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The Manufacture/Outsource Decision In Electronics Manufacturing – UA01-04

A profit maximization formulation of the make vs. buy (manufacture vs. outsource) decision in electronics manufacturing.


Avaya Inc.

Research Team:

Scott J. Mason

Universities Involved:

University of Arkansas

Start Date:


End Date:



This report investigates the manufacture/outsource decision in electronics manufacturing with the introduction of contract manufacturing and its impact on various aspects of the electronics manufacturing supply chain: transportation, order processing, warehousing, and purchasing.
Electronics manufacturing has accounted for at least 30 percent of the United States’ Gross National Product since World War II and has continued to grow since then. As the industry increases, the more difficult it is for a single enterprise to realize opportunities in a timely and cost effective. This brings the need for outsourcing. Although electronics and contract manufacturers working together results in quite a powerful alliance, it is important for the enterprise to be aware of the impacts that contract manufacturing may have on the electronics manufacturing supply chain.
The report provides a brief introduction to the electronics manufacturing process, describes the electronics manufacturing supply chain, discusses several of the ways that contract manufacturing impacts the electronics manufacturing supply chain, and gives some conclusions and areas for future research
The University of Arkansas and Avaya are building a total cost model which will provides Avaya with the best choice of manufacturing, either internally or externally, to identify what level of system to outsourcing which will maximum company profits.