Under uncertainty of exchange rate, we extend the batch process production model of Lin et al. by considering an export-oriented manufacturer making decisions to switch freely between domestic and foreign locations. The export-oriented manufacturer is risk neutral and has rational expectations. We use dynamic programming and Lagrange multipliers for a stochastic optimization control problem to get the productive value of exporter products in domestic and foreign locations. Next, the export-oriented manufacturer can make decision regarding the optimal entry (exit) trigger for transferable locations wherever the product locations are. It provides the supplier with another way to make decisions.
