Multi-Objective Outsourcing Strategies for Functional and Fast Fashion Products in Textile Supply Chain

Transcription

1 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) Multi-Objective Outsourcg Strtegies for Functionl nd Fst Fshion Products Textile Supply Ch ShheenSrdr 1,Young He Lee 2*, Muhmmd Sd Memon Deprtment of Industril nd Mngement Engeerg, Hnyng University Ansn, Gyeonggi-do 15588, South Kore 1 shheen1934@yhoo.com 2 yhlee@hnyng.c.kr 3 msmemon@live.com Abstrct Key fctors of outsourcg strtegies clude cost nd cpcity flexibility. Cost svg nd cpcity flexibility depend on the connection between product chrctertics nd the supply ch network. Functionl products volve efficient supply chs. Fshion products should move the production nd dtribution system s quickly s possible which mximum cpcity flexibility provides responsive supply ch. Moreover, complex products with globl prts sourcg volve comprtively more rk. Th pper evlutes n outsourcg strtegies considerg functionl nd fst fshion products the textile supply ch. There re four ctegories of production options. Textile mnufcturer receives production contrcts t -house fcility home country. Cpcity flexibility mesured s the combtion of desttions with mximum cpcity. Product complexity rk corported s the number of prts/components sourced domesticlly nd terntionlly t ech production desttion. A multi-objective model for outsourcg strtegies proposed bsed on opertionl cost, cpcity flexibility, nd product complexity rk. The model solved usg three vrts of gol progrmmg. Bsed on the results, severl sights re proposed for outsourcg decion mkg. Keywor-Textile supply ch, outsourcg strtegies, gol progrmmg, functionl products, fst fshion products I. INTRODUCTION The textile supply ch conts severl divions with sequence of complicted processes ech divion. The grment/fshion production divion requires comprtively more lbor thn cpitl tensive divions such s yrn production, fbric production, nd fbric processg. In developed mrkets, lbor cost pproximtely 50 percent of the fl cost of grment [1], resultg higher unit production cost. There re three globl mrkets for production outsourcg the textile dustry, the developed, emergg, nd developg mrkets. There greter difference of lbor cost the textile dustry s shown Tble I. Th difference motivtes the mnufcturers to outsource terntionlly. Compnies tht outsource terntionlly focus on chievg cost benefits, while compnies tht outsource domesticlly focus on chievg cpcity flexibility[2]. The grment/fshion mnufcturer receives demnd for frequent contrcts with different vrieties. Durg pek seson, level strtegy my be unble to meet customer dedles. In th cse, strtegic cpcity expnsion my be considered. However, there cpcity underutiliztion rk durg slck times. Hence, cpcity flexibility ten to decrese beyond the dedles. Th pper estimtes the cpcity flexibility bsed on customer dedles nd desttion led time. The key focus of th pper to evlute outsourcg strtegies bsed on two ctegories of textile products. The first ctegory volves functionl textile products which require efficient supply chs. The second ctegory volves fst fshion textile products which require responsive supply chs. A comprehensive evlution of functionl products with efficient supply chs nd novtive products with responsive supply chs provided by Fher [3]. Th pper uses three gol progrmmg () metho to differentite the functionl products from the fst fshion products. metho llow the mnufcturer to set priority for n objective bsed on product requirements (Lexicogrphic ). The decion mker my set weights for different objectives bsed on different requirements (Weighted ). If the decion mker wnts blnced chievement of ech objective, Chebyshev pplied. p-issn : Vol 8 No 2 Apr-My

