Dynamic suppliers' risk management of large‐scale and complex equipment development

Abstract

Purpose

The paper attempts to establish a two‐dimension frame to analyze dynamic supplier risks of large‐scale and complex equipment and study the probability distribution of the occurring risks.

Design/methodology/approach

Starting from the dynamic and correlated supplier risks of large‐scale and complex equipment, a two‐dimension frame to analyze these risks is established. A maximum entropy model is also built to research the probability distribution of the risks; then, K‐T conditions are proved to solve the model. A real case is also studied in the last part of the paper.

Findings

The results are convincing: in order to analyze the supplier risk dynamically of large‐scale and complex equipment development project, a two‐dimension analysis frame is established and a maximum entropy model is worked out. The case study shows that they are valuable.

Practical implications

The two‐dimension frame gives a new viewpoint for risk management, but also the maximum entropy model supplies a valuable method for risk management.

Originality/value

The paper succeeds in creating a dynamic analysis frame to study risks and building a new method to research the disciplines of the dynamic risks.

Citation

Yuan, W., Liu, S. and Yuan, C. (2012), "Dynamic suppliers' risk management of large‐scale and complex equipment development", Kybernetes, Vol. 41 No. 7/8, pp. 839-850. https://doi.org/10.1108/03684921211257694