bluuebunny/crossref_metadata_2025 huggingface dataset:
Algorithms for the Simple Equal Flow Problem
Authors: Ahuja Ravindra K. , Orlin James B. , Sechi Giovanni M. , Zuddas Paola
Published: November 2008

The minimum cost flow problem is to determine a least cost shipment of a commodity through a network G = (N, A) in order to satisfy demands at certain nodes from available supplies at other nodes. In this paper, we study a variant of the minimum cost flow problem where we are given a set R ⊆ A of arcs and require that each arc in R must carry the same amount of flow. This problem, which we call the simple equal flow problem, arose while modeling a water resource system management in Sardinia, Italy. We consider the simple equal flow problem in a directed network with n nodes, m arcs, and where all arc capacities and node supplies are integer and bounded by U. We develop several algorithms for the simple equal flow problem—the network simplex algorithm, the parametric simplex algorithm, the combinatorial parametric algorithm, the binary search algorithm, and the capacity scaling algorithm. The binary search algorithm solves the simple equal flow problem in O(log(nU)) applications of any minimum cost flow algorithm. The capacity scaling algorithm solves it in O(m(m + n logn) log (nU)) time, which is almost the same time needed to solve the minimum cost flow problem by the capacity scaling algorithm. These algorithms can be easily modified to obtain an integer solution of the simple equal flow problem.
Simulation-Based Optimization with Stochastic Approximation Using Common Random Numbers
Authors: Kleinman Nathan L. , Spall James C. , Naiman Daniel Q.
Published: November 2008

The method of Common Random Numbers is a technique used to reduce the variance of difference estimates in simulation optimization problems. These differences are commonly used to estimate gradients of objective functions as part of the process of determining optimal values for parameters of a simulated system. Asymptotic results exist which show that using the Common Random Numbers method in the iterative Finite Difference Stochastic Approximation optimization algorithm (FDSA) can increase the optimal rate of convergence of the algorithm from the typical rate of k−1/3 to the faster k−1/2, where k is the algorithm's iteration number. Simultaneous Perturbation Stochastic Approximation (SPSA) is a newer and often much more efficient optimization algorithm, and we will show that this algorithm, too, converges faster when the Common Random Numbers method is used. We will also provide multivariate asymptotic covariance matrices for both the SPSA and FDSA errors.
Partitioning Customers into Service Groups
Authors: Whitt Ward
Published: November 2008

We explore the issues of when and how to partition arriving customers into service groups that will be served separately, in a first-come first-served manner, by multiserver service systems having a provision for waiting, and how to assign an appropriate number of servers to each group. We assume that customers can be classified upon arrival, so that different service groups can have different service-time distributions. We provide methodology for quantifying the tradeoff between economies of scale associated with larger systems and the benefit of having customers with shorter service times separated from other customers with longer service times, as is done in service systems with express lines. To properly quantify this tradeoff, it is important to characterize service-time distributions beyond their means. In particular, it is important to also determine the variance of the service-time distribution of each service group. Assuming Poisson arrival processes, we then can model the congestion experienced by each server group as an M/G/squeue with unlimited waiting room. We use previously developed approximations for M/G/sperformance measures to quickly evaluate alternative partitions.
The Many-Player Advertising Game
Authors: Fruchter Gila E.
Published: November 2008

This study extends the time-variant closed-loop strategy of Fruchter and Kalish (1997) to the n-player advertising game. We demonstrate that solving an n-player game using 2 players results in overadvertising.
Bundling Information Goods: Pricing, Profits, and Efficiency
Authors: Bakos Yannis , Brynjolfsson Erik
Published: November 2008

We study the strategy of bundling a large number of information goods, such as those increasingly available on the Internet, and selling them for a fixed price. We analyze the optimal bundling strategies for a multiproduct monopolist, and we find that bundling very large numbers of unrelated information goods can be surprisingly profitable. The reason is that the law of large numbers makes it much easier to predict consumers' valuations for a bundle of goods than their valuations for the individual goods when sold separately. As a result, this “predictive value of bundling” makes it possible to achieve greater sales, greater economic efficiency, and greater profits per good from a bundle of information goods than can be attained when the same goods are sold separately. Our main results do not extend to most physical goods, as the marginal costs of production for goods not used by the buyer typically negate any benefits from the predictive value of large-scale bundling.

