Optimised resilience measures for supply chain using portfolio selection

Abstract In this paper the portfolio selection theory of Markowitz is applied to the field of supply chain resilience using two simulations based on the empirical supply chain resilience data. The main objective of the paper is to explore how portfolio selection theory can be deployed to obtain an efficient portfolio of resilience measures that is optimised with a view in further research to minimise the area of the resilience recovery triangle. The paper begins with a discussion on causation analysis and the evolution in modelling resilience with a brief review of supply chain resilience and the literature related to Markowitz theory of portfolio selection in the supply chain literature. There follows a description of how to apply Markowitz theory of portfolio selection to supply chain resilience measures and two simulations are presented with their findings together with suggestions for further research. The proposed methodology helps to optimise resilience measures.