Minimizing the average tardiness: the case of outsource machines

Abstract

Two important factors that affect outsourcing decisions are the production cost and the potential loss of customer goodwill due to late orders. This article deals with the problem of finding outsourcing strategies or solutions that consider trade-offs between outsourcing cost and average tardiness, an important measure of lost customer goodwill. Assumptions include that outsource costs are a function of machine use and that the planning organization owns no production equipment; instead, the production function is completely outsourced. Furthermore, the planning organization has flexibility in terms of the quantity of parallel production resources to outsource and it controls the assignment of jobs to these parallel production resources. The article presents lower bounds for the problem, which are used for comparisons. Several approaches to generate trade-off solutions are proposed and compared under a variety of experimental factors.

Keywords:

• Scheduling
• Supply chain scheduling
• Outsourcing
• Pareto solutions
• Multi-criteria
• Average tardiness
• Parallel machines
• Machine utilization