Strategic decision-making at a steel manufacturer assisted by linear programming

Singer, M., Donoso, P., 2006. Journal of Business Research 59 pp. 387-390.

We present an Activity Based Costing (ABC) technique for calculating unit product cost, and a dynamic Activity Based Management (ABM) method for assessing the feasibility of prospective production plans, in terms of capacity balance, product-dependent yield and other considerations. Both methods are implemented as a linear programming system that optimizes the business plan of a Chilean integrated steel manufacturer. After  empirically validating the system, we show how it can assist the strategic decision-making role, understanding it either within the neoclassical theory of the firm, the industrial organization theory, the resource-based view, or other approaches of strategic management.

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