Global supply network configuration using air-cargo free trade zones: A simulation-based approach

A Free Trade Zone (FTZ) is an economic zone that an international business can utilize to optimize its supply network. It provides the advantages of operation efficiency as well as financial benefits. For these reasons, many international businesses choose to locate their manufacturing factories or distribution centers in an FTZ. However, the deployment of business sites in such an area necessitates the re-designing of their supply network and also requires decision support analysis. In this study, we develop an economics evaluation model and a simulation model for the use of an air-cargo FTZ by an international business. The feasibility of the two models is illustrated by applying them to an international business. The results show how the global supply network is re-configured after the application of air-cargo FTZs.