On the Optimality of Single-Item, Incremental Cost Rules for the Make-Buy Decision

Autor:	Richard M. Burton, Dan J. Laughhunn
Rok vydání:	1971
Předmět:	Economics and Econometrics Weighted sum model Incremental decision tree Admissible decision rule Operations research Decision engineering Computer science General Engineering Decision tree Decision rule Education Operations management Decision analysis Optimal decision
Zdroj:	The Engineering Economist. 16:227-246
ISSN:	1547-2701 0013-791X
DOI:	10.1080/00137917108902690
Popis:	Decision rules for the make-buy decision most often assume the form of single-item, incremental cost rules which, for application, require decisions to be made for each item in isolation from all others. While it has been recognized that such decision rules may be non-optimal in situations where equipment capacity limits exist, the literature has not considered other cases where non-optimality arises. The purpose of this paper is to use linear programming as a framework for evaluating the optimality of single-item, incremental cost rules. The major conclusion of this paper is that the presence of any type of binding constraint in the planning problem, regardless of its origin, renders a single-item decision rule potentially non-optimal. A set of optimal screening decision rules is developed to be used in conjunction with a linear programming model for make-buy decisions in cases where such binding constraints exist.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::197fe0ce9a0ec669d1cbc6908bef0fd1 https://doi.org/10.1080/00137917108902690 Zobrazit plný text záznamu