In searching for a new budget formula for the College of Business at California State University at Long Beach, a major university in the west, several rational budget formulas were explored. This report develops an explanation in quantitative terms of the reasoning process pursued by the department chairs in arriving at the compromise budget allocation model that is currently in place in the college. It shows that in a group decision‐making process concerning the allocation of resources, compromises are made between decision‐makers in order to come to some common agreement, if one in fact exists. Rational models based on some formula are introduced, and resources can be allocated based on the formula. However, among the models presented using a decision matrix, the model that will eventually be selected is the one that has the minimal variance in ranking regrets and monetary regrets if the highest‐ranking model is not chosen. The ranking regret provides a good guide and quick identification of the “most‐likely‐to‐succeed” compromise model. However, the monetary regret appears to be the final compromise determinant.
Chong, P.S. and Runyon, L.R. (2004), "In search of a consensus team decision budget agreement", International Journal of Educational Management, Vol. 18 No. 5, pp. 297-303. https://doi.org/10.1108/09513540410543448
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