a multiobjective approach to vendor selection abstract purchases from vendors involve significant costs for many firms decisions related to these purchases include the selection of vendors and the determination of order quantities to be placed with the selected vendors such decisions are frequently multiobjective in nature that is they are evaluated by more than one criterion at least 23 criteria for various vendor selection problems have been identified in this article we present a multiobjective approach to systematically analyze the inherent tradeoffs involved in multicriteria vendor selection problems the approach is motivated by and demonstrated with an actual purchasing problem facing a division of a fortune 500 company

operating flexibility global manufacturing and the option value of a multinational network the multinational corporation is a network of activities located in different countries the value of this network derives from the opportunity to benefit from uncertainty through the coordination of subsidiaries which are geographically dispersed we model this coordination as the operating flexibility to shift production between two manufacturing plants located in different countries a stochastic dynamic programming model treats explicitly this flexibility as equivalent to owning an option the value of which is dependent upon the real exchange rate the model is extended to analyze hysteresis effects and within country growth options we show that the management of across border coordination has led to changes in the heuristic rules used for performance evaluation and transfer pricing

exact and heuristic solutions of the global supply chain problem with transfer pricing we examine the example of a multinational corporation that attempts to maximize its global after tax profits by determining the flow of goods the transfer prices and the transportation cost allocation between each of its subsidiaries vidal and goetschalckx vidal c j goetschalckx m 2001 a global supply chain model with transfer pricing and transportation cost allocation european journal of operational research 129 1 134 158 proposed a bilinear model of this problem and solved it by an alternate heuristic we propose a reformulation of this model reducing the number of bilinear terms and accelerating considerably the exact solution we also present three other solution methods an implementation of variable neighborhood search vns designed for any bilinear model an implementation of vns specifically designed for the problem considered here and an exact method based on a branch and cut algorithm the solution methods are tested on artificial instances these results show that our implementation of vns outperforms the two other heuristics the exact method found the optimal solution of all small instances and of 26 of medium instances

the impact of carbon emission costs on manufacturers production and location decision abstract this paper investigates how emerging carbon emission costs may affect the joint production and location decisions for a manufacturer across the world s regions specifically we develop a new theoretical model which explicitly links product demand production costs and carbon emission levels to location decisions and investigate the manufacturer s optimal decisions between two distinct regions the results show that the influence of carbon emissions on manufacturers decisions can vary greatly under different circumstances both off shoring and near shoring are possible under rising carbon emission costs manufacturers with high or low demand have different tolerance levels to the rising carbon emission costs when considering an alternative location trade costs can change the pattern of relocation to gain policy insights for those who pursue reducing carbon emissions different product examples are used to calculate the critical carbon price which triggers different location choices the results suggest that if production technology is stable raising carbon cost itself has only limited effects on reducing total carbon emissions especially for high value low emission industries the location shift which is more sensitive to changes in variable carbon emissions may lead to a significant emission reduction when completed additional pricing decision from the manufacturer shows no significant effect on the location decisions however if demand is linked directly to carbon emission footprint of the product then it is more hopeful that a raised carbon price would reduce the carbon emissions significantly through relocation

why has u s inflation become harder to forecast we examine whether the u s rate of price inflation has become harder to forecast and to the extent that it has what changes in the inflation process have made it so the main finding is that the univariate inflation process is well described by an unobserved component trend cycle model with stochastic volatility or equivalently an integrated moving average process with time varying parameters this model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well

semiparametric bayesian inference for time varying parameter regression models with stochastic volatility we develop a bayesian semiparametric method to estimate a time varying parameter regression model with stochastic volatility where both the error distributions of the observations and parameter driven dynamics are unspecified we illustrate our methodology with an application to inflation

purchasing raw materials with uncertain fluctuating prices on identifie les differentes etapes de la decision d achat des matieres premieres ainsi que les differentes approches et les aptitudes requises on decrit plusieurs methodes et modeles proposes et appliques aux differentes etapes les aspects importants etant l inadequation des modeles de stocks classiques l application de la programmation lineaire au probleme de melange la prevision des prix a l aide de l econometrie et de l analyse des series temporelles et la prise de decision sequentielle pour l achat au jour le jour

the multinational firm and exhaustible resources a multinational firm trading in exhaustible resources is examined the exhaustibility of the transferred good requires the generalization of some existing concepts and introduces some new results the optimal extraction strategy is examined and comparative static implications of government policies are established the performance of the multinational is compared with the outcomes that arise in the absence of a multinational under varying assumptions concerning the nature of the market in the latter case the behaviour of the firm is seen to depend crucially upon the transfer price limitations imposed by the governments this issue is complicated by the lack of an obvious set of such limitations

strategic transfer pricing most research into cost systems has focused on their motivational implications this paper takes a different approach by developing a model where two oligopolistic firms strategically select their cost based transfer prices duopoly models frequently assume that firms game on their choice of prices product prices however are ultimately based on the firms transfer prices that communicate manufacturing costs to marketing departments it is for this reason that transfer prices will have a strategic component to them we derive implications for cost system choice and transfer pricing including showing that firms may cross subsidize their products a result consistent with the empirical evidence

taxes and the division of foreign operating income among royalties interest dividends and retained earnings abstract how do taxes influence the way u s corporations divide foreign affiliate operating income among royalties dividends interest and retained earnings the paper goes beyond previous work that focused largely on dividend repatriation behavior and provides a comprehensive analysis of the disposition of foreign subsidiary operating income the empirical results show that taxes have a large and statistically significant effect on the composition of payments own tax prices discourage the payment of dividends royalties and interest but dividend and other repatriation taxes do not increase retained earnings they only alter the composition of payments the results are therefore consistent with a generalized hartman sinn model of the mature controlled foreign corporation that has various alternative repatriation vehicles finally this paper integrates the choice of payments with income shifting among countries because the latter may be part of a low tax strategy for repatriations in this general framework conventional composite tax prices are not appropriate because the response to a change in a composite tax price depends on which components changed

macroeconomic forecasting and structural change the aim of this paper is to assess whether explicitly modeling structural change increases the accuracy of macroeconomic forecasts we produce real time out of sample forecasts for inflation the unemployment rate and the interest rate using a time varying coefficients var with stochastic volatility tv var for the us the model generates accurate predictions for the three variables in particular for inflation the tv var outperforms in terms of mean square forecast error all the competing models fixed coefficients vars time varying ars and the na ove random walk model these results are also shown to hold over the period commonly referred to as the great moderation

