IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-3-540-26993-9_31.html
   My bibliography  Save this book chapter

The Real Option Value of Operational and Managerial Flexibility in Global Supply Chain Networks

In: Risk Management

Author

Listed:
  • Arnd Huchzermeier

    (WHU)

Abstract

The analysis and the coordination of global supply chain networks is of great interest to managers of globally operating firms. This tutorial addresses important issues related to the management of global manufacturing and distribution networks. In particular, the benefit of operational and managerial flexibility is examined in the context of the coordination of a multi-stage supply chain network and the deployment of real options. We demonstrate i) that the value of operational flexibility can be exploited, e.g., through global coordination, transfer pricing and knowledge transfer, and ii) that the option value of managerial flexibility can enhance the firm’s shareholder value and reduce its downside risk exposure, e.g., through distribution postponement or stochastic recourse. A wellpublished Harvard case study is utilized to illustrate how these benefits and option values can easily be quantified. In teaching and in practice, global supply chain network analysis can be supported effectively through the use of spreadsheet addins, such as Monte Carlo simulation and (non-linear) optimization tools. We discuss briefly the differences between operational and financial hedging. The corresponding spreadsheet models can be downloaded by accessing the following internet address: http://www.whu.edu/prod.

Suggested Citation

  • Arnd Huchzermeier, 2005. "The Real Option Value of Operational and Managerial Flexibility in Global Supply Chain Networks," Springer Books, in: Michael Frenkel & Markus Rudolf & Ulrich Hommel (ed.), Risk Management, edition 0, pages 609-629, Springer.
  • Handle: RePEc:spr:sprchp:978-3-540-26993-9_31
    DOI: 10.1007/3-540-26993-2_31
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wiedenmann, Susanne & Geldermann, Jutta, 2015. "Supply planning for processors of agricultural raw materials," European Journal of Operational Research, Elsevier, vol. 242(2), pages 606-619.
    2. Larry J. LeBlanc & Michael R. Galbreth, 2007. "Implementing Large-Scale Optimization Models in Excel Using VBA," Interfaces, INFORMS, vol. 37(4), pages 370-382, August.
    3. Goh, Mark & Lim, Joseph Y.S. & Meng, Fanwen, 2007. "A stochastic model for risk management in global supply chain networks," European Journal of Operational Research, Elsevier, vol. 182(1), pages 164-173, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-3-540-26993-9_31. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.