Screening location strategies to reduce exchange rate risk

Timothy J. Lowe, Richard E. Wendell, Gang Hu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

45 Citations (Scopus)

Abstract

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.
Original languageEnglish
Pages (from-to)573-590
Number of pages18
JournalEuropean Journal of Operational Research
Volume136
Issue number3
DOIs
Publication statusPublished - 1 Feb 2002
Externally publishedYes

Keywords

  • Education
  • Investment analysis
  • Location
  • Multicriteria analysis
  • Production

ASJC Scopus subject areas

  • Information Systems and Management
  • Management Science and Operations Research
  • Statistics, Probability and Uncertainty
  • Applied Mathematics
  • Modelling and Simulation
  • Transportation

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