ARCHIVES - Analyzing Flexibility in Global Supply Chains

Analysis and coordination of global supply chain networks is a complex task for managers of multinational firms. Dr. Arnd Huchzermeier, of the Graduate School of Management at WHU Kobenz, Germany, has put together a tutorial, which examines critical issues related to the management of global manufacturing and distribution networks. The tutorial focuses on the benefits of operational and managerial flexibility in the coordination of a multistage supply chain network.

A straight forward case study is used to convey the principles of supply chain network modeling and optimization. The tutorial starts with a simple production distribution model to minimize costs and adds real world global supply chain issues one at a time. With each new issue the tutorial illustrates the changes in the model's formulation and the effect on the solution. The issues addressed include the addition of import duties, market prices, tax considerations, transfer prices, and exchange rate risk considerations.

The tutorial goes on to quantify the option value of managerial flexibility in the face of both demand and price/exchange rate uncertainty. The value is derived from the manager's ability to postpone production and distribution decisions until market demand and price/exchange rates are known with certainty. The tutorial illustrates how the option values are computed by scenario or stochastic programming models as well as Monte Carlo simulation.

A total of 29 different What'sBest! and LINGO models used in the tutorial can be downloaded from the web at

For more information on What'sBest! or LINGO, please see the product pages. You can also download a demo version from our download page or order a full blown version directly from our order page.