Make Production Decisions Research Articles

Satisfaction Gaps: New Realities in Managing Automation

Builds on prior research into the impact of automation on job characteristics, which found that co‐ordination, job autonomy, and work pace were reinforced by automation, while new skill requirements, job security and exertion remained unaffected. Job satisfaction correlates reveal the existence of elements both reinforced by automation and unrelated to job satisfaction. Such elements represent sources of operator indifference to the benefits of automation or satisfaction gaps, and they include interdepartmental task co‐ordination, discretion in making production decisions, confidence to complete tasks without supervision, the achievement of career goals, perceptual skills, security of records, and longer work hours in the post‐automation period.

THE EFFECT OF PRICE REDUCTION AND DIRECT INCOME SUPPORT POLICIES ON AGRICULTURAL INPUT MARKETS IN AUSTRIA

The purpose of this paper is to examine empirically the effects of a shift from price support to direct income policy on agricultural factor markets and aggregate output. By utilising an econometric model for the Austrian agricultural sector, it is argued that the main purpose of this policy change, which is to move producers away from making production decisions in response to income support policies and to facilitate their response to market signals (‘decoupling’), is only partially realised. Switching from price to direct income support would result in little reduction in output, but some positive secondary effects can be observed. Ecological goals could be realised by lessening the degree of industrialisation due to lowering the capital-labour and intermediate input-labour ratios.

Application of Mathematical Programming to a Large-scale Agricultural Production and Distribution System

This paper addresses an actual production planning problem for a large seed corn production company. Various scenarios are included in different mathematical programming models in order to help the management make production decisions. A linear programming package and a mixed-integer programming package are combined by a designed heuristic program to solve the problem. The solutions obtained and an accompanying sensitivity analysis provide the management with insight into the system's operation and potentials of cost savings.

Estimating The Value of the 0/92 Reduced Planting Alternatives of the 1985 Farm Bill For Farm Program Participants

Abstract The 50/92 and 0/92reduced planting alternativestives of the 1985 farm bill allow farm program participants more flexibility in making production decisions. Specifically, these provisions relax the incentive to produce inherent in earlier commodity programs that linked deficiency payments directly to harvested acreage. This study examined the value of this additional decision flexibility for crop producers in the Blacklands of Central Texas. The results suggest that the reduced planting alternatives would not be used by, and have no value for risk neutral producers, but have substantial value for risk averse producers who would reduce planted acreage in years when yield expectations are low.

Use of Accounting Product-Costing Systems in Making Production Decisions

In this paper, we extend results reported in Hilton, Swieringa, and Turner [1988] testing a theory of heuristic decision making proposed by Dickhaut and Lere [1983]. That theory addresses the role of accounting product-costing information in production-quantity decisions.1 Dickhaut and Lere showed that under a plausible heuristic production-decision process, the decision maker should sometimes prefer absorption costing, because it results in a production quantity closer to the quantity determined via a complete, optimizing analysis than the quantity resulting when variable costing is used. Their theory provides the basis for a behavioral theory of the effects on production decisions of accounting product-costing system choice and use. Our results support the Dickhaut/Lere choice heuristic and indicate that our subjects tended to choose the accounting system (variable or absorption costing) predicted by their theory. We obtained stronger evidence in support of the Dickhaut/Lere heuristic in this study than in our earlier study, a result we attribute to three key differences in experimental design: (1) in this study we used a between-subjects design

Operating Decisions and the Disclosure of Management Accounting Information

In this paper, we analyze how the use of management accounting information to make operating decisions can reveal or communicate that information imprecisely when direct (precise) disclosure is a costly alternative. Specifically, we consider how data employed in making a decision to retain or replace a factor of production (e.g., a piece of equipment, a production process, or a manager) are inexactly inferred by outsiders who observe the outcome of the decision process. Such data, used in making production decisions, normally would be generated by the internal accounting system of the firm and considered proprietary. The primary result of the analysis is that we identify conditions under which optimal management decision making is altered by the existence of this potential indirect communication alternative to direct disclosure. In addition, the results suggest that care be taken in empirical tests relating production decisions to management accounting data. Because of the way in which the optimal retention-replacement decision may diverge from the efficient decision (the decision that would be made in the absence of the imprecise inferences made by outsiders), there may not be an unambiguous interpretation of the correct relation between the retention-replacement decision and the cost of direct disclosure. Our work provides an analytically tractable model of the use of man-

An investigation of company product decision making

This article is concerned with an investigation of the approaches taken by companies in making product decisions. The first part is concerned with a review of the range of product decisions as presented within the literature. This range is established within the context of corporate planning, with a major split between long term strategic planning product decisions, and short term operational planning product decisions. The second part of the article is concerned with the results of a survey that was designed to investigate the criteria that companies use within their product decision making. These criteria included those applicable to strategic planning, but also incorporated a range of criteria applicable to short term operational planning, as proposed in a recent article by Greenley [8]. The overall conclusion to the survey results was that a common and universal approach to product decision making cannot be identified within this sample of companies. A low level of agreement as to the relative degree of importance of the criteria was evident, and, little attention to differentiating product decisions with time was also evident. The results also challenge the importance given by the literature to the concepts of product life cycle, portfolio analysis and synergy. Finally, the author suggests two implications as a consequence of these results.

Social welfare losses due to a monopoly

We compare the R&D decision of a second best social surplus maximizer to that of a profit maximizing monopolist in a second best world, namely one in which a monopolist makes production decisions. We show that a monopolist underinvests in R&D relative to a second best social surplus maximizer. We show that the expected present value social surplus under a monopoly situation increases with the production technology except at the technology level where a monopolist stops doing R&D.

