NSF Award
2440850
This EArly-concept Grant for Exploratory Research (EAGER) award will contribute to the prosperity and welfare of the nation’s defense and commercial industrial base by developing an innovating framework for strengthening supply chain of critical minerals. The US is 100 percent reliant on imports for at least 12 key minerals deemed critical by the US government, increasing exposure to a number of natural and geopolitical risks. These minerals play a significant role in developing products important to renewable energy and defense technologies, among other important sectors. Using the supply chain for manganese as a test case, this project will study strategies for companies in a distributed supply chain to form alliances to ensure continuity of product flow by promoting supplier stability and decreasing single source dependencies. Currently, supply chain participants act in self-interest for profit maximization, leading to potential inefficiencies in ensuring functionality and performance of the entire supply chain. By engaging in alliances via shared costs, the potential exists to reduce exposure to demand and price fluctuations and raw material supply disruptions and to improve supply chain performance. Such strategies place a premium on stable sourcing as opposed to low-cost sourcing and incentivize all supply chain participants to ensure end market product availability. The project develops new models and utility functions to quantify the value, benefit and cost associated with companies engaging in strategic cooperation. Additionally, the project will offer mechanisms to control commodity price volatility using financial instruments such as offtake agreements and minimum guaranteed purchase prices. The results of this research will offer a blueprint for companies to form associations and alliances with each other that encourage risk sharing among supply chain partners and offer a fair way of allocating the cost of resilience among them. This award will support the involvement of a graduate student and undergraduate student to advance the research agenda.<br/><br/>This project will develop a framework wherein companies in a supply chain are viewed as players in a cooperative game. Collaboration among two or more players of groups are called coalitions where the assertion that the maximum benefit of cooperation can be realized by partaking in the grand coalition (group of all players) will be assessed. Notably, the study will quantify the cost of resilience defined as additional capacity built into the supply chain network by means of chaining and containment that offers benefit of stability to all entities in the network. The project focuses on developing fair cost allocation schemes using proportional allocations methods and advanced game-theoretic methods such as Shapley Value and Least Core. Novel optimization approaches are employed to enforce fairness as constraints of the model during cost allocation with the goal of maximizing the incentive to participate in a grand coalition for each company. Profit and Loss functions for players are developed using method of least squares comprising of linear and non-linear regression. These cost functions will predict commodity prices based on the value of the refined product in the open market, which in turn will serve as an indicator of viability in cooperation among players in the game. The project will validate methods by conducting a case study on purchase and sale of manganese and its refined products with its largest application area in the steel industry.<br/><br/>This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.
