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You Can't Control Risk Unless You Measure It or Model It and You Can't Achieve Success Unless You Do!
Created an interactive computerized planning model for two divisions (standards and specials) of a fastener manufacturer enabling it to test alternative short-term tactical plans before committing precious company resources. Values entered into the risk model were based on management's assessment of their probabilities and likelihood of occurrence as well as benchmarked results from similarly situated companies. Model outputs included Net Sales, Profit Contribution, Return on Labor, Pre Tax Profit and Standards/Specials Capacity Utilization. Payoff: The Company avoided under-utilization of its capacity and made better use of its resources.
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A multinational company maintained a large portfolio of revolving credit debt agreements with a combination of domestic and foreign banks. Its borrowing rates were tied to the London Interbank market. Its borrowing periods ranged from one day to one year. Utilized optimization and Monte Carlo simulation to determine the least cost borrowing alternative. Payoff: The Company was able to better manage the risks imposed by the LIBOR market and as an added bonus felt that it succeeded in reducing its annual interest and financing costs.
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