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Redesign of global supply chains with integration of transfer pricing: Mathematical modeling and managerial insights

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  • Hammami, R.
  • Frein, Y.

Abstract

Unlike the supply chain (SC) design problem which deals with the configuration of a new SC, the redesign problem assumes that a SC already exists and focuses on its reconfiguration in order to take profit of the changing logistics, financial, and fiscal advantages offered by each country. First, this requires considering specific decisions and cost factors such as those associated with facility closing and capacity relocation. These aspects are often ignored by SC design models. Second, to better capitalize on the tax advantages in each country, the redesign of SC requires the consideration of taxation rates and, mainly, transfer pricing. Indeed, companies can use transfer pricing to shift profits to lower-tax countries which may impact on the SC redesign decisions (e.g., on the relocation of operations and manufacturing facilities).

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  • Hammami, R. & Frein, Y., 2014. "Redesign of global supply chains with integration of transfer pricing: Mathematical modeling and managerial insights," International Journal of Production Economics, Elsevier, vol. 158(C), pages 267-277.
    • Handle: RePEc:eee:proeco:v:158:y:2014:i:c:p:267-277
    DOI: 10.1016/j.ijpe.2014.08.005
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    Cited by:

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    2. Cascavilla, Alessandro, 2023. "Negotiated transfer pricing and uncertain regulation: a simulated trust game approach," MPRA Paper 118703, University Library of Munich, Germany.
    3. Liu, Songsong & Papageorgiou, Lazaros G., 2018. "Fair profit distribution in multi-echelon supply chains via transfer prices," Omega, Elsevier, vol. 80(C), pages 77-94.
    4. Kopel, Michael & Löffler, Clemens, 2023. "Tax differences and international location strategies," International Journal of Production Economics, Elsevier, vol. 256(C).
    5. Bassma Azzamouri & Vincent Hovelaque, 2024. "An integrated steering approach to improve a phosphate supply chain efficiency," Post-Print hal-04418207, HAL.
    6. Julio B. Clempner & Alexander S. Poznyak, 2019. "Solving Transfer Pricing Involving Collaborative and Non-cooperative Equilibria in Nash and Stackelberg Games: Centralized–Decentralized Decision Making," Computational Economics, Springer;Society for Computational Economics, vol. 54(2), pages 477-505, August.
    7. Clempner, Julio B., 2020. "Penalizing passenger’s transfer time in computing airlines revenue," Omega, Elsevier, vol. 97(C).
    8. da Silva Stefano, Gustavo & Antunes, Tiago dos Santos & Lacerda, Daniel Pacheco & Wolf Motta Morandi, Maria Isabel & Piran, Fabio Sartori, 2022. "The impacts of inventory in transfer pricing and net income: Differences between traditional accounting and throughput accounting," The British Accounting Review, Elsevier, vol. 54(2).
    9. Julio B. Clempner, 2018. "Strategic Manipulation Approach for Solving Negotiated Transfer Pricing Problem," Journal of Optimization Theory and Applications, Springer, vol. 178(1), pages 304-316, July.
    10. Ariane Kayser & Florian Sahling, 2023. "Relocatable modular capacities in risk aware strategic supply network planning under demand uncertainty," Schmalenbach Journal of Business Research, Springer, vol. 75(1), pages 1-35, March.

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