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

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5.4 Programming on MatlabTo solve the sequence of computations we used MATLAB. A lattice, as represented on Figure 5.1,models the demand evolution.Figure 5.1: Demand Model - Lattice TreeFor each node, the firm can either be in the normal or disruption states, and the program calculatesthe values of the sourcing strategy in both situations. It is important to notice that the value in thedisruption state depends on the past; indeed the probabilities of going in the next state depend onthe moment of the last disruption. As a result, at t, for any demand node, the program does tcalculations in order to take into account all the possible states of disruption, and one calculation totake into account the normal state. As there are t nodes at t, the number of calculations is( t + 1) *per period. To cover the whole tree, the programs doesT32 T ( T + 1) T ( T + 1)(2T+ 1) TΣ ( t + t ) = +≈ calculations.i=126T∞3This high idea of size is due to the fact that the process is path dependent, and as a result runningthe program may take a few minutes.The detailed MATLAB program is presented in Appendix C.t56
5.5 Discussion on the methodologyTo tackle this problem writing and solving stochastic equations is difficult as the value at t dependson the past and more particularly on the moment of the last disruption. Such a numerical approach,as binomial lattices, makes the resolution easier.This methodology can also be used to quantify other flexible strategies that firms could envisage inorder to avoid disruptions. For example, firms could rely on this approach to determine the optimalsafety stock to cover against disruption shortages.57
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Managing Risks of Supply-Chain Disr
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AcknowledgementsI would like to exp
Page 6 and 7: 4.2.5 Conclusions .................
Page 8 and 9: List of FiguresFigure 1.1: Strategy
Page 11 and 12: Chapter 1Introduction.Modern supply
Page 13 and 14: - Levels 2 and 3--between these two
Page 15 and 16: 5. In terms of implementation, Forr
Page 17 and 18: Some articles focus precisely on di
Page 19 and 20: 2.3 Secure the Supply-ChainThere ar
Page 21 and 22: 1) Firms need to build a resilient
Page 23 and 24: at ports and airports and along the
Page 25 and 26: 2.6 Conclusions- Increase the secur
Page 27 and 28: The most adapted approach (single V
Page 29 and 30: suppliers’. The main objective of
Page 31 and 32: Some people continue to think that
Page 33 and 34: For example, there is no market for
Page 35 and 36: 4.1.3 Option ValueJust like a finan
Page 37 and 38: - I0: initial investmentThe problem
Page 39 and 40: Re plicating portfolio in the up st
Page 41 and 42: Let’s consider a portfolio compri
Page 43 and 44: The differential equation is quite
Page 45 and 46: value of the cash flows of the proj
Page 47 and 48: update their option management stra
Page 49 and 50: Chapter 5OptionModeling Dual-Sourci
Page 52 and 53: We will describe the firm’s curre
Page 54 and 55: investment costs are denotedIMainSu
Page 58 and 59: Chapter 6Results of the ModelThis c
Page 60 and 61: uses the main supplier its profits
Page 62 and 63: drivers - in particular at the time
Page 64 and 65: what will happen. To hedge this dem
Page 66 and 67: 6.5 Conclusions- Real options allow
Page 68 and 69: market share from its competitor.7.
Page 70 and 71: = 0.99 * ($100) + 0.01* (-$200)= $9
Page 72 and 73: Table 7.1: Assumption on Parameter
Page 74 and 75: 7.2.4 Exploit at maximum real optio
Page 76 and 77: developed “ a general simulation
Page 78 and 79: (13) Lee, H.L., Wolfe, M. (2003),
Page 80 and 81: and Supply Management Course.(38) Z
Page 82 and 83: to reserve for the future, by maxim
Page 84 and 85: APPENDIX B: PARAMETER VALUES USED T
Page 86 and 87: normal or in disruption.The program
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Page 92 and 93: % Probability of going from (m,k,j)
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Page 98 and 99: elsevalue.DecOneNormal=3;end-------
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