taxes and dividends the uk evidence abstract this paper provides empirical evidence on the simultaneous effects of both corporation and personal income taxes on dividend payment adjustments and on the behaviour of share prices on the ex dividend dates the results show that companies set their dividend policies to minimise their tax liability and to maximise the after tax return of their shareholders in particular firms that are unable to deduct the advanced corporation tax from their tax liability are found to pay low dividends in addition consistent with the tax hypothesis we find that the differential taxation of dividends and capital gains results in a decrease in ex day share prices by significantly less than the amount of the dividend there is no evidence of a tax induced dividend clientele

a tax savings model for the emerging global manufacturing network the emerging global manufacturing network involves nodal location features of tax areas and international logistics zones manufacturing procedures of simple process and deep process as well as transportation arcs since choosing tax savings locations and manufacturing procedures that increase after tax profit is important to global manufacturers this study aims to present several tax savings approaches and to develop a tax savings model for maximizing after tax profit in the emerging network numerical illustration demonstrates that the proposed model is an effective approach for global manufacturers to achieve tax savings the proposed model elucidates the crucial logistics behavior associated with tax savings

optimal production allocation and distribution supply chain networks abstract enterprise optimisation can rapidly strip significant bottom line costs out of global operations giving companies a real competitive edge the benefits of managing supply chain networks by integrating operational design and financial decisions have been acknowledged by the industrial and academic community the objective of this work is to determine the optimal configuration of a production and distribution network subject to operational and financial constraints operational constraints include quality production and supply restrictions and are related to the allocation of the production and the work load balance financial constraints include production costs transportation costs and duties for the material flowing within the network subject to exchange rates as a business decision the out sourcing of production is considered whenever the organisation cannot satisfy the demand a mixed integer linear programming milp model is proposed to describe the optimisation problem a case study for the coatings business unit of a global specialty chemicals manufacturer is used to demonstrate the applicability of the approach in a number of scenarios

the semiparametric asymmetric stochastic volatility model with time varying parameters the case of us inflation we propose a semiparametric extension of the time varying parameter regression model with asymmetric stochastic volatility for parameter estimation we use bayesian methods we illustrate our methods with an application to us inflation

redesign of global supply chains with integration of transfer pricing mathematical modeling and managerial insights abstract unlike the supply chain sc design problem which deals with the configuration of a new sc the redesign problem assumes that a sc already exists and focuses on its reconfiguration in order to take profit of the changing logistics financial and fiscal advantages offered by each country first this requires considering specific decisions and cost factors such as those associated with facility closing and capacity relocation these aspects are often ignored by sc design models second to better capitalize on the tax advantages in each country the redesign of sc requires the consideration of taxation rates and mainly transfer pricing indeed companies can use transfer pricing to shift profits to lower tax countries which may impact on the sc redesign decisions e g on the relocation of operations and manufacturing facilities this paper contributes to the literature by 1 developing a large scale optimization model that is specific to the problem of sc redesign while addressing decisions costs and complexity factors that are often ignored by the model based sc design literature 2 integrating transfer pricing in the model by using two methods one of them is the profit split method that is dictated by the oecd transfer pricing guidelines 1995 2010 which could be considered as a novelty in large scale sc optimization models and 3 using the model to derive a series of insights that may be helpful for companies and governments most of these insights are difficult to obtain without the support of models like the one developed here

cost based transfer pricing under r d risk aversion in an integrated supply chain abstract this paper examines the economic role of transfer pricing for a vertically integrated supply chain when a risk averse production division manager faces uncertainty on the outcomes from r d investment in particular we compare two representative cost based transfer pricing methods full cost and variable cost pricing we construct an economic model based on the assumption that r d investment reduces the expected fixed costs of a production factor as well as the variable production costs we show that a firm s profit under full cost transfer pricing is greater than that under variable cost transfer pricing under certainty contrary to this benchmark result variable cost pricing becomes more profitable than full cost pricing when the risk averse manager bears relatively high risk

endogenous transfer pricing and the effects of uncertain regulation abstract a scenario is constructed under which a multinational firm mnf faces a threat of a penalty the probability of which is based on the mnf s transfer price given this scenario the mnf s optimum transfer price could be in the interior and simultaneous interaction of the transfer price and real variables exists increased surveillance of the transfer price makes the mnf move its transfer price towards the arm s length price and checks fiscal abuses but it worsens the international allocation of resources even though the cost advantage of the exporting country increases still the impact on global welfare is ambiguous

an enhanced robustness approach for managing supply and demand uncertainties abstract managing supply and demand uncertainties is a topic that receives increasing management attention due to 1 more price based competitions forcing firms purchase from cheaper but less reliable or unproven suppliers and 2 undesirable consequences of unaddressed demand fluctuations such as reduced service level financial loss reputational damage and loss of market share this paper presents a realistic production distribution planning model that is robust to common supply interruptions and demand variations a robustness approach named elastic p robustness is introduced that obviates the need to estimate probability distribution of random parameters when managing operational uncertainties of the supply chain the application of the proposed approach is investigated in an actual organization from discrete durable parts manufacturing sector our analyses of numerical results focus on 1 exploring different tactics for managing supply and demand variations 2 examining the benefits of concurrent consideration of supply and demand uncertainties 3 benchmarking the performance of the proposed approach against the popular robustness algorithms and 4 investigating the price of robustness under various supply and demand scenarios

linkages between service sourcing decisions and competitive advantage a review propositions and illustrating cases abstract this paper focuses on linkages between strategic service sourcing decisions and the competitiveness of business firms it responds to calls for more research focusing on the outcomes of services and the nature and durability of service benefits and contributes with relatively comprehensive detailed and managerially oriented knowledge regarding the linkages between service sourcing and competitive advantage the paper reviews the literature and develops propositions regarding how different make or buy decisions supply base structures and types of buyer seller relationships influence the possibility of simultaneously maintaining positive bonds with customers keeping costs low and developing valued and differentiated offerings the practical applications of the propositions are illustrated with four case studies

