Consequences of the Organizational Structure for the Production Planning System

Firms which produce different goods in multistage production processes are faced with the important task of organizing these processes so that they are in line with the firm’s objectives. Where the size of a firm and its channels of information prohibit the use of centralized decision making in short-run problems, a partial response to the organization problem will often be made by decentralizing responsibility for the job and machine schedules, respectively. Other important reasons for decentralizing responsibility are shown, for example, by Mintzberg (1979, p. 182). They all stipulate that in many cases essential organizational tasks lie in deciding which persons should be made responsible for which parts of production planning.