A General Model for Making Short-Run Operating Decisions: Methodology and Steps

Short-run operating decisions are non-routine managerial decisions of a very diverse nature. They include, for example, the decisions to add/ drop operating segments, to make-or-buy compo­nents, to accept a one-time special order at less than the usual price, among others. There is, how­ever, no agreed-upon decision-making model to facilitate comprehension and practical application of these decisions, making their common charac­teristics explicit. This paper aims to propose and justify such a general model for short-run deci­sion-making. The suggested model contributes to the extant literature by integrating the basic steps in the managerial decision-making process and the unique methodology of short-run operat­ing decisions – the relevant-information approach and the contribution approach. More specifically, this paper (1) explores the need of the model, (2) presents the proposed model with its four steps and methodology, and (3) briefly discusses its benefits, as well as suggesting some directions for future research. The study is entirely qualita­tive and fully applies deductive reasoning.