scholarly journals Application of the theory of decision making under risk and uncertainty at modelling of costs

2010 ◽  
Vol 56 (No. 5) ◽  
pp. 201-208 ◽  
Author(s):  
M. Beranová ◽  
D. Martinovičová
Keyword(s):  
Decision Making ◽  
Financial Accounting ◽  
Cost Functions ◽  
Risk And Uncertainty ◽  
Managerial Decision ◽  
Managerial Decision Making ◽  
Bayesian Theorem ◽  
Long Run ◽  
Short Run ◽  
The Cost

The costs functions are mentioned mostly in the relation to the Break-even Analysis where they are presented in the linear form. But there exist several different types and forms of cost functions. Fist of all, it is necessary to distinguish between the short-run and long-run cost function that are both very important tools of the managerial decision making even if each one is used on a different level of management. Also several methods of estimation of the cost function's parameters are elaborated in the literature. But all these methods are based on the past data taken from the financial accounting while the financial accounting is not able to separate the fixed and variable costs and it is also strongly adjusted to taxation in the many companies. As a tool of the managerial decision making support, the cost functions should provide a vision to the future where many factors of risk and uncertainty influence economic results. Consequently, these random factors should be considered in the construction of cost functions, especially in the long-run. In order to quantify the influences of these risks and uncertainties, the authors submit the application of the Bayesian Theorem.

scholarly journals Modelling of cost-functions under risk and uncertainty

2009 ◽  
Vol 57 (3) ◽  
pp. 13-20 ◽  
Author(s):  
Michaela Beranová ◽  
Dana Martinovičová
Keyword(s):  
Cost Function ◽  
Free Market ◽  
Probabilistic Approach ◽  
Cost Functions ◽  
Cost Curve ◽  
Risk And Uncertainty ◽  
Optimal Point ◽  
Bayesian Theorem ◽  
Long Run ◽  
Short Run

In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, these curves are used by the entities to find the optimal point of production, where they make the highest profits. There exist several different types of cost curves, while each of them is relevant to a different area of economics. In the article, authors are focused on solution of cost-functions modelling, both short-run cost function and long-run cost function under circumstances of risk and uncertainty. Considerations about factors of risk and uncertainty are based on an irrefutable fact that companies are not separate entities taken out of surrounding environment; entities operate in global world where many random factors are influencing the processes in companies while the number of these random factors is ad infinitum. The fact that estimation of cost functions' parameters are realized from past data is the basis of the considerations about planning of future scope of production based on these functions. Especially for the long-run cost functions it is impossible to leave out all the random influences. Their quantification is derived from aposteriori probabilistic approach according to Bayesian Theorem.

Maximization, Incomparability, and Managerial Choice

2007 ◽  
Vol 17 (03) ◽  
pp. 497-513 ◽  
Author(s):  
Nien-hê Hsieh
Keyword(s):  
Decision Making ◽  
Stakeholder Theory ◽  
Market Value ◽  
Managerial Decision ◽  
Managerial Decision Making ◽  
Single Measure ◽  
Long Run ◽  
Managerial Choice ◽  
Managerial Responsibility

ABSTRACT:According to one prominent view of rationality, for the choice of alternative to be justified, it must be at least as good as other alternatives. Michael Jensen has recently invoked this view to argue that managers should act exclusively to maximize the long-run market value of economic enterprises. According to Jensen, alternative accounts of managerial responsibility, such as stakeholder theory, are to be rejected because they lack a single measure to compare alternatives as better or worse. Against Jensen's account, this paper argues that choosing the alternative that is at least as good as other alternatives need not preclude managers from respecting considerations in addition to long-run market value. The paper argues that such considerations may be incorporated into managerial decision-making by introducing constraints and priorities into the process of maximizing long-run market value and by allowing for “clumpy” values.

scholarly journals THE MANAGERIAL DECISION-MAKING MODEL FOR THE MODERNIZATION OF TECHNOLOGIES FOR BUSINESS PROCESSES AT A LARGE INDUSTRIAL ENTERPRISE

2019 ◽  
Vol 8 (6) ◽  
Author(s):  
Anton N. Karamyshev
Keyword(s):  
Decision Making ◽  
Business Process ◽  
Business Processes ◽  
Economic Effect ◽  
Machine Building ◽  
Industrial Enterprise ◽  
Managerial Decision ◽  
Management Tools ◽  
Managerial Decision Making ◽  
The Cost

Existing technologies for substantiating the modernization of basic business processes make it relatively easy to calculate the economic effect of its implementation (by saving resources, reducing labor intensity, increasing both labor productivity and production volumes) because all calculations are based primarily on linear relationships. The rationale for the modernization of auxiliary business processes is more problematic since their specific features significantly complicate the calculation of the economic effect. Firstly, there is a lack of information about the technologies for supporting auxiliary business processes. Secondly, the existing management tools do not consider the complex and closed nature of economic relations between supporting business processes. Thirdly, the complexity of assessing the quality of products of auxiliary business processes and their impact on the main business processes. In order to provide an opportunity to justify business process modernization projects, the author has developed a model that evaluates the effectiveness of a managerial decision on modernization based on changes in the total profit of the enterprise, which differs from the existing ones taking into account the cyclical nature of economic relationships between auxiliary business processes. The developed model for managerial decision-making for the modernization of business process technologies at a large industrial enterprise is based on the author’s method of calculating the cost of production of a large machine-building enterprise, taking into account the principle of multi-cyclical distribution of the cost of auxiliary business processes

scholarly journals Risk and Uncertainty Revisited: A Clarification of Theory and Application

2021 ◽  
Vol 14 (1) ◽  
pp. 1
Author(s):  
M. J. Alhabeeb
Keyword(s):  
Decision Making ◽  
Risk And Uncertainty ◽  
Managerial Decision ◽  
Core Element ◽  
Managerial Decision Making ◽  
The Core ◽  
Professional Research

In addition to the obvious public confusion and lack of distinction between the terms, risk and uncertainty and other related concepts, the interchangeable use seems to seep into the academic and professional research. According to a 2018 study by De Groot and Thurik, it was reported that 88.3% of articles in this topic, across the related fields, did not adhere to the distinction between risk and uncertainty, rendering all the undesirable theoretical and empirical consequences. This paper is intended to revisit the concepts of risk and uncertainty, not only clarifying the meaning and use of the terms, but also shedding a light on differentiating all the related concepts. The focus is on risk, being the core element directly related to the success and failure of all financial and managerial decision making. The approach is not only conceptual, but also supported by mathematical and numerical applications.

scholarly journals Leadership Styles for Foreign Operations

2005 ◽  
Vol 25 (2) ◽  
pp. 256-267
Author(s):  
Arthur Elliott Carlisle
Keyword(s):  
Decision Making ◽  
Leadership Styles ◽  
Foreign Country ◽  
Managerial Decision ◽  
Managerial Decision Making ◽  
Long Run ◽  
Foreign Operations

The author discusses on the criteria to follow in choosing a style of leadership which is to be applied to foreign operations. In a country which is colonial in tradition, the authoritarian job-centered approach may be preferable. On the long run nonetheless, an organization wishing to be accepted in a foreign country can benefit enormously by using a democratic people-centered style in managerial decision making.

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