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Combining decision tree and MAUT for selecting a country for a global manufacturing facility

Listed author(s):
  • Canbolat, Yavuz Burak
  • Chelst, Kenneth
  • Garg, Nitin
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    The paper presents a multi-phase approach for selecting a country in which to locate a global manufacturing facility. An influence diagram is used to frame the decision. A decision tree then analyzes uncertainties regarding cost and generates a risk profile. The risk profile becomes one of the measures in an MAUT model that incorporate a wide range of factors. This sequential approach of using the output from a decision tree as input to MAUT is demonstrated with an example involving an auto supplier locating a new plant in one of five countries. Three decision makers were interviewed to determine the weights and the shape of the individual utility curves. The paper identifies, clearly defines, and incorporates a variety of measures for which national data are readily available. This list is broader and less subjective when compared to other examples reported in the literature.

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    Article provided by Elsevier in its journal Omega.

    Volume (Year): 35 (2007)
    Issue (Month): 3 (June)
    Pages: 312-325

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    Handle: RePEc:eee:jomega:v:35:y:2007:i:3:p:312-325
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    1. Goetschalckx, Marc & Vidal, Carlos J. & Dogan, Koray, 2002. "Modeling and design of global logistics systems: A review of integrated strategic and tactical models and design algorithms," European Journal of Operational Research, Elsevier, vol. 143(1), pages 1-18, November.
    2. Killmer, K. A. & Anandalingam, G. & Malcolm, S. A., 2001. "Siting noxious facilities under uncertainty," European Journal of Operational Research, Elsevier, vol. 133(3), pages 596-607, September.
    3. Ralph L. Keeney, 1973. "A Decision Analysis with Multiple Objectives: the Mexico City Airport," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 101-117, Spring.
    4. Ralph L. Keeney & Timothy L. McDaniels, 1992. "Value-Focused Thinking about Strategic Decisions at BC Hydro," Interfaces, INFORMS, vol. 22(6), pages 94-109, December.
    5. Lowe, Timothy J. & Wendell, Richard E. & Hu, Gang, 2002. "Screening location strategies to reduce exchange rate risk," European Journal of Operational Research, Elsevier, vol. 136(3), pages 573-590, February.
    6. Melachrinoudis, Emanuel & Min, Hokey, 2000. "The dynamic relocation and phase-out of a hybrid, two-echelon plant/warehousing facility: A multiple objective approach," European Journal of Operational Research, Elsevier, vol. 123(1), pages 1-15, May.
    7. Badri, Masood A., 1999. "Combining the analytic hierarchy process and goal programming for global facility location-allocation problem," International Journal of Production Economics, Elsevier, vol. 62(3), pages 237-248, September.
    8. Owen, Susan Hesse & Daskin, Mark S., 1998. "Strategic facility location: A review," European Journal of Operational Research, Elsevier, vol. 111(3), pages 423-447, December.
    9. Donald L. Keefer & Samuel E. Bodily, 1983. "Three-Point Approximations for Continuous Random Variables," Management Science, INFORMS, vol. 29(5), pages 595-609, May.
    10. Yurimoto, Shigeru & Masui, Tadayuki, 1995. "Design of a decision support system for overseas plant location in the EC," International Journal of Production Economics, Elsevier, vol. 41(1-3), pages 411-418, October.
    11. Ralph L. Keeney & Timothy L. McDaniels, 1999. "Identifying and Structuring Values to Guide Integrated Resource Planning at BC Gas," Operations Research, INFORMS, vol. 47(5), pages 651-662, October.
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