MATHEMATICAL FORMULATION OF THE TASK SEGREGATION PROBLEM IN INTERNAL CONTROL SYSTEM DESIGN*

Segregation of tasks is an important factor in the determination of internal control system reliability. In assigning tasks within an organization, the impact on internal control system reliability must be considered. This paper uses reliability modeling as the basis of a method for formulating the design problem. Formulation of the problem in this manner facilitates development of a knowledge base for auditors' judgments and the use of such knowledge in the design problem. It is demonstrated that under certain conditions the problem can be solved easily. This is useful not only in task assignment but also in manpower decisions. New concepts such as reliability degradation and a task combination matrix are introduced in developing the formulation.     

EFFECTS OF BUDGETARY CONTROL DESIGN ON MANAGEMENT DECISIONS: SOME EMPIRICAL EVIDENCE*

An examination of budgetary slack behavior reveals that managerial characteristics and the economic environment may contribute to the failure of budgetary control systems. Large management-controlled firms that operate in industries with high barriers to entry behave as if they allocate more slack resources when compared with owner-controlled firms of similar size and market power. The results confirm that accounting operating-income numbers reflect manifestations of slack behavior in the budgetary process. Management-controlled firms in particular seem to act as if they fail to release and redistribute slack resources. It is concluded that budgetary slack behavior points to failures in the organization design that may lead to inefficient allocation of resources and to inferior profit performance.     

THE INVESTIGATION OF COST VARIANCES: A FUZZY SET THEORY APPROACH*

In a standard costing system, deviations (variances) of actual cost from standard cost should be investigated in order to help management identify the causes of the variances and who is responsible for them before corrective actions are taken. In reality, however, actual cost rarely equals standard cost and so many variances occur that it is impractical and uneconomical to investigate all of them. These two conflicting factors—the necessity of investigating cost variances and the impracticality of investigating all the variances—present management with the problem of deciding which variances to investigate. In this paper a model, based on fuzzy set theory, for the cost-variance investigation is proposed and applied to an actual investigation problem faced by a manufacturing company.     

PARTICIPATION IN BUDGETARY DECISION MAKING,TASK DIFFICULTY,LOCUS OF CONTROL,AND EMPLOYEE BEHAVIOR: AN EMPIRICAL STUDY*

This study investigates the relationship between participation in budgetary decision making and attitude (toward job and employer), taking into account the effects of task difficulty and locus of control on participation and attitude. Managers from two companies participated in the study. Attitude was found to be related positively to participation and negatively to task difficulty. Implications of the results are discusses.     

Subordinate Participation in Audit Budgeting Decisions: A Comparison of Decisions Influenced by Organizational Factors to Decisions Conforming with the Vroom-Jago Model*

This study examines the role of subordinate participation in the effectiveness of audit hours budget decisions in accounting firms. The study compares decisions influenced by organizational factors (such as organizational policies or the preferences of the superior) to decisions that conform to the Vroom-Jago (VJ) model. Our results indicate that actual level of participation used in budget decisions appears to be based primarily on perceived preferences of superiors and participation styles available under the circumstancesof the individual audit. However, results also indicate that decisions consistent with the Vroom-Jago model are characterized by higher decision quality and increased subordinatedevelopment. Since managers are apparently reluctant to use decision styles that conflictwith organizational factors, accounting firms may wish to gather information regarding the attributes of the decision context and use the VJ model to establish their available decision styles and determine the preferences of superiors. Doing so has the advantage of considering decision-specific attributes while enhancing the probability of manager compliance with a desired decision style.     

IMPACT OF PARTICIPATION IN THE BUDGETARY PROCESS ON MANAGERIAL ATTITUDES AND PERFORMANCE: UNIVERSALISTIC AND CONTINGENCY PERSPECTIVES*

Data from responsibility-center managers reveal that greater budgetary participation contributes to managerial performance and attitudes in high-environmental-uncertainty situations but hampers performance and attitudes in low-uncertainty situations. Higher budgetary participation reduces managers' propensity to create slack in high- (but not in low-) uncertainty conditions.     

