Time Horizon: A Concept for Management

by Ronald Ebert, DeWayne Piehl



Time horizon may be defined as that distance into the future to which a decision-maker looks when evaluating the consequences of a proposed action. There are many decision situations faced by the manager in which time is a significant variable and must be included explicitly in the analysis. Among these are new plant and facilities planning, plant layout, systems analysis, investment analysis, market analysis, inventory planning, new product planning, and others. In such decisions the time frame in which the analysis is conducted is very important to the outcome of the decision. The manager can apply time horizon in several different ways including informally, formally in selecting and characterizing his employees, and as a continuing research instrument. By simply being conscious of the concept of time horizon during one's interactions with other members of the organization, one can develop an awareness of the time frame of each. This takes practice, noticing the references the person uses when supporting an argument and arranging them on a time scale.

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