The same sign local effects principle and its applications for risk reduction

A simple yet powerful general risk‐reduction principle has been formulated related to systems each state of which can be obtained from a given initial state by adding the effects from a specified set of modifications. An important application of the formulated principle has been found in determining the global extremum of multivariable functions whose partial derivatives maintain the same sign in a rectangular domain. The proposed generic principle has also been applied with success to minimise the transportation costs related to a set of interchangeable sources servicing a set of destinations. A counter‐example has been given which demonstrates for the first time that selecting the nearest available source to supply the destinations along the shortest available paths does not guarantee an optimal solution. This counter‐intuitive result is contrary to the long‐standing and well‐established practices in network optimisation. The application of the proposed generic principle in logistic supply networks leads to a significant reduction of the risk of congestion and delays.