Worked-example setupScope and assumptions
- Rowan Advisory, the output points, and the client-service criterion are fictional teaching facts.
- Both displayed alternatives lie on the same fixed linear frontier and meet the supplied quality threshold.
- For this one decision only, Rowan's authorized manager has documented that at least four forecast packages must be completed before additional reconciliations are considered.
- Period
- One fictional analyst-day
- Units
- Completed reconciliations and completed forecast packages per comparable analyst-day
- Rounding
- Exact ratios
Two points, one boundary
Rowan compares two daily plans on the same linear frontier:
| Plan | Reconciliations | Forecasts | Productively efficient? | Meets the four-forecast criterion? |
|---|---|---|---|---|
| Reconciliation-heavy | 8 | 2 | Yes | No |
| Criterion-satisfying | 4 | 4 | Yes | Yes |
Both plans have frontier utilization of 1. Neither leaves modeled productive capacity idle. Productive efficiency therefore cannot select between them.
Make the criterion visible
The authorized manager has documented a bounded service requirement: complete at least four forecast packages before assigning the remaining modeled capacity to reconciliations. Under that criterion and the two supplied alternatives, the 4-and-4 plan is allocatively preferred. The 8-and-2 plan remains productively efficient even though it fails this particular criterion.
Change the criterion and the allocative conclusion may change. A profit criterion would require prices and costs; a risk criterion would require risk evidence; a fairness criterion would require affected interests and a reasoned standard. None can be smuggled into the word “efficient.”
Decision record
Both alternatives lie on Rowan's modeled production frontier. Select the 4-reconciliation, 4-forecast plan because it satisfies the manager's stated four-forecast service requirement. This is an allocative conclusion under a declared criterion, not a claim that the alternative is universally best.
The distinction matters in budgeting, control design, staffing, and public policy: using resources fully and using them for the right ends are different questions.
Verified calculation · economics foundations analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- production possibilities
- 1 field
Inspect data
{
"rowan_frontier_choice": {
"max_output_a": 12,
"max_output_b": 6,
"output_a_name": "reconciliations",
"output_b_name": "forecasts",
"points": {
"criterion_satisfying": {
"output_a": 4,
"output_b": 4
},
"reconciliation_heavy": {
"output_a": 8,
"output_b": 2
}
}
}
}Recomputed result
| Measure | Value |
|---|---|
| criterion satisfying frontier utilization | 1 |
| criterion satisfying productively efficient | 1 |
| reconciliation heavy frontier utilization | 1 |
| reconciliation heavy productively efficient | 1 |