Emergency decision-making model for production expansion using Monte Carlo simulation

In order to reduce the risk in emergency decision-making of production expansion of a supply chain, this research devotes to the establishment of a supply chain business decision-making risk function with the employment of using the Monte Carlo simulation to estimate corresponding variables. The risk function at a value range of relatively low risk investment is achieved by the Monte Carlo simulation. The range of calculation value produced by traditional method is larger than that produced by Monte Carlo method. This result is mainly because of random variable values in Monte Carlo method. The research verifies that Monte Carlo method can be effectively used to establish emergency decision-making model of production expansion in supply chains. Thus, Monte Carlo method can be viewed as a new approach which can effectively reduces the risk in supply chain investment decision.