Make-or-buy and supplier selection problems in make-to-order supply chains

Abstract

Time- and cost-effective management of a make-to-order (MTO) supply chain often requires sourcing decisions, such as make-or-buy and supplier selection, to be jointly made with scheduling of supply chain operations. In this chapter, we introduce an RCPSP-based modeling framework to exploit the synergies and interactions between sourcing and scheduling decisions in MTO supply chains under explicit resource constraints. A mixed-integer nonlinear program (MINLP) is formulated to minimize the system wide total supply chain cost. We also present a numerical example to demonstrate the scope and depth of decision-support offered by the model for purchasing and program managers.