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Strategic capacity planning in automotive production networks under duties and duty drawbacks

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  • Mariel, Katharina
  • Minner, Stefan

Abstract

High tariffs and complex customs procedures for automotive goods have a crucial impact on global production strategies. Global market growth forces automotive OEMs to invest significantly in capacity adjustments to their worldwide production networks. To ensure future profitability, capacity utilization and customs have to be balanced. The overall duty expenditures can be reduced by claiming duty drawbacks when imported materials are used for export manufacturing. In this regard, OEMs have to decide on where to build up production capacity, where to produce components and where to manufacture the vehicles. Motivated by real-world planning problems of a major OEM, we develop a mixed-integer model that simultaneously considers strategic capacity adjustments and duties and drawbacks for multi-stage, multi-product production processes. As for the accurate consideration of duty payments, an exact tracking of the routes and the location sequence of the particular production steps are required. We present a path-based formulation of alternative production options.

Suggested Citation

  • Mariel, Katharina & Minner, Stefan, 2015. "Strategic capacity planning in automotive production networks under duties and duty drawbacks," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 687-700.
  • Handle: RePEc:eee:proeco:v:170:y:2015:i:pb:p:687-700
    DOI: 10.1016/j.ijpe.2015.05.033
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    References listed on IDEAS

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    Cited by:

    1. Rajat Mishra & Randy Napier & Mahmut Yasar, 2019. "Do competitors respond to capacity changes? Evidence from U.S. manufacturers," Operations Management Research, Springer, vol. 12(3), pages 159-172, December.
    2. Kozjek, Dominik & Vrabič, Rok & Eržen, Gregor & Butala, Peter, 2018. "Identifying the business and social networks in the domain of production by merging the data from heterogeneous internet sources," International Journal of Production Economics, Elsevier, vol. 200(C), pages 181-191.
    3. Jakubovskis, Aldis, 2017. "Flexible production resources and capacity utilization rates: A robust optimization perspective," International Journal of Production Economics, Elsevier, vol. 189(C), pages 77-85.
    4. Mariel, Katharina & Minner, Stefan, 2017. "Benders decomposition for a strategic network design problem under NAFTA local content requirements," Omega, Elsevier, vol. 68(C), pages 62-75.

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