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Centralized VERSUS decentralized productionplanning

Published online by Cambridge University Press:  12 October 2006

Georgios K. Saharidis ,
Yves Dallery  and
Fikri Karaesmen
Georgios K. Saharidis
Affiliation:
Laboratoire Génie Industriel, École Centrale Paris, Grande Voie des Vignes, 92295 Chatenay-Malabry Cedex, France; e-mail:
Yves Dallery
Affiliation:
Laboratoire Génie Industriel, École Centrale Paris, Grande Voie des Vignes, 92295 Chatenay-Malabry Cedex, France; e-mail:
Fikri Karaesmen
Affiliation:
Department of Industrial Engineering, Koç University, 34450 Istanbul, Turkey; fkaraesmen@ku.edu.tr
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Abstract

In the course of globalization, many enterprises change their strategies and are coupled in partnerships with suppliers, subcontractors and customers. This coupling forms supply chains comprising several geographically distributed production facilities. Production planning in a supply chain is a complicated and difficult task, as it has to be optimal both for the local manufacturing units and for the whole supply chain network. In this paper two analytical models are used to solve the production planning problem in supply chain involving several enterprises. Generally in practice, for competitive and/or practical reasons, frequently each enterprise prefers to optimize its production plan with little care about the other members of the supply chain. This case is presented through a simple model of decentralized optimization. The aim of this study is to analyze and compare the two types of optimization: centralized and decentralized. The initial question is: what are the profit and the optimal policy of global (centralized) optimization in contrast to local (decentralized)? We characterize this gain by comparing the optimal profits obtained in both cases.

Keywords

Global-local optimizationproduction planningcentralized-decentralized models.
Type
Research Article
Information
RAIRO - Operations Research , Volume 40 , Issue 2: ROADEF 03 , April 2006 , pp. 113 - 128
Copyright
© EDP Sciences, 2006

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