Regulatory factors and capacity-expansion planning in global chemical supply chains

Abstract

Capacity-expansion planning is a class of strategic supply-chain problems that has received extensive attention from both chemical engineering and operations research communities since the late 1950s. Nevertheless, to the best of our knowledge, no previous work has so far addressed these problems on a global scale while accounting for the effect of multiple key regulatory factors. This paper fills this gap in the capacity-planning research using a four-prong approach. First, it introduces and classifies key regulatory factors that can significantly influence the earnings or business operations of multinational companies. Second, it presents a new deterministic capacity-expansion-planning model in which sizes of expansions or new facilities are variables and domestic and international regulatory factors are explicitly taken into account. Third, it extends the deterministic model to address important issues such as distribution centers, outsourcing, and uncertainty in problem parameters. Last, it demonstrates the importance and effect of incorporating multiple regulatory factors in capacity-expansion-planning models using illustrative examples.