Screening location strategies to reduce exchange rate risk

A firm that markets its products and services world-wide may face significant financial risk due to exchange rate fluctuations unless it maintains an international sourcing/production network. Thus, the firm must evaluate various sourcing/production network designs. The selection of the appropriate...

Full description

Saved in:
Bibliographic Details
Published in:European journal of operational research 2002-02, Vol.136 (3), p.573-590
Main Authors: Lowe, Timothy J, Wendell, Richard E, Hu, Gang
Format: Article
Language:English
Subjects:
Education
Investment analysis
Location
Multicriteria analysis
Production
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:A firm that markets its products and services world-wide may face significant financial risk due to exchange rate fluctuations unless it maintains an international sourcing/production network. Thus, the firm must evaluate various sourcing/production network designs. The selection of the appropriate design is not straight-forward since decisions are made in an environment of uncertainty and involve multiple time periods. We propose a two-phase approach to screen various alternative designs (configurations) utilizing a number of criteria, and illustrate it using a popular Harvard Business School case. As by-products, we introduce a new criterion for making a pairwise stochastic comparison of alternatives and demonstrate the value of maintaining excess geographically-dispersed production capacity.
ISSN:0377-2217
1872-6860
DOI:10.1016/S0377-2217(01)00065-0