Dependence in operations : modeling and applications

Operations Management is replete with examples where dependence in risk has large financial consequences. Modeling dependence in multi-dimensional systems is a hard problem. Traditional models of dependence suffer from the curse of dimensionality. This dissertation introduces a framework, called subordinated Markov chains, to model dependence in risk and demonstrates the efficacy of the framework for two applications in operations management. First, the mathematical validity of the framework is established along with simulation algorithms for the framework. Next, the framework is used to model dependent outages of electricity power plants and to model the joint disruptions in the facility location problem.