Christoph Schneeweiss

Hierarchical coordination mechanisms within the supply chain

Abstract The paper analyses operational coordination mechanisms between a producer and a supplier within a supply chain having private local information. For a make to order production setting the coordination is achieved through the combined use of a task-oriented and a control-oriented type of instrument. The task-oriented instrument describes the producer’s procurement policy for components whereas the control-oriented instrument is made up by penalty costs for non-correct delivery. In using both of these instruments various coordination schemes are employed in making use of the theory of hierarchical planning. Though it is assumed that producer and supplier possess some private information they are not taken to behave antagonistically. The question, which information should be disclosed, is of central importance for the overall performance of the supply chain and is the main focus of an extensive quantitative analysis which finally is used to give recommendations for the design of a supply contract.

Distributed decision making––a unified approach

Abstract The paper gives an overview over the broad area of distributed decision making (DDM). In achieving a systematic procedure a general framework is developed that allows to describe the numerous approaches in DDM in a unified way. Focusing on application areas the paper is not only considering various fields in the management sciences, like hierarchical production planning, supply chain management, or managerial accounting, but is regarding other disciplines as well. Particularly, economics and computer sciences are investigated as to their specific contributions to DDM. It turns out that each field and discipline elaborate different aspects of DDM which particularly for OR could be used to solve concrete highly involved DDM problems.

Distributed decision making in supply chain management

Abstract The paper identifies different classes of distributed decision making problems in supply chain management. Since, these problem classes have been developed in various sciences like applied mathematics, operations research, economics and artificial intelligence, the paper gives a systematic overview as to the specific contribution each single science is providing, particularly indicating possible synergies. Moreover, it points to those distributed decision-making problems that prove to be of major relevance for supply chain management.

Multi-Stage Lot-Sizing for General Production Systems

In this paper the multi-stage lot-sizing problem for general production structures is considered. General production structures are characterized by the fact that each stage may have several predecessor or successor stages. The objective is to minimize total costs which consist of a fixed charge per lot at each stage and linear holding costs. Time varying demand for final products is assumed to be known and has to be satisfied. A simple heuristic procedure is presented consisting of two phases. In the first phase a “basic policy” is determined which derives reorder times under the assumption of demand being constant. These reorder intervals are then in a second phase used to solve the time varying problem. In doing so a first possibility is to realize a cyclic policy simply according to the “basic policy”. A second possibility of taking into account non-stationarity is to take adjusted cost parameters and apply single-stage inventory models. A simulation study shows that considerable cost improvements can be realized using this heuristic.

Principal Agent Theory

Up to now we have investigated decision makers acting as a team or an enforced team. Though the actors were allowed to possess private information, an antagonistic behavior was not assumed to be present or effective. In particular, the levels did not exploit their information in an opportunistic way.

Measuring and designing flexibility as a generalized service degree

The paper designs and measures flexibility as the availability of a dynamic system in an uncertain environment. After a brief discussion of the literature, flexibility is defined essentially as the service degree of a systems dynamic technology. As a further step, this measure is extended to incorporate a systems planning, forecasting, and implementation ability. To obtain a deeper insight into the complex nature of the measure the design of flexibility is discussed within the framework of hierarchical planning.

Hierarchically integrated lot size optimization

The paper describes a new hierarchically integrated approach to improve conceptual deficiencies of traditional Production Planning and Control (PPC-)Systems for a make-to-stock job shop production. The main concern is a restructuring of traditional planning levels and an improvement of their hierarchical interdependence. Thus, already at the medium term planning level lot sizes are determined which, in the traditional concept is a task of the MRP-module. The hierarchical interdependence is not simply a top-down relationship, but is supplemented by an explicit anticipation of the lower levels. Considering the information status at the medium term level the job shop is described as a queueing network and the lot sizes are obtained minimizing simultaneously mean lead time, (medium term) capacities, and (short term) inventories. The approach is computational feasible and, based on some numerical results, is compared with a deterministic multi level capacitated lot sizing model.

A Quantitative Measure for Flexibility

During the last decade flexibility has become a key notion of modern life and sciences. Especially for management science dealing with the dynamics of systems, flexibility turns out to be of particular importance. Expressions like flexible manufacturing, flexible workforce, and flexible market behaviour indicate its popularity.

Determining Depreciations as a Two-Stage Problem

Within the framework of a hierarchical model, the paper determines depreciation rates for exhaustable facilities. It hierarchically integrates an investment model with a production model combining the tactical investment calculus with the operational cost accounting level. Using the anticipation procedure of hierarchical planning, depreciation rates, as part of the contribution margin of the operational production model, influence the anticipated cash flow of the net present value (NPV) criterion of the investment level. Hence, using a two-stage procedure depreciation rates are determined as NPV-optimal cost parameters. The paper fully accounts for a stochastic environment and compares numerically the two-stage cost evaluation with linear depreciations.

On the validity of reorderpoint inventory models for regular and sporadic demand

Abstract Starting from a continuously inspected stochastic dynamic inventory problem the procedure of Brown derives reorderpoint policies being implemented in many software packages. Schneider adapted this procedure to the more realistic periodically inspected problem. Although his method is straight-forward some crucial assumptions have to be imposed. In the present paper these assumptions are investigated analytically and numerically, particularly with respect to regular and sporadic demand, thus giving clear limits as to the validity of the fundamental derivation of Brown/Schneider.