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Supply Chain Risk Management, Second Edition by David L. Olson

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CHAPTER 5

Simulation of Supply Chain Risk

Supply chains involve many risks, as we have seen. Modeling those risks requires consideration of probability, which calls for Monte Carlo simulation, a well-developed analytic technique. This chapter shows two basic simulation models involving supply chains: a supply chain software business case and inventory modeling.

Monte Carlo Simulation

Simulation models are sets of assumptions concerning the relationships among model components. Simulations can be time oriented (for instance, involving the number of events such as demands in a day) or process oriented (for instance, involving queuing systems of arrivals and services). Uncertainty can be included by using probabilistic inputs for elements such ...

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