CONVEX APPROXIMANTS AND DECENTRALIZATION: A SUMT APPROACH.
Systems research memo.,
NORTHWESTERN UNIV EVANSTON ILL TECHNOLOGICAL INST
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A number of authors have been concerned with methods of calculating internal prices which, when delegated to the various divisions of a company, will insure that the divisions carry out of their own accord their part of an optimal overall program. Unfortunately, in general there are no prices which have this property. Other authors have therefore looked for additional instructions which might be given to the divisions. This paper considers the problem under slightly more general conditions than have hitherto been postulated, and shows that, by developing an approximation to the problem using the SUMT method of Fiacco and McCormick, divisional problems can be derived which fulfill the purposes of decentralization, and which have unique solutions as close to optimal as desired. Author
- Administration and Management
- Operations Research