Research Reports from the Department of Operations
Document Type
Dissertation
Publication Date
1-1-1974
Abstract
The objective of this research is to develop a systematic procedure for evaluating alternative capacity expansion decisions in a multinational environment when considering explicitly both tangible and intangible factors. A mathematical programming decision model is developed to select those countries and production levels that maximize expected utility, considering all possible alternatives. Consideration of intangible factors in the form of an environmental value is investigated. A regression model predicts the environmental value of a country from a set of fundamental causal factors derived through factor analysis. The environmental value is incorporated into a return on investment index which forms the expected country production utility. A computer program based on an integer programming algorithm is used to test the efficiency of the model in an actual corporate plant site expansion decision, i.e., to select the optimal location for expansion among a list of potential countries and production alternatives. The causal factors of the environmental value (E) were identified as product infrastructure (PI), fiscal stability (FS), and labor cost stability (LS). For the example considered, it was determined that E = .52 PI + .30 FS + .18 LS, and a recommendation was made for a new plant to be located in South Africa with a capacity of 1.5 million items annual production.
Keywords
Operations research, Industrial location--Mathematical models, Industrial capacity--Planning, International business enterprises--Planning, Decision making--Mathematical models, Production planning
Publication Title
Dissertation/Technical Memorandums from the Department of Operations, School of Management, Case Western Reserve University
Issue
Technical memorandum no. 323 ; Submitted in partial fulfillment of the requirements for the Degree of Doctor of Philosophy.
Rights
This work is in the public domain and may be freely downloaded for personal or academic use
Recommended Citation
Kondylis, Emmanuel Constantine, "A Multinational Plant Capacity Expansion Planning Model" (1974). Research Reports from the Department of Operations. 325.
https://commons.case.edu/wsom-ops-reports/325