Decentralized decision-making framework

In the decentralized decision-making framework, each entity within the RPS concentrates on optimizing its own profit subject to its own transportation and processing capacity constraints. The upstream entities in one tier provide the price-flow contract that connects the downstream price information to the flow they will provide. We refer to this price-flow contract as the flow function. Each upstream entity acts individually to determine the flow function used to contract with each member of the next tier. The flow function is determined using a robust optimization formulation that captures the idea that the upstream entity does not have exact price information from the downstream entities, and wants to minimize the worst outcome it can have. 

To begin with, DMS focus on introducing decentralized decision making within the factory (Dekkers 2010). Thus, independent manufacturing units (composed of machines or machine groups) are formed within the shop floor and certain control powers are distributed to each of these units. These units are then incorporated with an overall framework, which is responsible for making decisions on the global level. 

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