While determining optimal bundling strategies for more than two goods is a notoriously difficult problem, we use statistical techniques to provide strong asymptotic results and bounds on profits for bundles of any arbitrary size. We show how our model can be used to analyze the bundling of complements and substitutes, bundling in the presence of budget constraints, and bundling of goods with various types of correlations and how each of these conditions can lead to limits on optimal bundle size. In particular we find that when different market segments of consumers differ systematically in their valuations for goods, simple bundling will no longer be optimal. However, by offering a menu of different bundles aimed at each market segment, bundling makes traditional price discrimination strategies more powerful by reducing the role of unpredictable idiosyncratic components of valuations. The predictions of our analysis appear to be consistent with empirical observations of the markets for Internet and online content, cable television programming, and copyrighted music.
Optimal Pricing Strategy for New Products
Authors: Krishnan Trichy V. , Bass Frank M. , Jain Dipak C.
Published: November 2008

Robinson and Lakhani (1975) initiated a long research stream in marketing when they used the Bass model (1969) to develop optimal pricing path for a new product. A careful analysis of the extant literature reveals that the research predominantly suggests that the optimal price path should be largely based on the sales growth pattern. However, in the real world we rarely find new products that have such pricing pattern. We observe either a monotonically declining pricing pattern or an increase-decrease pricing pattern that does not seem close to the sales path. In this paper, we use a variation of the generalized Bass model (called GBM) developed by Bass et al. (1994) that yields optimal pricing policies that are consistent with empirical data.
The Effects of Low Inventory on the Development of Productivity Norms
Authors: Schultz Kenneth L. , Juran David C. , Boudreau John W.
Published: November 2008

Low inventory, a crucial part of just-in-time (JIT) manufacturing systems, enjoys increasing application worldwide, yet the behavioral effects of such systems remain largely unexplored. Operations research (OR) models of low-inventory systems typically use a simplifying assumption that processing times of individual workers are independent random variables. This leads to predictions that low-inventory systems will exhibit production interruptions leading to lower productivity. Yet empirical results suggest that low-inventory systems do not exhibit the predicted productivity losses. This paper develops a model integrating feedback, goal setting, group cohesiveness, task norms, and peer pressure to predict how individual behavior may adjust to alleviate production interruptions in low-inventory systems. In doing so we integrate previous research on the development of task norms. Operations research models are used to show how norms can significantly improve throughput by decreasing variance and increasing the speed of the slowest workers, even if accompanied by decreases in speed of the fastest workers. Findings suggest that low-inventory systems induce individual and group responses that cause behavioral changes that mitigate production interruptions.
Disclosure Detection in Multivariate Categorical Databases: Auditing Confidentiality Protection Through Two New Matrix Operators
Authors: Chowdhury Sumit Dutta , Duncan George T. , Krishnan Ramayya , Roehrig Stephen F. , Mukherjee Sumitra
Published: November 2008

As databases grow more prevalent and comprehensive, database administrators seek to limit disclosure of confidential information while still providing access to data. Practical databases accommodate users with heterogeneous needs for access. Each class of data user is accorded access to only certain views. Other views are considered confidential, and hence to be protected. Using illustrations from health care and education, this article addresses inferential disclosure of confidential views in multidimensional categorical databases. It demonstrates that any structural, so data-value-independent method for detecting disclosure can fail. Consistent with previous work for two-way tables, it presents a data-value-dependent method to obtain tight lower and upper bounds for confidential data values. For two-dimensional projections of categorical databases, it exploits the network structure of a linear programming (LP) formulation to develop two transportation flow algorithms that are both computationally efficient and insightful. These algorithms can be easily implemented through two new matrix operators, cell-maxima and cell-minima. Collectively, this method is called matrix comparative assignment (MCA). Finally, it extends both the LP and MCA approaches to inferential disclosure when accessible views have been masked.
A Quantile Regression Approach to Generating Prediction Intervals
Authors: Taylor James W. , Bunn Derek W.
Published: November 2008

Exponential smoothing methods do not involve a formal procedure for identifying the underlying data generating process. The issue is then whether prediction intervals should be estimated by a theoretical approach, with the assumption that the method is optimal in some sense, or by an empirical procedure. In this paper we present an alternative hybrid approach which applies quantile regression to the empirical fit errors to produce forecast error quantile models. These models are functions of the lead time, as suggested by the theoretical variance expressions. In addition to avoiding the optimality assumption, the method is nonparametric, so there is no need for the common normality assumption. Application of the new approach to simple, Holt's, and damped Holt's exponential smoothing, using simulated and real data sets, gave encouraging results.
Dynamic Routing and Operational Controls in Workflow Management Systems
Authors: Kumar Akhil , Zhao J. Leon
Published: November 2008

