Framework for assessing the sensitivity of productivity measures to exogenous factors and operational decisions

Abstract

The present disclosure is directed to a framework for modelling the effects on exogenous factors on an operating plan that captures how a business would react to variability of exogenous factors as well as the effect of simultaneously implementing various operating decisions. The framework can also generate optimal operating plans given variability of exogenous factors and reactive business decisions. The framework offers strategic risk management decision support for a business producing goods that are heavily exposed to raw material prices in the commodity markets. The framework accounts for both exogenous factors as well as operational decisions. Specifically, for example, the framework can model corporate earnings and the impact of expenses, revenue, and profit / loss from financial instruments given uncertain exogenous factors while integrating the effects on earnings of operational decisions made in relation to physical assets, real options, and of finished goods selection.

Description

[0001] Cross References to Related Applications [0002] This application claims the benefit of US Patent Application Serial No. 14 / 268,836, filed May 2, 2014, which is hereby incorporated by reference in its entirety. technical field [0003] The present disclosure generally relates to predictive modeling of business operations planning. More specifically, the present disclosure relates to methods for modeling in a single computational framework the sensitivity of a current or future business operating plan to extrinsic factors and to operating decisions made within the operating plan. Furthermore, the present disclosure relates to methods for generating a candidate operating plan designed to optimize a selected measure of productivity (eg, revenue) taking into account assumed extrinsic factors and a company's output goals. Background technique [0004] In today's business world, companies are more focused than ever on running their businesses efficiently while reducing th...

AI Technical Summary

Problems solved by technology

For example, even though a product may appear to be profitable, that product may have been sitting on the shelf for months and the company may place a different product on the shelf that sells faster, or a different product for the product that was on the shelf. Raw materials may have been used to produce a different product that is more profitable or has a less volatile distribution of expenses

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