Economics at your fingertips  

Outsourcing decision under Utopian environment

Amitava Ray, Bijan Sarkar and Subir Sanyal

Journal of Applied Accounting Research, 2008, vol. 9, issue 3, 181-191

Abstract: Purpose - The aim of this paper is to develop and demonstrate an outsourcing decision model in which constraint resource prevents the throughput of the organization. Design/methodology/approach - An integrated model is proposed by incorporating the weighted product model (WPM) of AHP in estimating the priority of each product in a multi-product constraint resource environment. A numerical example is presented to demonstrate the effectiveness of this model. The outsourcing decision model compares four alternatives: Standard cost accounting, standard theory-of-constraints (TOC), LP analysis and an original solution. Findings - The numerical results show that the proposed model is superior and more realistically optimizes resource allocation and measures the performance of the model. Research limitations/implications - This research is limited to the production processes that do not have multiple constraints. Practical implications - This research is applicable to the companies which produce multi-products in a situation in which market demand exceed the company's production capacity. Originality/value - This is the first time that the WPM of AHP/TOC has been used to maximize the product throughput. Instead of calculating $return per constraint minute, it decides the priority of product that maximizes the product throughput in the constraint resource environment. It makes a significant contribution to the manufacturing organization where one can compare the financial performance of the organization by selecting the right decision model.

Keywords: Standard costs; Accounting; Linear programming; Outsourcing (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link) ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://emeraldgroupp ... journals.htm?id=jaar

Access Statistics for this article

Journal of Applied Accounting Research is currently edited by Julia Mundy

More articles in Journal of Applied Accounting Research from Emerald Group Publishing
Series data maintained by Virginia Chapman ().

Page updated 2018-02-10
Handle: RePEc:eme:jaarpp:v:9:y:2008:i:3:p:181-191