Businesses around the world are paying more attention to process management and process automation to improve organizational efficiency and effectiveness. In this paper, we describe a general framework for implementing dynamic routing and operational control mechanisms in Workflow Management Systems (WMSs). The framework consists of three techniques: workflow control tables, sequence constraints, and event-based workflow management rules. Our approach offers several unique features that are missing in commercial workflow management systems: (1) it provides more flexibility in process modeling and control; (2) it permits rework on an ad hoc basis; (3) it handles exceptions to routing and operational controls; and (4) it exploits parallelism to increase system throughput and response time. Finally, the workflow management techniques are applied to the case of consumer loan management and compared with other approaches based on static routing.
Component Sharing in the Management of Product Variety: A Study of Automotive Braking Systems
Authors: Fisher Marshall , Ramdas Kamalini , Ulrich Karl
Published: November 2008

Product variety in many industries has increased steadily throughout this century. Component sharing—using the same version of a component across multiple products—is increasingly viewed by companies as a way to offer high variety in the marketplace while retaining low variety in their operations. Yet, despite the popularity of component sharing in industry, little is known about how to design an effective component-sharing strategy or about the factors that influence the success of such a strategy. In this paper we critically examine component sharing using automotive front brakes as an example. We consider three basic questions: (1) What are the key drivers and trade-offs of component-sharing decisions? (2) How much variation exists in actual component-sharing practice? and (3) How can this variation be explained? To answer these questions, we develop an analytic model of component sharing and show through empirical testing that this model explains much of the variation in sharing practice for automotive braking systems. We find that the optimal number of brake rotors is a function of the range of vehicle weights, sales volume, fixed component design and tooling costs, variable costs, and the variation in production volume across the models of the product line. We conclude with a discussion of the general managerial implications of our findings.
Optimizing a Ring-Based Private Line Telecommunication Network Using Tabu Search
Authors: Xu Jiefeng , Chiu Steve Y. , Glover Fred
Published: November 2008

One of the private line network design problems in the telecommunications industry is to interconnect a set of customer locations through a ring of end offices so as to minimize the total tariff cost and provide reliability. We develop a Tabu Search method for the problem that incorporates long term memory, probabilistic move selections, hierarchical move evaluation, candidate list strategies and an elite solution recovery strategy. Computational results for test data show that the Tabu Search heuristic finds optimal solutions for all test problems that can be solved exactly by a branch-and-cut algorithm, while running about three orders of magnitude faster than the exact algorithm. In addition, for larger size problems that cannot be solved exactly, the tabu search algorithm outperforms the best local search heuristic currently available. The performance gap favoring Tabu Search increases significantly for more difficult problem instances.
Tools for Inventing Organizations: Toward a Handbook of Organizational Processes
Authors: Malone Thomas W. , Crowston Kevin , Lee Jintae , Pentland Brian , Dellarocas Chrysanthos , Wyner George , Quimby John , Osborn Charles S. , Bernstein Abraham , Herman George , Klein Mark , O'Donnell Elissa
Published: November 2008

This paper describes a novel theoretical and empirical approach to tasks such as business process redesign and knowledge management. The project involves collecting examples of how different organizations perform similar processes, and organizing these examples in an on-line “process handbook.” The handbook is intended to help people: (1) redesign existing organizational processes, (2) invent new organizational processes (especially ones that take advantage of information technology), and (3) share ideas about organizational practices.

A key element of the work is an approach to analyzing processes at various levels of abstraction, thus capturing both the details of specific processes as well as the “deep structure” of their similarities. This approach uses ideas from computer science about inheritance and from coordination theory about managing dependencies. A primary advantage of the approach is that it allows people to explicitly represent the similarities (and differences) among related processes and to easily find or generate sensible alternatives for how a given process could be performed. In addition to describing this new approach, the work reported here demonstrates the basic technical feasibility of these ideas and gives one example of their use in a field study.
Note: On Semi-Active Timetabling in Resource-Constrained Project Scheduling
Authors: Sprecher Arno , Drexl Andreas
Published: November 2008

The purpose of this note is to demonstrate that the branch-and-bound algorithm presented in Demeulemeester and Herroelen (1992) does not reduce the enumeration to semi-active schedules.
Investigating Dynamic Multifirm Market Interactions in Price and Advertising
Authors: Vilcassim Naufel J. , Kadiyali Vrinda , Chintagunta Pradeep K.
Published: November 2008

