A Multi-Echelon Global Supply Chain Network Design Based on Transfer-Pricing Strategy

Abstract

An inimitable global supply chain would provide multinational enterprises (MNEs) competitive advantage and transfer pricing strategy to coordinate the relationship between the facilities within the global value chain. In this paper, we present a framework of multi-echelon global supply chain consisting of supplier, manufacturer and a distribution center which enables the MNEs to coordinate the facilities within the value chain based on the maximization total profits theory. An optimal model is established to describe how the transfer price affects the performance of the global supply chain. Through the numerical analysis, we find that the network of global supply chain positively affects the total performance of MNEs and transfer price strategy as a kind of coordinate method which impacts the total profit of the global supply chain.