Title: A simulation model for managing outsourcing decisions

Authors: Kazim Sari, Fuat Oktay, Arman T. Tevfik

Addresses: Faculty of Economics and Administrative Sciences, Department of International Logistics and Transportation, Beykent University, Sisli Ayazaga Mah., Hadimkoru Yolu Mevkii, Sisli, Istanbul 34396, Turkey. ' Faculty of Economics and Administrative Sciences, Department of Business Administration, Beykent University, Sisli, Istanbul 34396, Turkey. ' Faculty of Economics and Administrative Sciences, Department of Business, Kyrgyz-Turkish Manas University, Bishkek, Kyrgyzstan

Abstract: The aim of this research is to contribute into the development of a strategic and systematic outsourcing decision-making framework for practitioners. In this regard, the authors propose a concrete decision framework that would incorporate quantitative measures and financial dimensions in outsourcing decision-making process. In addition, the authors also provide a platform to make outsourcing decisions under high uncertainty levels associated with insufficient and/or imprecise data. For this purpose, Monte Carlo simulation is used to evaluate the financial results of an outsourcing decision based on a real industrial case. On the other hand, to express the environmental uncertainties and market dynamics into the analysis, fuzzy set theory is utilised. Therefore, this research, as dealing with one of the most important topics in industrial management, provides a better decision framework for practitioners using appropriate quantitative techniques.

Keywords: investment analysis; risk analysis; outsourcing; decision making; quantitative measures; uncertainty levels; insufficient data; imprecise data; Monte Carlo simulation; financial results; environmental uncertainties; market dynamics; fuzzy set theory; industrial management; electronics industry; Turkey.

DOI: 10.1504/IJMED.2010.036118

International Journal of Management and Enterprise Development, 2010 Vol.9 No.2, pp.132 - 146

Published online: 22 Oct 2010 *

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