Diagnosing the nature and magnitude of competitive interactions among firms is important for developing effective marketing strategies. In this paper, we formulate a game-theoretic model of firm interaction to analyze the dynamic price and advertising competition among firms in a given product market. Firm (or brand) level demand functions account for the contemporaneous and carry-over effects of these marketing activities, and also allow for the effects of competitor actions. Firms take into consideration the actions of their rivals, as well as their own demand and cost functions (both production and advertising) when determining the profit-maximizing price and advertising levels. Our formulation enables us to quantify not only the direction and magnitude of competitive reactions, but also to identify the underlying form of market conduct that generates the particular pattern of interaction. We specify and estimate a fully structural econometric model for three firms constituting a distinct sub-market within a personal-care product category. We estimate the demand and competitive interaction parameters, as well as the production and advertising cost functions for each firm. We then derive implications for competitive interactions and market structure. Interestingly, we find that while firms seem to compete on advertising, they price cooperatively, thereby enhancing their price-cost margins.
Anticipating the Consequences of School Reform: A New Use of DEA
Authors: Grosskopf Shawna , Hayes Kathy J. , Taylor Lori L. , Weber William L.
Published: November 2008

We use DEA-type linear programming techniques to simulate a basic component of educational reform-eliminating restrictions on the allocation of school personnel. Our technique allows us to identify potential output gains (or equivalently potential cost savings) from reform. We can also identify which personnel groups are likely to gain and lose under this reform. When we apply our model to a sample of Texas school districts, we find evidence that the educational establishment has substantial economic rents to protect from school reform, and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students. The technique, which relies on the relationship between the direct and indirect distance functions, can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules, environmental regulations, or deed restrictions.
Real Options and Product Life Cycles
Authors: Bollen Nicolas P. B.
Published: November 2008

In this paper, I develop an option valuation framework that explicitly incorporates a product life cycle. I then use the framework to value the real option to change a project's capacity. Standard techniques for valuing real options typically ignore product life cycle models and specify instead a constant expected growth rate for demand or price. I show that this specification can lead to significant error in the valuation of capacity options. In particular, the standard technique tends to undervalue the option to contract capacity and overvalue the option to expand capacity. This result has important implications for capital investment decisions, especially in high-technology industries that feature regular introductions of newly improved products.
Capacity Allocation Using Past Sales: When to Turn-and-Earn
Authors: Cachon Gérard P. , Lariviere Martin A.
Published: November 2008

Consider a supplier selling to multiple retailers. Demand varies across periods, but the supplier's capacity and wholesale price are fixed. If demand is high, the retailers' needs exceed capacity, and the supplier must implement an allocation mechanism to dole out production. We examine how the choice of mechanism impacts retailer actions and supply chain performance. In particular, we analyze turn-and-earn allocation, a method commonly used in the automobile industry. This scheme bases current allocations on past sales and thus enables retailers to influence their future allocations; they compete for scarce capacity even if they do not compete for customers.

We show that turn-and-earn induces the retailers to increase their sales when demand is low and the supplier's capacity is otherwise underutilized. Supplier profits thus increase. The impact on the supply chain depends on how restrictive capacity is. With mildly tight capacity, the retailers' higher sales rate does not significantly lower their profits but does reduce the cost of idle capacity. Supply chain performance improves. With extremely tight capacity, the retailers' intense competition dissipates more profits than the supplier gains, and supply chain performance suffers. Consequently, turn-and-earn does not generally coordinate the system. It is best characterized as a means for the supplier to increase her profits at the expense of the retailers and potentially even the supply chain. Furthermore, these results hold even if the retailers can hold inventory in anticipation of scarce capacity.
Inventory Control in Hybrid Systems with Remanufacturing
Authors: van der Laan Erwin , Salomon Marc , Dekker Rommert , Van Wassenhove Luk
Published: November 2008

This paper is on production planning and inventory control in systems where manufacturing and remanufacturing operations occur simultaneously. Typical for these hybridsystems is, that both the output of the manufacturing process and the output of the remanufacturing process can be used to fulfill customer demands. Here, we consider a relatively simple hybrid system, related to a single component durable product. For this system, we present a methodology to analyse a PUSH control strategy (in which all returned products are remanufactured as early as possible) and a PULL control strategy (in which all returned products are remanufactured as late as is convenient). The main contributions of this paper are (i) to compare traditional systems without remanufacturing to PUSH and to PULL controlled systems with remanufacturing, and (ii) to derive managerial insights into the inventory related effects of remanufacturing.
The Impact of Product Variety on Automobile Assembly Operations: Empirical Evidence and Simulation Analysis
Authors: Fisher Marshall L. , Ittner Christopher D.
Published: November 2008

