Target setting under uncertainty

Rui Fernandes, Joaquim Borges Gouveia and Carlos Pinho

International Journal of Business Performance and Supply Chain Modelling, 2011, vol. 3, issue 4, 297-315

Abstract: The main goal of this study is the definition of a key performance indicator, able to measure the impact of the demand uncertainty in a multi-stage supply chain inventory level. Despite the traditional bullwhip effect being normally analysed considering the particular dimension of the demand volatility in the amplification of upstream orders, an endogenous effect can be found and measured using a new indicator, able to help managers understanding the demand uncertainty penetration in the different stages of a supply chain. With this metric, managers are able to establish a more reliable target for their stock level, in each node, according to the risk exposure, promoting the optimisation of the invested capital in an aggregated supply chain analysis. The mathematical model is supported on the real options methodology. Overall, our investigation increases the knowledge related with demand's uncertainty treatment in supply chain performance.

Keywords: target setting; demand uncertainty; supply chain management; SCM; supply chain performance; inventory levels; mathematical modelling; real options. (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=43816 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbpsc:v:3:y:2011:i:4:p:297-315

Access Statistics for this article

More articles in International Journal of Business Performance and Supply Chain Modelling from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().