Design of international assembly systems and their supply chains under NAFTA

Wilbert Wilhelm, Dong Liang, Brijesh Rao, Deepak Warrier, Xiaoyan Zhu and Sharath Bulusu

Transportation Research Part E: Logistics and Transportation Review, 2005, vol. 41, issue 6, 467-493

Abstract: The purpose of this paper is to provide a decision support aid for the strategic design of an assembly system in the international business environment created by NAFTA. The strategic design problem is to prescribe a set of facilities, including their locations, technologies, and capacities, as well as strategic aspects of the supply chain, selecting suppliers; locating distribution centers; planning transportation modes; and allocating target levels (i.e., amounts) for production, assembly, and distribution. The objective is to maximize after-tax profits. This paper presents a mixed integer programming model that represents the complexities of the international design problem as well as relevant enterprise-wide decisions in the US-Mexico business environment under NAFTA. It deals with a broad set of design issues (e.g., bill-of-material restrictions, international financial considerations, and material flow through the entire supply chain) using effective modeling devices (e.g., linearizing non-linearities that arise in modeling transfer prices and allocating transportation charges). Examples demonstrate how managers might use the model as a decision support aid.

Keywords: Designing; international; assembly; systems; Designing; international; supply; chains; Strategic; planning; under; NAFTA; Modeling; international; business; considerations; Mixed; integer; programming (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (25)

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