Increased uncertainty in recent years has led the supply chains to incorporate measures to be more flexible in order to perform well in the face of the uncertain events. It has been shown that these measures improve the performance of supply chains by mitigating the risks associated with uncertainties. However, it is also important to assess the uncertainty under which a supply chain network can perform well and manage risk. Flexibility is defined in terms of the bounds of uncertain parameters within which supply chain operation is feasible. A hybrid simulation-based optimization framework that uses two-stage stochastic programming in a rolling horizon framework is proposed. The framework enables taking optimum planning decisions considering demand uncertainty while managing risk. The framework is used to study the trade-offs between flexibility, economic performance, and risk associated with supply chain operation. (c) 2015 American Institute of Chemical Engineers