Managing Risks of Supply-Chain Disruptions: Dual ... - CiteSeerX

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AcknowledgementsI would like to express my gratitude toward my advisor Richard de Neufville for his guidance andsupport; his advice was very valuable to lead me through the often-complex process of drafting andcompleting a thesis. I am very grateful too for his faith in my capacity for completing the TPP master inone year.I would also like to thank the research group on “Supply Chain Response to Global Terrorism” at theCenter for Transportation and Logistics, led by Yossi Sheffi, which financially supported my work andmade my studies at MIT possible. This group constituted a friendly and intellectually stimulatingenvironment. A special thanks to Jim Rice and Federico Caniato who were always ready to help me.This work was also made possible thanks to Carole Joppin who continuously helped me with her insightsand with whom I had very interesting discussions on real options.I am deeply grateful to the French-American Commission that gave me the Fulbright fellowship. Thisconstituted a valuable financial help, but above all it allowed me to have the greatest exchanges I had thisyear with several students from all over the world.My year at MIT would not have been the same without my friends. I would like to thank AlexandreCosquer for being so helpful in many fields of my life, Pierre Poignant for being careful and generous,Paul Francois Cossa for his humour, Adam Smith for welcoming me so well in the US and making mediscover his country, Ardoin de Masin and Erwan Letanneur for being there at my arrival at MIT andbeing great journeymen in Florida, Eeleen Tan for her kindness and highly valuable help. I would alsolike to thank Johnny Ribeiro in France and Emmanuel Clement-Wiltz in Australia for always being therein spite of the distance, Manon Breuvart for her wise advice and all my friends, particularly Julien Guyonand Arnaud Le Foll, with whom I had memorable parties back in France. Special thanks for StephaneKillian for being kind, patient and present for me.I would also like to thank my parents, Anne and Marcel, for their constant support that enabled me toundertake the studies I dreamed of, my sisters Geraldine and Constance for being understanding andhelpful sisters. .4
Table of contentsAcknowledgements......................................................................................................................... 4List of Figures ................................................................................................................................ 8List of Tables .................................................................................................................................. 9Chapter 1 Introduction............................................................................................................ 111.1 How to Manage Uncertainty: General Framework...............................................................111.2 How to manage supply-chain disruptions: Chosen Approach..............................................14Chapter 2 How to Manage Supply-Chain Risks of Disruption? ........................................... 162.1 Literature Review .....................................................................................................................162.2 Assess Risk.................................................................................................................................172.3 Secure the Supply-Chain..........................................................................................................192.4 Build-in Resilience ....................................................................................................................202.5 Limitation to Resilience............................................................................................................242.6 Conclusions................................................................................................................................25Chapter 3 Multiple Sourcing Approach ................................................................................. 263.1 Simple or Multiple Sourcing: Theoretical Approach ............................................................263.2 Lean Manufacturing and Single Sourcing..............................................................................283.3 Multiple Sourcing as a way to fight against disruptions in supply.......................................303.4 Conclusion .................................................................................................................................31Chapter 4 Real Options Presentation ..................................................................................... 324.1 Definition ...................................................................................................................................324.1.1 Definition by similarity with financial options ......................................................................................324.1.2 The different types of option .................................................................................................................334.1.3 Option Value..........................................................................................................................................354.2 Real Option Valuation..............................................................................................................364.2.1 Traditional NPV.....................................................................................................................................364.2.2 Option Pricing Theory ...........................................................................................................................384.2.3 Real Option valuation techniques ..........................................................................................................39a) Contingent claim analysis......................................................................................................................39b) Dynamic programming..........................................................................................................................414.2.4 Numerical Methods ...............................................................................................................................435
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Page 8 and 9: List of FiguresFigure 1.1: Strategy
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investment costs are denotedIMainSu
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5.4 Programming on MatlabTo solve t
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Chapter 6Results of the ModelThis c
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uses the main supplier its profits
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drivers - in particular at the time
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what will happen. To hedge this dem
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6.5 Conclusions- Real options allow
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market share from its competitor.7.
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= 0.99 * ($100) + 0.01* (-$200)= $9
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Table 7.1: Assumption on Parameter
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7.2.4 Exploit at maximum real optio
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developed “ a general simulation
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(13) Lee, H.L., Wolfe, M. (2003),
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and Supply Management Course.(38) Z
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to reserve for the future, by maxim
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APPENDIX B: PARAMETER VALUES USED T
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normal or in disruption.The program
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% Probability of going from (m,k,j)
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elsevalue.DecOneNormal=3;end-------
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