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| Author: | Kamien, M. I. Li, L. |
| Title: | Subcontracting, coordination, flexibility, and production smoothing in aggregate planning |
| Journal: | Management Science
1990 : NOV, VOL. 36:11, p.1352-1363 |
| Index terms: | PRODUCTION SCHEDULING SUBCONTRACTS PLANNING DECISION RULES INVENTORY CONTROL |
| Language: | eng |
| Abstract: | A production planning model is presented that explicitly considers subcontracting as a planning tool. Possible market and nonmarket subcontracting mechanisms and their costs are discussed. It is shown that a class of feasible subcontracting mechanisms in which firms coordinate their production via subcontracts Pareto-dominate other mechanisms. An example is given with quadratic cost functions and coordination subcontracts. Linear decision rules for production, inventory and subcontracting are derived. In the example, subcontracting reduces the variability of production and inventory. The same interpretation can be used for flexibility of manufacturing resources. |
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