Using historical information in the design of a decentralized firm’s budgetary planning system

Using historical information in the design of a decentralized firm’s budgetary planning system

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Article ID: iaor1988964
Country: United Kingdom
Volume: 16
Start Page Number: 129
End Page Number: 143
Publication Date: Mar 1989
Journal: Computers and Operations Research
Authors: ,
Keywords: planning, programming: linear
Abstract:

In organizational design, the decentralized multidivisional firm has the choice in the generation and use of information for budgetary planning. In this research the authors investigate the use of four historical information categories for the efficient determination of good plans. Based upon the simulation results of nine experiments for each of two models they found that historical information of last period’s solution, when used to set the initial budgetary plan and/or limit the proposed adjustments, can be efficient in an iterative planning system. The results are also consistent with a contingency theory of organizational design, since the level of environmental uncertainty and the degree of technology interdependency are important contingencies.

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