making decisions on offshore outsourcing and backshoring a case study in the bicycle industry abstract small and medium sized enterprises smes are expected to generate new innovations as well as future growth and employment for the european economy in the last two decades a large number of european manufacturing companies have offshored their production operations to low cost countries outside of the eurozone however also bringing back home the once offshore outsourced manufacturing i e backshoring has become a notable phenomenon even if it has received less attention in research until very recently this paper reports research on consecutive offshoring and backshoring decisions of a northern european bicycle manufacturing company we identified an over 30 percent cost advantage from offshore outsourcing that turned over a two year period into an advantage for the firm s own manufacturing in the home country the main reasons for the rediscovered advantage of in house manufacturing were 1 the increasing accuracy of cost allocation procedures 2 changes in external factors such as exchange rate variations and supplier costs 3 growing sales volumes and the simultaneous requirement for shorter lead times resulting from the redefinition of the product and 4 the network level learning to combine factory and network level operations the contribution of this paper is the insight that it provides into how companies can overvalue the cost benefits of offshore outsourcing as well as highlighting factors to be considered and the sensitivity analysis to be carried out in evaluating such decisions

a general unconstrained model for transfer pricing in multinational supply chains multinational supply chains operate in more than one country or tax jurisdiction and face decision problems concerned with trade flows of resources products and services transfer prices and allocation of transport costs between their divisions these decisions must consider for the sake of optimality corporate and governmental parameters such as the payment of dividends and royalties ownership of and control over subsidiaries income taxes differentials duties and quotas etc in this paper we generalize and extend the theory of the multinational firm to the case of multinational supply chains we propose a model that is more general and comprehensive than the previous ones proposed in the literature to be more specific our model integrates many of the previous research factors and includes new ones such as transport costs and duty drawbacks which are critical for supply chains that operate under international trade regulations under the maximization of the repatriated earnings objective we study the optimality conditions of the corporate decision variables to derive managerial guidelines and to determine how decisions regarding trade quantities transfer prices and transport cost allocations affect the amount of taxes to be paid to host governments as well as the total after tax repatriated earnings of the corporation

design of sustainable supply chains under the emission trading scheme increase in environmental concerns together with legislations are forcing industries to take a fresh look at the impact of their supply chain operations on the environment this paper introduces a mixed integer linear programming based framework for sustainable supply chain design that considers life cycle assessment lca principles in addition to the traditional material balance constraints at each node in the supply chain indeed the framework distinguishes between solid and liquid wastes as well as gaseous emissions due to various production processes and transportation systems the framework is used to evaluate the tradeoffs between economic and environmental objectives under various cost and operating strategies in the aluminum industry the results suggest that current legislation and emission trading schemes ets must be strengthened and harmonized at the global level in order to drive a meaningful environmental strategy moreover the model demonstrates that efficient carbon management strategies will help decision makers to achieve sustainability objectives in a cost effective manner

how supply competency affects fdi decisions some insights abstract foreign investment decisions by multinational enterprises are usually arrived by considering not just the firm specific factors but location specific factors are also of paramount importance using three supply factors specific to a country supply environment supply infrastructure absorptive capacity we construct a rating system representing the potential of a nation to attract foreign direct investment fdi we use the combinatorics and boolean based logical analysis of data lad method to capture the individual and combined impact of the supply factors on the fdi inflow the lad classification system is shown to be robust cross validating very well thereby allowing its use for prediction purposes and permitting the derivation of a rating system that can have various granularity levels by linking fdi potential with supply capability related factors the findings of this research contribute to future fdi decisions by firms as well as provide assistance and direction to strategic planners of countries that seek to enhance their attractiveness as fdi destinations as technology matures production processes start to lack differentiation and firms look to establish facilities globally to become more competitive this study enhances decision making process pinpointing areas for focused consideration

networked enterprise a new business model for global sourcing abstract the challenge of global sourcing is to have a management in sourcing operations that is difficult to imitate by competitors global companies are now striving to develop a sourcing strategy to support a new business model that caters for operations in any parts of the world this paper proposes that the development of a new business model in an established firm will depend on the extent to which a firm leverages the factor conditions and resolving conflicts a framework is developed to describe the dynamics of business model a case study on hasbro far east inc is presented to show the development of an information hub as their new business model the findings of the case study support the argument that factor conditions and conflicts play a key role in determining the success of transforming to a new business model thus the transformational path to information hub is dependent on the extent to which these conditions are played out in the new arrangement future research should concentrate on development of collaborative process to align activities

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

productivity change under an individual transferable quota management system this is a scanned version of a published article the author 2012 published by oxford university press on behalf of the agricultural and applied economics association the original can be found at http www aaea org publications ajae to the best of our knowledge one or more authors of this paper were federal employees when contributing to this work

a strategic tactical model for the supply chain design in the delocalization context mathematical formulation and a case study abstract in this paper we propose a mathematical model for the design of supply chains in the delocalization context our main objective is to develop a strategic tactical supply chain design model that integrates all the relevant components that characterize the delocalization problem we adopt the activity based approach to model the problem and we focus on the logistic decisions of activity location technology choice supplier selection etc and the financial decisions of transfer pricing transportation costs allocation etc the mathematical formulation is illustrated by a case study from the automotive sector a comparison between the model solution and the real decisions is used to prove the applicability and the utility of the proposed model

productivity measurement in common property resource industries an application to the pacific coast trawl fishery this article measures total factor productivity in industries that exploit resources held in common particular attention is paid to the valuation and specification of in situ commonproperty resources in a neoclassical production technology catchability of the resource and variations in economic capacity utilization an empirical analysis of the open access pacific coast trawl fishing industry demonstrates that disentangling the productivity residual from changes in resource abundance its catchability and variations in capacity utilization hones the productivity residual to finer precision lowering mean productivity growth by about hak removing biological noise from highly variable resources is also important the results are related to aprogram limiting the number of vessels and can contribute to sustainable resource management whenever resources are held in common

integrated production distribution planning in supply chains an invited review ss selc suk ereng uc s n c simpson asoo j vakharia c a department of decision and information sciences college of business administration university of florida gainesville fl 32611 7169 usa b department of management science and systems school of management university at bu alo bu alo ny 14260 4000 usa c department of decision and information sciences college of business administration university of florida 343 bus p o box 117169 gainesville fl 32611 7169 usa

reappraising the eclectic paradigm in an age of alliance capitalism this article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of mne activity in particular it argues that due to the increasing porosity of the boundaries of firms countries and markets the eclectic or oli paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter firm transactions the growing interdependencies of many intermediate product markets and the widening of the portfolio of the assets of districts regions and countries to embrace the external economies of interdependent activities

a global supply chain model with transfer pricing and transportation cost allocation abstract we present a model for the optimization of a global supply that maximizes the after tax profits of a multinational corporation and that includes transfer prices and the allocation of transportation costs as explicit decision variables the resulting mathematical formulation is a non convex optimization problem with a linear objective function a set of linear constraints and a set of bilinear constraints we develop a heuristic solution algorithm that applies successive linear programming based on the reformulation and the relaxation of the original problem our computational experiments investigate the impact of using different starting points the algorithm produces feasible solutions with very small gaps between the solutions and their upper bound ub

