A Methodology for the Comprehensive Assessment of International Procurement Costs Conference Paper uri icon


  • As the economy becomes more globalized and competitive, firms are manufacturing goods in a wider variety of locations. This may be to reduce costs by moving to a low cost country or to place production closer to potential customers. What is often lacking in these decisions is a holistic assessment of the costs associated with production location decisions. Too often the assessment is focused only on a limited set of cost factors (e.g., direct manufacturing and shipping) and does not take into account the dynamic nature of some costs. To address these limitations a comprehensive cost model to assess the cost of procuring goods from alternative locations is presented. A methodology is detailed for monetizing the numerous costs associated with international procurement. An illustrative case study analyzing the procurement of goods from two locations in Mexico and one in the US is detailed. Results of the case show that the non-direct manufacturing costs associated with procurement (e.g., inventory holding costs and shipping) can be greater than direct manufacturing costs. The effects of fuel and labor cost sensitively on the alternative locations is also detailed.

name of conference

  • ASME 2012 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference

published proceedings

  • Volume 5: 6th International Conference on Micro- and Nanosystems; 17th Design for Manufacturing and the Life Cycle Conference

author list (cited authors)

  • Johnson, M. D., Sawaya, W. J., & Natarajarathinam, M.

citation count

  • 0

complete list of authors

  • Johnson, Michael D||Sawaya, William J||Natarajarathinam, Malini

publication date

  • August 2012