Integrated Make-or-Buy and Facility Layout Problem with Multiple Products

Bernd Hillebrand, Grigory Pishchulov

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

179 Downloads (Pure)


Layout decisions represent an important step in production planning as they significantly affect the efficiency of a facility. They typically follow after make-or-buy decisions and capacity planning of a firm, and belong to the lowest level in the hierarchy of tactical production decisions. Sequential decision making neglects however the potential interaction between consecutive planning levels and may lead to inefficiencies. We propose an approach to a simultaneous make-or-buy decision making and facility layout planning in the presence of multiple products. To this end, we introduce a generalization of the classical quadratic assignment problem that takes into account (i) the costs of outsourcing, and (ii) the impact of layout decisions on the production costs of individual products. We further propose a solution approach based on the linearization of the resulting model and derive basic properties of the optimal planning decisions.
Original languageEnglish
Title of host publicationLogistics Management
Subtitle of host publicationContributions of the Section Logistics of the German Academic Association for Business Research, 2015, Braunschweig, Germany
EditorsDirk Mattfeld, Thomas Spengler, Jan Brinkmann, Martin Grunewald
PublisherSpringer Nature
ISBN (Print)9783319208626
Publication statusPublished - 2016

Publication series

NameLecture Notes in Logistics
ISSN (Print)2194-8917


Dive into the research topics of 'Integrated Make-or-Buy and Facility Layout Problem with Multiple Products'. Together they form a unique fingerprint.

Cite this