This paper presents an analytical model for analyzing hierarchical organizations. It considers various factors that affect the requirement for supervision and formulates them into an analytical model which aims at optimizing the organizational design. This decision includes allocation tasks to workers, considering complexity and compatibility of each task with respect to workers, and the requirement of management for planning, execution, training, and control in a hierarchical organization. The model is formulated as a 0-1 mixed integer program. The objective of the model is minimum operational cost, which are the sum of supervision costs at each level of the hierarchy and the number of workers assigned with tasks. This model addresses the span of control problem and provides a quantitative approach to the organizational design problem, and is intended for applications as a design tool in the make-to-order industries. Each project-based company may have to frequently readjust its organizational structure, as its capability and capacity shift over time. It could also be applied to functionality based companies as an evaluation tool, to assess the optimality of their current organization structure.
