Capacity planning with outsourcing opportunities under reliability and maintenance constraints

Abstract

This paper investigates capacity planning with outsourcing under reliability-maintenance constraints. The considered supply-chain consists of a single-manufacturer and multiple-subcontractors. The manufacturer's company is composed of a single unit subject to random failures. Corrective maintenance is endorsed when failures occur, and preventive maintenance can be carried out to reduce the degradation. The high in-house costs and the incapacity motivate the manufacturer outsourcing to independent subcontractors. In addition, based on the principle of comparative advantage, the manufacturer balances between in-house capacities and outsourcing services, which minimises the total cost. The aim is to propose a new policy based on the combination between integrated-maintenance and outsourcing policies. A mathematical model and an optimisation procedure have been developed in order to determine the best in-house production-maintenance and outsourcing plans for the manufacturer while minimising the total cost. In order to show the applicability of our approach, we conduct experimentations to study the management insights.