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07/05/2011

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Mehdi Amini

I would supplement your third wish for the analytical system - motivated by the most current high-impact, but rare events: Gulf oil spill, financial crisis of 2007, Japan tsunami, and political changes in the Middle East. I wish the analytical system to have a predictive capability to account for the potential high-impact rare events/scenarios. In a recent article, The New York Times (March 21, 2011) describes the world-wide supply line disruptions for a number of industries due to the Japan’s tsunami. The key question is whether the policy makers and executive who were involved in a multitude of decisions for decades regarding the relevant supply chain networks and infrastructures paid necessary attentions to the rare possibility of a tsunami and its potential high impact, knowing that earth quakes are very common in the region. In the current risk management and simulation practices, we pay attention to events with “high” probabilities, but completely ignore the rare events with unbearable outcomes. So, my third wish calls for a predictive feature to alarm decision makers about the potential rare events and allow simulation and optimization to measure their impacts, at least on the performance of the network of organization partnering in the supply chain under consideration. Knowing that Japan has experienced a similar event more than a century ago and having some measurements of its impact would be helpful to the policy makers and executives, specifically the ones who decided to locate the nuclear plants on the shores!

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