Kenichi Funaki

Recent Issues in International Supply Chain Network Design—Economic Partnership Modeling

In this paper, we present a supply chain network design technique with a preferential tariff under an economic partnership agreement. The proposed model has constraints to judge whether a preferential tariff applies under two types of rules which identify the product origin country. This model can estimate the cost reduction amount under preferential tariff utilization, and design the minimum total cost supply chain network. We show results of some case studies of factory location selection under the assumption that applicable new tariff schemes will go into effect and labor cost will rise remarkably in the future. These results suggest two types of strategies: selecting the lowest location and selecting high-cost locations for which a preferential tariff applies. It is confirmed that the proposed model can effectively perform such a quantitative evaluation.