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The multilevel approach to organizational issues of the firm--A critical review


  • Burton, Richard M
  • Obel, Børge


This paper critically reviews the progress and state of multilevel decomposition models for the firm and its management. The presentation introduces and summarizes the fundamental ideas and also gives concise statements concerning advanced developments. The pricing approach, and the budgeting approaches are the two approaches considered. For managerial planning, initial starting solutions, iteration processes, and stopping rules are important algorithmic and organizational considerations. Further, in decentralized organizations, the motivations for cheating in planning, incentives for innovation, and reactions to uncertainty require attention. For these approaches one concludes that further theoretical work designed especially for managerial relevance needs to be developed. Despite these deficiencies, the practitioner need not wait for all the answers as the currently employed methods of pricing and budgeting for planning suffer the same deficiencies, and yet lack the power to choose better plans as the multilevel decomposition approach offers.

Suggested Citation

  • Burton, Richard M & Obel, Børge, 1977. "The multilevel approach to organizational issues of the firm--A critical review," Omega, Elsevier, vol. 5(4), pages 395-414.
  • Handle: RePEc:eee:jomega:v:5:y:1977:i:4:p:395-414

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    References listed on IDEAS

    1. Richard Ehrhardt, 1979. "The Power Approximation for Computing (s, S) Inventory Policies," Management Science, INFORMS, vol. 25(8), pages 777-786, August.
    2. Richard Ehrhardt & Charles Mosier, 1984. "A Revision of the Power Approximation for Computing (s, S) Policies," Management Science, INFORMS, vol. 30(5), pages 618-622, May.
    3. Arthur F. Veinott, Jr. & Harvey M. Wagner, 1965. "Computing Optimal (s, S) Inventory Policies," Management Science, INFORMS, vol. 11(5), pages 525-552, March.
    4. Eliezer Naddor, 1975. "Optimal and Heuristic Decisions in Single-and Multi-Item Inventory Systems," Management Science, INFORMS, vol. 21(11), pages 1234-1249, July.
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    Cited by:

    1. Athanassopoulos, Antreas D., 1995. "Goal programming & data envelopment analysis (GoDEA) for target-based multi-level planning: Allocating central grants to the Greek local authorities," European Journal of Operational Research, Elsevier, vol. 87(3), pages 535-550, December.
    2. Jornsten, Kurt & Leisten, Rainer, 1995. "Decomposition and iterative aggregation in hierarchical and decentralised planning structures," European Journal of Operational Research, Elsevier, vol. 86(1), pages 120-141, October.
    3. Pramanik, Surapati & Roy, Tapan Kumar, 2007. "Fuzzy goal programming approach to multilevel programming problems," European Journal of Operational Research, Elsevier, vol. 176(2), pages 1151-1166, January.

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