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http://ssrn.com/abstract=1264014
 
 

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Operational Hedging Against Adverse Circumstances


Dan Weiss


Tel Aviv University - Faculty of Management

Michael W. Maher


University of California, Davis - Graduate School of Management

October 24, 2008

Journal of Operations Management, Forthcoming

Abstract:     
This paper investigates operational hedging against severe disruptions to normal operations. It offers a new method to evaluate the extent that operations policy serves as a hedge against adverse circumstances. We apply the proposed method to explore how supply chain characteristics affect the responses of airlines to the acute demand fall off after the September 11 terrorist attacks. Results indicate that operational hedging vehicles (fleet standardization, high fleet utilization, an aircraft ownership policy rather than leasing, and international operations) are more powerful in protecting firms than using financial instruments. The study contributes in guiding managers as to how operations policy can serve as an imperative factor in mitigating exposures to low-end performance levels.

Number of Pages in PDF File: 39

Keywords: Operations policy, Hedging,Airlines, Stochastic dominance

JEL Classification: G32, L29

working papers series


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Date posted: September 19, 2008 ; Last revised: December 14, 2008

Suggested Citation

Weiss, Dan and Maher, Michael W., Operational Hedging Against Adverse Circumstances (October 24, 2008). Journal of Operations Management, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1264014 or http://dx.doi.org/10.2139/ssrn.1264014

Contact Information

Dan Weiss (Contact Author)
Tel Aviv University - Faculty of Management ( email )
P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel
Michael W. Maher
University of California, Davis - Graduate School of Management ( email )
One Shields Avenue
Davis, CA 95616
United States
530-752-7034 (Phone)
530-752-0723 (Fax)
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