From Superstorms to Factory Fires
Managing Unpredictable Supply-Chain Disruptions. by David Simchi-Levi, William Schmidt, and Yehua Wei
TRADITIONAL METHODS FOR managing supply chain risk rely on knowing the likelihood of occurrence and the magnitude of impact for every potential event that could materially disrupt a firmâs operations. For common supply-chain disruptionsâpoor supplier performance, forecast errors, transportation breakdowns, and so onâthose methods work very well, using historical data to quantify the level of risk.
But itâs a different story for low-probability, high-impact eventsâmegadisasters like Hurricane Katrina in 2005, viral epidemics like the 2003 SARS outbreak, or major outages due to unforeseen events such ...
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