A two-level planning procedure with respect to make-or-buy decisions,including cost allocations |
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| Affiliation: | 1. Adult and Child Consortium for Health Outcomes Research and Delivery Science (ACCORDS), University of Colorado School of Medicine and Children''s Hospital Colorado (A Kempe, AW Saville, L Helmkamp, LM Dickinson, and D Gurfinkel), Aurora, Colo;2. Department of Pediatrics, University of Colorado School of Medicine (A Kempe), Aurora, Colo;3. Department of Pediatrics, UCLA Mattel Children''s Hospital, University of California at Los Angeles (C Albertin and P Szilagyi), Los Angeles, Calif;4. Department of Medicine, Statistics Core, David Geffen School of Medicine, University of California (X Zhou, S Vangela, and C-H Tseng), Los Angeles, Calif;5. Department of Clinical Pharmacy, University of Colorado Anschutz Medical Campus (JD Campbell and M Whittington), Aurora, Colo;6. Colorado Immunization Information System, Colorado Department of Public Health and Environment (H Roth), Denver, Colo;7. New York State Immunization Information System, New York State Department of Health (D Hoefer), Albany, NY |
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| Abstract: | The paper is concerned with a two-level corporate model. At the lower level, divisions produce for the external market. They require certain technical services. The divisions are coordinated by a central unit at the top level. The central unit must determine the integral plan of technical services i.e. firm-wide optimal make-or-buy decisions, without having complete information on the divisions.We present a decomposition-based planning procedure during which the central unit gathers information to derive an optimal make-or-buy decision while allocating the costs of internal technical services.The model formulation has substantial significance for the real world: A similar organizational structure, information dispersal among subunits and coupling of divisions and departments is commonly observed in existing firms. The resulting planning procedure can be interpreted in terms of planning and budgeting in real organizations. |
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