This study examines the impact of product variety on automobile assembly plant performance using data from GM's Wilmington, Delaware plant, together with simulation analyses of a more general auto assembly line. We extend prior product variety studies by providing evidence on the magnitude of variety-related production losses, the mechanisms through which variety impacts performance, and the effects of option bundling and labor staffing policies on the costs of product variety. The empirical analyses indicate that greater day-to-day variability in option content (but not mean option content per car) has a significant adverse impact on total labor hours per car produced, overhead hours per car produced, assembly line downtime, minor repair and major rework, and inventory levels, but does not have a significant short-run impact on total direct labor hours. However, workstations with higher variability in option content have greater slack direct labor resources to buffer against process time variation, introducing an additional cost of product variety. The simulation results support these findings in that once each workstation is optimally buffered against process time variation, product variety has an insignificant impact on direct assembly labor. The simulations also show that bundling options can reduce the amount of buffer capacity required, and that random variation is more pernicious to productivity than product variety, supporting the efforts of some auto makers to aggressively attack the causes of random variation.
Performance Evaluation of General and Company Specific Models in Software Development Effort Estimation
Authors: Maxwell Katrina , Van Wassenhove Luk , Dutta Soumitra
Published: November 2008

In this paper we present the results of our effort estimation analysis of a European Space Agency database consisting of 108 software development projects. We develop and evaluate simple empirical effort estimation models that include only those productivity factors found to be significant for these projects and determine if models based on a multicompany database can be successfully used to make effort estimations within a specific company. This was accomplished by developing company specific effort estimation models based on the significant productivity factors of a particular company and by comparing the results with those from general ESA models on a holdout sample of the company. To our knowledge, no other published research has yet developed and analysed software development effort estimation models in this way. Effort predictions made on a holdout sample of the individual company's projects using general models were less accurate than the company specific model. However, it is likely that in the absence of enough resources and data for a company to develop its own model, the application of general models may be more accurate than the use of guessing and intuition.
Managing Supply Chain Demand Variability with Scheduled Ordering Policies
Authors: Cachon Gérard P.
Published: November 2008

This paper studies supply chain demand variability in a model with one supplier and Nretailers that face stochastic demand. Retailers implement scheduled ordering policies: Orders occur at fixed intervals and are equal to some multiple of a fixed batch size. A method is presented that exactly evaluates costs. Previous research demonstrates that the supplier's demand variance declines as the retailers' order intervals are balanced, i.e., the same number of retailers order each period. This research shows that the supplier's demand variance will (generally) decline as the retailers' order interval is lengthened or as their batch size is increased. Lower supplier demand variance can certainly lead to lower inventory at the supplier. This paper finds that reducing supplier demand variance with scheduled ordering policies can also lower total supply chain costs.
Information Technology Effects on Firm Performance as Measured by Tobin's q
Authors: Bharadwaj Anandhi S. , Bharadwaj Sundar G. , Konsynski Benn R.
Published: November 2008

Despite increasing anecdotal evidence that information technology (IT) assets contribute to firm performance and future growth potential of firms, the empirical results relating IT investments to firm performance measures have been equivocal. However, the bulk of the studies have relied exclusively on accounting-based measures of firm performance, which largely tend to ignore IT's contribution to performance dimensions such as strategic flexibility and intangible value. In this paper, we use Tobin's q, a financial market-based measure of firm performance and examine the association between IT investments and firm q values, after controlling for a variety of industry factors and firm-specific variables. The results based on data from 1988–1993 indicate that, in all of the five years, the inclusion of the IT expenditure variable in the model increased the variance explained in q significantly. The results also showed that, for all five years, IT investments had a significantly positive association with Tobin's q value. Our results are consistent with the notion that IT contributes to a firm's future performance potential, which a forward-looking measure such as the q is better able to capture.
The Impact of Adding a Make-to-Order Item to a Make-to-Stock Production System
Authors: Federgruen Awi , Katalan Ziv
Published: November 2008

Stochastic Economic Lot Scheduling Problems (ELSPs) involve settings where several items need to be produced in a common facility with limited capacity, under significant uncertainty regarding demands, unit production times, setup times, or combinations thereof. We consider systems where some products are made-to-stock while another product line is made-to-order. We present a rich and effective class of strategies for which a variety of cost and performance measures can be evaluated and optimized efficiently by analytical methods. These include inventory level and waiting-time distributions, as well as average setup, holding, and backlogging costs. We also characterize how strategy choices are affected by the system parameters. The availability of efficient analytical evaluation and optimization methods permits us to address the impact of product line diversification or standardization on the performance of the manufacturing system, in particular the logistical implications of adding low-volume specialized models to a given make-to-stock product line.
Goal-Based Construction of Preferences: Task Goals and the Prominence Effect
Authors: Fischer Gregory W. , Carmon Ziv , Ariely Dan , Zauberman Gal
Published: November 2008

