Make or Buy: Impact of Information and Capacity on Optimal Production and Outsourcing Decision Making
Fashion goods industry is characterized by long production lead time and condense selling seasons. Accurate forecasting of demands and ability to adjust production and outsourcing decisions according to updated demand information are critical to reduce fashion companiesexpected costs. In this paper, we study the impact of information and production capacity on optimal production and outsourcing decision making using a Bayesian inventory model.We show that the optimal production and outsourcing policy is a modified base stock policy which is characterized by two base stock levels and the production capacity. We provide results regarding the monotonicity properties of the two base stock levels with respect to the production capacity. Our research enriches the literature in several facets: 1) we use Bayesian approach to allow more general demand models; 2) we characterize the optimal policies when firms face production capacity limits and outsourcing options.
Genaro J. Gutierrez Liwen Chen
McCombs School of Business, The University of Texas at Austin, Austin, TX 78712
国际会议
2007 International Conference on Manufacturing & Service Operations Management(2007制造与服务运作管理国际学术会议)
北京
英文
2007-06-18（万方平台首次上网日期，不代表论文的发表时间）