real options based analysis for supply chain management

Supply chain management is one of the requirements for achieving economic growth in any supply chain. changes in production and logistical capacity, fluctuations in demand, and variations in lead times are all potential causes of disruption in the supply chain. supply chain planning that allows for some degree of flexibility is a good way to deal with this issue and mitigate the effects of uncertainty. due to the increasing complexity and dynamics of the situation, decision-making in this area requires more advanced analytical methods. accordingly, the real options valuation (rov) has emerged, introducing a new way of thinking about investing, especially in conditions of uncertainty. this study addresses two core problems: (i) how to measure the effect of uncertainty on supply chain activities and (ii) how to manage these operations to reduce the negative risk provided by uncertainty. the primary concept behind the suggested rov technique is that an organization's internal planning choices would benefit from being informed by external market prospects. in the case of the uncertainty parameter, sensitivity analysis is performed, and under different values of this parameter, the obtained result is evaluated and validated.