Importance of Flexible Production System to Control Cybersecurity Investment Dependent

With the available internet and its facility, even physical stores rely on digital systems for transactions and storing data digitally. Therefore, there is a risk of cyberattacks leading to data breaches and customer identity theft from physical stores. Cyberattacks have devastating effects on both customers and retail stores, as both may face financial losses. Further, the retail store loses customers’ trust, reducing demand and total profit. Based on this, the study formulates a mathematical model to mathematically and numerically show the importance of cybersecurity investment for a profitable retail business by keeping data and transactions safe. A supply chain model is formulated with a retailer as a downstream player and two manufacturers as an upstream player, where manufacturers produce a single type of deteriorated product. This study finds an optimal cybersecurity investment for the retailer under a variable pricing strategy and advertisement policy to get the maximum profit. The formulated profit function is a highly nonlinear, unconstrained function solved using a classical optimization technique. The robustness of the result is tested through sensitivity analysis of input parameters. Results indicate that the cybersecurity investment increases the total profit by 3.95%.