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In-house production and outsourcing under different discount schemes on the total outsourcing cost

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Listed:
  • Lingfa Lu

    (Zhengzhou University)

  • Liqi Zhang

    (Henan Agricultural University)

  • Jinwen Ou

    (Jinan University)

Abstract

In this paper we consider a coordinated in-house production scheduling and outsourcing model, where a manufacturer might outsource part of the production to a subcontractor so as to achieve a tight production due date. The manufacturer pays a specific outsourcing cost for each job that is outsourced. To encourage the manufacturer to outsource more jobs, the subcontractor provides a specific discount scheme on the total outsourcing cost. Previous studies focus on the balance between in-house production performance and the total outsourcing cost. Our model is the first to investigate the impact on the manufacturer’s decision-making under different discount schemes on the total outsourcing cost. Four distinct discount schemes on the total outsourcing cost are studied. We either show the intractability of those problems, or provide efficient exact or approximation algorithms.

Suggested Citation

  • Lingfa Lu & Liqi Zhang & Jinwen Ou, 2021. "In-house production and outsourcing under different discount schemes on the total outsourcing cost," Annals of Operations Research, Springer, vol. 298(1), pages 361-374, March.
    • Handle: RePEc:spr:annopr:v:298:y:2021:i:1:d:10.1007_s10479-018-2866-3
    DOI: 10.1007/s10479-018-2866-3
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    References listed on IDEAS

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    3. Choi, Byung-Cheon & Chung, Kwanghun, 2016. "Min–max regret version of a scheduling problem with outsourcing decisions under processing time uncertainty," European Journal of Operational Research, Elsevier, vol. 252(2), pages 367-375.
    4. Lee, Ik Sun & Sung, C.S., 2008. "Single machine scheduling with outsourcing allowed," International Journal of Production Economics, Elsevier, vol. 111(2), pages 623-634, February.
    5. Ou, Jinwen & Zhong, Xueling, 2017. "Bicriteria order acceptance and scheduling with consideration of fill rate," European Journal of Operational Research, Elsevier, vol. 262(3), pages 904-907.
    6. Jinwen Ou & Xueling Zhong, 2017. "Order acceptance and scheduling with consideration of service level," Annals of Operations Research, Springer, vol. 248(1), pages 429-447, January.
    7. Shioura, Akiyoshi & Shakhlevich, Natalia V. & Strusevich, Vitaly A., 2018. "Preemptive models of scheduling with controllable processing times and of scheduling with imprecise computation: A review of solution approaches," European Journal of Operational Research, Elsevier, vol. 266(3), pages 795-818.
    8. Hau L. Lee & Meir J. Rosenblatt, 1986. "A Generalized Quantity Discount Pricing Model to Increase Supplier's Profits," Management Science, INFORMS, vol. 32(9), pages 1177-1185, September.
    9. Qi, Xiangtong, 2011. "Outsourcing and production scheduling for a two-stage flow shop," International Journal of Production Economics, Elsevier, vol. 129(1), pages 43-50, January.
    10. Slotnick, Susan A., 2011. "Order acceptance and scheduling: A taxonomy and review," European Journal of Operational Research, Elsevier, vol. 212(1), pages 1-11, July.
    11. Wang, J.-B. & Ng, C.T. & Cheng, T.C.E. & Liu, L.L., 2008. "Single-machine scheduling with a time-dependent learning effect," International Journal of Production Economics, Elsevier, vol. 111(2), pages 802-811, February.
    12. Zhang, Liqi & Lu, Lingfa & Yuan, Jinjiang, 2009. "Single machine scheduling with release dates and rejection," European Journal of Operational Research, Elsevier, vol. 198(3), pages 975-978, November.
    13. Choi, Byung-Cheon & Chung, Jibok, 2011. "Two-machine flow shop scheduling problem with an outsourcing option," European Journal of Operational Research, Elsevier, vol. 213(1), pages 66-72, August.
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    Cited by:

    1. Kandil, Narjes & Hammami, Ramzi & Battaïa, Olga, 2022. "Insourcing versus outsourcing decision under environmental considerations and different contract arrangements," International Journal of Production Economics, Elsevier, vol. 253(C).
    2. Qi Feng & Shisheng Li, 2022. "Algorithms for Multi-Customer Scheduling with Outsourcing," Mathematics, MDPI, vol. 10(9), pages 1-12, May.
    3. Caihua Xu & Qian Wang & Shah Fahad & Masaru Kagatsume & Jin Yu, 2022. "Impact of Off-Farm Employment on Farmland Transfer: Insight on the Mediating Role of Agricultural Production Service Outsourcing," Agriculture, MDPI, vol. 12(10), pages 1-16, October.
    4. Zhong, Xueling & Fan, Jie & Ou, Jinwen, 2022. "Coordinated scheduling of the outsourcing, in-house production and distribution operations," European Journal of Operational Research, Elsevier, vol. 302(2), pages 427-437.

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