2 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) TABLE I. Lbor Cost/Hourly Compenstion U.S. $ 1. Developed mrkets 2. Emergg mrkets 3. Developg mrkets Norwy Frnce Brzil Vietnm 0.60 Belgium Irelnd Russi 2.99 Mynmr 0.20 Denmrk Cnd Indi 1.17 Pktn 0.58 Sweden Itly Ch 2.10 Sri Lnk 0.81 Germny USA Indonesi 1.08 Bngldes 0.40 h Austrli UK Mexico 6.48 Colombi 2.97 Flnd Sp Turkey 4.50 Austri Greece Netherln Portugl Source. Srdr nd Lee [4] Product nture cuses the chievement of one objective through comprome on other objectives. Th pper considers functionl/bsic products when opertionl cost given first preference nd fst fshion products when the cpcity flexibility given first preference. The fst fshion supply ch brnch of the textile supply ch which production nd dtribution led time reduced, nd new products re mnufctured nd offered to consumers s fst s possible [5]. Therefore, fst fshion products should be ssigned to production desttions which cn produce new products s fst s possible. In other wor, desttions with mximum cpcity flexibility re the first choice for fst fshion products. Therefore, th pper estimtes cpcity flexibility bsed on mximum cpcity vilble the system. The m contribution of th pper to evlute outsourcg strtegies for functionl nd fst fshion products considerg opertionl cost, cpcity flexibility, nd product complexity rk. Product complexity contributes to the supply ch complexity regrdless of the loction of the production process cross the world. Complex products with complex supply ch networks cur more druptions. Product complexity rk creses with n crese number of prts [6]. In the textile dustry, prts to be sourced clude number of fbric vrts, number of trims nd ccessories, etc. Furthermore, if comprtively more prts re sourced terntionlly, the probbility of msg n item creses. Therefore, th pper corportes the impct of domestic nd terntionl prts sourcg on outsourcg strtegies. II. CONTRIBUTION TO THE LITERATURE Textile compnies fce severl chllenges such s rg costs, reshorg, supply ch globliztion, nd emergg consumer nee. To del with such chllenges, extg literture nee development of prcticl decion mkg tools for mngg outsourcg ctivities. Outsourcg problem corportes some fetures of the vendor selection problem. Severl studies ddressed the vendor selection problem, but few studies ddressed the vendor selection the outsourcg environment [7-8]. Comn nd Ronen [9] developed ler progrmmg model for production outsourcg. They optimized totl profit while decions clude which products should be mnufctured -house nd which products should be outsourced. De Almeid [10] proposed multi-criteri model for outsourcg vendor selection with respect to cost, delivery time, nd dependbility, usg two different pproches. Wdhw nd Rvdrn[11] modelled vendor selection outsourcg s multi-objective optimiztion problem ssumg price, led-time, nd qulity to be the most importnt objectives. Liou nd Chung [12] studied multiple criteri decion-mkg model for outsourcg provider selection, usg the DEMATEL, ANP nd VIKOR metho. Their decion mkg volved cost, qulity, rk, nd comptibility. Wng et l. [8] presented ler progrmmg model for outsourcg cost-effectiveness durg vendor selection. They use three objectives s totl cost, uncceptble mteril, nd led time. Bht nd Krhnmurthy [13] modelled sgle-stge mnufcturg fcility with flexible production rte nd sesonl demn, nd studied the benefits of cpcity flexibility. Alp nd Tn [14] proposed n tegrted cpcity nd ventory model considerg both the -house permnent cpcity nd temporry cpcity flexibility such s overtime, hirg/firg, or outsourcg. They defed cpcity flexibility s the cpbility to dopt production cpcity with n option of utilizg contgent resources ddition to permnent resources. They concluded tht higher demnd vribility requires more cpcity flexibility. Thus, outsourcg helps to sve -house cpcity expnsion cost the cse of demnd vribility. Chen nd Ksikitwiwt[15] quntified the cpcity flexibility for trnsport networks. They utilized the concept of totl cpcity flexibility (bsed on the ultimte cpcity concept) with respect to demnd vritions. p-issn : Vol 8 No 2 Apr-My

3 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) They defed totl cpcity flexibility s the mximum throughput the system cn hndle subject to relevnt constrts. In th pper, the concept of mximum cpcity flexibility utilized bsed on fst fshion products requirements. Th concept cn be used when demnd ptterns re uncert, nd production cn be llocted to fcility t desttion with mximum cpcity flexibility. In contrst, compny my give first preference to opertionl cost cse of bsic/functionl products. Th pper develops multi-objective optimiztion model with opertionl cost, cpcity flexibility, nd product complexity rk s three objectives. Three vrts of re used s solution methodology. Bsed on the results, severl sights nd strtegies re proposed. Tble II presents the contribution of the multi-objective model to the extg literture. Tble II. Contribution to the Extg Literture Cost Cpcity Rk Led flexibility time Description Comn nd Ronen [9] Profit De Almeid [10] Totl cost + qulity + dependbility Wdhw nd Rvdrn[11] Totl cost + led time + qulity Liou nd Chung [12] Totl cost + qulity + rk + comptibility Wng et l. [8] Totl cost + led time + qulity Bht nd Krhnmurthy [13] Totl expected cost Alp nd Tn [14] Integrted cpcity nd ventory model Chen nd Ksikitwiwt[15] Totl cpcity flexibility Th pper Totl cost + cpcity flexibility + product complexity rk III. MODEL DEVELOPMENT Consider textile mnufcturer the high cost country, which outsources domesticlly the sme country nd outsources terntionlly to low cost countries. There re four production options, specificlly, -house fcility the home country, domestic suppliers home country, terntionl subsidiry, nd terntionl suppliers. It supposed tht ech product, which outsourced to desttion, trnsported bck to the house fcility home country. Therefore, trnsporttion cost for -house fcility negligible. Ech fcility t ech desttion hs its own led time for ech contrct. The led time nd dedles re used to estimte mximum cpcity. Besides cost nd cpcity flexibility, the mnufcturer wnts mimum product complexity rk. Mximum loss due to product complexity rk ssumed s quntity ssigned t production fcility. Product complexity mesured bsed on the number of prts which re sourced domesticlly nd terntionlly t ech desttion. Selected fcilities should stfy customer demnd. The mnufcturer commits mimum production quntity with domestic nd terntionl suppliers. Decions clude the selection of production desttions for ech contrct nd production quntity t ech desttion. Fig. 1 presents schemtic of outsourcg problem. Nottions Sets I Set of domestic suppliers, i 1,2,..., I J Set of terntionl suppliers, j 1,2,..., J A Set of contrcts, 1,2,..., A Q Set of objective functions, q 1,2,..., Q p-issn : Vol 8 No 2 Apr-My

