A multi-period mixed integer programming model for the problem of relocating a global manufacturing facility

Zhang, A. and Huang, G.Q. (2010) A multi-period mixed integer programming model for the problem of relocating a global manufacturing facility. Journal of the Chinese Institute of Industrial Engineers, 27(6), pp. 407-417. (doi: 10.1080/10170669.2010.512772)

Abstract

In the recent years, changing business conditions have triggered labor-intensive global manufacturers to consider relocating out of the Pearl River Delta of China, known as “The World's Factory.” This article presents a multi-period mixed integer programming model for the problem of relocating a global manufacturing facility. The objective function of the model is to maximize total after-tax profit. The model addresses dynamic aspects of timing, including potential developments in business factors and the need for a gradual capacity transfer in order not to disrupt supply chain activities. The model application generates an optimal capacity transfer schedule and forecasts after-tax profits. In general, a stable exchange rate for the Chinese currency, renminbi (RMB), would make lower-cost areas of China more competitive. Also, a dramatic RMB appreciation would enhance the comparative advantage of Asian lower-cost countries. A rapid increase in oil prices would make locations near major markets more favorable in order to avoid high transportation costs.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Zhang, Dr Abraham
• Authors: Zhang, A., and Huang, G.Q.
• College/School: College of Social Sciences > Adam Smith Business School > Management
• Journal Name: Journal of the Chinese Institute of Industrial Engineers
• ISSN: 1017-0669
• Published Online: 19 August 2010

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