Coordinated Logistics Scheduling for In-House Production and Outsourcing

In this paper, we address a new scheduling model for a firm with an option of outsourcing. A job can be processed by either in-house production or outsourcing. All outsourced jobs have to be transported back to the firm in batches, and the transportation costs have to be taken into account. We model the situation as a scheduling problem with transportation considerations. We discuss four commonly used objective functions, and solve them by dynamic programming algorithms. Note to Practitioners-An efficient supply chain management needs the coordination of production and transportation. Such problems exist in many different scenarios. This research considers a particular problem for a firm that has an option of using a subcontractor to fulfill part of its orders. The production schedule has to be coordinated with logistics issues for the transportation from the subcontractor to the firm. The purposes of this paper are twofold. First, we build models and provide optimal solutions for the specific cases discussed in this paper. Second, we hope to raise the issue of coordinated logistics scheduling, and motivate future research on more complicated models.