1. The applications of BN in Supply Chain
Dai kun & Wang jiaqi

2. Supply Chain
a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer
A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.members of the supply chain try to provide customers with timely, reliable and high quality delivery of the right amount of products at low cost.

3. Risks in Supply Chain Internal risks
human errors, equipment failures, materials quality …
External risks
exchange rate changes, legislation, natural events
there are many kinds of risks that can affect the performance of the supply chain. The risks can be divided into two types, internal risks and external risks. Human errors, equipment failures, material quality and so on are internal risks. External risks are the risks such as exchange rate changes and nature events. Supply chain risk has been defined in many ways, all of which have the common theme of outcomes with a certain likelihood of occurrence and their potentially negative consequences.

4. Supply Chain Risk Management(SCRM)
Identify risks
Assess risks
Mitigate risks
Monitor risks
Aim: give strategies for reducing negative impacts and enhancing positive effects of risk.
People in the supply chain want to avoid risks to make the whole supply chain perform better, therefore, supply chain risk management(SCRM) comes into being.
SCRM is used to categorize risks and comprise of a series of proactive steps in order to identify, assess and mitigate risks. With the help of SCRM, supply chain managers can manage potential challenges, and prevent the destructive effects, by creating risk departments in organizations and identifying risks. The final aim of SCRM is to give strategies for reducing negative impacts and enhancing positive effects of risk.

5. Bayesian Network subjective causal relationships
---Relationships between risks and their impact
objective conditional probability distributions
---probability of the occurrence of the risk
A BN is an annotated directed acyclic graph that encodes probabilistic relationships among nodes of interest in an uncertain reasoning problem, it describes these probabilistic relationships. A BN consists of two primary components: the subjective causal relationships determined either by learning algorithms or expert opinion and the objective conditional probability distributions, so it is very appropriate to be used as a variety of risk models. BNs help supply chain managers have a precise supplier risk profiles. Each kind of risk is a node in the BN, we can know which kind of risk will affect the supply chain performance most seriously and determine the key suppliers having major potential impact on revenues of the organization after analysis.

6. Information Risks Information security breakdown Information sharing
leakage
reluctance in sharing information
Information sharing is quite important in supply chain while it may be the source of some risks. This paper focus on analyzing the various information risks within supply chains which can cause revenue impact. SCRM literature is lacking on information risk management. So this paper in attempting to provide a BN modeling approach for information risks in supply chain which are caused by external and internal factors.
In SCRM, information risk is defined from two perspectives: Information sharing perspective and IT infrastructure security perspective. Information sharing will cause information leakage risk, and for IT infrastructure security, risks will happen if there are IT infrastructure vulnerabilities . For example, the natural disasters will cause information breakdown which can impact the supply chain immediately. We focus on information sharing risks. This paper divides information risks in to two perspectives: security and sharing. Information breakdown is a security issue while information leakage and reluctance in sharing information are information sharing issue.

7. Information Risk – Research Model

8. Information Risk - Analysis
Top to bottom
Bottom to top
Propagation analysis
Sensitivity analysis
the model examines the probability of a company’s revenue impact on a company based upon the firms’ associated information breakdown, information leakages and information sharing risks.
a more backward approach (bottom to top) to diagnose the possible causes of variation in profitability due to information supply chain risk factors.
Propagation analysis using BBN helps managers to update the probability, when new data arrives.
Sensitivity analysis also explains the importance of various risk factors

9. Information Risk - Limitation
The difficulty of getting large enough data from current and potential suppliers.
The difficulty of guaranteeing the accuracy of data because of subjective of human.
A limitation related to the use of the BN methodology presented in this study is the ability to access the necessary data needed to construct the BNs. Depending on the established relationship, some companies may be reluctant to share risk profile data with their customers.
,the most important potential limitation is the supplier’s ability to provide accurate information regarding information breakdown, information leakages and limited information sharing risk factors. there must be willingness to periodically update this information in order to construct a risk profile that is valid and reliable. Managers hesitate to continually update due to deliberate inattention to various risk factors.

10. Supply Chain Operation Reference(SCOR)
a standard model for SCP evaluation which have uncertainty in its metrics
aims on combining qualitative and quantitative metrics of SCOR and use these uncertain metrics to build BN to measured supply chain performance.

11. SCOR Model - Performance Attributes
Customer- facing performance attributes
Reliability
Responsiveness
Flexibility
Internal-facing attributes
Cost
Assets
The SCOR model defines two types of performance attributes (SCOR, 2006). The customer- facing performance attributes which take reliability, responsiveness, and flexibility into account and the internal-facing attributes which includes cost and assets. It is important to note that, since the customer facing nodes were qualitative, distributions of them considered Rank with three states (Low, Medium, High). Also each child node constituted of the parent nodes with a special weight. The natures of internal facing nodes are quantitative and we estimated their distribution from historical data. All of these nodes have Normal distribution with their special mean and variance. Also child nodes are weighted mean of their parents with Normal distributions.

12. SCOR Model

13. Hybrid Framework – BN & Game Theory
Uncertainty in supply chain operations affects performance
BN : capture interdependency between risk factors and
Game theory : Model risks of misaligned objectives (conflicting incentives) among supply chain partners

14. Game Theory
Players (supply chain stakeholders) Rules of the game (policies, constraints) Complete set of actions or decisions for each player Outcomes or pay-o s resulting from each set of decisions
Simultaneous-Move Games
Sequential-Move Games
Nash equilibrium (both confessw)and subgame perfect equilibrium(L,LL)

15. Game Theoretic Analysis
direct costs& indirect costs
Misaligned objectives
Game theoretic risks
Fair strategy
After analyzing the strategic partnership, it is revealed that the partnership engendered misaligned objectives among the stakeholders that finally contributed to the game theoretic risks. As a result of this analysis, three nodes are identified namely ‘fair strategy’, ‘misaligned objectives’ and ‘game theoretic risks’. The qualitative and quantitative parts of the structure are determined for subsequent incorporation into the Bayesian network.

16. Basic framework
Initially, the key risk factors are identified within the supply chain followed by qualitative modeling of the Bayesian network. Game theoretic modeling of the conflicting incentives is carried out through a detailed analysis of available information in the form of policies and/or partnerships. The players are identified and their strategies are established followed by the determination of their pay-o s. Finally, game theoretic analysis is performed and results are incorporated in the Bayesian network in the form of a small network of ‘Game theoretic risks’. The ‘Game theoretic risks’ node is connected to an appropriate impact node and the conditional probability table of the child node is populated based on the game theoretic modeling results.

17. 1/Boeing perception
2/real time

18. Risk Propagation
Supply network & Risk graph

19. Risk Propagation Expected location risk contribution factor(ELRCF):
Propagation ratio:
The propagation ratio may be high while the ELRCF may be low
Shows how much risk spreads relative to its own loss at the location.

20. The propagation ratio may be high while the ELRCF may be low.

21. Summary and Q&A Part

22. Thank you!