Subcontracting, Coordination, Flexibility, and Production Smoothing in Aggregate Planning
AbstractWe propose a model in which subcontracting can be explicitly considered as a production planning strategy. Possible market and nonmarket subcontracting mechanisms and their costs are discussed. We show that a class of feasible subcontracting mechanisms in which firms coordinate their production via subcontracts Pareto-dominate other mechanisms. We then offer an example with quadratic cost functions and coordination subcontracts; linear decision rules for production, inventory, and subcontracting are derived. In the example, subcontracting reduces the variability in production and inventory. The same interpretation can be used for flexibility of manufacturing resources.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 36 (1990)
Issue (Month): 11 (November)
aggregate planning; production smoothing; subcontracting; coordination; dynamic programming; linear decision rules;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Maike Scherrer-Rathje & Patricia Deflorin & Gopesh Anand, 2010. "Outsourcing and its Impact on Manufacturing Flexibility: Contingencies Matter," Working Papers 0125, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Wang, Li Ming & Liu, Li Wen & Wang, Yong Jie, 2007. "Capacity decisions and supply price games under flexibility of backward integration," International Journal of Production Economics, Elsevier, vol. 110(1-2), pages 85-96, October.
- Szmerekovsky, Joseph G., 2007. "Single machine scheduling under market uncertainty," European Journal of Operational Research, Elsevier, vol. 177(1), pages 163-175, February.
- Boulaksil, Youssef & Fransoo, Jan C., 2009. "Order release strategies to control outsourced operations in a supply chain," International Journal of Production Economics, Elsevier, vol. 119(1), pages 149-160, May.
- Kogan, Konstantin & Tapiero, Charles S., 2009. "Optimal co-investment in supply chain infrastructure," European Journal of Operational Research, Elsevier, vol. 192(1), pages 265-276, January.
- Wang, Charles X. & Webster, Scott & Zhang, Sidong, 2011. "A comparison of two sourcing tactics for a new component," European Journal of Operational Research, Elsevier, vol. 211(2), pages 310-317, June.
- Olhager, Jan & Rudberg, Martin & Wikner, Joakim, 2001. "Long-term capacity management: Linking the perspectives from manufacturing strategy and sales and operations planning," International Journal of Production Economics, Elsevier, vol. 69(2), pages 215-225, January.
- Bertrand, J. W. M. & Sridharan, V., 2001. "A study of simple rules for subcontracting in make-to-order manufacturing," European Journal of Operational Research, Elsevier, vol. 128(3), pages 509-531, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).
If references are entirely missing, you can add them using this form.