Generally speaking, the objective of a business organization is to maximize profits and to minimize expenditure, loss and wastage.
Generally speaking, the objective
of a business organization is to maximize profits and to minimize expenditure,
loss and wastage. However, a company may not always attempt at profit
maximization only. At times, a necessity may arise to pay attention to other
objectives also. We describe some such situations in the sequel.
A manufacturing organization may
like to ensure uninterrupted supply of its products even if it means additional
expenditure for the procurement of raw materials or personal delivery of goods
during truckers’ strike, etc. with the objective of assuring the good will of
A company may be interested in
the full utilization of the capacity of the machines and therefore mechanics
may be recruited for attending to break downs of the machines even though the
occurrence of such break downs may be very rare.
A company, driven by social
consciousness, may spend a portion of its profits on the maintenance of trees,
parks, public roads, etc. to ensure the safety of the environment, with the
objective earning the support of the society.
Another organization may have the
objective of establishing brand name by providing high quality products to the
consumers and for this purpose it may introduce rigorous measures of quality
checks even though it may involve an increased expenditure.
While all the sales persons in a
company are formally trained and highly experienced, the management may still
pursue a policy to depute them for periodical training in reputed institutes so
as to maximize their capability, without minding the extra expenditure incurred
for their training.
A travel agency may be interested
to ensure customer satisfaction of the highest order and as a consequence it
may come forward to operate bus services even to remote places at the normal
rates, so as to retain the customers in its fold.
A bank may offer services beyond
normal working hours or on holidays even if it means payment of overtime to the
staff, in order to adhere to the policy of customer satisfaction on priority
A business organization may
accord priority for the welfare of the employees and so a major part of the
earnings may be apportioned on employee welfare measures.
A garment designer would like to
be always known for the latest fashion and hence may spend more money on
fashion design but sell the products at the normal rates, so as to earn the
A newspaper may be interested in
earning the unique distinction of ‘Reporter of Remote Rural Areas’ and so it
may spend more money on journalists and advanced technology for communication.
The above typical instances go to
show that the top level management of a business organization may embark upon
different goals in addition to profit maximization. Such goals may be necessitated
by external events or through internal discussion. At times, one such goal may
be in conflict with another goal.
‘Goal programming’ seeks to deal
with the process of decision making in a situation of multiple goals set forth
by a business organization. A management may accord equal priority to different
goals or sometimes a hierarchy of goals may be prescribed on their importance.
One has to strive to achieve the goals in accordance with the priorities
specified by the management. Sometimes the goals may be classified as higher level goals and lower level goals as perceived by the management and one would be interested in first achieving the
higher order goals and afterwards considering lower order goals.
Some of the goals that may be
preferred by a business organization are : maximum customer satisfaction,
maximum good will of the customers, maximum utilization of the machine
capacity, maximum reliability of the products, maximum support of the society,
maximum utilization of the work force, maximum welfare of the employees, etc.
Since different goals of an
organization are based on different units, the goal programming has a
multi-dimensional objective function. This is in contrast with a linear
programming problem in which the objective function is uni-dimensional.
Given a goal of an organization,
one has to determine the conditions under which there will be under-achievement
and over-achievement of the goal. The ideal situation will be the one with
neither under-achievement nor over-achievement of the goal.
Tags : Operations Management - Game Theory, Goal Programming & Queuing Theory
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