Strategic choices

Risk tolerance

Risk tolerance

One of the most important concepts within risk management is risk tolerance.  Without clearly defining risk tolerance it is virtually impossible to implement good risk management, since we do not know what to measure risk against. Defining risk tolerance means to define how much risk the business can live with.  Risk tolerance is vitally important […]

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Inventory management – Stochastic supply

Inventory management – Stochastic supply

This entry is part 4 of 4 in the series Predictive Analytics

The introduction of uncertain supply has shown that profit can still be maximized however the profit will be reduced by increased costs both in lost sales and in excess inventory. But most important, profit variability will increase raising issues of possible other strategies.

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Inventory management – Some effects of risk pooling

Inventory management – Some effects of risk pooling

This entry is part 3 of 4 in the series Predictive Analytics

We have thus shown through Monte-Carlo simulations, that the benefits of pooling will increase with the number of locations and that the benefits of risk pooling can be calculated without knowing the closed form of the demand distribution.

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Inventory Management: Is profit maximization right for you?

Inventory Management: Is profit maximization right for you?

This entry is part 2 of 4 in the series Predictive Analytics

Good inventory management is essential to the successful operation for most organizations both because of the amount of money the inventory represents and the impact that inventories have on the daily operations.

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The probability distribution of the bioethanol crush margin

The probability distribution of the bioethanol crush margin

This entry is part 1 of 2 in the series The Bio-ethanol crush margin

In the following we will illustrate some of the risks the bioethanol producer is facing using corn as feedstock. However, these risks will persist regardless of the feedstock and production process chosen.

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Uncertainty modeling

Uncertainty modeling

This entry is part 2 of 3 in the series What We Do

We know that forecasts based on average values are on average wrong. In addition will deterministic models miss the important uncertainty dimension that gives both the different risks facing the company and the opportunities they bring forth.

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