Design of International Assembly Systems and Their Supply Chains Under NAFTA

Although NAFTA has encouraged U.S.-based companies to locate assembly operations in Mexico, no widely-accepted tools provide decision support for the strategic design of an assembly system in this international environment. This paper provides such a decision support aid. The problem is to design an assembly system by prescribing facilities, including the location, technologies to be employed and capacity of each. Strategic aspects of the supporting supply chain are designed by selecting suppliers; locating distribution centers; planning transportation modes; and allocating target levels for production, assembly and distribution. The objective is to maximize after-tax profits. A mixed integer programming model is presented that represents the complexities of the international design problem as well as relevant enterprise-wide decisions in the US-Mexico business environment under NAFTA. It deals with a broad set of design issues (e.g., bill-of-material restrictions, international financial considerations, and material flow through the entire supply chain) using effective modeling devices. Several cases are investigated to demonstrate how managers might apply the model as a decision support aid. The examples show that the model can be successfully used to evaluate a variety of factors and analyze a number of tradeoffs related to the design of international assembly systems and supply chains.


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  • Accession Number: 01010471
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Nov 17 2005 11:53PM