Designing Workflow Coordination: Centralized Versus Market-Based Mechanisms

As a result of the increasing diffusion of decision-making within and between organizations, distributed scheduling methods have been proposed as alternatives to centralized, hierarchical, top-down production control schemes. While distributed scheduling methodologies are appealing, one must first address the fundamental questions of when and where such methods are appropriate. This paper seeks to provide answers to these questions. Using a generalized workflow framework, this paper models and compares the total expected costs of using decentralized and centralized organizational designs to coordinate the flows of information and work. This comparison allows one to define the characteristics of work environments where distributed scheduling methods are more suitable than hierarchical, top-down production approaches. Finally, from this analysis, one can conclude that distributed scheduling methods work well for systems where information technology is inexpensive relative to production cost, processing times are relatively long, and where the number of agents in the system is not too large.