An international location and production transfer model for high technology multinational enterprises

SUMMARY International location decisions represent a major determinant of the manufacturing strategies of high technology enterprises. This paper studies the global location decisions of these companies and the cost dynamics experienced in manufacturing a single product over time. A set of assumptions and variable cost functions are developed to model a high technology firm's locational choices and transfer of production from domestic to foreign manufacturing sites. An enumeration procedure is presented that determines the minimum cost locational sequence of plant and host country locations required during a specified time horizon. Application of the mathematical model to a multinational enterprise scenario outlines the solution methodology.