fair transfer price and inventory holding policies in two enterprise supply chains abstract a key issue in supply chain optimisation involving multiple enterprises is the determination of policies that optimise the performance of the supply chain as a whole while ensuring adequate rewards for each participant in this paper we present a mathematical programming formulation for fair optimised profit distribution between echelons in a general multi enterprise supply chain the proposed formulation is based on an approach applying the nash bargaining solution for finding optimal multi partner profit levels subject to given minimum echelon profit requirements the overall problem is first formulated as a mixed integer non linear programming minlp model a spatial and binary variable branch and bound algorithm is then applied to the above problem based on exact and approximate linearisations of the bilinear terms involved in the model while at each node of the search tree a mixed integer linear programming milp problem is solved the solution comprises inter firm transfer prices production and inventory levels flows of products between echelons and sales profiles the applicability of the proposed approach is demonstrated by a number of illustrative examples based on industrial processes

formation of a strategic manufacturing and distribution network with transfer prices abstract we propose a profit maximization model for the decision support system of a firm that wishes to establish or rationalize a multinational manufacturing and distribution network to produce and deliver finished goods from sources to consumers the model simultaneously evaluates all traditional location factors in a manufacturing and distribution network design problem and sets intra firm transfer prices that take account of tax and exchange rate differentials between countries utilizing the generalized benders decomposition approach we exploit the partition between the product flow and the cash allocation i e the pricing and revenue assignment decisions in the supply chain to find near optimal model solutions our proposed profit maximizing strategic planning model produces intuitive results we offer computational experiments to illustrate the potential valuable guidance the model can provide to a firm s supply chain design strategic planning process

macroeconomic forecasting performance under alternative specifications of time varying volatility summary this paper compares alternative models of time varying volatility on the basis of the accuracy of real time point and density forecasts of key macroeconomic time series for the usa we consider bayesian autoregressive and vector autoregressive models that incorporate some form of time varying volatility precisely random walk stochastic volatility stochastic volatility following a stationary ar process stochastic volatility coupled with fat tails garch and mixture of innovation models the results show that the ar and var specifications with conventional stochastic volatility dominate other volatility specifications in terms of point forecasting to some degree and density forecasting to a greater degree copyright 2014 john wiley sons ltd

trends in foreign direct investment flows a theoretical and empirical analysis this paper seeks to provide a rationale for changing trends in the flow and determinants of foreign direct investment fdi as a result of macro economic and firm strategy considerations we identify several factors that impact on such trends and develop propositions that could explain the phenomenon generically the study then provides preliminary empirical support for the propositions presented and outlines the path for further research needed to investigate more causal links the statistical analysis of investments by us multinational enterprises mnes reveals significant changes in the regional distribution of fdi and a change in some of its traditional determinants results show that us mnes are now making increasing investments into asia to exploit low wage levels and to secure entry into new markets

offshoring and outsourcing in a global supply chain impact of the arm s length regulation on transfer pricing abstract we consider the structure of a global supply chain for operational decisions in a multinational firm mnf with tax considerations the mnf consists of two divisions one for production and the other for retailing while the retail division of the mnf and the market for its product is located in a domestic country the production division may be located in either the domestic high tax country or a foreign low tax country when the two divisions of a mnf are co located in the domestic country the firm enjoys the benefit of a centralized operational decision on the order quantity to maximize its total profit although there is no tax saving opportunity on the other hand a mnf can enjoy a tax saving benefit when offshoring its production division to a low tax country although its operational decision on the order quantity is decentralized which is harmful to the supply chain profit due to double marginalization the mnf may further pursue the low procurement cost of its retail division by allowing the retail division to search for an outsourcing opportunity from an outside supplier however outsourcing can hurt the profit of the mnf from the loss of the production division due to competition with outside suppliers we analyze the trade offs in the mnf s optimal choice of supply chain structure in addition we incorporate a regulation on the mnf s internal transaction by tax authorities which is commonly called the arm s length regulation we study how the mnf s choice of the operational structure of its supply chain changes in consideration of this regulation our results suggest that tax considerations deserve attention from managers when designing the supply chain structure

an operational profit sharing and transfer pricing model for network manufacturing companies abstract new age companies are forging partnerships with other firms to market products that have been assembled through manufacturing activities distributed at different locations these locations belong to more than one company and the product passes through these different sites during its manufacturing stages this manufacturing collaboration is known as network manufacturing according to the network philosophy companies form alliances to manufacture a product and share in its operating profits this paper proposes a framework and methodology for profit sharing and transfer pricing between network companies we propose a paradigm that enables maximization of operating profits by the manufacturing network in its larger supply chain suggesting a departure from the model that maximizes profits for the individual company within the sphere of its own supply chain

competitive versus comparative advantage i explore the interactions between comparative competitive and absolute advantage in a two country model of oligopoly in general equilibrium comparative advantage always determines the direction of trade but both competitive and absolute advantage affect resource allocation trade patterns and trade volumes competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive absolute advantage in the sense of a uniform fall in home costs tends to raise home output in all sectors but also leads both countries to specialise less in accordance with comparative advantage

gray market trade with product information service in global supply chains abstract this paper investigates the economic effects of a product information service when potential consumers who are segmented by their taste exist in gray markets specifically we construct an economic model that considers a multinational firm mnf who expands business to a country and chooses whether to provide information service regarding product characteristics if receiving the information consumers in a specific segment whose taste suits the characteristics have positive utility from consuming the product while those in other segments have no utility by contrast consumers in all segments have positive expected utility before consuming the product without information with these settings we demonstrate that there arises the equilibrium that the mnf provides no information service when gray market trade i e parallel trade is allowed in the country leading to lower consumer welfare than when it is prohibited a primary finding in the equilibrium is that such a situation arises especially when potential consumers are less segmented in this situation the regulator in the country should ban the parallel imports so as to enhance consumer welfare the result is counterintuitive and notable because one might intuitively infer that gray market trade is less desirable when customers are more minutely segmented and the product information service is thus more specific and necessary

