Abstract
In this chapter, we provide an analytical model of integrated risk management with capacity reshoring. First, we review the analytical models on integrated operations-finance risk management in global manufacturing. Second, we formulate a global supply chain model and propose an optimal integration of operational flexibility and financial hedging. Third, we study analytically and numerically the interactions between operations and finance. Furthermore, the main insights and suggested directions for future research are summarized.
This chapter is a revised version of “Integrated operational and financial hedging with capacity reshoring” published in issue 260 of European Journal of Operations Research.
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Notes
- 1.
In this chapter, we use the terms “reliable domestic production” and “capacity reshoring” interchangeably.
- 2.
Here f and p denote (respectively) currency forwards and currency put options. For the sake of brevity, the vector h i is sometimes simply written as h when no confusion could result.
- 3.
For brevity, hereafter we use \( H\left( \varvec{h} \right) \) and \( R\left( \varvec{h} \right) \) to signify \( R\left( {\varvec{h}, s} \right) \) and \( H\left( {\varvec{h}, s} \right) \), respectively.
- 4.
We shall use “bc”, “rp”, “sw”, “op”, “fh”, and “int” to denote (respectively) “base case”, “reliable production only”, “switching options only”, “full operational flexibility”, “financial hedging only”, and “integrated risk management”.
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Zhao, L., Huchzermeier, A. (2018). Integrated Risk Management with Capacity Reshoring. In: Supply Chain Finance. EURO Advanced Tutorials on Operational Research. Springer, Cham. https://doi.org/10.1007/978-3-319-76663-8_5
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DOI: https://doi.org/10.1007/978-3-319-76663-8_5
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