capacity expansion contraction of a facility with demand augmentation dynamics we analyze the cost effective addition or removal of capacity from a facility governed by demand augmentation dynamics that is if the demand for goods or services exceeds the planned capacity of the facility during any period of a multiperiod planning horizon then additional capacity must be introduced within that period to meet the deficit the paper obtains an optimal management strategy that minimizes the sum of capital labor maintenance and underpro vision costs for n consecutive periods in the face of uncertain demands dynamic programming is used to demonstrate that under certain conditions on the cost functions an inventory like s s policy is optimal appropriately interpreted to define the removal as well as the augmentation of capacity the threshold levels s and s can be evaluated for each period without a costly search procedure in addition we show how to calculate various quantities of interest associated with the optimal policy

experimental evidence on scaling up education reforms in kenya abstract what constraints arise when translating successful ngo programs to improve public services in developing countries into government policy we report on a randomized trial embedded within a nationwide reform of teacher hiring in kenyan government primary schools new teachers offered a fixed term contract by an international ngo significantly raised student test scores while teachers offered identical contracts by the kenyan government produced zero impact observable differences in teacher characteristics explain little of this gap instead data suggests that bureaucratic and political opposition to the contract reform led to implementation delays and a differential interpretation of identical contract terms additionally contract features that produced larger learning gains in both the ngo and government treatment arms were not adopted by the government outside of the experimental sample

optimal capacity expansion over an infinite horizon the problem of choosing an optimal initial capacity expansion from a finite number of durable facility sizes is affected by potential future expansion decisions as we consider such expansions over longer and longer study horizons the optimal initial facility choice can fluctuate due to end of study effects we discuss an algorithm that will determine for arbitrary deterministic demand profiles how long a horizon is sufficient to reach stability in the first facility choice moreover it is shown that this first choice is the optimal first choice for the infinite horizon problem we also establish an explicit analytical formula for a study horizon guaranteed to provide a first facility size that followed by an infinite horizon expansion strategy will attain a discounted cost within a predetermined maximal error of the optimal infinite horizon cost

improving management with individual and group based consulting results from a randomized experiment in colombia differences in management quality are an important contributor to productivity differences across countries a key question is how to best improve poor management in developing countries this paper tests two different approaches to improving management in colombian auto parts firms the first uses intensive and expensive one on one consulting while the second draws on agricultural extension approaches to provide consulting to small groups of firms at approximately one third of the cost of the individual approach both approaches lead to improvements in management practices of a similar magnitude 8 10 percentage points so that the new group based approach dominates on a cost benefit basis moreover the paper finds some evidence that the group based intervention led to increases in firm size over the next three years while the impacts on firm outcomes are smaller and statistically insignificant for the individual consulting the results point to the potential of group based approaches as a pathway to scaling up management improvements

multi resource investment strategies operational hedging under demand uncertainty abstract consider a firm that markets multiple products each manufactured using several resources representing various types of capital and labor and a linear production technology the firm faces uncertain product demand and has the option to dynamically readjust its resource investment levels thereby changing the capacities of its linear manufacturing process the cost to adjust a resource level either up or down is assumed to be linear the model developed here explicitly incorporates both capacity investment decisions and production decisions and is general enough to include reversible and irreversible investment the product demand vectors for successive periods are assumed to be independent and identically distributed the optimal investment strategy is determined with a multi dimensional newsvendor model using demand distributions a technology matrix prices product contribution margins and marginal investment costs our analysis highlights an important conceptual distinction between deterministic and stochastic environments the optimal investment strategy in our stochastic model typically involves some degree of capacity imbalance which can never be optimal when demand is known

optimal capacity investment decisions with two sided fixed capacity adjustment costs in this paper we consider the optimal management of capacity when a firm faces fixed costs and variable costs to purchase capacity the firm can also salvage capacity and receive a variable value per unit capacity salvaged but faces a different fixed cost in this case each period the firm faces a stochastic demand and maintenance costs for capacity that it decides to keep the firm would thus like to decide how much capacity it should purchase or salvage each period we introduce a new concept which we call k1 k2 concavity and show that the profit to go function satisfies this property this enables us to characterize the structure of an optimal policy which is rather complex consisting of multiple regions in which different decisions are made we show how special cases of this problem e g no fixed costs expansion or contraction not allowed reduce to well known results and how k1 k2 concavity is a generalization of concavity k concavity and sym k concavity we also show how different lead times for purchasing or salvaging capacity can be integrated into the model finally we extend the model to the case where demand is markov modulated and a portion of capacity can deteriorate in each period

management of bureaucrats and public service delivery evidence from the nigerian civil service we study how the management practices bureaucrats operate under relate to the quantity and quality of public services delivered we do so exploiting data from the nigerian civil service for 4700 public sector projects we have hand coded independent engineering assessments of project completion rates and delivered quality we supplement this with a survey eliciting management practices for bureaucrats in the 63 civil service organizations responsible for these projects building on bloom and van reenen 2007 management practices matter a one standard deviation increase in bureaucrat s autonomy signi cantly increases project completion rates by 18 a one standard deviation increase in practices related to incentives monitoring of bureaucrats signi cantly lowers project completion rates by 14 we show the negative impacts of incentive provision monitoring arise because bureaucrats multi task and incentives are poorly targeted and because these management practices capture elements of subjective performance evaluation that leave scope for dysfunctional responses from bureaucrats to support a causal interpretation of our ndings we document the determinants of management practices and examine channels through which organizations might endogenously adjust management practices our results provide novel insights into how changes in how bureaucrats are managed can have potentially large impacts on public service delivery in a developing country context jel classi cation j33 j38 o20

