Companies are rarely the sole objective of profit maximisation, but several targets side by side, which can also conflict with each other. In addition to the profit, for example. Sales, market share, independence, Power, Prestige, and to observe corporate social responsibility objectives. In the case of concrete decisions on goals such as “profit maximize”, moreover, is usually much too General. You need more concrete targets, as a basis for a rating. The top goal is decomposed into measurable variables (cues) that you consider as evidence for the achievement of the goal. One looks, for example. no “profit maximum” employees, but someone has made a certain degree with a good grade, has a minimum of three years of work experience and experience abroad and the team is capable of. Between the requirements of the measurability of the criteria and the simplicity of the target system, there may be a conflict. The more I’m breaking a goal into individual cues down, the more I come to exactly measurable quantities. The goal of the system overall, but is more complex.
A concrete example should help the problem and the different solution possibilities:
A company wants to buy a new machine. The company wants to maximize the capital value of the machine, maintenance costs and the environmental damage to be minimised (three objectives: to capital value, maintenance cost, environmental protection). In a first decision-making round of different offers have been eliminated already, because they exceed a limit price or technical requirements do not meet. Four machines are used in the final selection (four Alternative). Two domestic suppliers, and each supplier from the USA and Japan. With regard to the state of the Environment – for example. the overall economic situation and the competitive situation as well as the exchange rates is safety. Result functions are known, i.e., the managing Director can be added to the machines, the acquisition payment and the repayments over the useful life, and thus through Discount of cash flows the capital assets charge. She also knows the offers of the suppliers in terms of maintenance intervals and maintenance costs, and finally, with the use of a machine-associated damage to the environment. The values for maintenance costs and for the damage to the environment is provided here with a Minus, so that you can seek for the columns, maintenance costs and the protection of the environment maximizing.
The result matrix is:
What is the best Alternative? The appropriate selection procedure to learn in this book…
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The Text comes from the teaching and textbook of Professor Göbel: decisions in companies.