International Migrant Labor and Supply Chains

The pandemic has disrupted supply chains globally with a major shortfall being that of labor shortages from production through distribution activities. In this chapter, I construct a supply chain network optimization model that includes both domestic labor and international migrant labor from multiple countries, with the latter made possible through investments in attracting labor subject to a budget constraint. The model allows for different wage settings for domestic versus migrant labor and also has the flexibility of having true information as to the wages of migrants provided or not. Variational inequality formulations of the model are derived, along with qualitative properties, and an algorithm presented that yields closed form expressions for the underlying problem variables at each iteration. The model is one of the very few variational inequality operations research models with nonlinear constraints. Three series of algorithmically solved numerical examples, motivated by a high value agricultural product—that of truffles, reveal interesting insights in terms of profits, prices, product path flows, and investments, with variations in the data including that of truthful and untruthful wages being used to attract migrant labor.