Economic model of outsourcing for a subcontractor manufacturing system in a single subcontractor - multi-outsourcers relationship

Abstract

This paper considers a manufacturing system composed of a single randomly failing machine. Initially, the system is the supplier of a direct client, in a supplier - client relation. In order to maximise its profits, the system provides an outsourcing task to several firms, in a subcontractor - multi-outsourcers relation. The research described here aims to study the outsourcing constraints from the subcontractor point of view, and determine when outsourcing is profitable for the subcontractor firms in the multi-outsourcers case.