Distributed Decision Making

1: Introduction.- 1.1 Some Typical Examples of Distributed Decision Making Situations.- 1.2 Examples of DDM Systems.- 1.3 Some Important Properties of DDM Systems.- 1.4 Outline of the Treatise.- I: Basic Foundations.- 2: Basic Concepts.- 2.1 General Characterization of Hierarchical Planning Structures.- 2.2 Coupling Equations and Anticipation Function.- 2.3 Distinguishing DDM Systems by Their Team Character within Hierarchical Interactions.- 2.4 Classifying General Planning Hierarchies by Their Anticipation.- 2.5 Illustrative Examples.- 2.5.1 Example 1: Make-or-Buy Decisions.- 2.5.2 Example 2: A Working Time Planning Model.- 2.5.3 Example 3: Supply Contracts.- 2.5.4 Example 4: Stackelberg Duopoly.- 2.6 Some Remarks Concerning General Solution Properties.- 3: Constructional DDM Systems.- 3.1 Decomposition DDM Systems.- 3.1.1 A Capacity Adaptation Model.- 3.1.2 A Coordination DDM System of the Dantzig/Wolfe Type.- 3.2 Relaxation Systems.- 3.3 A Brief Remark on Bi-Level Programming.- 4: Organizational DDM Systems.- 4.1 Top-Down DDM Systems.- 4.1.1 A Hierarchical Planning Model for the Repair Shops of the Deutsche Lufthansa AG.- 4.2 Tactical-Operational DDM Systems.- 4.2.1 Capacity Adaptation Hierarchy.- 4.2.2 Investment-Production Hierarchies.- 4.2.3 Strategic-Tactical-Operational DDM System.- 4.3 Value of Information and Delegation.- 4.3.1 Value of Information.- 4.3.2 Value of Delegation.- 4.4 Some Brief Remarks on Stochastic Programming.- 4.4.1 An Example of a Two-Stage Linear Stochastic Programming.- 4.4.2 Some General Remarks on Solution Procedures.- 5: Principal Agent Theory.- 5.1 Information Situation in the Principal Agent Theory.- 5.2 The Standard Problem of Principal Agent Theory.- 5.3 An Illustrative Example with Risk-Neutral Antagonists.- 5.3.1 Problem Statement and Problem Formulation.- 5.3.2 Problem Solution.- 5.4 Some General Observations Concerning the Solution of the Principal Agent Coupling Equations.- 5.5 The LEN Model.- 5.6 Some Extensions of the Standard Situation.- 5.6.1 Self-Selection Illustrated with a Supply Chain Contract.- 5.6.2 Hidden Information and Truthful Communication.- II: General Applications.- 6: Hierarchical Production Planning.- 6.1 Standard Model of Hierarchical Production Planning.- 6.1.1 The Structure of the Model.- 6.1.2 Mathematical Formulation of the Decision Models for the Three Levels.- 6.1.3 General Discussion of Hierarchical Production Planning.- 6.2 Integrative Hierarchical Production Planning.- 6.2.1 A Model to Illustrate the Integrative Approach to HPP.- 6.2.2 Interpretation of the Integrative Model in Terms of a Tactical-Operational DDM System.- 6.2.3 General Discussion of Aggregation Procedures and the Integrative HPP.- 6.3 Process Production.- 6.3.1 A Dynamic Programming Formulation for Medium-Term and Short-Term Process Production.- 6.3.2 Integrative Hierarchical Production Planning for Process Production.- 6.4 General Discussion.- 7: Organizational Design.- 7.1 Designing the Organizational Structure as a DDM Problem.- 7.2 Process Design: The Design of a Flexibility Potential.- 7.2.1 Some Prelimary Remarks.- 7.2.2 Elementary Components of a Flexibility Measure.- 7.2.3 A General Measure of Flexibility.- 7.2.4 Numerical Specification of Flexibility.- 7.2.5 Planning and Implementation Ability as Further Components of Flexibility.- 7.2.6 The Design of Flexibility as a Hierarchical Planning Problem.- 8: Implementation.- 8.1 Planning and Implementation as a Two-Stage Decision Problem.- 8.2 Implementation as a Three-Stage Hierarchy.- 8.2.1 A General Model.- 8.2.2 The Solution Hierarchy.- 8.3 Formal Description of the Planning and Implementation Problem.- 8.3.1 The Coupling Equations.- 8.4 Working Time Contract.- 8.5 Implementation of Lotsizes.- 8.5.1 The Planning Level: Determination of Target Lotsizes.- 8.5.2 The Implementation Level: Adaptation of Target Lots.- 8.5.3 Anticipation.- 8.5.4 Description within the Framework of Hierarchical Planning.