An operational profit sharing and transfer pricing model for network-manufacturing companies
New age companies are forging partnerships with other firms to market products that have been assembled through manufacturing activities distributed at different locations. These locations belong to more than one company and the product passes through these different sites during its manufacturing s...
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Published in | European journal of operational research Vol. 175; no. 1; pp. 543 - 565 |
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Main Author | |
Format | Journal Article |
Language | English |
Published |
Amsterdam
Elsevier B.V
16.11.2006
Elsevier Elsevier Sequoia S.A |
Series | European Journal of Operational Research |
Subjects | |
Online Access | Get full text |
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Summary: | New age companies are forging partnerships with other firms to market products that have been assembled through manufacturing activities distributed at different locations. These locations belong to more than one company and the product passes through these different sites during its manufacturing stages. This manufacturing collaboration is known as network-manufacturing. According to the network philosophy, companies form alliances to manufacture a product and share in its operating profits. This paper proposes a framework and methodology for profit sharing and transfer-pricing between network companies. We propose a paradigm that enables maximization of operating profits by the manufacturing-network in its larger supply chain, suggesting a departure from the model that maximizes profits for the individual company within the sphere of its own supply chain. |
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ISSN: | 0377-2217 1872-6860 |
DOI: | 10.1016/j.ejor.2005.05.024 |