A Decentralized Approach to Estimate Activity-Based Costs and Near-Optimal Resource Allocation in Flexible Manufacturing Systems

Alok Gupta; Dale O. Stahl; Andrew B. Whinston

doi:10.1023/A:1007919802284

A Decentralized Approach to Estimate Activity-Based Costs and Near-Optimal Resource Allocation in Flexible Manufacturing Systems

Alok Gupta
, Dale O. Stahl
, Andrew B. Whinston

Administration (CSOM)

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

Flexible manufacturing systems (FMSs) can apply the efficiencies of large-scale production to small batch production. The coordination of FMS activities is a complex task; this paper presents a decentralized pricing mechanism that can be used to estimate the activity-based costs and manage the activities of the FMS efficiently. The pricing mechanism described in this paper does not require systemwide information to compute prices; instead, the pricing mechanism samples and uses the demand information at each CNC machine to compute rental prices at that machine. We derive the theoretical formula for rental prices supporting the optimal performance and propose simulation studies to estimate the rental prices for real-time price changes in a decentralized manner. Results from a preliminary simulation study indicate that stable rental prices can be estimated and significant improvements can be realized by using the pricing mechanism.

Original language	English (US)
Pages (from-to)	167-193
Number of pages	27
Journal	International Journal of Flexible Manufacturing Systems
Volume	9
Issue number	2
DOIs	https://doi.org/10.1023/A:1007919802284
State	Published - 1997

Bibliographical note

Funding Information:
This research was funded in part by National Science Foundation #IRI-9005969 but does not necessarily reflect the views of the NSF. Partial funding was also provided by Hewlett Packard Corporation and Texas Advanced Research Program. The authors thank two anonymous referees for their helpful suggestions and comments on the earlier version of this paper.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 9 Industry, Innovation, and Infrastructure

Keywords

Benefits
Decentralization
Flexible manufacturing systems
Pricing
Simulation
Stochastic equilibrium

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10.1023/A:1007919802284

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title = "A Decentralized Approach to Estimate Activity-Based Costs and Near-Optimal Resource Allocation in Flexible Manufacturing Systems",

abstract = "Flexible manufacturing systems (FMSs) can apply the efficiencies of large-scale production to small batch production. The coordination of FMS activities is a complex task; this paper presents a decentralized pricing mechanism that can be used to estimate the activity-based costs and manage the activities of the FMS efficiently. The pricing mechanism described in this paper does not require systemwide information to compute prices; instead, the pricing mechanism samples and uses the demand information at each CNC machine to compute rental prices at that machine. We derive the theoretical formula for rental prices supporting the optimal performance and propose simulation studies to estimate the rental prices for real-time price changes in a decentralized manner. Results from a preliminary simulation study indicate that stable rental prices can be estimated and significant improvements can be realized by using the pricing mechanism.",

keywords = "Benefits, Decentralization, Flexible manufacturing systems, Pricing, Simulation, Stochastic equilibrium",

author = "Alok Gupta and Stahl, \{Dale O.\} and Whinston, \{Andrew B.\}",

note = "Funding Information: This research was funded in part by National Science Foundation \#IRI-9005969 but does not necessarily reflect the views of the NSF. Partial funding was also provided by Hewlett Packard Corporation and Texas Advanced Research Program. The authors thank two anonymous referees for their helpful suggestions and comments on the earlier version of this paper.",

year = "1997",

doi = "10.1023/A:1007919802284",

language = "English (US)",

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pages = "167--193",

journal = "International Journal of Flexible Manufacturing Systems",

issn = "0920-6299",

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T1 - A Decentralized Approach to Estimate Activity-Based Costs and Near-Optimal Resource Allocation in Flexible Manufacturing Systems

AU - Gupta, Alok

AU - Stahl, Dale O.

AU - Whinston, Andrew B.

N1 - Funding Information: This research was funded in part by National Science Foundation #IRI-9005969 but does not necessarily reflect the views of the NSF. Partial funding was also provided by Hewlett Packard Corporation and Texas Advanced Research Program. The authors thank two anonymous referees for their helpful suggestions and comments on the earlier version of this paper.

PY - 1997

Y1 - 1997

N2 - Flexible manufacturing systems (FMSs) can apply the efficiencies of large-scale production to small batch production. The coordination of FMS activities is a complex task; this paper presents a decentralized pricing mechanism that can be used to estimate the activity-based costs and manage the activities of the FMS efficiently. The pricing mechanism described in this paper does not require systemwide information to compute prices; instead, the pricing mechanism samples and uses the demand information at each CNC machine to compute rental prices at that machine. We derive the theoretical formula for rental prices supporting the optimal performance and propose simulation studies to estimate the rental prices for real-time price changes in a decentralized manner. Results from a preliminary simulation study indicate that stable rental prices can be estimated and significant improvements can be realized by using the pricing mechanism.

AB - Flexible manufacturing systems (FMSs) can apply the efficiencies of large-scale production to small batch production. The coordination of FMS activities is a complex task; this paper presents a decentralized pricing mechanism that can be used to estimate the activity-based costs and manage the activities of the FMS efficiently. The pricing mechanism described in this paper does not require systemwide information to compute prices; instead, the pricing mechanism samples and uses the demand information at each CNC machine to compute rental prices at that machine. We derive the theoretical formula for rental prices supporting the optimal performance and propose simulation studies to estimate the rental prices for real-time price changes in a decentralized manner. Results from a preliminary simulation study indicate that stable rental prices can be estimated and significant improvements can be realized by using the pricing mechanism.

KW - Benefits

KW - Decentralization

KW - Flexible manufacturing systems

KW - Pricing

KW - Simulation

KW - Stochastic equilibrium

UR - https://www.scopus.com/pages/publications/0031122186

UR - https://www.scopus.com/pages/publications/0031122186#tab=citedBy

U2 - 10.1023/A:1007919802284

DO - 10.1023/A:1007919802284

M3 - Article

AN - SCOPUS:0031122186

SN - 0920-6299

VL - 9

SP - 167

EP - 193

JO - International Journal of Flexible Manufacturing Systems

JF - International Journal of Flexible Manufacturing Systems

IS - 2

ER -

A Decentralized Approach to Estimate Activity-Based Costs and Near-Optimal Resource Allocation in Flexible Manufacturing Systems

Abstract

Bibliographical note

UN SDGs

Keywords

Publisher link

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