4 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) Objectives Opertionl cost (ech desttion) Cpcity flexibility (ech desttion) Product complexity rk (ech desttion) Cpcity flexibility (mximum cpcity flexibility) Dedles Led time Product complexity rk Number of prts Number of prts sourced domesticlly (t ech desttion) Number of prts sourced terntionlly (t ech desttion) In-house mnufcturg (comprtively high cost) Cost svgs Interntionl subsidiry (comprtively low cost) Interntionl suppliers (comprtively low cost) Domestic suppliers (comprtively high cost) Borders Decion vribles Desttion selection for ech contrct (ech desttion) Contrct quntity to ech desttion (ech desttion) Prmeters D g Demnd for contrct (units/contrct) Dedle for contrct (dys/contrct) Fig. 1. Problem Environment LT Led time for contrct t locl fcility/-house (dys/contrct) LT Led time for contrct t subsidiry (dys/contrct) LT i Led time for contrct t domestic supplieri (dys/contrct) LT j Led time for contrct t terntionl supplier j (dys/contrct) C Unit production cost for contrct t locl fcility/-house ($) C Unit production cost for contrct t subsidiry ($) C i Unit production cost for contrct t domestic supplieri ($) C j Unit production cost for contrct t terntionl supplier j ($) T Unit trnsporttion cost for contrct from subsidiry ($) T i Unit trnsporttion cost for contrct from domestic supplieri ($) T j Unit trnsporttion cost for contrct from terntionl supplier j ($) mq i Mimum quntity of contrct to be produced t domestic supplieri (units/contrct) p-issn : Vol 8 No 2 Apr-My

5 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) mq j E pr BE Mimum quntity of contrct to be produced t terntionl supplier j (units/contrct) Totl number of prts contrct Filure rte for prts sourcg for contrct t -house fcility Number of prts to be sourced terntionlly for contrct t -house fcility BE Number of prts to be sourced terntionlly for contrct t subsidiry BE i Number of prts to be sourced terntionlly for contrct t domestic supplieri BE j dp Number of prts to be sourced terntionlly for contrct t terntionl supplier j Filure rte for domestic prts sourcg for contrct t -house fcility dp Filure rte for domestic prts sourcg for contrct t subsidiry dp i Filure rte for domestic prts sourcg for contrct t domestic supplieri dp j ip Filure rte for domestic prts sourcg for contrct t terntionl supplier j Filure rte for terntionl prts sourcg for contrct t -house fcility ip Filure rte for terntionl prts sourcg for contrct t subsidiry ip i Filure rte for terntionl prts sourcg for contrct t domestic supplieri ip j wt Filure rte for terntionl prts sourcg for contrct t terntionl supplier j Weight given to terntionl prts sourcg for contrct t -house fcility wt Weight given to terntionl prts sourcg for contrct t subsidiry wt i Weight given to terntionl prts sourcg for contrct t domestic supplieri wt j Weight given to terntionl prts sourcg for contrct t terntionl supplier j dc Totl loss s function of product complexity rk for contrct ($) Decion vribles Q Q Quntity of contrct produced t locl fcility/-house (units/contrct) Quntity of contrct outsourced to terntionl subsidiry(units/contrct) Q i Quntity of contrct outsourced to domestic supplieri (units/contrct) Q j z y w i x j Quntity of contrct outsourced to terntionl supplier j (units/contrct) Bry vrible for ssignment of contrct t locl fcility/-house Bry vrible for ssignment of contrct t subsidiry Bry vrible for ssignment of contrct t domestic supplieri Bry vrible for ssignment of contrct t terntionl supplier j d OC d CF d Devitionl vribles for opertionl cost Devitionl vribles for cpcity flexibility Devitionl vribles for product complexity rk p-issn : Vol 8 No 2 Apr-My

