Communication-based coordination modeling in distributed manufacturing systems

Global markets are increasingly demanding organizations to collaborate and coordinate efforts for coping with distributed customers, operations, and s uppliers. An important aspect of the collaboration process of distributed, often remote organizations is the coordination cost. The coordination equip ment and operating costs limit the benefit attainable from collaboration. I n certain cases, this cost can turn the interaction among distributed organ izations non-profitable. Previous research investigated a distributed manuf acturing case, operating under a job-shop model with two distributed collab orating centers, one for sales and one for production. A new model incorpor ating the communication cost of coordination has been developed and yields the net reward of the total system, determining the profitability of the co ordination. Two alternative coordination modes are examined: (1) distribute d coordination by the two centers; (2) centralized coordination by a third party. The results indicate that distributed and centralized coordination m odes are comparable up to a certain limit; over this limit distributed coor dination is always preferred. A key conclusion is that distributed coordina tion should always be preferred (to centralized coordination) when the hard ware costs for the distributed system are less than or to half the hardware costs of the centralized system. (C) 1999 Published by Elsevier Science B. V. All rights reserved.