Coordination of manufacturing and engineering activities during product transitions

Abstract

Product transitions involve the replacement of products currently being produced and distributed by a firm with new products throughout the firm's supply chain. In high technology industries effective management of product transitions is crucial to long-term success, and involves the coordination of multiple product development units and a manufacturing unit by a product division serving a particular market. Since the different units are organizationally autonomous, and the product division does not have access to their detailed technological constraints and internal operating policies, a decentralized solution is required. We develop a price-based coordination framework using the subadditive dual of a mixed-integer linear program that seeks to maximize the number of units whose proposed plans are included in the final solution. The proposed approach yields superior solutions to a linear-programming-based branch-and-price approach within the same computing budget. We discuss the broader applicability of this integer column generation approach, and suggest directions for future work.