Article ID: | iaor20022679 |
Country: | Netherlands |
Volume: | 136 |
Issue: | 3 |
Start Page Number: | 573 |
End Page Number: | 590 |
Publication Date: | Feb 2002 |
Journal: | European Journal of Operational Research |
Authors: | Wendell Richard E., Lowe TImothy J., Hu Gang |
Keywords: | programming: multiple criteria |
A firm that markets its products and services world-wide may face significant financial risk due to exchange rate fluctuations unless it maintains an international sourcing/production network. Thus, the firm must evaluate various sourcing/production network designs. The selection of the appropriate design is not straight-forward since decisions are made in an environment of uncertainty and involve multiple time periods. We propose a two-phase approach to screen various alternative designs (configurations) utilizing a number of criteria, and illustrate it using a popular Harvard Business School case. As by-products, we introduce a new criterion for making a pairwise stochastic comparison of alternatives and demonstrate the value of maintaining excess geographically-dispersed production capacity.