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Formation of a strategic manufacturing and distribution network with transfer pricesAuthor-Name: de Matta, Renato

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  • Miller, Tan

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.

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  • Miller, Tan, 2015. "Formation of a strategic manufacturing and distribution network with transfer pricesAuthor-Name: de Matta, Renato," European Journal of Operational Research, Elsevier, vol. 241(2), pages 435-448.
    • Handle: RePEc:eee:ejores:v:241:y:2015:i:2:p:435-448
    DOI: 10.1016/j.ejor.2014.08.042
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    Cited by:

    1. Renato Matta, 2019. "Product costing in the strategic formation of a supply chain," Annals of Operations Research, Springer, vol. 272(1), pages 389-427, January.
    2. Hoo Poh Ying & Cassendra Bong Phun Chien & Fan Yee Van, 2020. "Operational Management Implemented in Biofuel Upstream Supply Chain and Downstream International Trading: Current Issues in Southeast Asia," Energies, MDPI, vol. 13(7), pages 1-26, April.
    3. Renato Matta, 2017. "Contingency planning during the formation of a supply chain," Annals of Operations Research, Springer, vol. 257(1), pages 45-75, October.
    4. da Silva Stefano, Gustavo & Antunes, Tiago dos Santos & Lacerda, Daniel Pacheco & Wolf Motta Morandi, Maria Isabel & Piran, Fabio Sartori, 2022. "The impacts of inventory in transfer pricing and net income: Differences between traditional accounting and throughput accounting," The British Accounting Review, Elsevier, vol. 54(2).
    5. Sol Picciotto, . "International tax, regulatory arbitrage and the growth of transnational corporations," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.

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