a foreign expansion model with multi site locations in service industries abstract capital budget constrained foreign expansion model with multi site locations may have far reaching implications for the service sectors this paper aims to present a foreign expansion model with multi site locations which is capable of optimizing the commodity pricing and capital investment policy having found some properties of the model we propose a solution method which consists of the newton raphson method and the technique of piecewise linear approximation the results of proposed model may be beneficial for foreign expansion in services with regard to businesses like fast food steak restaurant cafe shops and so on

integration of financial statement analysis in the optimal design of supply chain networks under demand uncertainty abstract models that aim to optimize the design of supply chain networks have become a mainstream in the supply chain literature this paper aims to fill a gap in the literature by introducing a mathematical model that integrates financial considerations with supply chain design decisions under demand uncertainty the proposed mixed integer linear programming milp problem enchases financial statement analysis through financial ratios and demand uncertainty through scenario analysis the applicability of the model is illustrated by using a case study along with a sensitivity analysis on financial parameters expressing the business environment the model could be used as an effective and convenient strategic decision tool by supply chain managers

economic interests and regional trading arrangements the case of nafta this article examines lobbying in the united states on the north american free trade agreement nafta i argue that economies of scale and production sharing across borders create incentives for firms to seek regional trade liberalization statistical analysis demonstrates that sectors with these characteristics were more likely to lobby for free trade in north america these sectors were also exposed to free trade more rapidly under the tariff phasing schedule in the nafta treaty however corporate restructuring to rescale production for the regional market and to increase offshore assembly presented adjustment costs for u s workers which created divisions between labor unions and their employers i conclude that regional arrangements are an attractive mechanism to liberalize trade for firms in need of larger than national markets to take advantage of economies of scale or to develop production sharing networks

a stochastic model for risk management in global supply chain networks abstract with the increasing emphasis on supply chain vulnerabilities effective mathematical tools for analyzing and understanding appropriate supply chain risk management are now attracting much attention this paper presents a stochastic model of the multi stage global supply chain network problem incorporating a set of related risks namely supply demand exchange and disruption we provide a new solution methodology using the moreau yosida regularization and design an algorithm for treating the multi stage global supply chain network problem with profit maximization and risk minimization objectives

modeling and design of global logistics systems a review of integrated strategic and tactical models and design algorithms the overall focus of this research is to demonstrate the savings potential generated by the integration of the design of strategic global supply chain networks with the determination of tactical production distribution allocations and transfer prices the logistics systems design problem is defined as follows given a set of potential suppliers potential manufacturing facilities and distribution centers with multiple possible configurations and customers with deterministic demands determine the configuration of the production distribution system and the transfer prices between various subsidiaries of the corporation such that seasonal customer demands and service requirements are met and the after tax profit of the corporation is maximized the after tax profit is the difference between the sales revenue minus the total system cost and taxes the total cost is defined as the sum of supply production transportation inventory and facility costs two models and their associated solution algorithms will be introduced the savings opportunities created by designing the system with a methodology that integrates strategic and tactical decisions rather than in a hierarchical fashion are demonstrated with two case studies the first model focuses on the setting of transfer prices in a global supply chain with the objective of maximizing the after tax profit of an international corporation the constraints mandated by the national taxing authorities create a bilinear programming formulation we will describe a very efficient heuristic iterative solution algorithm which alternates between the optimization of the transfer prices and the material flows performance and bounds for the heuristic algorithms will be discussed the second model focuses on the production and distribution allocation in a single country system when the customers have seasonal demands this model also needs to be solved as a subproblem in the heuristic solution of the global transfer price model the research develops an integrated design methodology based on primal decomposition methods for the mixed integer programming formulation the primal decomposition allows a natural split of the production and transportation decisions and the research identifies the necessary information flows between the subsystems the primal decomposition method also allows a very efficient solution algorithm for this general class of large mixed integer programming models data requirements and solution times will be discussed for a real life case study in the packaging industry 2002 elsevier science b v all rights reserved

the effect of temporal closures and individual quotas on fishing trip duration a hazard function analysis in this article we assess the effect that two different fishery management regimes have on the duration of the fishing trip a basic theoretical model predicts that trip duration should increase with temporal closures and decrease with an individual quota system therefore we propose and apply an empirical trip duration model estimations are based on data for the pelagic fleet in central southern chile conforming to the theoretical predictions the results indicate that temporal closures tend to increase trip duration whereas individual quotas reduce it moreover the regulatory regimes also affect the magnitude of the impact that other determinants have on trip duration the results are consistent with increased efficiency in fleet operation under an individual quota system

intrafirm trade arm s length transfer pricing rule and coordination failure abstract this paper demonstrates that uniform imposition of the arm s length principle on transfer pricing leads to coordination failure among countries in terms of economic welfare if the countries trade products in the form of intrafirm transactions by multinational firms mnfs to highlight this implication we first show that imposition of the arm s length principle on an mnf induces it to transfer a product among subordinate divisions at marginal cost i e the competitive price which is consistent with the purpose of the principle nonetheless if regulators in each country impose the principle on mnfs all of the following economic welfare measures decrease compared with the situation where the principle is not imposed 1 consumer welfare in each of the trading countries 2 profit of each mnf and thus 3 total world economic welfare this result indicates that it is possible that enforcement of the principle has no positive effect at all in the world because economic welfare of all economic agents deteriorates when the principle is imposed a numerical analysis demonstrates that this possibility arises in a broad range of circumstances even including the situation where a giant economic world power and a small underdeveloped country mutually trade products in these circumstances an agreement among trading countries that no country imposes the arm s length principle may encourage pareto improvement of the world economy

vendor selection with price breaks abstract we study the problem of vendor selection where a buyer must choose order quantities to place with vendors in a multiple sourcing network the selection process is influenced by the price delivery and quality objectives of the buyer as well as by the production or rationing constraints of the vendors vendors are assumed to offer price breaks which depend on the sizes of the order quantities each proce break schedule is characterized by two attributes it represents either quantity discounts or surcharges and is either cumulative all units or noncumulative incremental we present linear and mixed binary integer programming models that provide unifying frameworks for models of vendor performance measures from the purchasing literature and models of price breaks from the operations research literature we argue that our models offer viable approaches to vendor selection with price breaks because of the availability of commercial software packages for personal computers that provide flexible and efficient computational tools for solving the models this implies that vendor selection with price breaks can be performed at the fingertips of purchasing managers

tariff concessions in production sourcing in this paper we study a multi stage production sourcing problem where tariff concessions can be exploited at the firm level using free trade agreements between countries to solve the problem an algorithm which embeds a very large scale neighborhood vsln search into a simulated annealing framework is developed a numerical study is conducted to verify the effectiveness of the solution approach

