Authors
Michael R. Galbreth & Larry J. LeBlanc
Abstract
Spreadsheet optimization modeling plays an important role in the management of today's sophisticated supply chains. However, despite the advantages of spreadsheets (or in some cases because of these advantages) there are significant risks associated with spreadsheet models.
Spreadsheet risk is defined as the chance of adverse operational or financial consequences due to erroneous creation, maintenance, and/or use of spreadsheet models. Such errors arise because the intrinsic complexity of optimization models is beyond the expertise of many non-technical managers.
In this article we discuss procedures that we developed for managing the substantial risks associated with the use of spreadsheets for supply chain optimization. The issues we address go far beyond simple data entry mistakes, which are possible in virtually every aspect of business and can never be completely eliminated.
Sample
This is an algebraic representation of a spreadsheet supply chain optimization model. While many would be comfortable with the spreadsheet approach, it is likely that non-technical managers would find the algebraic formulation much less intuitive.
Publication
2010, Journal of Business Logistics, Volume 31, Number 2, pages 21-33
