Two stage mathematical programming model for the national economy

Abstract

The economy of Bangladesh is heavily dependent on foreign borrowing in order to finance its own development work. To reduce this dependency, an appropriate planning and its implementation are indispensible. Bangladesh economy is considered as consisting of fifty three production I service sectors. Theoretically, each sector supplies its output to other sectors and itself for use as intermediate inputs, and for final use as consumption, investment, exports, imports and inventory. However, in reality each sector need not supply its output for intermediate use to all sectors, and need not supply output for all categories of final demand (consumption, investment, exports, imports and inventory). Considering the advantages of the hierarchical planning process, a hierarchical planning model has been developed in this research. For the planning model developed,the fifty three sectors are grouped into nine broad sectors on the basis of certain criteria. These nine sectors are considered in the upper level of the hierarchical model and decisions are made for this nine broad sectors. In the lower level model each broad sector is disaggregated on a scientific basis and decisions are made for all the fifty three sectors. The models are solved using an available LP package. The results provide a full-fledged multi-period plan for the Bangladesh economy.