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Incorporating Outsourcing Strategy and Quality Assurance into a Multiproduct Manufacturer–Retailer Coordination Replenishing Decision

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Listed:
  • Yuan-Shyi Peter Chiu

    (Department of Industrial Engineering and Management, Chaoyang University of Technology, Taichung 413, Taiwan)

  • Victoria Chiu

    (Accounting Department, Finance and Law, State University of New York at Oswego, Oswego, NY 13126, USA)

  • Tsu-Ming Yeh

    (Department of Industrial Engineering and Management, National Quemoy University, Kinmen 892, Taiwan)

  • Hua-Yao Wu

    (Physics Department, College of Liberal Arts and Sciences, State University of New York at Oswego, Oswego, NY 13126, USA)

Abstract

This study explores the multiproduct manufacturer-retailer coordination replenishing decision featuring outsourcing strategy and product quality assurance. Globalization has generated enormous opportunities. Consequently, transnational firms now face tough competition in global markets. To stay competitive, a firm should meet the client’s multi-item and quality requirements under capacity constraints and optimize the intra-supply chain system to allow the timely distribution of finished goods under minimum system cost. The outsourcing option is considered to release machine loadings and reduce cycle time effectively. All items fabricated are screened for quality, and reworkable and scrap items are separated. Any reworked items that fail the quality reassurance screening are discarded, whereas all outsourced products are quality-guaranteed by the provider. A fixed-quantity multi-shipment plan is used when the whole finished lot is quality-ensured to help present-day transnational firms gain competitive advantage by making efficient and cost-effective multiproduct manufacturing and delivering decisions. Mathematical modeling is built to portray the system’s characteristics, and conventional differential calculus is used to solve and derive the optimal operating policy for the proposed problem. Simultaneously, we find the optimal delivery frequency and common cycle time for the problem mentioned above. A simulated numerical example and sensitivity analysis demonstrate the research result’s capability and applicability. Our precise analytical model can reveal/highlight the impact of deviations in quality- and outsourcing-related features on the optimal operating policy and several performance indicators that help managerial decision-making.

Suggested Citation

  • Yuan-Shyi Peter Chiu & Victoria Chiu & Tsu-Ming Yeh & Hua-Yao Wu, 2020. "Incorporating Outsourcing Strategy and Quality Assurance into a Multiproduct Manufacturer–Retailer Coordination Replenishing Decision," Mathematics, MDPI, vol. 8(12), pages 1-19, December.
    • Handle: RePEc:gam:jmathe:v:8:y:2020:i:12:p:2212-:d:461506
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    References listed on IDEAS

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