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Two-stage production scheduling with an outsourcing option

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  • Lee, Kangbok
  • Choi, Byung-Cheon

Abstract

This paper considers a two-stage production scheduling problem in which each activity requires two operations to be processed in stages 1 and 2, respectively. There are two options for processing each operation: the first is to produce it by utilizing in-house resources, while the second is to outsource it to a subcontractor. For in-house operations, a schedule is constructed and its performance is measured by the makespan, that is, the latest completion time of operations processed in-house. Operations by subcontractors are instantaneous but require outsourcing cost. The objective is to minimize the weighted sum of the makespan and the total outsourcing cost. This paper analyzes how the model's computational complexity changes according to unit outsourcing costs in both stages and describes the boundary between NP-hard and polynomially solvable cases. Finally, this paper presents an approximation algorithm for one NP-hard case.

Suggested Citation

  • Lee, Kangbok & Choi, Byung-Cheon, 2011. "Two-stage production scheduling with an outsourcing option," European Journal of Operational Research, Elsevier, vol. 213(3), pages 489-497, September.
    • Handle: RePEc:eee:ejores:v:213:y:2011:i:3:p:489-497
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    References listed on IDEAS

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    Cited by:

    1. Gunasekaran, Angappa & Irani, Zahir & Choy, King-Lun & Filippi, Lionel & Papadopoulos, Thanos, 2015. "Performance measures and metrics in outsourcing decisions: A review for research and applications," International Journal of Production Economics, Elsevier, vol. 161(C), pages 153-166.
    2. Thürer, Matthias & Stevenson, Mark & Qu, Ting & Godinho Filho, Moacir, 2014. "The design of simple subcontracting rules for make-to-order shops: An assessment by simulation," European Journal of Operational Research, Elsevier, vol. 239(3), pages 854-864.
    3. Zhen, Lu, 2014. "A three-stage optimization model for production and outsourcing under China’s export-oriented tax policies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 1-20.
    4. Della Croce, Federico & Koulamas, Christos & T'kindt, Vincent, 2017. "A constraint generation approach for two-machine shop problems with jobs selection," European Journal of Operational Research, Elsevier, vol. 259(3), pages 898-905.
    5. Chung, Dae-Young & Choi, Byung-Cheon, 2013. "Outsourcing and scheduling for two-machine ordered flow shop scheduling problems," European Journal of Operational Research, Elsevier, vol. 226(1), pages 46-52.
    6. Shabtay, Dvir & Gerstl, Enrique, 2024. "Coordinating scheduling and rejection decisions in a two-machine flow shop scheduling problem," European Journal of Operational Research, Elsevier, vol. 316(3), pages 887-898.
    7. Mohammed Haoues & Mohammed Dahane & Nadia Kenza Mouss, 2019. "Outsourcing optimization in two-echelon supply chain network under integrated production-maintenance constraints," Journal of Intelligent Manufacturing, Springer, vol. 30(2), pages 701-725, February.

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