Supply Chain Strategies for Trade War Conditions: A Scenario Analysis of Strategies and Tariffs Using a Linear Programming Model.
(2024) SMMM40 20241Department of Service Studies
- Abstract
- Study purpose: The primary aim of this study is to explore the performance of different supply
chain configurations made in response to various U.S. tariff rate conditions, particularly those
impacting imports from China. Previous research has predominantly addressed this topic at the
macro level, whereas this study employs a single-case firm, Nexus, to provide a more
comprehensive analysis of the performance of tariff mitigation strategies at the micro level.
Methodology: The methodology employed in this study uses linear programming models and
scenario analysis within a case study framework. We utilized the linear programming tool,
Cosmic Frog by Optilogic, recognized for its capability to simulate real-world supply chain
... (More) - Study purpose: The primary aim of this study is to explore the performance of different supply
chain configurations made in response to various U.S. tariff rate conditions, particularly those
impacting imports from China. Previous research has predominantly addressed this topic at the
macro level, whereas this study employs a single-case firm, Nexus, to provide a more
comprehensive analysis of the performance of tariff mitigation strategies at the micro level.
Methodology: The methodology employed in this study uses linear programming models and
scenario analysis within a case study framework. We utilized the linear programming tool,
Cosmic Frog by Optilogic, recognized for its capability to simulate real-world supply chain
networks and various scenario outcomes including changes in tariff rates and different sourcing
strategies. The tool enabled the creation of a model of the firm’s supply chain, the
implementation of alterations to sourcing and assembly configurations, and the assessment of
their performance under a range of tariff rate scenarios.
Findings: The analysis revealed that, from the tested strategies, reallocating supply capacity
to Mexico emerged as the most cost-effective one, significantly improving cost metrics
compared to the Default. However, the study also revealed that strategies designed solely to
avoid tariffs could lead to increased costs in other operational areas, thereby necessitating
careful integration into the firm's existing supply chain framework. Geographical factors also
emerged as crucial, with configurations in lower-cost regions like Vietnam showing distinct
advantages in operational expenditures compared to areas such as South Korea.
Research implications: The implications of this research extend to both theoretical and
practical realms of supply chain and operations management. Theoretically, the study enriches
the existing literature by providing empirical evidence on the impacts of strategic supply chain
reconfigurations in response to international trade policies. Practically, it offers an example to
firms that it is possible to evaluate tariff mitigation strategies with relatively low risk and
investment. Furthermore, it provides insight that firms can use to better evaluate their
strategical options. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9160465
- author
- Kärnä, Panu Petteri LU and Szász, Botond
- supervisor
- organization
- course
- SMMM40 20241
- year
- 2024
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Tariff impact analysis, linear programming, scenario analysis, sourcing and assembly strategies, trade policy
- language
- English
- id
- 9160465
- date added to LUP
- 2024-06-14 10:22:36
- date last changed
- 2024-06-14 10:22:36
@misc{9160465,
abstract = {{Study purpose: The primary aim of this study is to explore the performance of different supply
chain configurations made in response to various U.S. tariff rate conditions, particularly those
impacting imports from China. Previous research has predominantly addressed this topic at the
macro level, whereas this study employs a single-case firm, Nexus, to provide a more
comprehensive analysis of the performance of tariff mitigation strategies at the micro level.
Methodology: The methodology employed in this study uses linear programming models and
scenario analysis within a case study framework. We utilized the linear programming tool,
Cosmic Frog by Optilogic, recognized for its capability to simulate real-world supply chain
networks and various scenario outcomes including changes in tariff rates and different sourcing
strategies. The tool enabled the creation of a model of the firm’s supply chain, the
implementation of alterations to sourcing and assembly configurations, and the assessment of
their performance under a range of tariff rate scenarios.
Findings: The analysis revealed that, from the tested strategies, reallocating supply capacity
to Mexico emerged as the most cost-effective one, significantly improving cost metrics
compared to the Default. However, the study also revealed that strategies designed solely to
avoid tariffs could lead to increased costs in other operational areas, thereby necessitating
careful integration into the firm's existing supply chain framework. Geographical factors also
emerged as crucial, with configurations in lower-cost regions like Vietnam showing distinct
advantages in operational expenditures compared to areas such as South Korea.
Research implications: The implications of this research extend to both theoretical and
practical realms of supply chain and operations management. Theoretically, the study enriches
the existing literature by providing empirical evidence on the impacts of strategic supply chain
reconfigurations in response to international trade policies. Practically, it offers an example to
firms that it is possible to evaluate tariff mitigation strategies with relatively low risk and
investment. Furthermore, it provides insight that firms can use to better evaluate their
strategical options.}},
author = {{Kärnä, Panu Petteri and Szász, Botond}},
language = {{eng}},
note = {{Student Paper}},
title = {{Supply Chain Strategies for Trade War Conditions: A Scenario Analysis of Strategies and Tariffs Using a Linear Programming Model.}},
year = {{2024}},
}