Design and Analysis of Global Supply Chain Network with Trans-Pacific Partnership under Fluctuating Material Prices

Abstract

Manufacturing firms are becoming more global and forming global supply chain networks in their pursuit of lower production costs and emerging markets, including those in Asia. The global supply chain network consists of domestic as well as international suppliers, factories, and markets. Then, the supply chain network applies customs duties when parts and products are transported across overseas borders. In addition, awareness about several cross-border treaties such as regional free trade agreements (FTAs) and the Trans-Pacific Partnership (TPP), is indispensable when designing a global supply chain network. The current fluctuations in oil and energy price also cannot be ignored. This study analyzes the effect of fluctuating material prices on the global supply chain network under customs duty rates and the TPP regime. First, the global supply chain network with customs duty and TPP is modeled. Next, the model is formulated with integer programming. Finally, sensitivity analysis is conducted in order to investigate the effect on the global supply chain network of the fluctuations in material prices.