A Multiple-Period, Mixed-Integer-Programming Model for Multinational Facility Location

Abstract

Existing literature on multinational enterprises andfacility location lacks discussion of foreign site selection problems. This article presents a multiple-period, mixed-integer-programming mathematical model that maximizes after-tax profit to the parent corporation by selecting the optimal overseas manufacturing location(s). The model deals with such factors as time, political risk and threat of expropriation, host-nation incentives and regulations, labor characteristics and training grants, technology and experience effects, and parts and sourcing. A data matrix, using columns to define variables and rows to define the objective function and constraints, is presented. A hypothetical example illustrates the model, which is applicable to varying problem sizes even though the size of the data matrix increases quickly with larger-scale site-selection problems.