What is Efficient Frontier in Supply Chain Management? PDF Book

Learn Efficient Frontier definition in supply chain management with explanation to study “What is Efficient Frontier”. Study efficient frontier explanation with SCM terms to review supply chain management course for online MBA programs.

Efficient Frontier Definition

  • Convex line which describes current performance trade-us between (usually two) measures of operations performance.

    Operations Management by Nigel Slack, Alistair Brandon-Jones, Robert Johnston

Efficient Frontier Explanation

The effective wilderness is the arrangement of ideal portfolios that offer the most noteworthy expected return for a characterized degree of hazard or the least chance for a given degree of anticipated return. Portfolios that lie beneath the productive wilderness are imperfect since they don't give enough come back to the degree of hazard. Portfolios that bunch to one side of the proficient boondocks are imperfect since they have a more elevated amount of hazard for the characterized pace of return. The effective outskirts graphically speaks to portfolios that augment returns for the hazard accepted. Profits are reliant for the speculation blends that make up the portfolio. The standard deviation of a security is synonymous with hazard. In a perfect world, a financial specialist looks to populate the portfolio with protections offering extraordinary returns yet whose consolidated standard deviation is lower than the standard deviations of the individual protections. The less synchronized the protections (lower co-change) at that point the lower the standard deviation. In the event that this blend of upgrading the arrival versus hazard worldview is effective, at that point that portfolio should arrange along the proficient wilderness line.

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