This chapter discusses that the problem of economic planning is best viewed as one of solving an extremely large constrained maximization problem. The objective function is identified with a measure of economic welfare, which has maximized subject to a variety of constraints, including those imposed by the details of available production processes and by the economy's endowment of economic resources. In a typical decentralized planning scheme, one might find that a central authority was responsible for ensuring that for each good supply and demand were in balance, taken across the whole economy, and that this authority was provided with the minimum information sufficient for execution of this task. Responsibility for ensuring that technological constraints were satisfied would be delegated to firms in whose processes the constraints were embodied. The chapter also explores that most planning procedures discussed have been iterative in the sense that they view the planning problem as being solved by a trial and error process, in which information exchanges among the participants in the decentralized process lead to the construction of better and better approximations to the solution of the planning problem.
