Two-machine flow shop scheduling problem with an outsourcing option

We consider a two-machine flow shop problem in which each job is processed through an in-house system or outsourced to a subcontractor. A schedule is established for the in-house jobs, and performance is measured by the makespan. Jobs processed by subcontractors require paying an outsourcing cost. The objective is to minimize the sum of the makespan and total outsourcing costs. We show that the problem is NP-hard in the ordinary sense. We consider a special case in which each job has a processing requirement, and each machine a characteristic value. In this case, the time a job occupies a machine is equal to the job's processing requirement plus a setup time equal to the characteristic value of that machine. We introduce some optimality conditions and present a polynomial-time algorithm to solve the special case.