Sourcing decisions of project tasks with exponential completion times: Impact on operating profits
When managing a project, a firm must evaluate multiple strategic factors and operational issues before deciding which tasks to keep in-house and which to outsource. We focus on one operational aspect of this evaluation process by examining the impact of different sourcing decisions of project tasks with exponential completion times on operating profits. As an initial attempt, we present two stylized models that capture two simplest types of projects: (a) a project with two "parallel" tasks that can be performed simultaneously and (b) a project with two "serial" tasks that must be performed sequentially. For each model, we determine the optimal operating profit for the case when the firm outsources zero task, one task, or two tasks. These operating profits can be informative for making sourcing decisions of different project tasks.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bartel, Ann P. & Lach, Saul & Sicherman, Nachum, 2008.
"Outsourcing and Technological Innovations: A Firm-Level Analysis,"
IZA Discussion Papers
3334, Institute for the Study of Labor (IZA).
- Bartel, Ann P & Lach, Saul & Sicherman, Nachum, 2008. "Outsourcing and Technological Innovations: A Firm-Level Analysis," CEPR Discussion Papers 6731, C.E.P.R. Discussion Papers.
- Magott, Jan & Skudlarski, Kamil, 1993. "Estimating the mean completion time of PERT networks with exponentially distributed durations of activities," European Journal of Operational Research, Elsevier, vol. 71(1), pages 70-79, November.
- Weidenbaum, Murray, 2005. "Outsourcing: Pros and cons," Business Horizons, Elsevier, vol. 48(4), pages 311-315.
- D. R. Fulkerson, 1961. "A Network Flow Computation for Project Cost Curves," Management Science, INFORMS, vol. 7(2), pages 167-178, January.
- Paul S. Adler & Avi Mandelbaum & Viên Nguyen & Elizabeth Schwerer, 1995. "From Project to Process Management: An Empirically-Based Framework for Analyzing Product Development Time," Management Science, INFORMS, vol. 41(3), pages 458-484, March.
- Paul, Anand & Gutierrez, Genaro, 2005. "Simple probability models for project contracting," European Journal of Operational Research, Elsevier, vol. 165(2), pages 329-338, September.
- Kamburowski, Jerzy, 1985. "An upper bound on the expected completion time of PERT networks," European Journal of Operational Research, Elsevier, vol. 21(2), pages 206-212, August.
- Turner, J.R., 2001. "Project Contract Management and a Theory of Organization," ERIM Report Series Research in Management ERS-2001-43-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Dharma Kwon, H. & Lippman, Steven A. & Tang, Christopher S., 2010. "Optimal time-based and cost-based coordinated project contracts with unobservable work rates," International Journal of Production Economics, Elsevier, vol. 126(2), pages 247-254, August.
- De, Prabuddha & James Dunne, E. & Ghosh, Jay B. & Wells, Charles E., 1995. "The discrete time-cost tradeoff problem revisited," European Journal of Operational Research, Elsevier, vol. 81(2), pages 225-238, March. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:134:y:2011:i:1:p:138-150. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.