A DECENTRALIZED APPROACH TO ESTIMATE ACTIVITY-BASED COSTS AND NEAR-OPTIMAL RESOURCE-ALLOCATION IN FLEXIBLE MANUFACTURING SYSTEMS

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