Preferences inferred from choice are more likely to favor the alternative that is superior with respect to the prominent (most important or salient) attribute than are preferences inferred from matching (direct tradeoff) judgments. This prominence effect violates standard models of rational choice and complicates the task of measuring preferences. In this article, we propose a new task-goal hypothesisregarding the prominence effect: The prominent attribute receives more weight in tasks whose goal is to differentiate among options than in tasks whose goal is to equate options. We use this hypothesis to generalize the prominence effect beyond choice and matching to several additional tasks, including the choice-based matching and difference comparison methods that are widely employed in decision analysis. The results of three studies provide strong support for the task-goal account of the prominence effect and cast doubt on competing explanations. We discuss the implications of these findings for descriptive decision theory and for preference measurement in decision analysis, public policy, and marketing.
Decentralized Supply Chains Subject to Information Delays
Authors: Chen Fangruo
Published: November 2008

We consider a supply chain whose members are divisions of the same firm. The divisions are managed by different individuals with only local inventory information. Both the material and information flows in the supply chain are subject to delays. Under the assumption that the division managers share a common goal to optimize the overall performance of the supply chain (i.e., they act as a team), we characterize the optimal decision rules for the divisions. The team solution reveals the role of information leadtimes in determining the optimal replenishment strategies. We then show that the owner of the firm can manage the divisions as cost centers without compromising the systemwide performance. This is achieved by using an incentive-compatible measurement scheme based on accounting inventory levels. Finally, we investigate the impact of irrational behavior on supply chain performance and demonstrate that it is important for the upstream members of the supply chain to have access to accurate customer demand information.
The Effects of Selling Packaged Goods on Inventory Decisions
Authors: Ernst Ricardo , Kouvelis Panagiotis
Published: November 2008

In this paper, we study within a newsboy type modeling framework the common business practice of retail firms to sell products not only as independent items, but also as part of multiproduct packets (packaged goods). Our emphasis is on understanding the effects of such practices on the inventory decisions of the firm. We provide insights on the resulting level of suboptimality when inventory decisions are made with demand information only on the independent items and without accounting for the demand substitution structure induced between independent items and packaged goods. Our stylized model studies an environment with two products that are not direct substitutes for each other, sold either independently or as part of a packet that contains one unit of each. We provide necessary and sufficient optimality conditions for this model and suggest an efficient numerical search for obtaining the optimal stocking levels. An extensive computational study allowed us to provide insights on the nature of the optimal stocking policies, the suboptimality of independent newsboy policies, the effects of demand correlation among individual products and multiproduct packets, and the determining role of induced substitution structure among products during stockout occasions on the profitability of the inventory system.
Organizational Form and Efficiency: The Coexistence of Stock and Mutual Property-Liability Insurers
Authors: Cummins J. David , Weiss Mary A. , Zi Hongmin
Published: November 2008

This article introduces a new approach, cross-frontier analysis, for estimating the relative efficiency of alternative organizational forms in an industry. The technique is illustrated by analyzing a sample of stock and mutual property-liability insurers using nonparametric frontier efficiency methods. Cross-frontier analysis measures the relative efficiency of each organizational form by computing the efficiency of each stock (mutual) firm relative to a reference set consisting of all mutual (stock) firms. We test agency-theoretic hypotheses about organizational form, including the managerial discretion and expense preference hypotheses. The results indicate that stocks and mutuals are operating on separate production and cost frontiers and thus represent distinct technologies. Consistent with the managerial discretion hypothesis, the stock technology dominates the mutual technology for producing stock outputs and the mutual technology dominates the stock technology for producing mutual outputs. However, consistent with the expense preference hypothesis, the stock cost frontier dominates the mutual cost frontier. Our findings thus suggest a richer interpretation of organizational form than provided by previous researchers.
Profitability and Marketability of the Top 55 U.S. Commercial Banks
Authors: Seiford Lawrence M. , Zhu Joe
Published: November 2008

