Budget Setting Strategies for the Company's Divisions

The paper deals with the issue of budget setting to the divisions of a company. The approach is quantitative in nature both in the formulation of the requirements for the set-budgets, as related to different general managerial objectives of interest, and in the modelling of the inherent uncertainties in the divisions' revenues. Solutions are provided for specific cases and conclusions are drawn on different aspects of this issue based on analytical and numerical analysis of the results. From a more general standpoint the paper is also intended to set the ground for a schematic and precise approach to the managerial problem of budget-setting.