6 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) The opertionl cost t four production desttions ( C ) Q z ( C T ) Q y ( C T ) Q w ( C T ) Q x (1) i i i i j j j j i j The rtio of customer dedles to the desttion led time cn be used to estimte mximum cpcity of production fcility t desttion. For ll desttions, mximiztion of the followg expression le to the mximum cpcity flexibility vilble the system g g g g z, y w i x j (2) LT LT LT LT i i j j To clude decion vribles to objective function, cpcity flexibility cn be written s the mximiztion of the followg function Qg Qg Qig Q j g z, y w i x j (3) D LT D LT D LT D LT i i j j Hence, cpcity flexibility cn be defed s the mximiztion of the vilble cpcity mongst different production options. Cpcity flexibility per contrct cn be expressed s follows 1 Qg Qg Qig Q j g z y w i x j A (4) DLT DLT i DLTi j DLT j Mximiztion of the bove expression results the lloction of the production quntity to the combtion of desttions with mximum cpcity. Mesurement unit for the cpcity flexibility illustrted s follows. Zr, fst fshion compny, creses its responsiveness with 50 percent cpcity utiliztion without extr shifts t most of its production fcilities. In th wy, Zr tentionlly leves extr cpcity for fst response. Th extr cpcity cn be used to fulfil pek or unexpected demnd [16]. Fifty percent cpcity utiliztion understn tht the Zr could produce double items (2.00 times) usg the extg cpcity (i.e. cpcity flexibility 2.00). Suppose tht the mximiztion of cpcity flexibility results Th cn be terpreted s th combtion of desttions hs cpcity to produce 200% per contrct (2.00 times per contrct) durg dedles. Hence, cpcity flexibility cn be mesured terms of times per contrct. Product complexity rk mesured s follows. The probbility of druption s function of totl number of prts product t -house fcility cn be expressed s follows [6]. E 1 1 pr (5) If the number of prts required for contrct creses, the probbility of druption lso creses. Similrly, s the filure rte creses, the probbility of druption lso creses. In the bove expression, the impct of domestic nd terntionl prts sourcg cn be cluded. Hence, the probbility of druption considerg domestic nd terntionl prts sourcg t -house fcility cn be written s BE E BE 1 1 wt ip (1 wt ) 1 1 dp, (6) The prts tht re sourced terntionlly hve more probbility of druption. Therefore, the ide to ssign reltively more weight to terntionl prts sourcg. Moreover, the filure rte for domestic/terntionl sourcg cn be estimted considerg the fctors such s frequency of msg component from prts suppliers, ggregte qulity level of prts suppliers, nd mnufcturg technology level t domestic or terntionl prts supply mrkets. In ddition to these fctors, the filure rte for terntionl prts sourcg lso depen on the fctors such s uncert led times, trnsporttion difficulties, border-crossgs, nd trde procedures. Hence, two different filure rtes re used for prts sourcg t ech production desttion. Msg sgle prt cuses dditionl cost such s premium freight, extr overtime, setups, nd downtime cost. In th pper, it ssumed tht mximum loss due to product complexity rk equivlent to the whole quntity ssigned to production fcility. Hence, the totl loss for contrct t ll production desttions p-issn : Vol 8 No 2 Apr-My

7 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) dc BE E BE wt 1 1 ip (1 wt ) 1 1 dp ( C ) Q z BE E BE wt 1 1 ip (1 wt ) 1 1 dp ( C T ) Qy i BE E BE i i wt 1 1 ip (1 wt ) 1 1 dp ( C T ) Q w i i i i i i i BE E BE j j wt 1 1 ip ( 1 wt ) 1 1 dp j j j j ( C j Tj ) Qj x, j Totl loss s function of product complexity rk for ll contrctscn be expressed s (8) dc Bsed on bove ides, the multi-objective outsourcg problem formulted s follows. Mimize opertionl cost Z1 ( C ) Q z ( C T ) Q y ( C T ) Q w ( C T ) Q x i j Mximize cpcity flexibility 1 Qg Qg Qig Q j g Z2 z y w i x j A DLT DLT i DLTi j D LT j i i i i j j j j (9) (10) Mimize product complexity rk Z dc (11) 3 subject to Q Q Dg z, (12) LT Dg y, (13) b LT s Dg Qi wi,, i (14) LT i Dg Qj xj,, j (15) LT j (16) Q Q Q Q D i j, i j i i i Q w mq,, i (17) (7) p-issn : Vol 8 No 2 Apr-My

8 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) j j j Q x mq,, j (18) Q, Qi, Q, Qj 0 (19) OC CF d, d, d 0 (20) z, y, wi, xj [0,1] (21) Objective function (9) shows mimiztion of totl opertionl cost. Objective function (10) shows mximiztion of cpcity flexibility. Objective function (11) shows the mimiztion of totl loss s function of product complexity rk. Constrts (12)-(15) represent cpcity constrts terms of led time nd dedles. Constrt (16) shows demnd stfction constrt. Constrts (17)-(18) show mimum committed quntity between mnufcturer nd suppliers. Constrts (19)-(20) re non-negtivity constrts. Constrt (21) represents ssignment of contrcts s bry vrible. IV. GOAL PROGRAMMING FORMULATIONS Th pper uses three vrts of, Lexicogrphic, Weighted, nd Chebyshev. Optimiztion softwre LINGO 15.0 ws used to implement metho. In metho, the trget level for ech gol specified, nd unwnted devition from the trget level mimized. Therefore, objective function for mimiztion of totl devition OC CF M Z d d d (22) In the cse of opertionl cost nd product complexity rk, unwnted devitions were specified s positive devitions. In contrst, unwnted devition for cpcity flexibility ws specified s negtive devition. Cost nd cpcity flexibility hve different mesurement units. To compre devitions sme units, normliztion performed by dividg ech objective with relevnt constnt [17].In th pper, percentge normliztion used to convert ll devitions to percentge vlue wy from trget vlues [17-19]. Thus, the objective (22) becomes M Z OC CF d d d (23) T T T OC CF where, TOC, T CF, nd T re normliztion constnts for opertionl cost, cpcity flexibility, nd product complexity rk, respectively. In th pper, normliztion constnt the best vlue chieved through optimiztion of three objectives seprtely. These best vlues re lso specified s trget vlues for ssocited objectives. A. Lexicogrphic Formultion Lexicogrphic utilizes the priority level for ech devition ssocited with ech objective. It performs series of optimiztions. Higher priority level should be mimized first. The vlue of mimum devition higher priority level should be mted, nd next priority level should be mimized [19]. Suppose the followg priority levels re defed by the decion mker, priority 1 (P1) = opertionl cost, priority 2 (P2) = cpcity flexibility, nd priority 3 (P3) = product complexity rk. The bsic lgebric formultion for priority levels [19] M P, P, P (24) Th vector restricts the stfction of higher priority level first. Therefore, first of ll, the objective tht hs first preference should be mimized [19]. Mimiztion of first priority level M z subject to (25) d OC ( C ) Qz ( C T ) Qy ( Ci T ) Q w ( C T ) Q i j d d T i i i j j j xj (26) OC OC OC Q g 1 i j z y w i x j A DLT DLT i DLTi j DLTj CF CF CF d d T Q g Q g Q g (27) p-issn : Vol 8 No 2 Apr-My

