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

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to reserve for the future, by maximizing the expected value of the portfolio.The paper of Martinez-de-Albeniz presents two types of result. First it characterizes the optimalreplenishment policies and then it provides structural properties of the portfolio. In case of a singleperiod model, it even derives closed form expressions that can be easily solved.Martinez-de-Albeniz, in particular, expands its study to disruption management. Improving hismodel, he defined a random variable A in [0,1] so that the amount that can be ordered by themanufacturer from the contract is no more than Ax (where x is the maximum capacity, defined aspreviously). To model disruption, A is such that it takes the value 0 with probability p, and 1otherwise. He defines new optimality equations, and in the particular case of a single period and anexponentially distributed demand he derives n closed form equations that permit to determineeasily the optimal n-uplet x , x ,..., x ) .(1 2 nIn particular he solves the problem posed in Sheffi (2001). A high technology company sellsmedical devices made by a contract manufacturer in Malaysia. The Malaysian supplier delivers thedevices at $100 a piece and the devices are sold by the US company at $400 each. Fixed costs,including marketing and setup, have been estimated at $200 per device. The company estimatedthat there is a 1% probability that the Malaysian supplier will not be able to deliver for an extendedperiod (that was modeled as a single period in Albeniz’s paper). A local supplier can deliver thesame devices for $150 each.Using the previous notations we have:vv12= 100, w1= 150, w2= 0, A1= 0, A⎧0 w.p. α ⎫= ⎨ ⎬⎩1 w.p.1-α⎭2= 1 w.p.1Assuming that the demand is exponential with probability 1, Figure A.1 presents the optimalcapacities to reserve toward each supplier, according to the disruption probability.82
Figure A.1: Optimal portfolio quantities as a function of the disruption probability α83
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Managing Risks of Supply-Chain Disr
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AcknowledgementsI would like to exp
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4.2.5 Conclusions .................
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List of FiguresFigure 1.1: Strategy
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Chapter 1Introduction.Modern supply
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- Levels 2 and 3--between these two
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5. In terms of implementation, Forr
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Some articles focus precisely on di
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2.3 Secure the Supply-ChainThere ar
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1) Firms need to build a resilient
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at ports and airports and along the
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2.6 Conclusions- Increase the secur
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The most adapted approach (single V
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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 56 and 57: 5.4 Programming on MatlabTo solve t
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 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 96 and 97: -----------------------------------
Page 98 and 99: elsevalue.DecOneNormal=3;end-------
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