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.