9 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) (28) dc d d T Constrts (12) (21) re cluded. Mimiztion of the negtive devition for cpcity flexibility (second priority) M z d CF (29) subject to d OC Optiml vlue of from Eqution (25), Constrts (12) (21), nd Constrts (26) (28) re cluded. The mimiztion of positive devition for product complexity rk (third priority) M z d (30) subject to Optiml vlues of d OC nd d CF from Equtions (25) nd (29), Constrts (12) (21), nd Constrts (26) (28) re cluded. Th formultion the optiml solution for Lexicogrphic. B. Weighted Formultion Weighted llows direct trde-offs between different gols [19]. These direct trde-offs re performed by ssigng preferentil weights to the gols. Weighted cn be formulted s M Z d OC d CF d TOC TCF T (31) where, 1, 2, nd 3 represent weights for ssocited objectives. subject to 3 q 1 (32) q1 Constrts (12) (21) nd Constrts (26) (28) re cluded. C. Chebyshev Formultion Chebyshev mimizes the worst (mximum) devition from ny sgle gol. If decion mker wnts blnce between gols chievement, Chebyshev good option [19]. If the mximl devition from mongst the set of gols, Chebyshev formultion [19] M Z (33) subject to doc (34) T OC CF d T d T CF (35) (36) Constrts (12) (21) nd Constrts (26) (28) re cluded. V. NUMERICAL EXAMPLE In th section, effectiveness of multi-objective model tested. Tble III presents numericl dt for the multi-objective model. For three contrcts, demnd 3636 units, 5547 units, 4960 units, respectively, customer dedles re 5 dys, 15 dys, nd 5 dys, respectively, nd number of prts 20, 95, nd 186, respectively. Optimiztion of dividul objective provides the followg results. In the cse of only opertionl cost, most of the quntity outsourced to low cost desttions. Opertionl cost, cpcity flexibility, nd product complexity rk re $ , 0.60 times per contrct, nd $62058, respectively. p-issn : Vol 8 No 2 Apr-My

10 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) In the cse of only cpcity flexibility, most production outsourced to the domestic suppliers. Opertionl cost, cpcity flexibility, nd product complexity rk re $ , 2.08 times per contrct, nd $86300, respectively. In the cse of only product complexity rk, production llocted bsed on mimum loss. Opertionl cost, cpcity flexibility, nd product complexity rk result $ , 1.26 times per contrct, nd $58576, respectively. Now, six cses re evluted bsed on chngg priority levels Lexicogrphic, nd preferentil weights Weighted. In ech cse, preferentil weights for first, second, nd third preferences re specified s 0.65, 0.25, nd 0.10, respectively. Chebyshev hs sme results ech cse. Followg bbrevitions re used, opertionl cost = OC, cpcity flexibility = CF, nd product complexity rk =. To compre ll objectives the sme units, normliztion ws performed usg the Vlue Pth Approch (VPA). Th pproch the most efficient technique to illustrte the comprons between objectives. In th pproch, chieved vlue for ech objective divided by the best solution for ssocited objective. The VPA technique pplied severl ppers [11, 20]. In the cse of opertionl cost nd product complexity rk, normlized vlues re greter thn or equl to one. In th cse, performnce of n objective decreses s the vlue creses from one. In the cse of cpcity flexibility, normlized vlues re less thn or equl to one. In th cse, performnce of n objective decreses s the vlue decreses from one. For ech objective the best vlue 1. For the six cses, summry of results nd normlized vlues re given Tble IV. Tble III. Input dt for outsourcg problem Contrct no. Inhouse Domestic suppliers Subsidir y Interntionl suppliers Unit production cost ($) Led time of ech fcility t ech desttion (dys/contrct) Number of prts tht re sourced terntionlly Filure rte for terntionl prts sourcg Filure rte for domestic prts sourcg Weight given to terntionl prts sourcg Trnsporttion cost per unit ($) Contrct 1 to Mimum production quntity committed with suppliers (units/contrct) Contrct 1 to p-issn : Vol 8 No 2 Apr-My

