} \sum\limits_{\mathrm{ik}}^{34} h_{\mathrm{ik}}$      (10)

$\sum\limits_{\mathrm{k}=1}^{34} \mathrm{~h}_{\mathrm{ik}}=1 \quad, \mathrm{i}=1,2, \ldots \ldots, 34$                      (11)

$\sum\limits_{\mathrm{i}=1}^{34} \mathrm{~h}_{\mathrm{ik}}=1 \quad, \mathrm{k}=1,2, \ldots \ldots, 34$                      (12)

$h_{i k}=0 \, or \, 1$

Given that the decision variables values are zero or one, the output of this program for the numerical values indicating the level of risk is required. For example, h (1, 7) indicates the place to solve the problem due to the large volume (1156 decision variable) software for risk 7 (1) and h (2, 28) indicate the level of risk (2) is 28. Accordingly ranking risks according to this table (9) is provided.