COMBINing THE DELAYED DIFFERENTIATION POLICY AND COMMON PARTS’ PARTIAL OUTSOURCing STRATEGY INTO A MULTI-ITEM FPR-BASED SYSTEM
This study investigates a multi-item finite production rate- (FPR-) based system incorporating a delayed product differentiation
policy and common parts’ outsourcing strategy. A two-stage fabrication scheme is proposed, wherein, in
stage one, all common parts of the end products (assuming they have a known completion rate as compared with the
finished products) are partially produced in-house and partially supplied by an outside contractor with an extra unit
outsourcing; in stage two, all end products are finished in sequence, under a rotation fabrication cycle time discipline.
An explicit model is developed to clearly represent the proposed problem. Through the optimization technique, the
optimal rotation cycle decision is obtained. Thus, diverse characteristics of this particular multi-item, FPR-based system
with postponement and outsourcing strategies can now be revealed. As demonstrated by numerical illustrations,
these characteristics include the (i) convexity of the system cost function, (ii) impact of common parts’ outsourcing
strategy on the utilization, (iii) breakup of system cost components, (iv) combined impact of the outsourcing ratio and
common parts’ completion rate on the system cost function, and (v) effect of the outsourcing ratio on optimal rotation
cycle decision. Our decision-support-type system can facilitate production managers in achieving their goals of reducing
orders’ response times and minimizing the overall system cost.
Authors truthfully appreciate Ministry of Science and
Technology of Taiwan for supporting this project (grant#:
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