A decision support system for stochastic cost-volume-profit analysis

Abstract A decision support system for applying cost-volume-profit analysis in an uncertain environment is presented. Product mix programming problem is considered when the contributions of the products are stochastic in nature. Previous studies in this area have assumed that the product contributions are normally distributed and are independent of each other. These assumptions are relaxed in this paper by using four moments of the contributions. A decision support framework for CVP analysis with four moments is presented. The goal is to assist the decision maker in using multiple models and data sources for achieving different objectives. Various models needed for a flexible formulation of the decision problem are discussed. Components of the database and features of the dialog interface are presented along with a prototypical implementation.

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