A Dynamic Model of the Firm

Kong Chu and Thomas H. Naylor
Additional contact information
Kong Chu: California Western and Duke University
Thomas H. Naylor: California Western and Duke University

Management Science, 1965, vol. 11, issue 7, 736-750

Abstract: In this paper we utilize traditional microeconomic theory and elementary queuing theory to develop a computer simulation model of a single-product, multi-process firm. One of our objectives is to demonstrate that the body of economic theory known as the "theory of the firm" may be used to provide a convenient frame of reference in applying some of the more recently developed analytical tools of operations research and computer technology to the analysis of the behavior of the firm. The static equilibrium model of the firm presented in Value and Capital by J. R. Hicks is taken as a point of departure in constructing a simulation model in which (1) the time interval between the arrival of orders at the firm is a stochastic variate with a known probability distribution, (2) each order which the firm receives must pass through n processes before it is transformed into a single unit of output, and (3) the time interval which an order spends at the jth process (j - 1,..., n) is a stochastic variate with a known probability distribution.

Date: 1965
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.11.7.736 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:11:y:1965:i:7:p:736-750

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().