One of the more visible and often controversial effects of globalization is the rising trend in global sourcing, commonly referred to as outsourcing, offshoring or offshore outsourcing. Today, many organizations experience the necessity of growing globally in order to remain profitable and competitive. This research focuses on the process that organizations undergo in making strategic decisions of whether or not to go offshore, and then on the location and volume of these offshore operations.This research considers the strategic decision of offshoring and sub-divides it into two components: analysis of monetary benefits and evaluation of intangible variables. In this research, these two components are integrated by developing an analytical decision approach that can incorporate quantitative and qualitative factors in a structure based on multiple solution methodologies. The decision approach developed consists of two phases which concurrently assess the offshoring decision by utilizing mixed integer programming and multi-attribute decision modeling, specifically using Analytic Network Process, followed by multi-objective optimization and tradeoff analysis. The decision approach is further enhanced by employing engineering economic tools such as life cycle costing and activity based costing. As a result, the approach determines optimal offshoring strategies and provides a framework to investigate the optimality of the decisions with changing parameters and priorities.The applicability, compliance and effectiveness of the developed integrated decision making approach is demonstrated on two real life cases in two different industry types. Through empirical studies, different dimensions of offshoring decisions are examined, classified and characterized within the framework of the developed decision approach. The solutions are evaluated by their value, level of support and relevance to the decision makers.The utilization of the developed systematic approach showed that counterintuitive decisions may sometimes be the best strategy.This study contributes to the literature with a comprehensive decision approach for determining the most advantageous offshoring location and distribution strategies by integrating multiple solution methodologies. This approach can be adapted in the corporate world as a tool to improve global vision.
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