Models Using the Graph Theory

Abstract

The graph theory enables the econometrics to be applied in the management of organisational entities. This theory is based on the concept of undirected and directed graph, including the circuits that may occur in a graph. The graph is a specific form for representing the activities performed by organisational entities. With their help, the elements of the system “organisational economic entities” are analysed in detail. Graph is a set of reciprocal inter-conditioned activities that have a beginning and a end. Each activity is assigned specific financial resources material, human and technological. For these reasons each activity has a cost and requires execution time. Depending on the execution time of each activity in the graph we obtain finally the total duration of the process, a complex of activities represented by the graph. The essence of each graph refers to the calculation of the size of the critical path in the graph, based on the graph theory. In the graph theory, a specific situation is the graphic transport networks, which are preponderant in econometric models. For any manager, the calculation of the critical paths and of the Hamiltonian roads and circuits in a graph leads to taking optimal decisions.