Contemporary Business Studies - Academy of Knowledge Process ...

International Journal of Contemporary Business Studies
Vol: 3, No: 1. January, 2012 ISSN 2156-7506
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Appendix 2: Risk Profile for Supplier 1
On-time delivery
Capacity utilization
Tier II information sharing
Delivery flexibility
Capacity shortage likelihood
Manufacturing employees
Capacity change
Inventory status sharing
Order fulfillment information
sharing
Given the risk event relationships exhibited in the Supplier Bayesian Network illustrated in Figure 2
along with the a-priori probabilities for risk event variables contained in Table 1, the following
probability computations regarding network risks, operational risks, external risks, and revenue impact for
Supplier 1 are provided below:
P(Network Risks) = ∑ (Probability of Network Risk Event) × (Probability of Event Occurrence)
∑ (Probability of Event Occurrence)
P(Network Risks) = [(.20) x (1)] + [(.50) x (1)] + [(.50) x (1)] +[(.31) x (1)] +[(.20) x (1)]
P(Network Risks) = 1.71 = 0.34
5
1+1+1+1+1
P(Operational Risks) = ∑ (Probability of Operational Risk Event) × (Probability of Event Occurrence)
∑ (Probability of Event Occurrence)
P(Operational Risks) = [(.46) x (1)] + [(1.00) x (1)] + [(.20) x (1)] + [(.20) x (1)]
P(Operational Risks) = 1.86 = 0.47
4
1+1+1+1
P(External Risks) = ∑ (Probability of External Risk Event) × (Probability of Event Occurrence)
∑ (Probability of Event Occurrence)
P(External Risks) = [(.18 x (1)] + [(1.00) x (1)] + [(.11) x (1)]
1+1+1
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