Compensation Schemes,Skill Level,and Task Performance: An Experimental Examination*

The effect of budget-based incentive compensation schemes is a fundamental issue in developing and implementing organizational control systems. This study investigates the effect of alternative compensation schemes on performance and satisfaction. A theoretical model outlining the primary relationships is formulated and related hypotheses specified. The hypotheses reflect an integration of agency theory and organization behavior research. Across-group and within-group effects are investigated using both single-period and multiperiod analyses. A laboratory study involving 40 subjects is undertaken and the findings provide insights into the individual and group effects of alternative compensation schemes and the dynamics of changing Compensation schemes on productivity and satisfaction. Specifically, a relationship is found between compensation schemes and performance. The effect on performance is independent of the compensation scheme's perceived fairness. Satisfaction is a function of the congruence between the preferred scheme and the implemented scheme.     

STRUCTURED OBSERVATION OF THE DECISION-MAKING ENVIRONMENT: A RELIABILITY AND VALIDITY ASSESSMENT

Information analysts gather and interpret information regarding organizational decision making. One source of information is the physical environment of the decision maker. A system for structured observation of the environment (STROBE) was developed and was used to gather information on administrators and medical directors of regional blood service organizations in the United States and Canada. Our results suggest that the reliability of STROBE is high and validity is acceptable, suggesting that STROBE may be useful in gathering data usually obtained through interviewing or observing behavior of decision makers.     

THE STRUCTURE OF EXECUTIVE INFORMATION SYSTEMS: AN EXPLORATORY ANALYSIS

This paper reports on a study which attempted to identify the structure of executive information systems and evaluate their relationship to decision making. The study centered on answering the question: “Where and how do senior executives get their decision-making information?” The data, provided by five senior executives, were gathered by a variety of means which included personal interviews, questionnaires, and logs of the executives' incoming-information transactions for a two-week period. Our findings support beliefs that senior executives receive much information from the environment, that informal systems play a role equal to that of formal systems, and that computers do not provide much information directly to an executive. The study also found that internal information is important and that preferred sources and media vary with different decision roles. The authors suggest that the scope of MIS and DSS be broadened to match those information networks managers actually rely on in daily practice.     

MULTIPLE-CRITERIA DECISION MAKING INCLUDING QUALITATIVE FACTORS: THE POST-MODEL ANALYSIS APPROACH

As a method of solving multiple-criteria decision making problems with a single quantitative objective and multiple qualitative objectives, the post-model analysis (PMA) approach is proposed. The essence of PMA is to support the trade-offs between a quantitative objective and multiple qualitative objectives so that the decision maker can find a perceived most preferred nondominated solution. To this end, the optimal solution of a quantitative model is found first, without regard for qualitative factors. The solution is then evaluated in terms of qualitative objectives. When the initial quantitatively optimal solution is adjusted to allow improvement of qualitative goals, opportunity costs of achieving qualitative goals are incurred. In this process, an expert system and/or graphical display can be used. PMA therefore provides a way to incorporate quantitative models into knowledge-based expert systems.     

ONE APPROACH TO REALLOCATING INSTRUCTIONAL RESOURCES: THE HOUSTON MODEL

In this paper a model for deciding which instructional departments should receive and surrender new or reallocatable resources is developed. It combines a two-dimensional assessment of resource needs based on instructional characteristics and the academic priority of the department to arrive at resource allocation priorities. Unusual features of the model are its reliance on judgments of departmental centrality to institutional mission as the discriminating variable in ascribing academic priorities and the careful avoidance of “halo effects” through independent assessment of resource needs and academic priorities. The model is sensitive enough to discriminate between competing claims for scarce resources while retaining a simplicity of logic that makes its mechanics understandable to those with little grounding in the decision sciences.     

A SIMULATION OF THE EFFECTS OF ALTERNATIVE RULE SYSTEMS FOR JAI ALAI*

The inequities of the present system of rules in jai alai are documented on the basis of empirical information and theoretical results from a Monte Carlo simulation model. Some suggestions are made for changing the rules in order to make the game more equitable for both players and bettors. The simulation model is used to compare the effectiveness of the suggested rules with that of the present rules.     

ON THE COST OF NEW ISSUES OF COMMON STOCK: AN AMENDMENT TO THE CONSTANT GROWTH MODEL

Expansion decisions by corporate managements are importantly influenced by their perceptions of the firm's cost of capital and especially the cost of common equity. Their decision making is then influenced by the common perception that new issues of common stock are more costly than retained earnings because of the flotation costs inherent in new issues. Thus a rate of expansion that requires new issues is downgraded in decision making. In this paper the authors show that in actuality new issues of common equity may be less costly than retained earnings. Thus different decision-making implications are clearly involved.     

