A multifactor model for international plant location and financing under uncertainty
type: Item
instance of: scholarly article
title: A multifactor model for international plant location and financing under uncertainty
zbMATH Open document ID: 0615.90041
DOI: 10.1016/0305-0548(86)90053-5
author: James E. Hodder
author: M. Cemal Dincer
published in: Computers \& Operations Research
publication date: 1986-01-01T00:00:00Z
review text: This paper presents a model for analyzing internationl plant location and financing decisions under uncertainty. The model diverges from the usual plant location problem in that location and financing decisions are considered simultaneously. This approach is necessary since subsidized financing as well as preferential tax treatment can be significant influences on international location decisions. In addition, financing in different currencies can be used to hedge uncertain price and exchange rate movements. Risk aversion enters via a mean-variance objective function in firm profit. The resulting problem is mixed-integer quadratic and would generally present severe computational difficulties. However, we show that a multifactor approach can be used to transform this problem into one which can be solved fairly readly. The result is a model which is computationally feasible for problems of reasonable size while still including the effects of uncertainty, financial subsidies and hedging strategies on international location decisions. Computational experience is discussed for two solution procedures. One approach uses the quadratic programming package of LINDO coupled to a branch-and-bound procedure. The other approach used a gradient search procedure plus branch-and-bound.
Mathematics Subject Classification ID: 90B05
Mathematics Subject Classification ID: 90C90
Mathematics Subject Classification ID: 90C10
Mathematics Subject Classification ID: 90C20
Mathematics Subject Classification ID: 65K05
zbMATH DE Number: 3997519
zbMATH Keywords: internationl plant location
zbMATH Keywords: financing decisions under uncertainty
zbMATH Keywords: Risk aversion
zbMATH Keywords: Computational experience
zbMATH Keywords: branch-and-bound
zbMATH Keywords: gradient search
describes a project that uses: LINDO
MaRDI profile type: Publication
full work available at URL: 0305-0548(86)90053-5
OpenAlex ID: W1978433734
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description: scientific article; zbMATH DE number 3997519