Coordination Strategies for Production and Marketing in a Functionally Decentralized Firm

This paper analyzes a mathematical model which allows marketing to choose prices and promotion strategies and allows production to choose work force levels, production rates and inventory levels in an autonomous manner. The type and manner of information which must be known in order to find the joint optimum is presented, and an analysis of the effects of using incomplete information on the overall solution is given. An iterative scheme whereby production and marketing discover the correct information is presented. Finally an interactive computer program is given which allows one to gain knowledge about the effects of production and marketing on each other. _x000B_