Book Chapter

Verifying functionality: Maximizing value of the firm (MVF)

V Tang, K Otto, W Seering

Contributions to Management Science | Published : 2018

Abstract

Macro-economists cannot expect governments or central banks to use them as test objects for their theories. Likewise, we cannot expect firms to submit themselves as test subjects to verify the functionality of our prescriptive paradigm. Therefore we simulate with a surrogate of a real company. The surrogate is system dynamics model of ADI, a high technology electronics firm. The model has over 620 equations to represent ADI’s operational behavior of its functional areas and the firm’s interactions with its external environment. The model’s documentation covers over 400 pages. This chapter models the decision to Maximize the Value of Firm (MVF). The goal is to shield ADI from “vulture hunters..

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University of Melbourne Researchers