A vendor-buyer coordinated system featuring an unreliable machine, scrap, outsourcing, and multiple shipments

Abstract

Operating in today's highly competitive global markets, transnational enterprises always seek to optimize internal vendor-buyer coordinated systems to ensure timeliness and quality deliveries, given the reality of unreliable machines and limited capacity. To facilitate accurate decision making to help organizations gain competitive advantages in such situations, this study explores an intra-supply-chain problem featuring a partial outsourcing batch fabrication plan, random scrap, Poisson-distributed breakdown rate, and multiple shipments of end-product. First, we build a model to characterize the problem clearly. Then, we carry out formulations, analyses, and derivations of the model to attain the problem's cost function. We then use differential calculus and propose a specific algorithm to confirm the convexity of the obtained cost function and derive the optimal runtime. Finally, we offer a numerical illustration to demonstrate the result's applicability for other business circumstances. Additional elements of the problem are then discussed, including the individual and combined influence of variations in scrap, outsourcing, breakdown, and shipping frequency. The features of an optimal operating policy and cost relevant parameters are now revealed to assist management with strategic planning and decision making in real-world intra-supply-chain environments.

Integrating Supply Chain Partners through Implementing Industry 4.0 Technologies to Enhance Competitiveness

“…Open and transparent information exchange facilitates faster decision-making, enables proactive adjustments to changing market conditions, and enhances overall supply chain agility [64,65]. The hybrid decision-making framework in [66] combines mathematical modeling, optimization techniques, and simulation methods to address the challenges inherent in managing such systems effectively. The buyer's involvement in the early design and development phase would improve the producer's performance.…”

Optimizing a multiproduct manufacturing system with delayed differentiation, outsourcing, expedited rate, and rework strategies

“…The researchers first discussed/ evaluated KPIs of a real case of outsourcing information technology services of a telecommunication vendor and then extended to two different settings to demonstrate their evaluation procedures at both client and vendor sides. Recent works [20][21][22][23] also explored the impact of different aspects of adjusted fabrication rate and subcontracting on planning, operations, and management of diverse manufacturing and supply-chain systems. Since few past works have developed a precise model to derive the optimal replenishing policy and explicitly disclose collective/individual impact of postponement, rework, and dual uptime-reduced strategies on the problem's operating cycle policy and crucial performance indices, we aim to serve this purpose and help manufacturers have better control over their operations and facilitate their effective/efficient decision-making.…”

A multi-item manufacturing system with an outsourcer and random defective items

“…A real case form industry was utilized to demonstrate the potential benefits of their approach. Other studies (Chiu, Zhao et al, 2020;Dan-Asabe et al, 2019;Prajapati et al, 2020) explored the benefits, risks, and different aspects of implementing outsourcing policies in manufacturing firms.…”