Network Design Decisions Using Decision Trees?

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written 7.9 years ago by

teamques10 ★ 68k

A manager must make many different decisions when designing a supply chain network
Many of them involve a choice between a long-term (or less flexible) option and a short-term (or more flexible) option
If uncertainty is ignored, the long-term option will almost always be selected because it is typically cheaper
Such a decision can eventually hurt the firm, however, because actual future prices or demand may be different from what was forecasted at the time of the decision
A decision tree is a graphic device that can be used to evaluate decisions under uncertainty
Combine strategic planning and financial planning during network design
Use multiple metrics to evaluate supply chain networks
Use financial analysis as an input to decision making, not as the decision-making process
Use estimates along with sensitivity analysis.

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