Ningxiong Xu

Mitigating Supply Chain Disruptions by using Option Contracts

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Modeling supplier selection and the use of option contracts for global supply chain design

Mitigation strategies for supply chain risks have have been discussed in the literature for a long time now. Khan and Burnes (2007) mention several strategies like:

  • Multiple sources of supply vs single sourcing
  • Buffers
  • Risk sharing/knowledge transfer
  • Proactive supply management

But it seems difficult to assign a value and maximum cost for these strategies. Xu and Nizick (2009) are filling this gap.
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