Transfer pricing and decentralized dynamic lot-sizing in multistage, multiproduct production processes
✍ Scribed by Thomas Pfeiffer
- Publisher
- Elsevier Science
- Year
- 1999
- Tongue
- English
- Weight
- 141 KB
- Volume
- 116
- Category
- Article
- ISSN
- 0377-2217
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✦ Synopsis
This paper presents the use of a transfer pricing system to coordinate business units in a Wagner±Whitin type model for a decentralized lot-sizing problem in a dynamic multistage, multiproduct environment. The paper includes two major proofs: (1) a transfer pricing system enabling optimal decentralized lot-sizing is characterized. The transfer pricing system can be interpreted as a generalization of the reciprocal method or step-down allocation method in cost location accounting; and (2) based on a Wagner±Whitin type theorem and the Kakutani ®xed point theorem, it is shown that such a transfer pricing system exists.