The purpose of this paper is to use systemic thinking to explain and predict the cost of logistics outsourcing, and to devise policies to minimize the cost of risk.
A method of system dynamics is adopted to capture the dynamic interaction of logistics outsourcing systems and to analyze the impact of some factors in the system on policy decisions over a long‐term horizon.
This paper illustrates the internal mechanism of the logistics outsourcing cost of risk systems by virtue of system dynamic principles, to develop a system dynamics model, and to give a quite detailed description of how the model could work.
The results of the simulation analysis provide useful information for logistics outsourcing risk managers.
This paper contributes to the discussion on the use of system dynamics for studying logistics outsourcing cost of risk.