11 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) VI. RESULTS AND DISCUSSION metho cn be compred usg normlized vlues Tble IV. For stnce, consider Cse 1. For cpcity flexibility, Lexicogrphic performs 86% worse thn Weighted. Th outcome cn be clculted s follows. Greter vlue Lesser vlue times worse 86% worse Lesser vlue 0.29 In the followg, key results re summrized bsed on pproximte observtions. Grphicl representtions re shown Fig. 2 to Fig. 6. In Cse 1, for opertionl cost nd product complexity rk, Lexicogrphic nd Weighted perform better thn Chebyshev. For cpcity flexibility, Chebyshev performs better thn other two vrts, nd Weighted performs better thn Lexicogrphic (Fig. 2). In Cse 2, for opertionl cost nd product complexity rk, Lexicogrphic nd Weighted perform better thn Chebyshev. For cpcity flexibility, Chebyshev performs better thn other two vrts (Fig. 3). In Cse 3, for opertionl cost nd product complexity rk, Lexicogrphic performs worse thn other two vrts. For cpcity flexibility, Lexicogrphic performs better thn other two vrts (Fig. 4). Cse 4 behves sme s Cse 3. In Cse 5, for product complexity rk, Lexicogrphic performs better thn the other two vrts. For opertionl cost, Weighted performs better thn the other two vrts (Fig. 5). In Cse 6, for product complexity rk, Chebyshev performs worse thn the other two vrts (Fig. 6). Tble IV. solution nd normlized compron for lterntive cses Opertionl cost ($) Cpcity flexibility (times per contrct) 2.08 (mximum) Idel vlue for ech objective (mimum) Cse 1. OC CF Sequence Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Normlized Compron Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Cse 2. OC CF Sequence Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Normlized Compron Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Cse 3. CF OC Sequence Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Normlized Compron Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Product complexity rk ($) (mimum) p-issn : Vol 8 No 2 Apr-My

12 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) Cse 4. CF OC Sequence Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Normlized Compron Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Cse 5. OC CF Sequence Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Normlized Compron Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Cse 6. CF OC Sequence Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Normlized Compron Lexicogrphic Weighted or non-preemptive Chebyshev or Mmx Fig. 2. Cse 1, OC CF sequence p-issn : Vol 8 No 2 Apr-My

13 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) Fig. 3. Cse 2, OC CF sequence Fig. 4. Cse 3, CF OC sequence p-issn : Vol 8 No 2 Apr-My

14 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) Fig. 5. Cse 5, OC CF sequence Fig. 6. Cse 6, CF OC sequence In Lexicogrphic, if more preference given to opertionl cost, most of the production outsourced to low cost terntionl desttions. In th cse, cpcity flexibility cnnot be chieved. Moreover, chngg the sequence for cpcity flexibility nd product complexity rk (CO-CF- or CO--CF) does not chnge the results. In both orders, cpcity flexibility results the worst vlue. However, product complexity rk objective shows moderte chievement both orders. Hence, these two sequences seem pproprite for the functionl products with moderte product complexity. Product complexity rk depen on the chrctertics of the domestic nd terntionl prts sourcg t production desttion. In Lexicogrphic, if high preference given to cpcity flexibility, then opertionl cost nd product complexity rk objectives become worse due to the lloction of more quntity to the high cost domestic desttions with more cpcity flexibility. In th cse, chngg the sequence for opertionl cost nd product complexity rk (CF-CO- or CF--CO) shows similr results. Th due to the fct tht fter chievement of cpcity flexibility gol, it becomes difficult to chieve other two gols. As result, more production moves towr high cost domestic desttions. Hence, these two sequences seem pproprite for the fst fshion products with moderte product complexity. In Lexicogrphic, if more preference given to product complexity rk, both domestic nd terntionl desttions re selected bsed on the lest impct of the product complexity. In th cse, opertionl cost nd cpcity flexibility depend on the desttions with lest product complexity rk. Furthermore, order chnge of opertionl cost nd cpcity flexibility (-CO-CF or -CF-CO) shows sme results. Hence, these two p-issn : Vol 8 No 2 Apr-My

