The supply chain scheduling problem with subcontracting option is studied. In this problem, a plant receives a set of orders from a customer at the beginning of the planning horizon. Each order can either be processed by the plant or be subcontracted at costs. The plant needs to determine which order should be subcontracted, and make production and distribution schedules to all the orders which are produced in-house. The objective is to minimize the total cost, including subcontracting cost, production cost and distribution cost, with the constraint that all the orders which are produced in-house should be finished no more than a given deadline. The mathematical model for the problem is formulated and a heuristic algorithm is developed. Finally, the experiment results show the effectiveness of the proposed algorithm.