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Simulation of Decentralized Planning in Two Danish Organizations Using Linear Programming Decomposition

Author

Listed:
  • John Christensen

    (Odense University)

  • Börge Obel

    (Odense University)

Abstract

This paper describes the results of two studies where decentralized planning has been simulated. The coordination mechanisms employed were based on the Dantzig-Wolfe decomposition algorithm, and the Ten Kate decomposition algorithm, which are price directive and budget directive planning procedures, respectively. The importance of the results is that the data and the structure of the two planning problems come from real organizations--a cooperative slaughterhouse and a forecast model for Danish agriculture. Thus conclusions based on using a price-directive and a budget-directive planning method to simulate decentralized planning in these organizations have relevance to the potential value of using such methods in real organizations. The main conclusions concern the importance of and the difficulties in finding good starting strategies for the two methods and the impact of the organizational structure on the rate of improvement for the methods.

Suggested Citation

  • John Christensen & Börge Obel, 1978. "Simulation of Decentralized Planning in Two Danish Organizations Using Linear Programming Decomposition," Management Science, INFORMS, vol. 24(15), pages 1658-1667, November.
    • Handle: RePEc:inm:ormnsc:v:24:y:1978:i:15:p:1658-1667
    DOI: 10.1287/mnsc.24.15.1658
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    Citations

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    Cited by:

    1. Suleyman Karabuk & S. David Wu, 2003. "Coordinating Strategic Capacity Planning in the Semiconductor Industry," Operations Research, INFORMS, vol. 51(6), pages 839-849, December.
    2. Charles Corbett & Frank Debets & Luk Wassenhove, 1996. "An efficient budget allocation policy for decentralisation of responsibility for site decontamination projects," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(3), pages 287-305, April.
    3. Corbett, Charles J. & Debets, Frank J.C. & Van Wassenhove, Luk N., 1995. "Decentralization of responsibility for site decontamination projects: A budget allocation approach," European Journal of Operational Research, Elsevier, vol. 86(1), pages 103-119, October.
    4. Meijboom, B.R., 1983. "Decomposition-based planning procedures," Other publications TiSEM 5abab508-b9b6-4748-88f3-2, Tilburg University, School of Economics and Management.
    5. John Christensen, 2019. "Corporate choice and individual values: using accounting to align incentives," Business Research, Springer;German Academic Association for Business Research, vol. 12(1), pages 95-114, April.
    6. Jornsten, Kurt & Leisten, Rainer, 1995. "Decomposition and iterative aggregation in hierarchical and decentralised planning structures," European Journal of Operational Research, Elsevier, vol. 86(1), pages 120-141, October.

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