Utilizing recent developments in data envelopment analysis (DEA), this paper examines the performance of the top 55 U.S. commercial banks via a two-stage production process that separates profitability and marketability. Substantial performance inefficiency is uncovered in both dimensions. Relatively large banks exhibit better performance on profitability, whereas smaller banks tend to perform better with respect to marketability. New context-dependent performance measures are defined for profitability and marketability which employ a DEA stratification model and a DEA attractiveness measure. When combined with the original DEA measure, the context-dependent performance measure better characterizes the profitability and marketability of 55 U.S. commercial banks. The new approach identifies areas for improved bank performance over the two-stage production process. The effect of acquisition on efficiency and attractiveness is also examined.
Computer Simulation of Peak Hour Operations in a Bus Terminal
Authors: Jennings Norman H. , Dickins Justin H.
Published: November 2008

Every working day between 5 and 6 P.M., 20,000 New Jersey bound commuters enter the Port of New York Authority Bus Terminal in New York City. Over 400 buses arrive in the terminal, load these commuters and depart during this one peak hour.

This terminal is located in the heart of the city where land availability is critical. Thus, “limited access” multiple berth platforms are utilized.

The commuter operation in the terminal is characterized by the following conditions:

1. Two random inputs cause two converging inter-related waiting lines to be formed—one of buses and one of passengers. Bus waiting lines are critical because of limited bus storage areas.

2. “Limited access” berthing which prevents buses from passing in platform lanes necessitates a commuter traffic simulation method to govern the problem's internal logic.

3. Parameters for bus arrival distribution functions can be controlled to some degree by scheduling policy. The method provides for evaluation of a variety of such policies.

4. Three parties with three independent interests—The Port Authority, the bus owners and operators, and the commuters—must be simultaneously satisfied.

Because of these conditions; optimum design constitutes a challenging research problem. A Port Authority Operations Research team studied the problem using traffic simulation and Monte Carlo methods on an IBM 650 Computer.
Contributions of Accounting to Measurement in Management
Authors: Vatter William J.
Published: November 2008

The quantitative aspects of business management were left almost entirely in the hands of accountants prior to the advent of “scientific management” some seventy-five years ago. Although this term has fallen into disuse, the emphasis upon quantitative bases for decision-making and control has increased as the management problem has become more complex. Needs for additional data and for more comprehensive analysis have brought changes in accounting to provide more frequent and more detailed information. New systems for processing data have been developed; in some cases these appear to have replaced or to have amended the traditional notions about accounting. Actually, none of the new methods really alters the basic situation: no one approach to managerial measurements is completely effective in all circumstances. What is really needed is a combination of techniques; traditional and novel methods, census and sampling techniques, general- and special-purpose analyses all contribute to the measurement objective. We should strive to combine all available quantitative techniques in such ways as will provide optimum service to meet the needs of management.
Development and Evaluation of Surveillance Sampling Plans
Authors: Derman C. , Solomon H.
Published: November 2008

The problem of maintaining quality of inventory in the presence of deterioration is studied. Repeated application of sampling inspections together with replacement policies are used to maintain quality. The effect of such repeated applications can be measured in terms of the proportion of poor product existing at any time. In this paper, the sampling plans studied are those commonly used in acceptance sampling, and the replacement policy consists in replacing lots judged defective by the sampling procedure. The theory of Markov processes is used to evaluate the effectiveness of the sampling plans and replacement policy. As illustrations, special cases are considered. Graphs are provided for these cases.
The Application of Linear Programming to Team Decision Problems
Authors: Radner Roy
Published: November 2008

In a team decision problem there are two or more decision variables, and these different decisions can be made to depend upon different aspects of the environment, or information variables, the resulting payoff being a random variable. The choice of optimal rules for selecting information variables and for making decisions is the central problem of the economic theory of teams. This paper shows, by means of an example, how linear programming can be applied to obtain optimal team decision functions in the case in which the payoff to the team is a convex polyhedral function of the decision variables.
On Inventory, Production and Employment Scheduling
Authors: Schild A.
Published: November 2008

The paper extends results of Holt, Modigliani, Muth and Simon in scheduling over time to minimize costs. It studies generalizations of the cost function which are possible without spoiling the essential simplicity of the decision rules. This is illustrated by a costing model which includes: (a) inventories of individual products, (b) a more realistic treatment of set-up costs, (c) an interest factor to discount future costs, and (d) the cost of additional temporary storage when inventory is high.
Discussion—A Note on the Asymptotic Behavior of an Optimal Procurement Policy
Authors: Mills Edwin S.
Published: November 2008

Considerable attention in recent years has been devoted to the problem of meeting known demands or requirements over some finite number of planning periods at minimum cost. Representative of these problems is a problem that was first solved in the fundamental paper by Modigliani and Hohn [Modigliani, F., F. E. Hohn. 1955. Production planning over time and the nature of the expectation and planning horizon. Econometrica 23 46–66.] (referred to as M-H). No new solutions to this problem are presented in this note. Rather the procedure is to utilize the results of the M-H paper and to investigate the behavior of the decision rule through time in a very special case which seems to be of considerable practical importance.
Information Flow and Worker Productivity
Authors: Goldman Alan S.
Published: November 2008

In this paper we are concerned with the design of an organization in the internal decision-making area. Our problem is to develop an effective system of communication and control. Effectiveness (the “pay-off”) will be measured in terms of the effect of the system and organization on the productivity of labor.

