TY - JOUR
T1 - The Enhanced Make-or-Buy Decision
T2 - The Fallacy of Traditional Cost Accounting and the Theory of Constraints
AU - Coman, Alex
AU - Ronen, Boaz
PY - 1995
Y1 - 1995
N2 - We present a model for finite capacity scheduling in situations where the market demand exceeds the company's manufacturing capacity. Subcontracting to fill in the gap between the market demand and production capacity is an excellent tool to elevate the manufacturing constraint in the short term. Our model prescribes a simple ratio rating a product's priority for the constrained manufacturing resource. The ratio, developed from a linear programming analysis, enhances the Theory of Constraints (TOC) for the make-or-buy situation. We use a well known TOC example to illustrate fallacies of the TOC when outsourcing is possible.
AB - We present a model for finite capacity scheduling in situations where the market demand exceeds the company's manufacturing capacity. Subcontracting to fill in the gap between the market demand and production capacity is an excellent tool to elevate the manufacturing constraint in the short term. Our model prescribes a simple ratio rating a product's priority for the constrained manufacturing resource. The ratio, developed from a linear programming analysis, enhances the Theory of Constraints (TOC) for the make-or-buy situation. We use a well known TOC example to illustrate fallacies of the TOC when outsourcing is possible.
KW - Outsourcing
KW - Theory of Constraints
UR - http://www.scopus.com/inward/record.url?scp=84974744803&partnerID=8YFLogxK
U2 - 10.3233/HSM-1995-14404
DO - 10.3233/HSM-1995-14404
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AN - SCOPUS:84974744803
SN - 0167-2533
VL - 14
SP - 303
EP - 308
JO - Human Systems Management
JF - Human Systems Management
IS - 4
ER -