Multi-objective Outsourcing Strategies in Textile Supply Chain Management

Abstract

Manufacturing companies have been outsourcing to the global markets for many decades. Key motives of production outsourcing include cost savings and capacity flexibility. Nowadays, reshoring is an emerging trend due to the challenges such as increasing cost, transportation bottlenecks, and fragmentation of the supply chain networks. Therefore, it has become much important to evaluate the outsourcing strategies. This dissertation evaluates outsourcing strategies for operational cost, capacity flexibility, and risk in two different situations. For each situation, a multi-objective optimization model is presented. Operational cost calculation remains same in both situations. Capacity flexibility and risk are incorporated in different ways according to the specific environment. In the first model, capacity flexibility is quantified as the capacity reserved at domestic suppliers to deal with uncertainty. In this situation, outsourcing risk is considered at the international destinations. In the second model, capacity flexibility is quantified as the maximum capacity available in the system. In this case, risk is incorporated as a function of product complexity. For both models, three variants of goal programming were used as solution methodology. The optimization software LINGO 15.0 was used to solve both models. Different cases were evaluated to study the conflicting tradeoffs between three objectives. Based on results, several insights and strategies are proposed. This dissertation primarily concentrates on the textile industry, but it could be adapted in other supply chains after related adjustments.