15 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) sequences seem pproprite for significntly complex products with lower preferences of opertionl cost nd cpcity flexibility. Hence, if the decion mker hs cler priority md, Lexicogrphic seems best. Weighted chieves trget levels for one objective on the expense of worse vlue of the other objective. If direct trde-offs re desired between opertionl cost, cpcity flexibility, nd product complexity rk, Weighted seems good. Th vrt of seems pproprite for the products for which the mnufcturer not fully confident bout the priorities for opertionl cost, cpcity flexibility, nd product complexity rk. In th vrt, direct trde-offs between gols re performed bsed on cresg or decresg weights. In Chebyshev, none of the objectives fully chieved, but production llocted to ech selected desttion bsed on blnced optimiztion of ech objective. Hence, th vrt of seems suitble for the products which require blnced chievement of opertionl cost, cpcity flexibility, nd product complexity rk. These products fll between bsic/functionl products nd fst fshion products. metho were lso compred terms of the solution times. Considerg the weights nd priorities Cse 1 (i.e. OC CF sequence), the problem size ws grdully cresed s follows. Problem size A: Contrcts = 2, domestic suppliers = 2, terntionl suppliers = 2. Problem size B: Contrcts = 3, domestic suppliers = 2, terntionl suppliers = 2. Problem size C: Contrcts = 3, domestic suppliers = 3, terntionl suppliers = 3. The solution times for ech problem size re shown Fig. 7. In the problem size B, only one contrct dded. Thus, there not much difference of the solution times between problem sizes A nd B. However, remrkble difference of solution times cn be observed between problem sizes A nd C, for ech vrt. Th compron ws performed only for the smll problem sizes. The lrge size problem would tke considerble solution times. Therefore, future work my develop n improved lgorithm to crese the overll effectiveness of the solution. Fig. 7.Solution times for different problem sizes for three vrts VII. INSIGHTS FOR PRACTITIONERS Three vrts of were used to evlute the outsourcg strtegies. Bsed on Lexicogrphic, some of the key observtions my be summrized s follows. For functionl/bsic products with lower/moderte complexity, opertionl cost my be given first priority. In th cse, cpcity flexibility cnnot be chieved. However, product complexity rk depen upon the nture of the connection between product complexity nd supply ch network. For fst fshion products with lower/moderte complexity, cpcity flexibility my be given first priority. Consequently, more cpcity flexibility provides resilience to del with product complexity rk or uncert situtions. For functionl/bsic products with higher product complexity, both the opertionl cost nd product complexity rk my be given the sme preference (first priority). In th cse, Lexicogrphic my be used. The sum of unwnted devitions for opertionl cost nd product complexity rk should be mimized first. Cpcity flexibility my be given second priority. p-issn : Vol 8 No 2 Apr-My

16 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) For fst fshion products with higher product complexity, both cpcity flexibility nd product complexity rk my be given the sme preference (first priority). In th cse, Lexicogrphic my be used. The sum of devitions for cpcity flexibility nd product complexity rk should be mimized first. Opertionl cost my be given second priority. If the decion mker wnts blnced chievement between gols, Chebyshev seems pproprite. Weighted my be used if the decion mker wnts to perform direct trde-offs between gols usg pproprite weights. Thus, the ppliction of pproprite vrt depen on product nture nd extg sitution. Selectg pproprite solution techniques hs greter impct on outsourcg strtegies. Domestic outsourcg provides more cpcity flexibility thn terntionl outsourcg, becuse cpcity flexibility ten to become effective beyond the dedles. Domestic outsourcg would sve cpcity expnsion cost. Furthermore, if the low cost subsidiry confronts cpcity shortge problems, domestic suppliers the sme country, which subsidiry locted, provide similr cpcity benefits s the cpcity expnsion t th subsidiry. There greter difference of lbour cost the developed, emergg, nd developg mrkets. From emergg to developg mrkets, further cost svgs my be chieved. Contrcts with relxed dedles nd constnt rte demnd my be shifted from cresg cost emergg mrkets towr the low cost developg mrkets. The rk shrg strtegy my be dopted with suitble combtion of globl desttions. Product complexity rk results druption cost. However, reltively high opertionl cost mrkets cur dditionl over time, setups, nd downtime cost due to the lbour cost difference cross the globe. Mnufcturers do not relize druption cost due to the fct tht th cost offset by lower cost t terntionl desttions. Furthermore, product complexity long with extended supply ch networks creses druption rk regrdless of the mnufcturg loction cross the globe. VIII. CONCLUSIONS AND FUTURE WORK In th pper, n outsourcg problem proposed bsed on opertionl cost, cpcity flexibility, nd product complexity rk. The key focus of the outsourcg problem ws to evlute the outsourcg strtegies considerg functionl/bsic nd fst fshion products. Product complexity rk ffects both the functionl nd fst fshion products. The key reson for terntionl outsourcg cost svg, nd the key reson for domestic outsourcg cpcity flexibility. Product complexity ffects the outsourcg decion mkg regrdless of the domestic/terntionl outsourcg. Hence, th pper cptures reltic spects of the outsourcg problem. Three vrts of were used to evlute the outsourcg strtegies. Multi-objective outsourcg problem provides useful sights for outsourcg nd offshorg decion mkg. Optimiztion softwre Lgo 15.0 ws used to solve outsourcg problem. The solution time considerbly creses with n crese problem size. Future work my develop n improved lgorithm to solve lrge size problem. Furthermore, th model studies cpcity flexibility bsed on mximum cpcity vilble the system. Future work my consider other conditions which cpcity flexibility should mtch specific demnd situtions. For exmple, cpcity expnsion/contrction seems more prcticl thn outsourcg cert situtions. In th cse, evlution of outsourcg strtegies for offshorg/reshorg phenomenon cn be modelled. The rk relted to globliztion my be corported different wys. More rigorous models will fcilitte offshorg nd reshorg prctices. ACKNOWLEDGMENTS Th reserch ws supported by Bsic Science Reserch Progrm through the Ntionl Reserch Foundtion of Kore (NRF) funded by the Mtry of Eduction, Science nd Technology (2014R1A1A ). Also th reserch ws supported byhnyng University, Kore ( ). REFERENCES [1] Yu, Y., nd V. Ly Opertionl Effects nd Firms' Responses: Perspectives of New Zelnd Apprel Firms on Interntionl Outsourcg. Interntionl Journl of Logtics Mngement 22 (3): [2] Grobler, A., B. T. Lugen, R. Arkder, nd A. Fleury Differences Outsourcg Strtegies between Firms Emergg nd Developed Mrkets. Interntionl Journl of Opertions nd Production Mngement 33 (3): [3] Fher, M. L Wht the Right Supply Ch for Your Product? Hrvrd Busess Review 75 (2): [4] Srdr, S. nd Y. H. Lee Anlys of Outsourcg Strtegies for Cost nd Cpcity Flexibility Textile Supply Ch Mngement. Proceedgs of the 17th Interntionl Conference on Industril Engeerg Theory, Applictions nd Prctice, Pusn Ntionl University, Busn, South Kore, October 6-9: [5] Choi, T. M Fst Fshion Systems: Theories nd Applictions. CRC Press. [6] Inmn, R. R., nd D. E. Blumenfeld Product Complexity nd Supply Ch Design. Interntionl Journl of Production Reserch 52 (7): [7] Wng, J. J., R. Gu, nd X. J. Dio Usg Hybrid Multi-Criteri Decion Aid Method for Outsourcg Vendor Selection. Proceedgs of the 4th Interntionl Conference on Wireless Communictions, Networkg nd Mobile Computg, WiCOM'08, Dl, October 12-14: 1-4. p-issn : Vol 8 No 2 Apr-My

