Article ID: | iaor20063005 |
Country: | United Kingdom |
Volume: | 41 |
Issue: | 6 |
Start Page Number: | 467 |
End Page Number: | 493 |
Publication Date: | Nov 2005 |
Journal: | Transportation Research. Part E, Logistics and Transportation Review |
Authors: | Wilhelm Wilbert E., Liang Dong, Rao Brijesh, Warrier Deepak, Zhu Xiaoyan, Bulusu Sharath |
Keywords: | programming: integer |
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.