Risk management and multiple criteria decision making of entreprise production program

Abstract

The paper reports investigation on the integration methods for risk management and multiple criteria decision making (MCDM) of production program for achieving better business results as well as mitigating business risks. Multiple criteria decision making was used to define the business strategy variant of production program. The starting point in defining the model of risk management integration for the choice of production program was to define the objective function and real constraints. It is found that the application of quantitative methods for risk assessment, i.e. Bayesian Network, for calculating total risk score more precisely describe a real state-of-art of the system compared to other risk assessment methods. Implementation of the integrated model for risk management and MCDM in manufacturing enterprises increases the quality of decision-making, because for all possible production program variant, profit and total risk are calculated and used to conclusively choose the variant with a highest revenue and lowest risk for production loss occurrence.