Inventory Model with Supply Disruption Risk and Service Level Constraint

We develop a newsvender model with service level constraint for oneproduct and multi-supplier system, where the supplies are susceptible to disruption risks. We prove the convexity of the programming problem,and provide the necessary and sufficient conditions for the optimal order quantities. Through analysis or numerical experiments we observe the effects of the disrupt risk and the service level constraint on the optimal policy. We propose some managerial insights in managing the multi-source supply chain with disruption risks.