CHAPTER1T1 A COMPARATIVE LOoK at MoDELS of COMPANY BEHAVIOUR
CHAPTER11: A COMPARATIVE LOOK at MODELS of COMPANY BEHAVIOUR
Three models come from its own particular academic discipline as follows Model Academic Discipline Break- even Accountancy Linear programming Management Science Theory of the firm Economics
◼ Three models come from its own particular academic discipline as follows Model Academic Discipline Break- Even Accountancy Linear Programming Management Science Theory of the Firm Economics
CrITERION [A]: COMPANY OBJECTIVE Linear programming model: MAXIMISE PROFITS or MINIMISE coSts Economist's model: MaXIMISE PROFITS The both model company behaviour as depending fundamentally upon a desire to optimise( that is to maximise or minimise)a clearly specified objective
CRITERION [A]: COMPANY OBJECTIVE ◼ Linear programming model: MAXIMISE PROFITS or MINIMISE COSTS ◼ Economist's model: MAXIMISE PROFITS ◼ The both model company behaviour as depending fundamentally upon a desire to optimise ( that is to maximise or minimise ) a clearly specified objective
The break-even point is a useful piece of descriptive information The break-even model does not offer any obvious company objective
◼ The break-even point is a useful piece of descriptive information ◼ The break-even model does not offer any obvious company objective
CriTEriOn B]: DECISION VARIABLES Models (1)and( 3: To analyse single product firms--to produce 1 product only Model 3 ) 1 SINGLE DECISION VARIABLE the number of units of output to maximize the break-even model: one decision variable Models(1)and(3)seem somewhat limited in that they are restricted to handling single product firms Which has a rather uncomfortable feel about it in terms of realism
CRITERION [B] : DECISION VARIABLES ◼ Models (1) and (3): To analyse single product firms -- to produce 1 product only. ◼ Model (3): 1 SINGLE DECISION VARIABLE - the number of units of output to maximize ◼ The break-even model:one decision variable ◼ Models (1) and (3) seem somewhat limited in that they are restricted to handling single product firms which has a rather uncomfortable feel about it in terms of realism