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A multiple-factor decision analysis framework for manufacturing outsourcing

Author

Listed:
  • F. Fred Choobineh
  • Esmail Mohebbi
  • Bashar Al-Salim

Abstract

The competitiveness of the global market and availability of multiple outsourcing options have greatly increased the complexity of making 'good' outsourcing decisions. Improving the decision-making process when faced with a complex decision situation requires a systematic decision-making framework. We propose such a framework for making strategic manufacturing outsourcing decisions that benefits from prominent decision analysis tools. We envision a multiple factor outsourcing decision model and specifically advocate the use of: 1) value-focused thinking to identify the outsourcing objectives; 2) a combination of an influence diagram and a decision tree to model the decision situation; 3) the cumulative prospect theory as an alternative to traditional utility theory for modelling the risk behaviour of the decision maker; 4) the prospect stochastic dominance to establish pair-wise dominance between outsourcing choices. We have developed a procedure for dividing the outsourcing choices into dominated and non-dominated sets, and rank ordering the elements of non-dominated set to identify the best strategy.

Suggested Citation

  • F. Fred Choobineh & Esmail Mohebbi & Bashar Al-Salim, 2013. "A multiple-factor decision analysis framework for manufacturing outsourcing," International Journal of Data Analysis Techniques and Strategies, Inderscience Enterprises Ltd, vol. 5(3), pages 270-290.
    • Handle: RePEc:ids:injdan:v:5:y:2013:i:3:p:270-290
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