Abstract
The problem of rational organizational structure formation is considered. The problem is reduced to the discrete optimization problem of searching a hierarchy of managers that minimizes certain criterion (normally, the cost of hierarchy maintenance). Cost functions which can be written as a sum of homogenous function are analyzed. The conditions are derived when an optimal hierarchy has the constant span of control, a closed-form expression for the lower-bound estimate of optimal hierarchy cost is found, and an example of hierarchy calculation is given.
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