Distributed decision making (DDM) has become of increasing importance in quantitative decision analysis. In applications like supply chain management, service operations, or managerial accounting, DDM has led to a paradigm shift. The book provides a unified approach to such seemingly diverse fields as multi-level stochastic programming, hierarchical production planning, principal agent theory, negotiations or contract theory. Different settings like multi-level one-person decision problems, multi-person antagonistic planning, and leadership situations are covered. Numerous examples and real-life planning cases illustrate the concepts. The new edition has been considerably expanded by additional chapters on supply chain management, service operations and multi-agent systems.

1: Introduction

1.1 Some Typical Examples of Distributed Decision Making Situations
1.2 Examples of DDM Systems
1.3 Some Important Properties of DDM Systems
1.4 Outline of the Treatise
I: Basic Foundations
2: Basic Concepts
2.1 General Characterization of Hierarchical Planning Structures
2.2 Coupling Equations and Anticipation Function
2.3 Distinguishing DDM Systems by Their Team Character within Hierarchical Interactions
2.4 Classifying General Planning Hierarchies by Their Anticipation
2.5 Illustrative Examples
2.5.1 Example 1: Make-or-Buy Decisions
2.5.2 Example 2: A Working Time Planning Model
2.5.3 Example 3: Supply Contracts
2.5.4 Example 4: Stackelberg Duopoly
2.6 Some Remarks Concerning General Solution Properties
3: Constructional DDM Systems
3.1 Decomposition DDM Systems
3.1.1 A Capacity Adaptation Model
3.1.2 A Coordination DDM System of the Dantzig/Wolfe Type
3.2 Relaxation Systems
3.3 A Brief Remark on Bi-Level Programming
4: Organizational DDM Systems
4.1 Top-Down DDM Systems
4.1.1 A Hierarchical Planning Model for the Repair Shops of the Deutsche Lufthansa AG
4.2 Tactical-Operational DDM Systems
4.2.1 Capacity Adaptation Hierarchy
4.2.2 Investment-Production Hierarchies
4.2.3 Strategic-Tactical-Operational DDM System
4.3 Value of Information and Delegation
4.3.1 Value of Information
4.3.2 Value of Delegation
4.4 Some Brief Remarks on Stochastic Programming
4.4.1 An Example of a Two-Stage Linear Stochastic Programming
4.4.2 Some General Remarks on Solution Procedures
5: Principal Agent Theory
5.1 Information Situation in the Principal Agent Theory
5.2 The Standard Problem of Principal Agent Theory
5.3 An Illustrative Example with Risk-Neutral Antagonists
5.3.1 Problem Statement and Problem Formulation
5.3.2 Problem Solution
5.4 Some General Observations Concerning the Solution of the Principal Agent Coupling Equations
5.5 The LEN Model
5.6 Some Extensions of the Standard Situation
5.6.1 Self-Selection Illustrated with a Supply Chain Contract
5.6.2 Hidden Information and Truthful Communication
II: General Applications
6: Hierarchical Production Planning
6.1 Standard Model of Hierarchical Production Planning
6.1.1 The Structure of the Model
6.1.2 Mathematical Formulation of the Decision Models for the Three Levels
6.1.3 General Discussion of Hierarchical Production Planning
6.2 Integrative Hierarchical Production Planning
6.2.1 A Model to Illustrate the Integrative Approach to HPP
6.2.2 Interpretation of the Integrative Model in Terms of a Tactical-Operational DDM System
6.2.3 General Discussion of Aggregation Procedures and the Integrative HPP
6.3 Process Production
6.3.1 A Dynamic Programming Formulation for Medium-Term and Short-Term Process Production
6.3.2 Integrative Hierarchical Production Planning for Process Production
6.4 General Discussion
7: Organizational Design
7.1 Designing the Organizational Structure as a DDM Problem
7.2 Process Design: The Design of a Flexibility Potential
7.2.1 Some Prelimary Remarks
7.2.2 Elementary Components of a Flexibility Measure
7.2.3 A General Measure of Flexibility
7.2.4 Numerical Specification of Flexibility
7.2.5 Planning and Implementation Ability as Further Components of Flexibility
7.2.6 The Design of Flexibility as a Hierarchical Planning Problem
8: Implementation
8.1 Planning and Implementation as a Two-Stage Decision Problem
8.2 Implementation as a Three-Stage Hierarchy
8.2.1 A General Model
8.2.2 The Solution Hierarchy
8.3 Formal Description of the Planning and Implementation Problem
8.3.1 The Coupling Equations
8.4 Working Time Contract
8.5 Implementation of Lotsizes
8.5.1 The Planning Level: Determination of Target Lotsizes
8.5.2 The Implementation Level: Adaptation of Target Lots
8.5.3 Anticipation
8.5.4 Description within the Framework of Hierarchical Planning
9: Supply Chain Management
9.