joint inventory and cash management for multidivisional supply chains this paper develops a centralized supply chain model that integrates material flows with cash flows the supply chain is owned by a single firm with two divisions the downstream division headquarters facing random customer demand replenishes materials from the upstream division the firm installs a financial services platform that pools the divisions cash into a master account managed by the headquarters in each period cash is received from customers and paid to the outside vendor after materials are delivered the headquarters determines how much cash to retain for inventory replenishment the objective is to determine an optimal joint inventory replenishment and cash retention policy for the entire supply chain we prove that the optimal policy has a surprisingly simple structure both divisions implement a base stock policy for inventory replenishment the headquarters monitors the corporate working capital and implements a two threshold policy for cash retention this result is obtained by exte

revealed comparative advantage and competitiveness in hungarian agri food sectors we examine the competitiveness of hungarian agriculture and food processing in relation to that of the eu based on four indices of revealed comparative advantage using highly disaggregate data for the period 1992 to 1998 consistency tests suggest that the indices are less satisfactory as cardinal measures but are useful in identifying the demarcation between comparative advantage and comparative disadvantage hungary is shown to have a comparative advantage in a range of agri food products including animals and meat this complements the findings of those studies that have used price and cost based approaches in identifying competitiveness in cereals and crops results indicate that the rca indices when interpreted as a binary measure have remained surprisingly stable during the period of transition although there is evidence of a weakening in the level of comparative advantage as revealed in the balassa index

an evaluation of the investment environment in international logistics zones a taiwanese manufacturer s perspective abstract with the rapid development of international logistics the role of international logistics zones has become increasingly important this study evaluated the importance of investment environment factors namely political infrastructure cost and market factors for firms intention to invest in international logistics zones a structural equation modeling sem approach was employed to analyze respondents foreign direct investment fdi intention results indicated that market cost and infrastructure factors have a positive effect on firms intention to invest in international logistics zones the influence of political factor on firms investment intention was not supported in this study theoretical and practical implications of the findings for firms foreign direct investment in international logistics zones are discussed

valuing patents on cost reducing technology a case study we present an approach for valuing patents on production process improvements specifically we focus on valuing a patent on cost reducing process improvements from the viewpoint of the patent holding firm we do this by considering the relevant cash flows that result from owning the patent the patent value is determined by 1 licensing fees and royalty income 2 competitive advantage resulting from the patent 3 patent maintenance costs we discuss a case study that presents the difficulties and challenges in finding the relevant information that is needed to estimate the cash flows we show that valuation of patents on production process improvements cannot be done without good knowledge of technology markets and competitors

short run cost based pricing model for a supply chain network abstract we have studied a short run cost based pricing model of a supply chain network with multiple production and operation units first we discussed the cost based pricing model of a production unit and explained the distinguishing feature of the cost function an average cost decreases as the output increases second we extended the model to include multiple production and operation units and then presented a short run cost based pricing model of a supply chain network with multiple production and operation units the cost function is considered as a monotonic multi dimensional mapping third we discussed the existence and uniqueness of the solution of the above model we found if the system is profitable there is at least a meaningful solution and the solution usually is not unique that is to say the low cost price solution can be found by an iterative method according to the kantorovich theorem and it is possible that there is another high cost price solution finally we illustrated the model with an example

a hierarchical process industry production distribution planning model abstract global and multinational companies are subject to government regulations in addition to other international uncertainties due to operation in diverse geographic locations such government regulations often affect the cost of raw materials adversely which in turn creates adverse impact on product cost and forces the decision makers to re evaluate current production distribution plan this paper presents an integrated supply chain model for simultaneous strategic and operational planning of a strategic business unit sbu in a global supply chain affected by government regulations the model incorporates impact of changes in cost of inputs on expected product cost and solves for an optimal strategic and operational plan for the entire supply chain in addition the model includes exchange rates border crossing costs and solves a multi period model with due consideration of uncertainties in demand and transportation time

supply network dynamics as a source of new business abstract supply networks where operational control extends well over organizational boundaries have emerged in industries producing relatively complex and customized products with tight profit margins products like ships automobiles and telecommunication systems incorporate complex design and engineering skills that are produced through a tier structured multi level supply networks efficiency in these networks has stemmed from specialization and cost efficiency in individual value adding operations this paper demonstrates how supplier networks have evolved and how the inherent dynamics of these networks generate constantly new business opportunities for fast moving companies with a clear focus on operational efficiency we use action research methodology on cases from the shipbuilding and constructions industry to document some of the dynamic features of supply networks this insight is then applied to the electronics manufacturing services business to explain the fundamentals of successful operations in this highly competitive business with ever narrowing margins in this dynamic market of contract manufacturing companies with constant focus on the reduction of production lead times by incorporating value added operations either physically or logically to maintain and recreate profitable business to succeed in doing this issues related to industrial parks local tacit knowledge and reverse repair logistics must be managed in cross organizational manner we conclude that there is an ever changing limit to the expansion of supplier networks through specialization and cost efficiency and that at one point contracting and integrating parts of the supply network will create operationally outperforming business models that further boost the inherent dynamics of supply networks

a framework linking intangible resources and capabilities to sustainable competitive advantage this article is concerned with the role of intangible resources in business strategy in particular it is concerned with identifying the intangible sources of sustainable competitive advantage sustainable competitive advantage results from the possession of relevant capability differentials regulatory and positional capabilities are concerned with intangible assets functional and cultural capabilities are concerned with competencies a framework linking intangible resources to capabilities has been devised and is used as the basis of a new technique for identifying the relative contribution which the different intangible resources make to competitive advantage the results of the use of this technique in six case studies are reported

testing for input substitution in a regulated fishery input restrictions are commonly used to prevent rent dissipation in fisheries this paper examines whether these schemes are successful by calculating the degree of input substitution between restricted and unrestricted inputs conventional elasticities of substitution cannot be used when the firm faces controls on the use of some inputs in this case the appropriate measure of substitution the elasticity of intensity must be used data from the british columbia salmon fishery provide evidence of input substitution possibilities for two vessel types these results call into question the usefulness of input control schemes

