Application

Abstract

In this section some results set forth in the preceding chapters will be applied to a case of management planning. To this end we will investigate problems of planning the firm’s product range (quality and extent) for one time period in connection with simple problems of factor procurement, of sales and of financing which are associated with the planning of the product range. We will assume given capacities not to be extended and will take in factor markets and markets for the sale of the firm’s products by certain very simple conditions. For sake of a lucid exposition we do not treat several periods by a flexible planning approach: we will formulate a one-period stiff planning model. We will investigate a firm already existing at the start of the period and which intends to exist after the end of the period concerned. In order to simplify our arguments we assume that virtually only one sort of raw material is employed as an input factor which can be processed to n different products by a single-stage production.¹⁾ Thus the problem of planning the product range involves choosing the sort of product to be produced amongst the n technically possible ones, and simultaneously, fixing the respective amounts to be produced.²⁾