Article Title

Adapting Baumol’s inventory theoretic to landed cost decisions

Authors

Stephan P. Brady, The Pennsylvania State UniversityFollow
Peter F. Swan, The Pennsylvania State UniversityFollow
Richard R. Young, The Pennsylvania State UniversityFollow

Abstract

Major U.S. corporations have been importers for over 200 years. A significant impetus for “offshoring” has been reducing costs—usually labor costs. Often, other costs were overlooked. There has been a growing disenchantment with sourcing goods overseas, especially when there may be domestic alternatives as other costs begin to dominate. Baumol and Vinod’s Inventory Theoretic model was useful in adding transportation considerations. However, Baumol leaves out several important costs that unless considered in offshoring decisions can lead to suboptimal solutions. This paper extends that model, providing a prescriptive model that could be operationalized by firms to evaluate offshore sourcing decisions.

Recommended Citation

Brady, Stephan P., Swan, Peter F., & Young, Richard R. (2010). Adapting Baumol’s inventory theoretic to landed cost decisions. Journal of Transportation Management, 21(1), 62-73. doi: 10.22237/jotm/1270080300

DOI

10.22237/jotm/1270080300