Futures Markets and Production Decisions

This paper investigates the use of futures prices in making production decisions. We derive a preference-independent production rule for firms that face both demand and production uncertainty. This rule is compared to a simple "marginal cost equals future price" rule, which previously has been suggested for firms with deterministic output. Data for agricultural producers are used to examine the importance of output uncertainty in the determination of the proper production rule. Our analysis suggests that for many crops the simple rule is sufficiently accurate to be a useful guide to production.

Imports and the Supply of Winter Tomatoes: An Application of Rational Expectations

AbstractA model of the Florida tomato industry is formulated under the hypothesis that growers make production decisions as rational economic agents. This assumption implies that anticipated Mexican tomato imports as well as other economic variables are taken into account when the planting decision is made. Maximum likelihood estimation methods are used to solve the simultaneous equations model, and the implications of the model's reduced form are analyzed. The empirical findings are consistent with the rational expectations hypothesis that producers respond to market information in its entirety when making acreage decisions.

Information, Advertising, and the Structure of the Market

The thesis of this paper is that consumer information influences the size distribution of competing sellers' market shares in a particular manner. By measuring the response of appropriate measures of the distribution of shares to a reduction in the real cost of advertising messages (and thus to an increase in their rate of transmission), it is, in principle, possible to infer whether advertising messages add to or subtract from the stock of information consumers find useful in making product decisions. The principal justification for the research presented here is simply that much of the previous work in this area fails to shed much light on the basic nature of advertising. Statistical associations between, say, the advertising-to-sales ratio and the four-firm concentration ratio are found by some researchers and disputed by others, but there is, typically, residual ambiguity This paper suggests that ignorance has a systematic effect of increasing the market shares of larger brands and reducing those of smaller brands, both relative to a costless information environment. Therefore, cheaper information has an effect of making sellers' shares more equal. To determine whether advertising acts in a manner that is consistent with increases or decreases in this information, the introduction of commercial television in the 1950s provides an appropriate test. The evidence suggests that in markets where the message transmission advantages of television were most prominent-where the real costs of advertising fell the most-the largest sellers systematically lost market share to the smaller.

Employment and Dividend Policy of the Firm under Risk

In a recent paper, Foley and Hellwig (1975) investigated the connections between trading uncertainties inherent in the trading process and the holding of liquid assets through the model of a consumer who buys a consumption good and sells labour facing a sequence of employment-unemployment contingencies. The consumer owns a non-interest-bearing asset, called and cannot buy the consumption good without paying money for it. An important assumption of the model is that, by the time he makes his decision for a given period, the agent knows whether he is employed or not in that period. Therefore, the consumption decision depends not only on the initial money holding of the consumer but also on his current employment situation. In Section 7 of their paper, Foley and Hellwig introduced firms to study the behaviour of market aggregates. The firms and the consumers are treated symmetrically. Therefore, the firms make production decisions under certainty about effective demand by workers who, on their side, are supposed to know already whether they are employed or not (footnote 1, page 340). One way to remedy this problem is explicitly to introduce a dynamic structure by assuming that in each period the labour market opens first. It implies that the firms have to make employment decisions before knowing what their current sales will be. Therefore, they face a problem of liquidity: their labour demand is constrained by the quantity of money they initially hold. Furthermore, the distribution of profits cannot be exogenous: the firms must be able to decide upon the dividends to pay to the shareholders. It is the purpose of the present paper to provide a simple model of a firm which decides upon an employment level and a dividend payment facing a sequence of sale-no sale contingencies. Section 2 of the paper is devoted to the presentation of the model. Properties of the optimal policy are discussed in Section 3, while Section 4 deals with the asymptotic behaviour of the model. Finally, Section 5 contains a discussion of the main assumptions underlying the model.

Discussion of Economically Optimal Performance Evaluation and Control Systems

A remark was made at a doctoral consortium not long ago that the cost variance investigation problem had been essentially put to rest by Kaplan [1969] in his oft-cited article. Borrowing a Bayesian operator from Girshick and Rubin [1952], Kaplan cast the cost controller in the role of a player in a game against nature and an opposing player whose strategy was fixed by a known transition function. Extensions based on Ross [1971] allowed for revisions of the process without investigation (e.g., Hughes [1975]) and allowed the transition function to be uncertain with information about the process acquired by state investigations used to improve prior estimates of that transition function (e.g., Magee [1977]). However, the concept of cost variances or subsequent state investigations relating to the incentives of individuals who are delegated production decisions adds an entirely new dimension to the problem. The game now has two players, including an agent who makes production decisions and a principal who sets the agent's compensation and receives the residual payoff from the production that ensues. Costs in this setting provide signals on both random states of nature and the agent's actions. Consideration of state investigation now involves anticipating a response by the agent to the prospect of having his actions revealed, given that those actions may be only partially observable from costs or other outputs. Thus, the opposing player's strategy is determined endogenously rather than being given exogenously as before, thereby significantly enriching the problem as well as complicating it. Relying on an analysis inspired by Harris and Raviv [1978], Demski and Feltham [1978] reconsidered cost control problems in settings where

The visible hands, quantity targets as coaxing tools

Planning is studied in a two-tier environment motivated by Soviet economic reforms. The center's goal is ex post balancing of demand and supply of funded commodities after one informational exchange period. Firm managers make production decisions to maximize a combination of current profit and output adjusted for penalties when quantity directives are not fulfilled. After judiciously differentiating incentive structures, the center manipulates quantity targets to coax production decisions satisfying its balancing objective. A taxonomy of target misspecifications is developed. Traditional concerns of ex ante consistency and feasibility of production plans are shown to be less important in the new environment.