A Decision Support System for evaluation and prioritization, the import risks to manage the effects of sanctions on Iran (Case Study: Farabi Pharmaceutical Company)

Journal of Production and Operations Management. 2018;9(1):79-106 DOI 10.22108/jpom.2018.92395.0

 

Journal Homepage

Journal Title: Journal of Production and Operations Management

ISSN: 2251-6409 (Print); 2423-6950 (Online)

Publisher: University of Isfahan

LCC Subject Category: Technology: Manufactures: Production management. Operations management

Country of publisher: Iran, Islamic Republic of

Language of fulltext: Persian

Full-text formats available: PDF, HTML, XML

 

AUTHORS

Bahram Izadi (Assistant Professor, Department of Management, Sheikh Bahaei University, Isfahan, Ira)
Mahbobeh Shafie (MA, Department of Management, Sheikh Bahaei University, Isfahan, Iran)

EDITORIAL INFORMATION

Double blind peer review

Editorial Board

Instructions for authors

Time From Submission to Publication: 16 weeks

 

Abstract | Full Text

This paper proposes a decision support system for the evaluation and prioritization of imports in sanction atmosphere based on fuzzy quantitative models which are implemented in an Iranian pharmaceutical company. The most important risks are obtained include international payment restrictions and shipping risks. At the end, the strategies are presented to alleviate the spotted risks. Introduction: Today’s organizations are facing many different risks, especially the ones whose nature of work is mostly commercial and are engaged in importing goods. Therefore, in order to survive and to reduce the activity risks, these organizations should constantly be under review and monitoring. In addition to common risks in the process of importing goods, the tough sanctions against some countries like Iran, have caused the importing of goods to become one of the most risky work. For this reason, in order to prevent the expanding problems arising from sanctions, it is necessary to determine the importance and priorities of the risks along with recognizing their occurrences on time. Thus, by analyzing and prioritizing the risks, it is possible to distribute the rare resources of the organizations effectively. With the presence of the sanctions, many decisions related to the imports are vague and uncertain; while making decision in the shortest possible time in these cases is a vital matter. These facts indicate the importance and the necessity of having a system to support the decisions on evaluating and prioritizing of risks in importing goods. Therefore, in this paper, a decision support system has been designed and implemented to evaluate and prioritize the risks involved in importing goods in Isfahan Farabi Pharmacy Company as a case study. A few models in decision support system are able to manage the available data even if they are vague and uncertain.   Materials and Methods: İn this research, with inspiration from Project Management Body of Knowledge (PMBOK) model which is one of the most comprehensive models in risk management, a new model is presented to analyze and prioritize the risks of importing goods at the time of imposing sanctions. This model consists of five stages: 1- planning for analysis and priority of the risks, 2- identifying these risks, 3- analyzing the risks which means to review and evaluate four criteria of ‘the possibility of the occurance of the risks’, ‘the degree of the effect of the risks’, ‘organizations’ ability in response to these risks’ (McDermott and colleagues, 2009), and ‘the uncertainty of decision makers in estimation’ (Klein & Cork, 1998). Thus, GFAHP and VIKOR methods by phase, group, and Grey Relationship Analysis for risk prioritizing will combine together; 4- planning in response to the risks; 5- controling and following up of risks. Implimentation of the suggested model for a case study (Farabi Pharmacy Company) is performed as follows: The system designed consists of three segments: 1- Data Base: the data based on this system is prepared by using Microsoft Excel software. 2- Original Model: this is the main section of the system which provides the possibility of performing calculations and MatLab software has been used for coding purposes. 3- User Interface: this will provide the communication between the user (decision makers) and the system.   Results and Discussion: The presented model was used to manage the risk of importing goods by using a software system which is designed in Farabi Pharmacy Company and the most important risks related to importing pharmaceutical ingredients in this company are recognized to be as follows: 1- risks related to transportation of importing goods, 2- unsecured paths of transfering exchanges, 3- failure to timely payment of exchange to selling companies, 4- the purchase from available limited and invalid suppliers, 5- lack of training and previous commercial experiences in confrontation with sanction situations, 6- increase of the values of foreign exchanges as compared with Iranian Rial, 7- liquidity shortage at sanction situation, 8- putting the commercial performance related to supply chain under pressure, 9- the decrease in precise and correct information in supply chain, 10- to decrease product quality as a result of bottlenecks arising from sanctions. After performing stages of analysis of risks by decision support system, the risks of ‘failure to timely payment of exchange to selling companies’, ‘unsecured paths of transfering exchanges’, and risks related to ‘transportation of importing goods’ were found to have the highest priorities. Therefore, the organization resources should first be used to edit and execute the strategies for management of these risks.   Conclusion: This paper has paid attention to quantifying the risks of importing goods for the first time and has presented a combined method of quantity models in decision making for offices. Using such a system in importing goods causes the recognition and control of related risks and the reduction of time and expences which are sometimes irreparable. The organization should spend most of its financial and human resources on executing a strategy for confrontation with risks of high priorities. At the end, some strategies for control and confrontation with each well known risks are presented.   References McDermott, R. E., Mikulak, R. J., & Beauregard, M. R. (2009). The Basics of FMEA (2th ed.). Taylor & Francis Group, LLC: USA. Klein, J. H., & Cork, R. B. (1998)."An approach to technical risk assessment". International Journal of Project Management, 16(6), 345-351.