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Mean-Risk Analysis: An Introduction

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Book cover Risk Analysis in Stochastic Supply Chains

Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 178))

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Abstract

Risk is a term commonly used in business. In a supply chain, risk is associated with the decision making problems whenever there exist uncertain outcomes and some of the outcomes are unfavorable (Lowrance 1976; Haimes 2004; Tuncel and Alpan 2010). There are different perspectives of supply chain risk analysis and management (Tang 2006; Sodhi et al. 2012). One of these perspectives focuses on examining the supply chain disruption risk which is defined as the supply chain risk associated with anthropogenic or natural disruptions such as earthquakes, hurricanes, terrorist attacks, big storms, economic crises, diseases, etc. Another perspective links risk in the supply chain with some “normal uncertainties” such as demand volatility, supply uncertainty, and cost–revenue variation; this kind of risk is termed as the supply chain operational risk, and it is the major area of supply chain risk that we examine in this book.

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Notes

  1. 1.

    It is known that there is very diverse perception towards the field of “supply chain risk management.” See Sodhi et al. (2012) for some consolidated recent views and findings from researchers in this emerging area.

  2. 2.

    The interested reader is referred to Tang (2006) and Zsidisin and Ritchie (2008) for more comprehensive views on different perspectives on supply chain risks. For the review on operational hedging, refer to Van Mieghem (2003), Boyabath and Toktay (2004), Gaur and Seshadri (2005), and Van Mieghem (2007).

  3. 3.

    Notice that the following review only covers a few key related areas and is not meant to be an exhaustive one. For example, the coherent measures of risk and the loss aversion issues are not reviewed here. Interested reader can refer to Artzner et al. (1999), Choi and Ruszczynski (2008) and Choi (2012) for more details on the coherent measures of risk, and Wang and Webster (2009) and Wang (2010) for more discussions on the inventory problems related to loss aversion.

  4. 4.

    Interested reader is also referred to Borgonovo and Peccati (2009) for a comparison among various risk averse inventory models.

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Authors and Affiliations

  1. Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

    Tsan-Ming Choi

  2. Department of Management Sciences, City University of Hong Kong, Kowloon Tong, Kowloon, Hong Kong

    Chun-Hung Chiu

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  1. Tsan-Ming Choi
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Choi, TM., Chiu, CH. (2012). Mean-Risk Analysis: An Introduction. In: Risk Analysis in Stochastic Supply Chains. International Series in Operations Research & Management Science, vol 178. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-3869-4_1

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