Organization Theory

Boulding & Spivey (1960) describes organizations in a theory context of linear programming. Adam Smith also provides an insight of how large organizations can only thrive if the operations are utilises a "strict rule and method". The theory of a firm originated from the works of Cournot in 1838, which involved the discovery of the main stream economics. Between 1838 to 1938, generation and half, did the topic evolve further y Edgeworth and Marshall in the early years. Then from 1930, Harrod, Joan Robinson and Chamberlin produced to what is known as the marginal analysis  which was able to be express able in formula of the differential calculus. 

The Marginal Analysis

An organization contains processes that comprises of input, process and output. For example, input such as labor  raw materials, are forms of factors of production. The costs value the level of output which denotes the worthiness. An organization position is a set of values of all variables with associated costs. In these set of values, possible positions needs to be identified in order to rule out values that are inconsistent with the constraints. 

An example of principal internal limitation, in qualitatively expression, orange seeds, labor and land will not produce carrots. In quantitative form, x units of seed, y of labor and z of land will not produce more than q units of fruit products. However, as for external limitation (market), if q units are sold, they must have a price attached of a certain value p". There is a need to create a good balance, known as the perfect market, the price can be retained at a higher price does not depend on the quantities sold. The opposite of this, imperfect market, prices are low and the number of units sold are at larger volume scale. These 2 are the general concept of the market limitation. 

The (a) production and (b) market function placed together defines the nature and context, this can then help to determine the optimum position of an organization, thus the net revenue should be maximized.

References:

Boulding, K. E.  & Spivey, A. (1960) Linear programming and the theory of the firm. The Macmillan Company, New York, USA.