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Plant location and inventory level decisions in global supply chains: Evidence from Korean firms

Title
Plant location and inventory level decisions in global supply chains: Evidence from Korean firms
Authors
Lee S.Park S.J.Seshadri S.
Ewha Authors
박승재
SCOPUS Author ID
박승재scopus
Issue Date
2017
Journal Title
European Journal of Operational Research
ISSN
0377-2217JCR Link
Citation
vol. 262, no. 1, pp. 163 - 179
Keywords
Exchange rateGlobal supply chainInventory levelManufacturingPlant location
Publisher
Elsevier B.V.
Indexed
SCIE; SCOPUS WOS scopus
Abstract
We investigate how firms make plant location and inventory level decisions to serve global markets. In our analysis, we consider not only differences in wages, transportation costs, and subsidies across countries but also exchange rate changes and competition between firms. We show that the degree of risk exposure of firms and the benefit of relocating plants to the final consumption market play a critical role in firms’ plant location decisions, especially when the global economy is highly uncertain. We provide conditions under which a firm relocates its plant from one country to another, and empirically validate the results. We then investigate how a firm manages inventory when its plant is located in a foreign country. We model and show that firm's inventory level depends on currency exchange rates and transportation costs when the firm imports products. We empirically confirm the predictions of the theory by using a unique firm-level dataset drawn from Korean firms. © 2017 Elsevier B.V.
DOI
10.1016/j.ejor.2017.03.044
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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