determining intra company transfer pricing for multinational corporations abstract although significant attention has been paid to transfer pricing the pricing of intermediate products sold between different divisions within one company the focus has been limited to tax minimization within regulatory boundaries this paper presents a comprehensive model that aims to determine the optimal transfer price for a multinational corporation mnc to maximize the entire organization s profit the model considers the situation in which intermediate products are sold from the mnc s selling divisions to buying divisions the buying divisions further process these intermediate products to produce final products the final products are then sold in both selling divisions and buying divisions across the mnc s global locations in contrast to the existing literature our innovative model incorporates elements such as international transportation costs holding costs taxes tariffs including the introduction of a second tariff and exchange rates this paper also provides managerial insights about the impact of setting transfer prices in different currencies on the variance of each division s profit given exchange rate uncertainty

multi output nonfrontier primal measures of capacity and capacity utilization this article implements an econometric approach for generating primal capacity output and utilization measures for fisheries in situations where regulatory environmental and resource conditions affect catch levels but are not independently identified in the data frontier based capacity models may interpret such impacts as production inefficiency however if such inefficiencies are unlikely to be eliminated the implied potential output increases may be unrealistic we develop a multi output multi input stochastic transformation function framework that permits various assumptions about how output composition may change when operating at full capacity we apply our model to catcher processor vessels in the alaskan pollock fishery

assessing efficiency gains from individual transferable quotas an application to the mid atlantic surf clam and ocean quahog fishery delayed fishing fleet restructuring complicates the assessment of efficiency gains from individual transferable quota itq fisheries management programs this article presents a methodology to estimate harvest sector efficiency gains in lieu of incomplete fleet restructuring the methodology is applied to assess the efficiency gains in the mid atlantic surf clam and ocean quahog fishery itq program while roughly 128 vessels harvested clams under the previous management regime the analysis suggests that 21 25 vessels will remain under ltqs the efficiency gains are estimated to be between 11 1 million and 12 8 million annually 1990 dollars

fishing revenue productivity and product choice in the alaskan pollock fishery a key element in evaluating fishery management strategies is examining their effects on the economic performance of fishery participants yet nearly all empirical studies of fisheries focus exclusively on the amount of fish harvested the economic benefits derived from fish stocks involve the amount of revenue generated from fish processing which is linked to both the way fish are harvested and the products produced from the fish in this study we econometrically estimate a flexible revenue function for catcher processor vessels operating in the alaskan pollock fishery recognizing potential endogeneity and a variety of fishing inputs and conditions we find significant own price supply responses and product substitutability and enhanced revenues from increased fishing days and tow duration after a regulatory change introduced property rights through a new fishing cooperative we also find significant growth in economic productivity or higher revenues over time after controlling for observed productive factors and price changes which exceeds that attributable to increased harvest these patterns suggest that the move to rights based management has contributed significantly to economic performance in the pollock fishery

competitiveness in a globalised world michael porter on the microeconomic foundations of the competitiveness of nations regions and firms in this paper we provide the text of an interview with professor michael porter discussing his research and ideas relating to the microeconomic foundations of global competitiveness the discussion provides a microeconomic perspective on some of the key issues relating to recent research on competitiveness productivity clusters us economic leadership economic growth and development

were there regime switches in u s monetary policy working paper 2004 14 june 2004 abstract a multivariate model identifying monetary policy and allowing for simultaneity and regime switching in coefficients and variances is confronted with u s data since 1959 the best fit is with a model that allows time variation in structural disturbance variances only among models that also allow for changes in equation coefficients the best fit is for a model that allows coefficients to change only in the monetary policy rule that model allows switching among three main regimes and one rarely and briefly occurring regime the three main regimes correspond roughly to periods when most observers believe that monetary policy actually differed and the differences in policy behavior are substantively interesting though statistically ill determined the estimates imply monetary targeting was central in the early 80s but was also important sporadically in the 70s the changes in regime were essential neither to the rise in inflation in the 70s nor to its decline in the 80s jel classification e52 e47 c53 key words counterfactuals lucas critique policy rule monetary targeting simultaneity volatility model comparison i the debate over monetary policy change in an influential paper clarida gali and gertler 2000 cgg presented evidence that us monetary policy changed between the 1970 s and the 1980 s indeed that in the 70 s it was drastically worse they found that the policy rule apparently followed in the 70 s was one that when embedded in most stochastic general equilibrium models would imply non uniqueness of the equilibrium and hence vulnerability of the economy to sunspot fluctuations of arbitrarily large size their estimated policy rule for the later period on the other hand eliminated this indeterminacy these results are a possible explanation of the volatile and rising inflation of the 70 s and of its subsequent decline the cgg analysis has two important weaknesses one is that it fails to account for stochastic volatility us macroeconomic variables and particularly the federal funds rate have gone through periods of tranquility and of agitation with forecast error variances varying greatly from period to period ignoring such variation does not lead to inconsistent estimates of model parameters when the forecasting equations themselves are constant but it strongly biases toward a finding of changed parameters tests of the stability of the forecasting equations the other weakness is that the cgg analysis rests on powerful and implausible identifying assumptions they require that we accept that the response of the monetary authority to expected future inflation and output does not depend on the recent history of inflation money growth or output it is hard to understand why this should be so especially in the 70 s when monetarism was a prominent theme in policy debates congress was requiring reports from the fed of projected time paths of monetary aggregates and financial markets were reacting sensitively to weekly money supply numbers the requirement for existence and uniqueness of equilibrium in dynamic models is that the monetary policy rule show a more than unit response of interest rates to the sum of the logs of all nominal variables that appear on the right hand side of the reaction function if we force a particular measure of expected future inflation to proxy for all the nominal variables that actually appear independently in the reaction function we are bound to get distorted conclusions on the one hand because expected future inflation will be a noisy measure of the full set of nominal influences on policy we might get downward bias in our estimates from the usual errorsin variables effect on the other hand to the extent that expected future inflation like most expected future values shows less variation than current nominal variables we could find a mistaken scaling up of coefficients

an analysis of the efficient production frontier in the fishery implications for enhanced fisheries management the transformation relationship between factor inputs and outputs the efficient production frontier epf contains important information for fisheries managers a directional technology distance function model of the harvesting technology is used to measure changes in the epf over time frontier shifts are summarized with input and output based frontier indicators that are interpreted as measures of bioeconomic productivity change the model is applied to the mid atlantic surf clam and ocean quahog fishery

on delineating supply chain cash flow under collectionrisk abstract the credit terms for accounts receivable ar offered by sellers to buyers not only create a time lag between supply chain physical flow and cash flow but also increase the collection risk contributed by late collection and default previous studies describing the relationship between the two major supply chain flows did not consider the collection risk which poses a serious challenge to companies with limited cash resources when seeking growth opportunities in sales this study first delineates the relationship between the two flows during a growth period without imposing any constraints a stochastic optimization model is then developed to observe the managerial implications of cash flow risk under tight cash constraints

