Business Management Dynamics

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ISSN: 2047-7031

bmd Business and Management Dynamics bmd
ISSN: 2047-7031  
Volume  5   Issue 2  2015  
Article Abstract
An In-house Production or Outsourcing Decision Model based on a Stochastic Programming Approach
Keywords:  Production decision, Outsourcing, Stochastic models, Time series models, Stochastic programming
Ming-Tao Chung and Ming-Hua Hsieh
As the production capacity of a company over a certain period of time is limited, enterprises must carefully consider product line development or outsourcing options. Unlike traditional studies that use static or comparative static analyses to determine optimal production strategies, this paper proposes a stochastic programming model that can be used to determine optimum quantities of multiphase development or outsourcing. The proposed model can be used as a reference guideline for future production allocation decisions made in high-tech industries that face uncertain demands. It can also be used as a basis for future financial projections.
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