Capacity Investment Planning for Multiple Vaccines Under Uncertainty: 2: Financial Risk Analysis

Capacity investment planning is a major decision for a vaccine company. Traditionally, due to the inherent flexibility used in almost all vaccine processes and risk-averse decisions, companies always started with limited capacities, thereby reducing the initial capital investment. However, in order to fulfil fast-growing vaccine demands, good and balanced financial risk management for capacity expansion is required to satisfy future demand without over committing capital. To complement the use of financial risk management, known probabilistic definitions of some classical risk measures such as expected downside risk (EDR), opportunity value (OV), value-at-risk (VaR) and conditional value-at-risk (CVaR) are adapted to be used in a scenario-based model for capacity investment planning for manufacture of multiple vaccines. Using these definitions, new models that manage financial risks and aid decisions are developed. Computational results and decision-making analysis methods are also presented and discussed. Numerical results show that this approach enables one to consider and manage the financial risk associated with the different designdjjf\ options, resulting in a set of solutions that can be used for decision-making.