Coordination Strategies for Production and Marketing in a Functionally Decentralized Firm

Abstract This paper analyzes a single period mathematical model which allows marketing to choose prices and promotion strategies and allows production to choose production 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.

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