Partial outsourcing: A real options perspective

Alvarez, Luis H. R.; Stenbacka, Rune

doi:10.1016/j.ijindorg.2006.01.003

Cited by 88 publications

(61 citation statements)

References 13 publications

(21 reference statements)

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“…For instance, Nokia, Motorola, and Ericsson are the largest outsourcers in the mobile phone industry with 15%-66% of their production outsourced [17,18]. Olhager et al [19] introduced a mobile phone supply chain, including raw material producers, material fabricators, factories, distributors, retail shops, and consumers.…”

Section: Literature Reviewmentioning

confidence: 99%

Cost-effectiveness analysis of the mobile phone manufacturing sector by using a novel fuzzy multi-objective programming model

Lin

2016

Scientia Iranica

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Abstract. This work presents a novel Fuzzy Multi-Objective Programming (FMOP)model with a modi ed S-curve membership function capable of solving integrated multicomponent, multi-supplier, and multi-time-period production planning problems by using fuzzy objectives for the mobile phone manufacturing sector. The proposed model attempts to minimize total manufacturing, total inventory holding, and total penalty costs, simultaneously, in relation to manufacturer/supplier capacity and warehouse space. Additionally, the proposed model provides a systematic means of facilitating the fuzzy decision-making process and enabling decision makers to interactively adjust the search direction during the solution procedure in order to obtain the preferred satisfactory solution of a Decision Maker (DM). Moreover, adequacy of the proposed model is demonstrated based on an implementation design involving several scenarios of manufacturing production system for mobile phones. Analytical results provide a valuable reference for decision managers attempting to more thoroughly understand the systematic analysis and potential of cost-e ective production planning.

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Section: Literature Reviewmentioning

confidence: 99%

Cost-effectiveness analysis of the mobile phone manufacturing sector by using a novel fuzzy multi-objective programming model

Lin

2016

Scientia Iranica

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“…That is, for X t >X, if the opportunity cost of not satisfying the demand exceeds the cost of outsourcing, then the firm can outsource production at the amount Q. 2 In the case of outsourcing, the firm is assumed to incur the variable cost c (> c) and the fixed cost k to start outsourcing. On the other hand, the fixed cost ℓ is incurred at the end of outsourcing.…”

Section: The Modelmentioning

confidence: 99%

“…The objective of his model was to minimize the total costs in a multi-period planning horizon under known demand. Shy and Stenbacka [13] explored the purely strategic incentives for outsourcing in an oligopoly setting, and Alvarez and Stenbacka [2] developed a partial outsourcing model that determines the optimal proportion of outsourced production corresponding to market uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Investment, Capacity Choice and Outsourcing Options under Uncertainty

Goto

Takashima

2013

IJROS

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Abstract:In this paper, we formulate the investment of a firm in a production facility with maximum capacity and outsourcing strategy. Previous research on capacity selection has resulted in explosive capacity and long delay in investment. The possibility that a firm will install a facility with an explosive capacity is slight, and firms can generally outsource production when the demand exceeds the capacity of a facility. The outsourcing strategy is expected to inhibit capacity, accelerate investment, and increase value. In this paper, we simultaneously investigate the optimal investment timing, the size of a facility, and the outsourcing strategy.

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“…Moreover, the costs of flexibility may be affected by technical progress, by efficiency of external markets, i.e., the opportunity of buying easily inputs from producers which may be specialized or located in low cost countries and, last but not the least, by the design of a proper capital budgeting. This final aspect is crucial: each firm should try to finance vertical flexibility in the best way in terms of the mix between equity, debt and other possible financial sources such as venture capital 2 . Unfortunately this financial aspect is often sidestepped in the analysis of both vertical relationships and flexibility since funding and organization themes are studied separately in financial 3 , managerial, industrial organization and operations research literature 4 .…”

Section: Introductionmentioning

confidence: 99%

“…Therefore, uncertainty is exogeneous and is not dependent upon flexibility. 2 Other financial channels may be activated by a firm. For the sake of simplicity we confine to debt, equity and the involvment of a venture capitalist.…”

Section: Introductionmentioning

confidence: 99%

Vertical Flexibility, Outsourcing and the Financial Choices of the Firm

Moretto

Rossini

2015

SSRN Journal

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We investigate the relationship between the extent of vertical flexibility and the underlying financial choices of a firm. By vertical flexibility we mean the opportunity to outsource a necessary input and to reverse the choice as input market conditions dictate. A firm simultaneously selects the portion of equity and debt and its vertical setting. Debt is provided by a lender that requires the payment of a fixed coupon over time and, as a collateral, an option to buy out the firm in certain circumstances. Debt leads to the same level of flexibility acquired by an unlevered firm. However, investment to set up a flexible technology occurs earlier. An alternative to debt is the involvement of venture capital for the production of the input. We explore this second avenue finding that the extent of outsourcing adopted is lower than for the unlevered firm, but the firm invests earlier.Keywords: vertical integration, flexible outsourcing, debt, equity and venture capital. JEL Classification: C61; G31; G32; L24. * We acknowledge the financial support of the Universities of Bologna and Padova within the 2014-15 RFO scheme and Fondazione Cassa dei Risparmi di Forlì. We thank the audiences of the 2014 ASSET Conference held in Aix en Provence (France) and of a seminar held in Trieste for comments and suggestions.

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Partial outsourcing: A real options perspective

Cited by 88 publications

References 13 publications

Cost-effectiveness analysis of the mobile phone manufacturing sector by using a novel fuzzy multi-objective programming model

Cost-effectiveness analysis of the mobile phone manufacturing sector by using a novel fuzzy multi-objective programming model

Investment, Capacity Choice and Outsourcing Options under Uncertainty

Vertical Flexibility, Outsourcing and the Financial Choices of the Firm

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