Two division managers at King Size Manufacturing have been in an ongoing discussion with top management about allocation of capital spending over the next three years. The current tentative plan calls for the bulk of capital expenditure to go to Division H, which historically has been the larger division of the firm. One manager defends this decision because, he says, his division has been providing the bulk of the profits for the company. Division J is smaller, and its manager says that it is time to make the divisions more equal in size by allocating more capital and other resources to his division. Bonuses in the divisions are based on total sales.

You have been asked to assist management in seeking a solution to this disagreement. How would you go about making a recommendation?