Driven by the case of a pharmaceutical company, this thesis examines the effect of severe production process disruptions over the market cycle of a high-margin product.
Using Monte Carlo simulation, the financial, as well as operational risks and performance implications, are quantified under various scenarios. Thereby, the model includes the possibility of repeated disruptions based on stochastic occurrences and the resulting short and long-term consequences due to the availability of substitutes.
Besides, the study evaluates appropriate risk management strategies based on safety stock policies and different risk preferences of the decision-maker. The results indicate rather moderate implications on expected profits due to production disruptions but a substantial impact on the downside risk for a firm. The optimal inventory policy depends significantly on the disruptions parameters, characteristics of the firm and risk appetite of the decision-maker and cannot be generalized. In case of a highly profitable product, conservative inventory policies are advantageous, as they do not only mitigate risks but also lead in most scenarios to a higher expected profit than lean policies.
Table of Contents
Abstract
Figure Index
Table Index
List of Abbreviations
1 Introduction
2 Background and Review of Related Literature
2.1 The Importance of Inventories
2.2 Overview of Supply chain Disruptions
2.3 Assessing the Impact of Supply chain Disruptions
2.4 Managing and Mitigating Supply chain Disruptions
3 Case study: An Aseptic Production process of a Pharma-ceutical company
4 Methodology
4.1 Description of the Base Model
4.2 Simulation Methodology and Production Disruption measures
5 Analysis and Results
5.1 Illustration of the Risk Exposure
5.2 Sensitivity Analysis
5.3 Risk Management Strategies based on different Scenarios
6 Conclusion and Outlook
6.1 Conclusion and Discussion of the Results
6.2 Limitations and Outlook for further Research
Appendix
References
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