Algorithm Models of Production Decision Making and Adaptation Cost Evaluations

Sergei Perminov ()
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Sergei Perminov: Russian Academy of Sciences

Computing in Economics and Finance 1996 from Society for Computational Economics

Abstract: Adaptation factors are not properly involved yet in decision making and not measured regularly in economic terms. In the paper we mean under adaptation cost an opportunity cost which one has to bear using a certain inefficient adaptation system compare to the better system. Adaptation cost as a parameter may be operationally and efficiently used in considerations how to improve a control. Adaptation cost is really hidden and unlike ordinary costs it requires a special methodology and techniques to be revealed. The study is focused on a production process considered as a perpetual flow of resources being processed stage by stage towards final products and customer satisfaction. Each action that takes place is a result of control decisions pursuing certain targets. The contra posing of targets and control decisions plays the crucial role in the analysis. It is assumed that control decisions are: establishing a compromise between many interests formulated in terms of targets, thought over in accordance with the concept of `bounded rationality', probabilistic, taken as a result of adaptation process.

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