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

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...

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Bibliographic Details
Main Authors: Chong Hyun Park, Patil, L., Saitou, K., Romeijn, E.
Format: Conference Proceeding
Language:English
Subjects:
Automation
Computer applications
Costs
Decision making
Globalization
Product design
Robustness
Supply chains
Uncertainty
Virtual enterprises
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Summary: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.
ISSN:2161-8070
2161-8089
DOI:10.1109/COASE.2009.5234119