Title :
Mitigating supply chain risk: A real options approach
Author :
Carbonara, N. ; Costantino, N. ; Pellegrino, R.
Author_Institution :
Dipt. di Meccanica, Mat. e Manage., Politec. di Bari, Bari, Italy
Abstract :
The purpose of this paper is to develop a framework for the quantification of the costs and benefits associated to these supply chain risk management strategies and of their potential impact on performance as well as on the risk profile of firms. To do this, we adopt a Real Options approach, where a real option is the "right but not the obligation" to choose a course of action and obtain an associated payoff. By using this approach, in this paper we develop a real options-based framework which models some of the most common supply chain risk management strategies in terms of real options, thus posing the base for the further evaluation of the costs and benefits associated to these strategies.
Keywords :
Monte Carlo methods; risk management; supply chain management; costs-benefit evaluation; firm risk profile; real options approach; supply chain risk management strategies; supply chain risk mitigation; Biological system modeling; Contracts; Monte Carlo methods; Risk management; Supply chains; Switches; Monte Carlo simulation; Real options; Supply chain risk; Supply chain risk mitigation strategies;
Conference_Titel :
Industrial Engineering and Engineering Management (IEEM), 2014 IEEE International Conference on
DOI :
10.1109/IEEM.2014.7058767