Decision-making for risk evaluation: integration of prospect theory with failure modes and effects analysis (FMEA)

Supply chain sustainability risk decision support model using integrated Preference Selection Index (PSI) method and prospect theory

Purpose

The purpose of this paper is to introduce the integrated model of the Preference Selection Index (PSI) and the prospect theory as new means to appraise the impact of supply chain sustainability risks based on five pillars of sustainability. Research has shown that sustainability risk assessment has a strong positive impact on improving the performance of enterprises.

Design/methodology/approach

This study adopts a new decision support model for assessing supply chain sustainability risk based on additional failure mode and effect analysis parameters and its integration with PSI methodology and prospect theory. A case example of the supply chain small and medium enterprise (SME) producing fashion have been used in this study.

Findings

The result of this study reveals some critical supply chain sustainability risks affecting the sustainability of enterprises under study.

Research limitations/implications

The use of a limited sample is often associated as a limitation in the research studies and this study is based on findings from SMEs in the fashion retail supply chain. This preliminary study provides academics and practitioners an exemplar of supply chain sustainability risk assessment using integration of the PSI method and prospect theory.

Practical implications

The result of this study is beneficial for practitioners, particularly owner–managers of SMEs who can use this study as guidance on how to consider risk behavior to identify and select the critical sustainability risks and plan mitigating strategies accordingly.

Originality/value

Scientific studies on using the PSI and its integration with prospect theory as means to assess the criticality of supply chain sustainability risks is very rare. To the best of the authors’ knowledge, this is the first paper that presents the integrated model of the PSI and prospect theory to rank supply chain sustainability risks based on five pillars of sustainability.

Reducing failures in daily medical practice: Healthcare failure mode and effect analysis combined with computer simulation

This study proposes a risk analysis approach for complex healthcare processes that combines qualitative and quantitative methods to improve patient safety. We combine Healthcare Failure Mode and Effect Analysis with Computer Simulation (HFMEA-CS), to overcome widely recognised HFMEA drawbacks regarding the reproducibility and validity of the outcomes due to human interpretation, and show the application of this methodology in a complex healthcare setting. HFMEA-CS is applied to analyse drug adherence performance in the surgical admission to discharge process of pheochromocytoma patients. The multidisciplinary team identified and scored the failure modes, and the simulation model supported in prioritisation of failure modes, uncovered dependencies between failure modes, and predicted the impact of measures on system behaviour. The results show that drug adherence, defined as the percentage of required drugs received at the right time, can be significantly improved with 12%, to reach a drug adherence of 99%. We conclude that HFMEA-CS is both a viable and effective risk analysis approach, combining strengths of expert opinion and quantitative analysis, for analysing human-system interactions in socio-technical systems. Practitioner summary: We propose combining Healthcare Failure Mode and Effects Analysis with Computer Simulation (HFMEA-CS) for prospective risk analysis of complex and potentially harmful processes, to prevent critical incidents from occurring. HFMEA-CS combines expert opinions with quantitative analyses, such that the results are more reliable, reproducible, and fitting for complex healthcare settings.