We shall be concerned with what information should be where and at what time for proper internal decision making. In accordance with general principles of communication which recent research has spelled out, we will demonstrate a system which appears to concentrate on providing a high probability of (1) aiding members of the group in making right decisions; (2) providing a basis for rational behavior; (3) leaving room for individual group members to make their own decisions.
On a Class of Capacitated Transportation Problems
Authors: Wagner Harvey M.
Published: November 2008

Transportation models (ordinary and transhipment) having certain types of capacity constraints on the flows between origins and destinations are studied from the point of view of transforming them into enlarged standardized (non-capacitated) models. Specifically constraints on the flow from disjoint and/or nested sets of origins to all destinations, and from any single origin to disjoint and/or nested sets of destinations are considered. Dual formulations are indicated for constraints on the flow to destinations from origins. In the case of a set of capacity constraints on the flow from each origin to each destination, the models proposed are easily seen to be of minimal dimension for any “standardized” version of such a capacitated problem.
A Note on Professor Manne's “Dominance” Theorem
Authors: Levitan R. E.
Published: November 2008

Professor Manne's paper recently appearing in this Journal (Manne, A. S. 1958. Programming of economic lot sizes. Management Sci. 4 (2, January).) is an ingenious application of linear programming technique to what may have hitherto been regarded as an intractable non linear situation. The excellences of the paper are, however, marred by a gap in the proof of the “Dominance” theorem.

It is the aim of this communication to point out that, although the constructive proof offered by Manne is vulnerable to counter-example, an alternative, fairly simple, proof can be given. The theorem being true, the important results of the paper are not weakend.
The Simulation of a Large-Scale Military Activity
Authors: Geisler Murray A.
Published: November 2008

This paper was originally given at the Fifth International Meeting of the Institute of Management Sciences. It describes the first experiment of the RAND Logistics Systems Laboratory, which was concerned with testing a series of logistics policies in a detailed man-machine simulation. The paper describes the policies, the elements simulated, the operation of the experiment, and its results. It also briefly mentions the second or current experiment of the Laboratory.
Competitive Coefficients
Authors: Friedman Lawrence
Published: November 2008

The value relationships among the competitors in a competitive situation are described by means of competitive coefficients. The competitive coefficient defines the indirect gain or loss to a competitor as a result of losses or gains by the other competitors. An example is given to illustrate the use of the coefficients in a game situation.
A Note on Manufacturers' Choice of Distribution Channels
Authors: Artle Roland , Berglund Sture
Published: November 2008

Many marketing problems are usually analysed in verbal terms only. For instance, different alternatives as regards the marketing routes, or channels, through which goods and services or their titles flow, are mostly considered in terms of “advantages” and “disadvantages”. Recently, however, techniques aiming at quantification—such as linear programming and search theory—have been gaining favor. This essay purports to clarify, in quantitative terms, some of the considerations that may underlie a manufacturer's choice of distribution channels. We shall limit ourselves to a comparison of two alternatives, namely selling through wholesalers and selling directly to retailers.
Increasing the Capacity of a Network: The Parametric Budget Problem
Authors: Fulkerson D. R.
Published: November 2008

The problem considered in this paper is that of allocating a budget of resources among the links of a network for the purpose of increasing its flow capacity relative to given sources and sinks.

On the assumption that the cost of increasing each link capacity is linear, a labeling algorithm is described that permits rapid calculation of optimal allocations for all budgets.
Input Distortion and Observer Overlap in Decision-Making
Authors: Kidd J. S. , Boyes Fred
Published: November 2008

A realistic decision-making situation was developed based on the simulation of a tactical military operation. A three-man team comprised the work unit; two acted in an information-processing role and one was assigned an information-integration and decision-making function. Differential levels of information input distortion and observer overlap were compared. It was found that input distortion degrades decision-making speed and accuracy and that the increased intensity of coverage provided by observer-overlap did not moderate this effect. Detailed analysis of the activities associated with the information-processing function were also made. The findings were interpreted in terms of both theoretical and methodological issues.