Advanced Search
MyIDEAS: Login

Unifying temporal and organizational scales in multiscale decision-making


Author Info

  • Wernz, Christian
  • Deshmukh, Abhijit
Registered author(s):


    In enterprise systems, making decisions is a complex task for agents at all levels of the organizational hierarchy. To calculate an optimal course of action, an agent has to include uncertainties and the anticipated decisions of other agents, recognizing that they also engage in a stochastic, game-theoretic reasoning process. Furthermore, higher-level agents seek to align the interests of their subordinates by providing incentives. Incentive-giving and receiving agents need to include the effect of the incentive on their payoffs in the optimal strategy calculations. In this paper, we present a multiscale decision-making model that accounts for uncertainties and organizational interdependencies over time. Multiscale decision-making combines stochastic games with hierarchical Markov decision processes to model and solve multi-organizational-scale and multi-time-scale problems. This is the first model that unifies the organizational and temporal scales and can solve a 3-agent, 3-period problem. Solutions can be derived as analytic equations with low computational effort. We apply the model to a service enterprise challenge that illustrates the applicability and relevance of the model. This paper makes an important contribution to the foundation of multiscale decision theory and represents a key step towards solving the general X-agent, T-period problem.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 223 (2012)
    Issue (Month): 3 ()
    Pages: 739-751

    as in new window
    Handle: RePEc:eee:ejores:v:223:y:2012:i:3:p:739-751

    Contact details of provider:
    Web page:

    Related research

    Keywords: Distributed decision-making; Game theory; Markov processes; Multi-agent systems; OR in service industries;


    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Nie, Pu-yan & Chen, Li-hua & Fukushima, Masao, 2006. "Dynamic programming approach to discrete time dynamic feedback Stackelberg games with independent and dependent followers," European Journal of Operational Research, Elsevier, vol. 169(1), pages 310-328, February.
    2. Geanakoplos, John & Milgrom, Paul, 1991. "A theory of hierarchies based on limited managerial attention," Journal of the Japanese and International Economies, Elsevier, vol. 5(3), pages 205-225, September.
    3. Brânzei, R. & Fragnelli, V. & Tijs, S.H., 2002. "Tree-connected peer group situations and peer group games," Open Access publications from Tilburg University urn:nbn:nl:ui:12-91321, Tilburg University.
    4. Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 301-24, Fall.
    5. Christian Wernz & Andrew Henry, 2009. "Multi-Level Coordination and Decision-Making in Service Operations," Service Science, INFORMS, vol. 1(4), pages 270-283, December.
    6. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
    7. Schneeweiss, Christoph, 2003. "Distributed decision making--a unified approach," European Journal of Operational Research, Elsevier, vol. 150(2), pages 237-252, October.
    8. Wernz, Christian & Deshmukh, Abhijit, 2010. "Multiscale decision-making: Bridging organizational scales in systems with distributed decision-makers," European Journal of Operational Research, Elsevier, vol. 202(3), pages 828-840, May.
    9. Ozdamar, Linet & Bozyel, M. Ali & Birbil, S. Ilker, 1998. "A hierarchical decision support system for production planning (with case study)," European Journal of Operational Research, Elsevier, vol. 104(3), pages 403-422, February.
    10. M. A. Pollatschek & B. Avi-Itzhak, 1969. "Algorithms for Stochastic Games with Geometrical Interpretation," Management Science, INFORMS, vol. 15(7), pages 399-415, March.
    11. Gfrerer, Helmut & Zapfel, Gunther, 1995. "Hierarchical model for production planning in the case of uncertain demand," European Journal of Operational Research, Elsevier, vol. 86(1), pages 142-161, October.
    12. Vetschera, Rudolf, 2000. "A multi-criteria agency model with incomplete preference information," European Journal of Operational Research, Elsevier, vol. 126(1), pages 152-165, October.
    13. Schneewei[beta], Christoph, 1995. "Hierarchical structures in organisations: A conceptual framework," European Journal of Operational Research, Elsevier, vol. 86(1), pages 4-31, October.
    14. Stadtler, Hartmut, 2005. "Supply chain management and advanced planning--basics, overview and challenges," European Journal of Operational Research, Elsevier, vol. 163(3), pages 575-588, June.
    15. Schneeweiss, Christoph & Zimmer, Kirstin, 2004. "Hierarchical coordination mechanisms within the supply chain," European Journal of Operational Research, Elsevier, vol. 153(3), pages 687-703, March.
    Full references (including those not matched with items on IDEAS)



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:223:y:2012:i:3:p:739-751. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.