Managing Uncertainty in a Make-To-Order Environment

In this paper we study the management of operational/financial risks of a custom manufacturer in the specialty chemical industry to cope with increased volatility of profits caused by growing competitive pressure and market uncertainty due to globalization. We argue that such a risk management can be established in two ways termed risk management through flexibility and risk management by objective, respectively. Using a modelbased approach, we operationalize these two constructs to show their effects on the profit/risk and the decision making of a firm through a stylized example motivated by the specialty chemicals business.

Naima Zerhane