Risk Pooling Example

We shall illustrate the reduction in safety stock due to risk pooling with a numerical example. 

ABC Tools has divided its northeast U.S. market into three customer regions. The weekly demands at the regions are normally distributed with mean and standard deviation as shown in Table 5.10. 

The demand correlations are given in Table 5.11. The company wants 

Two regional DCs, one covering region 1 and another covering regions 2 and 3 and 

The replenishment lead time from the plant to the DC is 1 week under all the options. Compare the total safety stocks ABC Tools has to carry under each option. 

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In the risk pooling Example 5.8, ABC Tools examined three network options, from completely deconsolidated to fully consolidated, based on inventory in the supply chain. Suppose ABC Tools decides to go with the option of one central warehouse suppl5dng all three customer regions. Then, the next question is where the central location should be such that it minimizes the distribution cost. 

The standard deviation can be used as a measure of risk. For example, if we pool the risk of random demands by several customers in one warehouse, the above formula indicates that the risk increases slower than the mean demand. It is therefore generally a good idea to pool risks. 

Worst case is used in risk assessments to describe an extreme assumption, choice, or value intended to fulfill the goal of being health-protective - that is, selected to be reasonably certain that exposure or risk is not underestimated and to err on the side of overestimating the exposure or risk. For example, a worst case assumption in evaluating dermal exposure to swimming pool water would be to assume that a person swims for 24h/day and is always 100% immersed. 

In a distribution supply chain, products flow out in a fan-shaped structure to the retailers. Consider the example of a warehouse and retailers in Figure 2.2. Even if the retailers serve independent markets, the retail supplies are linked because the warehouse inventory policy affects the supply to otherwise independent retailers. But the presence of the warehouse may generate significant benefits to the supply chain by enabling bulk commitments by the wholesaler or plant, which can deliver to the warehouse, followed by a distribution to retailers as their demands unfold. The warehouse thus offers the benefits of demand risk pooling and enables geographic postponement of the deliveries to retailers. We will analyze the impact of such risk pooling in Section 2.3. 

We will save the discussion of production planning models, however, for Chapter 5, based on the similarity of that problem to the facility location and location-allocation problems discussed in that chapter. Also in Chapter 5, we introduce the notion of risk pooling, which is a means of reducing the safety stock required to support a target service level by aggregating demands across multiple sources, for example across multiple customers or customer regions supported by a single facility. 

We shall illustrate the principles of risk pooling with a simple example. Consider a 3-stage supply chain network shown in Figure 5.6. The factory... 

Identifying and analyzing fire hazards and scenarios is the next step in a fire risk assessment. The hazard identification should be structured, systematic, audit-able, and address all fire hazards, including nonprocess fires. The result of the hazard identification is a list of potential fire hazards that may occur at the facility, for example, jet, pool, flash, BLEVE, electrical, or Class A fires. This list should also include the location where each fire could occur. Hazard identification techniques used to identify potential hazards are shown in Table 6-1. 

There seems to be a desire among the workshop participants to develop a series of standard distributions, or distribution parameters, for exposure and effects variables that are generally used in risk assessments. In the case of toxicity data, for example, investigations leading to the quantification of a generic variance for between-species variation from pooled data for many pesticides may be useful (Luttik and Aldenberg 1997). 

When the rats reached young adulthood, they were tested on a series of mazes and memory tasks, in one task, for example, a rat had to learn to swim to a hidden platform by first finding it and later remembering where in the pool the platform was hidden, in this task, a normal rat will remember where the hidden platform is located and use it to climb out of the water. By contrast, the Ecstasy-treated rats took much longer to find the hidden platform. Remember, these rats had not been treated with Ecstasy recently, yet they were substantially inferior to their peers that had never been exposed to MDMA. The effects of Ecstasy use during the first two trimesters of pregnancy have not yet been studied. However, hopefully a pregnant woman would choose not to expose her unborn child to this potential risk. 

Efficient fire protection is also based on the consideration of product or scenario-specific hazards, which may lead to very specific materials development goals. Examples are the combination of impacts, such as vandalism and ignition source for seats in railway vehicles, or a preceding shock wave before the fire impact in navy applications. Some more product-specific phenomena of such kind are related directly to material properties, such as building up an increased risk for pool fires through burning thermoplastic plastics or dripping foams, and thus have become topics in the development of some flame-retarded materials.103... 

Speciation science seeks to characterise the various forms in which PTMs occur or, at least, the main metal pools present in soil. This chapter provides a review of the single and sequential chemical extraction procedures that have been more widely applied to determine the plant and the human bioavailability of PTMs from contaminated soil and their presumed geochemical forms. Examples of complementary use of chemical and instrumental techniques and applications of PTMs speciation for risk and remediation assessment are illustrated. 

Further work is required in order to confirm the intuitively reasonable belief that a more composite measure, such as the DS of plaque fluid calculated by Margolis et al. and discussed in section 6.2, is a more applicable (inorganic) parameter for assessing, for example, caries risk. To date, little work has been done and those studies that have been reported have, for practical reasons, invariably used small numbers of subjects and often pooled plaque samples. The availability of semi-automated micro-analytical techniques, such as capillary electrophoresis, and the development of micro-electrodes, for example, those ofVogel et al., should enable researchers to analyse site-specific samples more easily. 

Finally, an oxyradical can have two less oxygen atoms than the base state. The oxyradical name will now have a hypo prefix and the suffix will be ite. An example would be aluminum hypophosphite. In the following example, calcium is combined with the oxyradical hypochlorite the resulting compound is calcium hypochlorite, a common swimming pool chlorinator. Calcium hypochlorite is an oxidizer and a fire risk when in contact with organic materials. 

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