The decentralized profit maximization of interconnected production systems Part II. Price coordination and buffer storage

This paper considers the steady-state decentralized profit maximization of inter connected production systems, using the price method. The occurrence of duality gaps is known to make the price method inapplicable ; however, it is shown that when the interconnection constraints need only be satisfied on average, the price method may still be applied despite duality gaps. In the case where the inter connection constraints result from simple interconnection product streams, average constraint satisfaction can be achieved by using buffer storage. The theory is illustrated by application to two previously published numerical optimization problems.