A Multiple Objective Search Process for Management Using a Transfer Pricing Example

Mark Cecchini, Robert Leitch, Caroline Strobel


Accounting managers of the multinational enterprise are responsible for budgeting and planning for a wide arrayof often conflicting objectives and constraints. Effective decision tools that support management inunderstanding tradeoffs between objectives of the budget process are invaluable. We explain the background ofand then illustrate an interactive search process for solving complex multiple objective problems. Themethodology we employ is a variant of multiple objective linear programming (MOLP) called the CombinedTchebycheff/Aspiration method. This method enables management to direct their search for a satisfactory oroptimal solution set as they discover what is feasible and tradeoffs among conflicting objectives. This is incontrast to goal programming where weights on objectives are determined beforehand. We illustrate the solutionmethod on the transfer pricing problem. The result is a search process that uses a mathematically rigorousprocedure to structure a complex problem, while including management feedback throughout the solutionprocess.

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DOI: http://dx.doi.org/10.5539/ijbm.v8n21p89

International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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