A Framework of Integrated Sustainable Make or Buy Decision Model

Abstract

Abstract Tolerance has been recognized as the connector between engineering design and manufacturing stages. It plays an important role in both stages and must be optimally determined to minimize several objectives such as manufacturing cost and quality loss. Considering the engineering design, the tolerance should be set tightly in order to get better quality. Conversely, considering manufacturing stage, the tolerance should be set loosely in order to make the manufacturing process less costly. Process and technological capabilities as well as limited production capacities made manufacturing companies to outsource some of their needed components to their suppliers. Hence, the manufacturing companies should decide which components have to make using its own production facilities and which one that must be purchased from the suppliers. These decisions can be made simultaneously with the determination of optimal tolerance. Due to the intense concerns on environment, sustainability gained more attention in recent years and attracted many researchers including in the field of make or buy decisions. We attempt to integrate the make or buy decisions with sustainability in the form of remanufacturing to determine the optimal component tolerance. We found that the Bass model, a widely used model to predict new product demand, can be integrated to make or buy decisions model specifically in determining the expected number of returned product to be remanufactured. We identify some problems in the integration such as the lead time which comes from the product useful life and time to collect the return product and also the representation of remanufacturing cost function in its relation with tolerance assignment, and considerations of single or multi manufacturing generations.