The reallocation of money values in decentralized organizations

Abstract

This paper treats the relationships between multiproduct LP-models and accounting principles. It shows how an LP-formulation should be adapted to the needs of financial analysts, and how ancillary cause-and-effect relationships can be formulated for costing or recompensing purposes.

A more fully expressed mathematical definition of equilibrium between supplies and demands of an intermediate product is introduced. It relates the unit value of an intermediate product to one determinate inflowing or onflowing product stream, with a specific volume. This makes decomposition techniques practicable for large decentralized organizations.

Product values and/or their corresponding inflowing or onflowing product streams, which are called linking streams, are different for different purposes of accounting or optimization. So are the components of costs and revenues to be reallocated.