Composite sourcing policy for multiple products on a single production facility
by Taebok Kim, Suresh Kumar Goyal
International Journal of Logistics Systems and Management (IJLSM), Vol. 8, No. 1, 2011

Abstract: In this paper, we address the composite sourcing policy of a single production facility where customer's order quantity can be made internally as well as externally. The surplus production capacity within a common production cycle can be utilised for in-sourcing of demand of other suppliers. We regard the traditional economics lot scheduling problem as a capacity allocation problem. Therefore, the decision problem is to determine the lot sizes as well as the composite sourcing policy for three production modes such as out-sourcing, in-sourcing and in-house making. We develop the mathematical model of the resulting decision problem and propose the solution procedure to determine the economic operating policy.

Online publication date: Thu, 30-Apr-2015

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