Quantitative Models for Operational Risk to Implement Tobacco Supply-Chain Strategies

Environmental issues are rapidly emerging as one of the most important topics in strategic supplying decisions. Perusal of the literature has shown many models to support executives in the assessment of a company\´s environmental performance. Unfortunately, none of these identifies operating guidelines on how the systems should be adapted to support the deployment of different types of tobacco supply-chain strategies. The paper seeks to investigate, how system dynamics modeling can be supportive for tobacco supply-chain management. The behavior of the tobacco supply-chain management under study is analyzed through a simulation model based on the principles of the system dynamics methodology. The simulation model can be helpful as an experimental tool, which can be used to evaluate alternative long-term strategies ("what-if" analysis) using total supply chain profit as measure of strategy effectiveness. Validation and numerical experimentation further illustrate the applicability of the developed methodology, while providing additional intuitively sound insights.