Title: Multi-criteria optimisation of budgeting decisions by telecommunication service providers in a simulation game

Authors: Vadim Kyrylov, Carole Bonanni

Addresses: School of Interactive Arts and Technology, Simon Fraser University, Surrey, BC V3T 2W1, Canada ' School of Interactive Arts and Technology, Simon Fraser University, Surrey, BC V3T 2W1, Canada

Abstract: We propose a multi-criteria model for budget allocation decisions made by telecommunications firms in a computer-based business strategy simulation game. Optimality criteria reflecting the anticipated rewards and risks are represented by modified Cobb-Douglas production functions. Some of these take into account anticipated actions of competitors which is a new approach in multi-criteria decision making as we know it. Because the decision space and the criteria functions are all convex, the optimisation problem becomes a convex one; it can be reduced to minimising a single utility function, i.e., the weighted sum of the criteria. In this instance, it is possible to set the weights of each criterion to reflect the firm|s strategy (e.g., aggressive vs. defensive). Therefore, we provide a closed-form algorithm for solving an optimisation problem in an automated mode.

Keywords: Cobb-Douglas production function; multi-criteria decision making; MCDM; telecommunications industry; market simulation; budgeting decisions; business strategy; simulation games; budget allocation.

DOI: 10.1504/IJMDM.2006.009144

International Journal of Management and Decision Making, 2006 Vol.7 No.2/3, pp.201 - 215

Published online: 06 Mar 2006 *

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