Decomposed vs integrated control of a one-stage production system

This paper deals with the question: Can the common belief that integrated control is better than decomposed control be justified in a quantitative way? We consider the case of a one-stage production system with several products, which is operating under tight production capacity constraints. The production schedule is cyclical, and there are long and sequence dependent setup times. The production system is regarded as consisting of two components, namely a production unit (PU) and an inventory unit (IU). The performance, with respect to inventory costs, timing and production quantity determination of two types of control of the production system are compared, namely decomposed and integrated control. For the generation of production orders, decomposed control uses only information from the IU, while integrated control combines the information from both units. The main conclusion, based on simulation experiments, is that the inventory costs are just slightly lower in case of integrated control. Integration outperforms decomposition with respect to timing and quantity determination. However, since the differences between both approaches are small, the less sophisticated approach of decomposition is preferable when choices between both types of control have to be made.