integrated capacity and inventory management with capacity acquisition lead times we model a make to stock production system that utilizes permanent and contingent capacity to meet non stationary stochastic demand where a constant lead time is associated with the acquisition of contingent capacity we determine the structure of the optimal solution concerning both the operational decisions of integrated inventory and flexible capacity management and the tactical decision of determining the optimal permanent capacity level furthermore we show that the inventory either before or after production the pipeline contingent capacity the contingent capacity to be ordered and the permanent capacity are economic substitutes we also show that the stochastic demand variable and the optimal contingent capacity acquisition decisions are economic complements finally we perform numerical experiments to evaluate the value of utilizing contingent capacity and to study the effects of capacity acquisition lead time providing useful managerial insights

is 75 of the sales promotion bump due to brand switching no only 33 is abstract several researchers have decomposed sales promotion elasticities based on household scanner panel data a key result is that the majority of the sales promotion elasticity approximately 74 on average is attributed to secondary demand effects brand switching and the remainder is attributed to primary demand effects timing acceleration and quantity increases the authors demonstrate that this result does not imply that if a brand gains 100 units in sales during a promotion the other brands in the category lose 74 units the authors offer a complementary decomposition measure based on unit sales the measure shows the ratio of the current cross brand unit sales loss to the current own brand unit sales gain during promotion the authors report empirical results for this measure they also derive analytical expressions that transform the elasticity decomposition into a decomposition of unit sales effects these expressions show the nature of the difference between the two decompositions to ga

capacity pricing and production under supply and demand uncertainties with an application in agriculture abstract we consider capacitated joint lot sizing and pricing problems when supply and a price sensitive demand are uncertain in cases where there is excess capacity the decision maker has the option to rent her capacity we model the case where price and production quantity are determined before the yield is realized joint decisions as well as the case where the price is determined after the yield is known sequential decisions in the joint decisions case we introduce the concept of expected demand fill rate elasticity and characterize the conditions in which a one sided production and pricing policy is optimal we extend the results to the case when there is a fixed production cost and show that a two sided production and pricing policy is optimal we also investigate the conditions under which it is optimal for the decision maker to rent her capacity in addition we look at the case in which the decision maker is risk averse and analyze the effect of the risk attitude on the optimal price and production quantity we extend our model to the multi period case and the case where there is a lead time to acquire new capacity we show that a one sided production pricing and capacity planning policy is optimal in this situation as well we apply our model to the agricultural sector and present numerical examples using data from the california almond industry

capacity decisions for high tech products with obsolescence abstract modern high tech products experience rapid obsolescence capacity investments must be recouped during the brief product lifecycle during which prices fall continuously we employ a multiplicative demand model that incorporates price declines due to both market heterogeneity and product obsolescence and study a monopolistic firm s capacity decision we investigate profit concavity and characterize the structure of the optimal capacity solution moreover for products with negligible variable costs we identify two distinct strategies for capacity choice demarcated by an obsolescence rate threshold that relates both to market factors and capacity costs finally we empirically test the demand model by analyzing shipping and pricing data from the pc microprocessor market

a capacitated production inventory model with periodic demand for a single product single stage capacitated production inventory model with stochastic periodic cyclic demand we find the optimal policy and characterize some of its properties we study the finite horizon the discounted infinite horizon and the infinite horizon average cases a simulation based optimization method is provided to compute the optimal parameters based on a numerical study several insights into the model are also provided

simultaneous capacity and production management of short life cycle produce to stock goods under stochastic demand this paper derives the optimal simultaneous capacity and production plan for a shortlife cycle produce to stock good under stochastic demand capacity can be reduced as well as added at exogenously set unit prices in both cases studied with and without carryover of unsold units a target interval policy is optimal there is a usually different target interval for each period such that capacity should be changed as little as possible to bring the level available into that interval our contribution in the case of no carry over is a detailed characterization of the target intervals assuming demands increase stochastically at the beginning of the life cycle and decrease thereafter in the case of carry over we establish the general result and show that capacity and inventory are economic substitutes the target intervals decrease in the initial stock level and the optimal unconstrained base stock level decreases in the capacity level in both cases optimal service rates are not necessarily constant over time a numerical example illustrates the results

business practices in small firms in developing countries management has a large effect on the productivity of medium and large firms but does management matter in micro and small firms where the majority of the labor force in developing countries works we develop 26 questions that measure business practices in marketing stock keeping record keeping and financial planning these questions have been administered in surveys in bangladesh chile ghana kenya mexico nigeria and sri lanka we show that variation in business practices explains as much of the variation in outcomes sales profits and labor productivity and total factor productivity in microenterprises as in larger enterprises panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth the association of business practices with firm outcomes is robust to including numerous measures of the owner s human capital we find that owners with higher human capital children of entrepreneurs and firms with employees employ better business practices data as supplemental material are available at http dx doi org 10 1287 mnsc 2016 2492 this paper was accepted by toby stuart entrepreneurship and innovation

