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.
Similar content being viewed by others
References
Bartal, Y., Leonardi, S., Spaccamela, A. M., Sgall, J., & Stougie, L. (2000). Multiprocessor scheduling with rejection. SIAM Journal on Discrete Mathematics, 13, 64–78.
Choi, B. C., & Chung, J. B. (2011). Two-machine flow shop scheduling problem with an outsourcing option. European Journal of Operational Research, 213, 66–72.
Choi, B. C., & Chung, K. H. (2016). Min-max regret version of a scheduling problem with outsourcing decisions under processing time uncertainty. European Journal of Operational Research, 252, 367–375.
Garey, M. R., & Johnson, D. S. (1979). Computers and intractablity: A guide to the theory of NP-completeness. San Francisco, CA: Freeman.
Lee, Y. H., Jeong, C. S., & Moon, C. (2002). Advanced planning and scheduling with outsourcing in manufacturing supply chain. Computer & Industrial Engineering, 43, 351–374.
Lee, I. S., & Sung, C. S. (2008a). Minimizing due date related measures for a single machine scheduling problem with outsourcing allowed. European Journal of Operational Research, 186, 931–952.
Lee, I. S., & Sung, C. S. (2008b). Single machine scheduling with outsourcing allowed. International Journal of Production Economics, 101, 623–634.
Lee, H. L., & Rosenblatt, M. J. (1986). A generalized quantity discount pricing model to increase supplier’s profits. Management Science, 32, 1177–1185.
Li, C. L., Ou, J. W., & Hsu, V. N. (2012). Dynamic lot sizing with all-units discount and resales. Naval Research Logistics, 59, 230–243.
Lu, L. F., Yuan, J. J., & Zhang, L. Q. (2008). The unbounded parallel batch machine scheduling with release dates and rejection to minimize makespan. Theoretical Computer Science, 396, 283–289.
Ou, J. W., Zhong, X. L., & Li, C.-L. (2016). Faster algorithms for single machine scheduling with release dates and rejection. Information Processing Letters, 116, 503–507.
Ou, J. W., & Zhong, X. L. (2017a). Order acceptance and scheduling with consideration of service level. Annals of Operations Research, 248, 429–447.
Ou, J. W., & Zhong, X. L. (2017b). Bicriteria order acceptance and scheduling with consideration of fill rate. European Journal of Operational Research, 262, 904–907.
Qi, X. T. (2008). Coordinated logistics scheduling for in-house production and outsourcing. IEEE Transactions on Automation Science & Engineering, 5, 188–192.
Qi, X. T. (2011). Outsourcing and production scheduling for a two-stage flow shop. International Journal of Production Economics, 129, 43–50.
Shabtay, D., Gaspar, N., & Kaspi, M. (2013). A survey on off-line scheduling with rejection. Journal of Scheduling, 16, 3–28.
Shakhlevich, N. V., Shioura, A., & Strusevich, V. A. (2009). Single machine scheduling with controllable processing times by submodular optimization. International Journal of Foundations of Computer Science, 20, 247–269.
Shioura, A., Shakhlevich, N. V., & Strusevich, V. 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, 266, 795–818.
Slotnick, S. A. (2011). Order acceptance and scheduling: A taxonomy and review. European Journal of Operational Research, 212, 1–11.
Zhang, L. Q., Lu, L. F., & Yuan, J. J. (2009). Single machine scheduling with release dates and rejection. European Journal of Operational Research, 198, 975–978.
Acknowledgements
The authors thank two anonymous referees for their comments and suggestions. This research was supported in part by NSFC (11771406, 11571321, and U1504103).
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Lu, L., Zhang, L. & Ou, J. In-house production and outsourcing under different discount schemes on the total outsourcing cost. Ann Oper Res 298, 361–374 (2021). https://doi.org/10.1007/s10479-018-2866-3
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10479-018-2866-3