Firms have a range of strategies for managing disruptions (see,e.g.,
Tomlin,2006). Our focus in this paper is on the use of inventory to
mitigate the impact of disruptions. Inventory managers who ignore
the risk of supply disruptions will encounter excess costs when
disruptions occur,in the form of stockout costs,expediting costs,
and loss of goodwill.On the other hand,disruptions at a given
location are typically relatively infrequent,so holding too much extra
inventory is costly,as well.An effective inventory policy should strike