Tan Miller (Ph.D. University of Pennsylvania) is the Harper Professor of Global Supply Chain Management at Rider University. He has logistics experience at Pfizer, Warner-Lambert, Mercer Management Consulting, Unisys and American Olean Tile. His responsibilities have included heading the logistics operations of a multi-billion dollar distribution network, leading a logistics strategic planning organization, and working in numerous other related supply chain functional areas. Dr. Miller has published four books on logistics and supply chain operations, planning and modeling. He has also published in such journals as the Journal of Business Logistics, Distribution Magazine, The Annals of Operations Research and Location Science, and he serves on the editorial board of several industry trade journals. He received his doctorate and MBA from the University of Pennsylvania and the Wharton School.
A GLOBAL SUPPLY CHAIN PROFIT MAXIMIZATION AND TRANSFER PRICING MODEL
Article first published online: 10 MAY 2011
2008 Council of Supply Chain Management Professionals
Journal of Business Logistics
Volume 29, Issue 1, pages 175–199, Spring 2008
How to Cite
Miller, T. and de Matta, R. (2008), A GLOBAL SUPPLY CHAIN PROFIT MAXIMIZATION AND TRANSFER PRICING MODEL. JOURNAL OF BUSINESS LOGISTICS, 29: 175–199. doi: 10.1002/j.2158-1592.2008.tb00074.x
- Issue published online: 10 MAY 2011
- Article first published online: 10 MAY 2011
- Capacity management;
- Global supply chain;
- Production and distribution;
- Production planning;
- Transfer pricing
In environments where tax rates in local regions do not represent major decision factors, a cost minimization methodology, which represents the most common optimization modeling approach for integrated manufacturing and distribution planning, can help formulate an effective integrated plan. However, when planning flexibility or alternatives exist because of differing local country tax rates and types and intra-company transfer pricing options, cost minimization methodologies may inaccurately identify profit-maximizing global production and distribution plans. Instead, a profit maximization model that explicitly evaluates decisions such as where to incur tax liabilities and how to set intra-company prices may be required to develop an integrated global manufacturing and distribution plan. In this paper, we discuss and formulate a model that yields profit maximizing global production and distribution plans. We discuss the managerial implications of our results, and the potential applications and benefits of the model.