17 ShheenSrdr et l. / Interntionl Journl of Engeerg nd Technology (IJET) [8] Wng, E. J., Y. C. Chen, W. S. Wng, nd T. S. Su Anlys of Outsourcg Cost-Effectiveness Usg A Ler Progrmmg Model with Fuzzy Multiple Gols. Interntionl Journl of Production Reserch 48 (2): [9] Comn, A., nd B. Ronen Production Outsourcg: A Ler Progrmmg Model for the Theory-of-Constrts. Interntionl Journl of Production Reserch 38 (7): [10] De Almeid, A. T Multi-Criteri Decion Model for Outsourcg Contrcts Selection bsed on Utility Function nd ELECTRE Method. Computers & Opertions Reserch 34 (12): [11] Wdhw, V., nd A. R. Rvdrn Vendor Selection Outsourcg. Computers & Opertions Reserch 34 (12): [12] Liou, J. J., Y. T. Chung Developg Hybrid Multi-Criteri Model for Selection of Outsourcg Providers. Expert Systems with Applictions 37 (5): [13] Bht, S., nd A. Krhnmurthy Vlue of Cpcity Flexibility Mnufcturg Systems with Sesonl Demn. IIE Trnsctions 47 (7): [14] Alp, O., nd T. Tn Tcticl Cpcity Mngement under Cpcity Flexibility. IIE Trnsctions 40 (3): [15] Chen, A., nd P. Ksikitwiwt Modelg Cpcity Flexibility of Trnsporttion Networks. Trnsporttion Reserch Prt A: Policy nd Prctice 45 (2): [16] Ferdows, K., M. A. Lew, nd J. A. Mchuc Rpid-fire fulfillment. Hrvrd Busess Review 82 (11): [17] Tmiz, M., D. Jones, nd C. Romero Gol Progrmmg for Decion Mkg: An Overview of the Current Stte-of-the-rt. Europen Journl of Opertionl Reserch 111 (3): [18] Romero C Hndbook of Criticl Issues Gol Progrmmg, Pergmon Press, Oxford. [19] Jones, D., nd M. Tmiz Prcticl Gol Progrmmg. New York: Sprger Vol [20] Rvdrn, A. R., R. UfukBilsel, V. Wdhw, nd T. Yng Rk Adjusted Multi-Criteri Supplier Selection Models with Applictions. Interntionl Journl of Production Reserch 48 (2): AUTHOR PROFILE Shheen Srdr received h PhD degree the deprtment of Industril & Mngement Engeerg, Hnyng University Feb. 2016, South Kore. H current reserch terests clude outsourcg strtegies, mnufcturg supply ch mngement (SCM), nd textile SCM. Young He Lee full professor the Deprtment of Industril & Mngement Engeerg, Hnyng University, South Kore, nd chirmn of the Koren Society of Supply Ch Mngement, nd chirmn of the Interntionl Federtion of Logtics & SCM Systems(IFLS). He received h BS from Kore University, nd MS nd PhD from the University of Illo t Chicgo 1983 nd H reserch terests re supply ch mngement, logtics mngement,simultion optimiztion. Muhmmd Sd Memon PhD cndidte the deprtment of Industril & Mngement Engeerg, Hnyng University, South Kore. H reserch terests clude product sfety supply ch mngement, nd supplier selection SCM. p-issn : Vol 8 No 2 Apr-My