A Comment on Shih's General Decision Model for CVP Analysis - A Reply.

Abstract In this article, the author responds to comments by some accounting experts on his general decision model for CVP analysis. The author says that he would like to respond briefly to optimization function first, and then to point out a few implications of his model formulation for the stochastic break-even analysis as a final wrap-up of my two Replies. The author wishes to point out that the model formulation developed in his paper could be extended and applied to the break-even analysis under uncertainty in which the production quantity would play a significant role. The value of the term Q, quantity, of course, can be decided in a variety of ways depending on the goals and objectives of the top management. It is clear that the production quantity Q now enters the stochastic break-even analysis as a factor in the determination of the lower bound of the mean demand. This is a significant departure from the traditional break-even analysis, and thus may be viewed as a potential for future research.