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Activity analysis with activity switching
Author(s) -
Panik Michael J.
Publication year - 1982
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090030303
Subject(s) - maximization , profit maximization , subsidy , profit (economics) , utility maximization , set (abstract data type) , economics , microeconomics , mathematical optimization , mathematical economics , econometrics , mathematics , computer science , market economy , programming language
This study presents a multi‐activity profit‐maximization model which includes a set of zero‐one activity switching variables. The contribution of these variables to total cost, in the form of fixed charges, provides a departure from the usual necessary and sufficient conditions for optimality. In particular, under certain conditions a system of penalties/subsidies emerges which facilitates the allocation of the firm's scarce resources.