Integration of product architecture and supply chain under currency exchange rate fluctuation

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2021-03-10
Authors
Günay, Elif
Park, Kijung
Okudan Kremer, Gül
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Industrial and Manufacturing Systems Engineering
The Department of Industrial and Manufacturing Systems Engineering teaches the design, analysis, and improvement of the systems and processes in manufacturing, consulting, and service industries by application of the principles of engineering. The Department of General Engineering was formed in 1929. In 1956 its name changed to Department of Industrial Engineering. In 1989 its name changed to the Department of Industrial and Manufacturing Systems Engineering.
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Industrial and Manufacturing Systems Engineering
Abstract

Various studies have discussed the coordination of product and supply chain design decisions for global supply chain management. However, the impact of currency exchange rate uncertainty on the selection of product architectures and their suppliers has not been sufficiently addressed. As a response, this study proposes a two-stage stochastic optimization model in which the first stage determines the product architecture, and the second stage identifies suppliers for the modules and components in an optimal fashion based on the product architecture and uncertain currency exchange rates. The overall objective of two-stage stochastic programming is to determine the optimal product architecture that minimizes the expected total supply chain cost over uncertain currency exchange rate scenarios. The proposed model is applied to a bicycle supply chain case study for three global marketplaces associated with multiple currency exchange rates. The results demonstrate that optimal product architecture and its suppliers should be varied based on currency exchange rates and their uncertain fluctuation levels. Also, a product architecture for the supply chain of each marketplace maintains its optimality in the total supply chain cost, up to a specific exchange rate. The findings show the importance of joint integration between product and supply chain design when considering currency exchange rates. Additionally, the benefit of stochastic modelling is demonstrated by comparing the solution quality of the model with its deterministic counterpart.

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This is a post-peer-review, pre-copyedit version of an article published in Research in Engineering Design. The final authenticated version is available online at DOI: 10.1007/s00163-021-00361-0. Posted with permission.

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Fri Jan 01 00:00:00 UTC 2021
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