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Supply chain outsourcing under exchange rate risk and competition

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  • Liu, Zugang
  • Nagurney, Anna

Abstract

This paper studies the impacts of foreign exchange risk and competition intensity on supply chain companies who are involved in offshore-outsourcing activities. In particular, we develop a variational inequality model that considers firms' decision-making regarding pricing, offshore outsourcing, transportation, and in-house production under competition and foreign exchange uncertainty. We also use a series of simulation examples to answer questions regarding outsourcing and pricing strategies of supply chain firms with different risk attitudes, and explore numerically their associated profits and incurred risks.

Suggested Citation

  • Liu, Zugang & Nagurney, Anna, 2011. "Supply chain outsourcing under exchange rate risk and competition," Omega, Elsevier, vol. 39(5), pages 539-549, October.
    • Handle: RePEc:eee:jomega:v:39:y:2011:i:5:p:539-549
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