Supply chain scheduling to minimize holding costs with outsourcing

This paper addresses a scheduling problem in a flexible supply chain, in which the jobs can be either processed in house, or outsourced to a third-party supplier. The goal is to minimize the sum of holding and delivery costs. This problem is proved to be strongly NP-hard. Consider two special cases, in which the jobs have identical processing times. For the problem with limited outsourcing budgets, a NP-hardness proof, a pseudo-polynomial algorithm and a fully polynomial time approximation scheme are presented. For the problem with unlimited outsourcing budgets, the problem is shown to be equivalent to the shortest path problem, and therefore it is in class P. This shortest-path-problem solution approach is further shown to be applicable to a similar but more applicable problem, in which the number of deliveries is upper bounded.