Decision support for optimal adaptation of product and supply chain systems based on real options theory

Author

Park, Chong Hyun ; Patil, Lalit ; Saitou, Kazuhiro ; Romeijn, Edwin

Author_Institution

Ind. & Oper. Eng. Dept., Univ. of Michigan, Ann Arbor, MI, USA

fYear

2009

fDate

22-25 Aug. 2009

Firstpage

316

Lastpage

321

Abstract

In order to remain profitable in the highly competitive global market, a manufacturing enterprise is expected to proactively adapt itself in anticipation of unplanned, but foreseeable high impact events. This paper presents a decision model for optimal adaptation of product and supply chain systems subject to sudden, severe changes in the operating environment. Extending our previous work, decision-tree based framework is developed for optimally choosing design-supplier alternatives in multi-product, multi-echelon product and supply chain systems based on the real options theory. A case study on a two-component, two-echelon supply chain is presented which highlights unique characteristics of product quality as compared to cost and time.

Keywords

decision trees; manufacturing industries; manufacturing systems; profitability; supply chain management; competitive global market; decision support; decision-tree based framework; design-supplier alternatives; manufacturing enterprise; multiechelon product system; multiproduct system; optimal product adaptation; product quality; real options theory; supply chain system; Automation; Computer applications; Costs; Decision making; Globalization; Product design; Robustness; Supply chains; Uncertainty; Virtual enterprises;

fLanguage

English

Publisher

ieee

Conference_Titel

Automation Science and Engineering, 2009. CASE 2009. IEEE International Conference on

Conference_Location

Bangalore

Print_ISBN

978-1-4244-4578-3

Electronic_ISBN

978-1-4244-4579-0

Type

conf

DOI

10.1109/COASE.2009.5234119

Filename

5234119