the multinational firm with arm s length transfer price limits abstract a multinational firm faced with arm s length limitations on its transfer prices is examined where the limitations are determined by the firm s marginal cost and intracountry prices such a firm is shown to manipulate its production and sales in order to gain a more desirable transfer price comparative static results develop policy implications not found in simpler models which often assume the firm to be constrained by arm s length limits but to be unaware of the effects of its actions on the limits

governance infrastructure and us foreign direct investment this paper examines the statistical importance of governance infrastructure as a determinant of us foreign direct investment fdi in broad terms governance infrastructure represents attributes of legislation regulation and legal systems that condition freedom of transacting security of property rights and transparency of government and legal processes our econometric analysis uses a two stage estimation procedure in the first stage the probability that a country is an fdi recipient is estimated the results indicate that countries that fail to achieve a minimum threshold of effective governance are unlikely to receive any us fdi countries that receive no us fdi are typically countries that do not promote free and transparent markets that have ineffective governments and that often have legal systems that are not rooted in english common law in the second stage the analysis is restricted to those countries that did receive fdi flows the estimated equations focus on the determinants of the amount of fdi received given that a country is a recipient of us fdi governance infrastructure including the nature of the legal system is an important determinant of the amount received

input output models for the analysis of a local global supply chain abstract a supply chain can be analysed as a network of production processes which can be localised within and outside a given geographic area each process can be defined as a system that produces output flows in consequence of input flows in this paper an input output approach based on production processes is used to develop specific models that investigate flows among production processes either of a whole global supply chain or of a part of the supply chain localised within a given area local by product and waste outputs are also considered the developed models can help improve design and management of supply chains also in terms of sustainable development of a local area in fact this use of the input output analysis entails a deeper understanding of the relationships among the processes and the environment

on integrating theories of international economics in the strategic planning of global supply chains and facility location abstract this paper relates three theories of international economics comparative advantage competitive advantage and competitiveness and formulates the thesis that incorporating them in the form of readily available individual competitiveness indicators in or ms models offers promise to enhance decision support for the strategic planning of global supply chains in general and for locating facilities in particular the purpose of this paper is to relate these theories from the field of international economics to give a roadmap of related measures that are provided by annual competitiveness reports and to pose several research questions as challenges to the or ms community as it seeks to improve models to support the strategic planning process accordingly specific objectives of this paper are to relate each of these theories and to describe their interrelationships to describe measures provided by two well known annual competitiveness reports and to illustrate application of the theories as a means of supporting the thesis of the paper and justifying the research questions we pose for future research while this paper discusses topics relative to the broader background of global supply chain design it illustrates applications associated with facility location a component of the global supply chain design since it has a rich history within the or ms community and since it is central to strategic planning in the global economy

a market driven transfer price for distributed products using mathematical programming a distributed product has its manufacturing activities distributed among many locations these locations could belong to one or more firms in a manufacturing network often components needed to manufacture a distributed product move through different nodes in the network and sometimes across international borders hence a transfer price is needed for the purpose of estimating duties and drawbacks being aware of the fact that transfer price can be used to manipulate taxable profits many countries have instituted rules concerning transfer price estimation for example in the united sates the internal revenue service irs says that the right price is the market value but for many components it is difficult to find a free market similar products may exist in the market but they may have different attributes in such cases it is important to be able to estimate the market driven transfer price given other similar products in the open market we develop a method using a mathematical programming model and providing companies an opportunity to work proactively with the irs in a cooperative manner in order to avoid costly audit and litigation this way companies avoid penalties and also gain certainty regarding tax liability an example illustrating the method is presented

the locational and functional behavior of u s autoparts suppliers the free trade agreement with mexico was expected to help u s autoparts suppliers move southward to take advantage of low labor cost but this has not yet happened we can find explanations for this rather perplexing phenomenon through analyzing the outcome of a postal survey conducted just before the north american free trade agreement nafta went into effect the responses from the suppliers highlight the apparent hierarchy in the lean produc tion system and its impact on the location choices of the parts manufacturing firms despite advances in transportation and telecommunication technologies the need to maintain short distance with respect to customers is still the single most important consideration in their decision making given the reluctance on the part of the vehicle assemblers a mass migration of suppliers to mexico seems unlikely although it is true that they are quite attracted to the low wages offered south of the border

the stochastic volatility in mean model with time varying parameters an application to inflation modeling this article generalizes the popular stochastic volatility in mean model to allow for time varying parameters in the conditional mean the estimation of this extension is nontrival since the volatility appears in both the conditional mean and the conditional variance and its coefficient in the former is time varying we develop an efficient markov chain monte carlo algorithm based on band and sparse matrix algorithms instead of the kalman filter to estimate this more general variant the methodology is illustrated with an application that involves u s u k and germany inflation the estimation results show substantial time variation in the coefficient associated with the volatility highlighting the empirical relevance of the proposed extension moreover in a pseudo out of sample forecasting exercise the proposed variant also forecasts better than various standard benchmarks

an integrated plant loading model with economies of scale and scope abstract this paper presents a new formulation of a class of plant product mix loading problems which are characterized by fixed facility costs concave production costs and an integrated network structure which encompasses inbound supply and outbound distribution flows in particular we are interested in assigning product lines and volumes to a set of capacitated plants fixed costs are incurred when a product line is assigned to a plant the production cost function also exhibits concavity with respect to each product line volume thus both scale and scope economies are considered explicitly in the model the problem formulation leads to a concave mixed integer mathematical program we develop an optimization algorithm within the framework of benders decomposition for the case of a piecewise linear concave cost function our algorithm generates optimal solutions efficiently the problem solutions also illustrate how our model is effective in evaluating tradeoffs between inbound production and outbound costs finally the model is used to illustrate the impact of various cost factors logistics scale and complexity on optimal product mix solutions

an integrated location production distribution and investment model for a multinational corporation abstract we present a mixed integer linear formulation that extends published models on multinational corporation facility location decisions by including exogenous variables such as exchange rates and tariff rates and incorporating production distribution and investment decisions the model provides insights on production levels facility configurations distribution strategies and levels of investment needed at these facilities and explores factors that influence the facility s configuration decisions several scenarios are considered based on various facility configurations and levels of exchange and tariff rates the results obtained from these show that the model s performance and results are in complete agreement with accepted economic theories