SCAT AND SPAT: LARGE-SCALE COMPUTER-BASED OPTIMIZATION SYSTEMS FOR THE PERSONNEL ASSIGNMENT PROBLEM

The personnel assignment problem involves the assignment of people to tasks, projects, etc., in a manner that maximizes a measure of aggregate utility for the assignees subject to several assignment constraints. In addition to computationally efficient solution algorithms, the effective implementation of mathematical models to solve the personnel assignment problem must include data processing systems with comprehensive error checking/resolution procedures, end user reports, documentation, and training. This paper summarizes two successful computer-based systems for solving large-scale personnel assignment problems that frequently occur in university settings. SCAT, the Student-Company Assignment Technique, assigns students to job interview slots. SPAT, the Student-Project Assignment Technique, assigns students to project teams in an MBA field project course. The SCAT and SPAT approaches can be generalized to a wide variety of personnel assignment problems in university, industry, government, and military settings.     

INFLATION,MAINTENANCE OF CAPITAL,AND THE IRR MODEL: AN APPRAISAL AND ALTERNATIVE

Capital budgeting under inflationary conditions presents some additional implementation problems when computing the internal rate of return. This paper reviews an earlier proposal made in this journal and concludes that it has some technical deficiencies. Further, it does not have the flexibility needed to be congruent with a wide variety of concepts of capital maintenance and asset evaluation. An algorithm is developed that will permit the user to make a variety of assumptions and then solve for the IRR that is consistent with those assumptions.     

AN APPROXIMATION TO THE HYPERCUBE MODEL WITH PATROL-INITIATED ACTIVITIES: AN APPLICATION TO POLICE

This paper applies the patrol-initiated-activity hypercube queuing model to historical data from a police agency. The model allows servers to handle both calls assigned by a central dispatcher and activities initiated by the servers. By duplicating a fairly complex dispatch strategy, the model was found to predict both assigned and server-initiated work loads accurately for the overall system and individual servers. The model is apparently ineffective in predicting small unit-travel-time differences for this police agency.     

A CONJUNCTIVE-COMPENSATORY APPROACH TO THE SELF-EXPLICATION OF MULTIATTRIBUTED PREFERENCES*

Consumer choice among multiattributed products is modeled as a two-stage process in which a conjunctive stage (that eliminates products with one or more “totally unacceptable” attribute levels) is followed by a compensatory stage (that trades off remaining products on multiple attributes). A self-explicated preference measurement procedure based on the two-stage model yielded a slightly larger predictive validity compared to conjoint analysis.     

A NOTE ON THE RELATIONSHIPS AMONG FINENESS,GARBLING, AND SUFFICIENCY FOR THE COMPARISON OF INFORMATION SYSTEMS*

Choice among competing information systems is an important problem for both the providers and users of information. When the attributes of the decision makers and decision problems for which information is produced are unknown or heterogeneous, it is difficult to choose among alternative information sources. Three criteria for such comparisons of information systems are available in the theory of information economics. These criteria may be distinguished by the differing restrictions that they impose on the generality of the studies in which they are used. This note explicates the relationships among these criteria and discusses the various limitations that they impose on generality.     

Heuristic Optimization of Physical Data Bases: Using a Generic and Abstract Design Model*

Designing efficient physical data bases is a complex activity, involving the consideration of a large number of factors. Mathematical programming-based optimization models for physical design make many simplifying assumptions; thus, their applicability is limited. In this article, we show that heuristic algorithms can be successfully used in the development of very good, physical data base designs. Two heuristic optimization algorithms are proposed in the context of a generic and abstract model for physical design. One algorithm is based on generic principles of heuristic optimization. The other is based on capturing and using problem-specific information in the heuristics. The goodness of the algorithms is demonstrated over a wide range of problems and factor values.     

REPLY TO: “ON THE SENSITIVITY OF BRAND-CHOICE SIMULATIONS TO ATTRIBUTE IMPORTANCE WEIGHTS”

Our reply to Curry, Louviere, and Augustine's critique of our earlier paper focuses on differences in motivation between our research and theirs. Our interest in the problem relates to the possible incorporation of self-explicated evaluations in conjoint data collection methods; subsequent to the appearance of our original paper, we have developed hybrid models that combine elements of self-explicated (compositional) and conjoint (decompositional) data collection procedures. As far as we can surmise from their critique, Curry, Louviere, and Augustine are concerned with much broader strategic issues relating share of choices in the consumer population to changes in the shape of attribute weight distributions, shape of the Pareto tradeoff boundary, and so on.