beyond baseline and follow up the case for more t in experiments the vast majority of randomized experiments in economics rely on a single baseline and single follow up survey if multiple follow ups are conducted the reason is typically to examine the trajectory of impact effects so that in effect only one follow up round is being used to estimate each treatment effect of interest while such a design is suitable for study of highly autocorrelated and relatively precisely measured outcomes in the health and education domains this paper makes the case that it is unlikely to be optimal for measuring noisy and relatively less autocorrelated outcomes such as business profits household incomes and expenditures and episodic health outcomes taking multiple measurements of such outcomes at relatively short intervals allows the researcher to average out noise increasing power when the outcomes have low autocorrelation it can make sense to do no baseline at all moreover the author shows how for such outcomes more power can be achieved with multiple follow ups than allocating the same total sample size over a single follow up and baseline the analysis highlights the large gains in power from ancova rather than difference in differences when autocorrelations are low and a baseline is taken the paper discusses the issues involved in multiple measurements and makes recommendations for the design of experiments and related non experimental impact evaluations

planning for surprise water resources development under demand and supply uncertainty i the general model a study of water resources development in south sweden revealed that water consumption unexpectedly stopped growing after construction had begun on a large project to expand water supplies the project had a long lead time for completion and planning had been based on traditional deterministic forecasts of future water use to explore the implications of such an uncertain structural shift in future consumption patterns we develop a model for determining the timing for initiating such a project in this model the original consumption forecast may be disrupted at some random future time by an event called a surprise as in the swedish situation we have modeled the surprise as an unexpected stagnation in future demand growth and benefit levels we show that this form of uncertainty makes desirable delaying the initiation of the project beyond the time optimal under the original forecast we then extend the model to include the lead time for the project as a variable and demonstrate that the lead time should be reduced from that optimal under a deterministic future finally we incorporate the option of abandoning the project when the surprise occurs and show that higher salvage values for the project lead to earlier optimal commitment times

the unfavorable economics of measuring the returns to advertising twenty five large field experiments with major u s retailers and brokerages most reaching millions of customers and collectively representing 2 8 million in digital advertising expenditure reveal that measuring the returns to advertising is difficult the median confidence interval on return on investment is over 100 percentage points wide detailed sales data show that relative to the per capita cost of the advertising individual level sales are very volatile a coefficient of variation of 10 is common hence informative advertising experiments can easily require more than 10 million person weeks making experiments costly and potentially infeasible for many firms despite these unfavorable economics randomized control trials represent progress by injecting new unbiased information into the market the inference challenges revealed in the field experiments also show that selection bias due to the targeted nature of advertising is a crippling concern for widely employed observational methods jel codes l10 m37 c93

capacity expansion under stochastic demands we consider the problem of optimally meeting a stochastically growing demand for capacity over an infinite horizon under the assumption that demand for product follows either a nonlinear brownian motion or a non markovian birth and death process we show that this stochastic problem can be transformed into an equivalent deterministic problem consistent with earlier work by a manne the equivalent problem is formed by replacing the stochastic demand by its deterministic trend and discounting all costs by a new interest rate that is smaller than the original in approximate proportion to the uncertainty in the demand

information acquisition for capacity planning via pricing and advance selling when to stop and act this paper investigates a capacity planning strategy that collects commitments to purchase before the capacity decision and uses the acquired advance sales information to decide on the capacity in particular we study a profit maximization model in which a manufacturer collects advance sales information periodically prior to the regular sales season for a capacity decision customer demand is stochastic and price sensitive once the capacity is set the manufacturer produces and satisfies customer demand to the extent possible from the installed capacity during the regular sales period we study scenarios in which the advance sales and regular sales season prices are set exogenously and optimally for both scenarios we establish the optimality of a control band or a threshold policy that determines when to stop acquiring advance sales information and how much capacity to build we show that advance selling can improve the manufacturer s profit significantly we generate insights into how operating conditions such as the capacity building cost and market characteristics such as demand variability affect the value of information acquired through advance selling from this analysis we identify the conditions under which advance selling for capacity planning is most valuable finally we study the joint benefits of acquiring information for capacity planning through advance selling and revenue management of installed capacity through dynamic pricing

capacity expansion with interrupted demand growth abstract in most long range planning problems accurate forecasting of demand growth is often difficult sometimes unexpected shocks in the economy occur and disrupt the predicted growth rate of demand for example growth can unexpectedly cease for and indeterminate length of time due to crucial occurrnces such as wars economic recessions or oil price shocks in this paper we examine the effects of unforeseen demand plateaus on the capacity expansion problem of sizing and timing production facilities we assume that demand for capacity follows a stochastic process that is we allow for plateaus to happen at random future times and to continue for an uncertain duration when the demand process is generated by an alternating renewal process we show that demand plateaus result in a modified discounting rate and a modified import cost