Outsourcing decision under Utopian environment

Purpose – The aim of this paper is to develop and demonstrate an outsourcing decision model in which constraint resource prevents the throughput of the organization.Design/methodology/approach – An integrated model is proposed by incorporating the weighted product model (WPM) of AHP in estimating the priority of each product in a multi‐product constraint resource environment. A numerical example is presented to demonstrate the effectiveness of this model. The outsourcing decision model compares four alternatives: Standard cost accounting, standard theory‐of‐constraints (TOC), LP analysis and an original solution.Findings – The numerical results show that the proposed model is superior and more realistically optimizes resource allocation and measures the performance of the model.Research limitations/implications – This research is limited to the production processes that do not have multiple constraints.Practical implications – This research is applicable to the companies which produce multi‐products in a ...

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