- 9: Supply Chain Management.- 9.1 The Design of Supply Chain Contracts to Coordinate Operational Interdependencies.- 9.1.1 Type of Contracts and Their Operational Impact.- 9.1.2 A Formal Description of the Operational Level.- 9.1.3 The Contract Level.- 9.1.4 Numerical Analysis.- 9.1.5 Summarizing Remarks.- 9.2 Process Coordination in a Supply Chain — a Continuous One-Period Model.- 9.2.1 Problem Description.- 9.2.2 Main Features of the Producer’s and Supplier’s Model.- 9.2.3 Coordination Schemes.- 9.2.4 Analytic Investigation.- 9.2.5 An Illustrative Numerical Example.- 9.3 A Multi-Period Model with Private Information.- 9.3.1 General Characteristics of the Multi-Period Model.- 9.3.2 Formal Description of the Supply Link.- 9.3.3 The Interrelation of the Producer’s and the Supplier’s Model.- 9.3.4 Types of Anticipation and Coordination.- 9.3.5 Numerical Analysis.- 9.3.6 General Discussion.- 9.4 Distributed Decision Making in Supply Chain Management.- 9.4.1 The Nature of DDM Problems in Supply Chain Management.- 9.4.2 Proper DDM Problems in Supply Chain Management.- 9.5 The Contribution of Different Sciences to DDM in SCM.- 10: Service Operations.- 10.1 Characterization of Services.- 10.1.1 Specification of Service Operations.- 10.1.2 Phases of Service Production.- 10.2 Execution Phase of a Service Operation.- 10.3 The Agreement-Execution Relationship.- 10.4 Delegation of a Service Operation.- 10.4.1 Coupling Equations.- 10.4.2 Modeling the Relationship Between Manager and Agent.- 11: Managerial Accounting.- 11.1 General Considerations and the Cost Value Problem.- 11.1.1 Classification.- 11.1.2 The Cost Value Problem.- 11.2 Steering Costs.- 11.2.1 Description of the Concept of Steering Costs.- 11.2.2 A Numerical Example.- 11.3 Tactical-Operational Cost Evaluation.- 11.3.1 Investment-Oriented Depreciations — Preliminary Considerations.- 11.3.2 Description of the Investment and the Production Level.- 11.3.3 Defining Investment-Oriented Depreciations.- 11.3.4 An Illustrative Numerical Example and Some Further Numerical Insights.- 11.3.5 General Discussion.- 11.4 Decision-Oriented Assignment of Common Cost.- 11.4.1 The Cost Separation Problem.- 11.4.2 The Algorithmic Determination of Steering Costs.- 11.4.3 The Complete Cost Assignment Problem.- 11.5 Strategic Costs.- 11.6 Cost Parameters as Incentives.- 11.6.1 Incentives and Behavioral Costs.- 11.6.2 Distorted Costs as Incentives.- 11.6.3 Transfer Prices as Incentives.- III: Leadership and Coordination Processes.- 12: General DDM Systems.- 12.1 The Individual Decision Process.- 12.1.1 General Two-Step Structure.- 12.1.2 A More Refined Description.- 12.1.3 The Entire Decision Process.- 12.2 A Formal Description of General DDM Systems.- 12.2.1 The Interaction of Individual Decision Processes.- 12.2.2 The General Coupling Equations.- 12.2.3 Leadership Properties of the Coupling Equations.- 13: Coordination through Communication.- 13.1 General Features of a Coordination and Communication Process.- 13.2 A Linear Coordination Process.- 13.3 Hierarchical Interference with the Base-Level Decision Processes.- 13.4 The Entire Coordination Process.- 14: Negotiations.- 14.1 A Hierarchical Negotiation Situation.- 14.2 A Formal Description of the Negotiation.- 14.3 Negotiations in the Presence of Multiple Scenarios.- 14.4 The Strategic Decision.- 14.5 The Entire Negotiation Process.- 15: Distributed Decision Making in Multi-Agent Systems.- 15.1 A Brief Description of MAS.- 15.2 Three Illustrative Examples of MAS.- 15.2.1 Coordination of Inventories in a Supply Chain.- 15.2.2 A Complex Multi-Facility Scheduling Problem.- 15.2.3 A Market Coordination of Locally Optimizing Agents in the Supply Chain.- 15.3 Multi-Agent Systems as Special DDM Systems.- 16: A Unifying Perspective of the Management Process.- 16.1 Summarizing Key Notions of DDM.- 16.2 DDM and Specific Theories in Business Administration.- 16.3 DDM and Non-Management Sciences.- 16.4 The Management Process.- Exercises.- Solutions to the Exercises.