Risk assessment of the effects of global aspects on the supplier selection using simulation

Increasing uncertainties in the supply chains has caused more attentions to the supply chain risk management approaches. These uncertainties in the global context are more important. On the other hand, due to competitive pressures, businesses are preparing themselves to operate in a global context to take advantage of the international markets. In addition, supplier selection in the global supply chains is a challenge: 1- more uncertainties to supply from the foreign supplier (exchange rate risk, extended lead times, regional risks), 2- more benefits (lower price, lower supply disruption). In this paper, we will examine the effect of risk behavior (risk averse and risk seeking) on the supplier sharing in the different exchange rates (Euro, US dollar and chinese Yuan renminbi) using Monte Carlo simulation. The results showed that adopting risk averse behavior will result in higher costs and lower stockouts. In addition, in the case of higher fluctuation in the exchange rate, risk aversion behavior is the best decision.