bluuebunny/crossref_metadata_2025 huggingface dataset:
On The Application of the Laplace Transform to Certain Economic Problems
Authors: Grubbström Robert W.
Published: November 2008

During the last thirty years, the method of the Laplace transform has found an increasing number of applications in the fields of physics and technology. In this article the author points out the possibility of solving problems in the area of discounting with the aid of this method. Without any loss of general validity, it is shown that a discount factor can always be written in an exponential manner which implies that the present value of a cash-flow will obtain a very simple form in the Laplace terminology. This simplicity holds good for stochastic as well as for deterministic economic processes, and the results mentioned below should, therefore, be of immediate use when applied, e.g., to investment problems.
Mathematical Model for a Duopolistic Market
Authors: Krishnan K. S. , Gupta Shiv K.
Published: November 2008

A mathematical model is developed for a marketing situation with two competitors when each competitor has two control variables, viz. price and promotional effort. The model discussed in this paper is an extension of Mills' model [Bass, Frank M., Buzzell, Robert D., Greene, Mark R., Lazer, William, Pessemier, Edgar A., Shawver, Donald L., Shuchman, Abraham, Theodore, Chris A., Wilson, George W. Mathematical Models and Methods in Marketing, article by Harland D. Mills, “A Study of Promotional Competition,” pp. 271–301, Richard D. Irwin, Inc., Homewood, Illinois, 1961.]. Mills has assumed that each competitor has only one control variable, viz. promotional effort and the profit margins of the two competitors are known. In this paper the profit margins are also control variables. The paper derives conditions under which non-boundary equilibrium solutions exist and the sensitivity of the model for small deviations in the decision variables from their equilibrium values is tested. Mills' results are found to be valid only under certain conditions.
A Bayesian Approach to an Individual Player's Choice of Bid in Competitive Sealed Auctions
Authors: Lavalle Irving H.
Published: November 2008

A general approach to the decision problem confronting the individual player in a noncooperative game is outlined and applied to one player's choice of bid in a competitive sealed auction for a valuable object. That player's Bayes-optimal bid is characterized under both general and specific assumptions as to the subjective probability distributions expressing his judgments. Under the specific assumptions, analytically tractable results (in terms of Gamma fractiles) are presented. Equilibrium and maximin bids are presented for comparative purposes.
Financial Implications of Lot-Size Inventory Models
Authors: Beranek William
Published: November 2008

The definition of the cost of resources devoted to inventories which is inherent in the economic-lot-size procedure implies financial conditions which may not exist. This would lead to infeasibility and/or to a misstatement of carrying costs. If carrying costs are incorrectly stated, then in these, as well as all standard inventory models which emobdy the same assumption, the indicated optimum inventory is either too high or too low, and needlessly excessive costs are incurred by firms using such models.

These weaknesses can be corrected by reflecting the firm's actual financial arrangements in the model's carrying cost equation and deriving the corresponding optimum lot size. Examples are presented illustrating how this may be done in the face of several different financial circumstances. In each case, the results of our procedure are compared to those that emerge from an application of the standard lot-size model.

Worthwhile savings in inventory cost are indicated, especially if the firm is employing the standard, or classical, model for a number of different products or for a single product which involves a large commitment of resources.

In sum, the model builder must be prepared to develop models which reflect the conditions of his financial environment if he is to choose both an optimal inventory and an optimal means of financing the inventory.
Simulation of a Psychological Decision Process in Personnel Selection
Authors: Smith Robert D. , Greenlaw Paul S.
Published: November 2008

Considerable attention in recent years has been given to the computer simulation of human thought processes in problem solving. This paper describes the computer simulation of the decision processes of a psychologist dealing with the ill-structured problem of analyzing psychological test scores and other data concerning individuals being considered for various types of clerical and clerical-administrative positions. The computer model was designed to output, as did the psychologist in his decision making, both: (1) numerous interpretive comments about each applicant, and (2) a specific recommendation as to whether the individual should be employed. The methodology and results of this research are described, and the possibility of utilizing computerized models of this type as an aid in personnel selection is suggested.
A Two-Stage Forecasting Model: Exponential Smoothing and Multiple Regression
Authors: Crane Dwight B. , Crotty James R.
Published: November 2008

This paper presents a forecasting technique which attempts to combine the advantages of both time series analysis and multiple regression. In this two-stage technique, an exponentially smoothed moving average model is used to forecast values of the dependent variable and/or selected independent variables as desired. These forecasts, along with data for other (lagged) independent variables, are then used as inputs to a multiple regression program. The observations are selected sequentially by the regression model so that each equation is based only upon data which would have been available at the time of the forecast, and the coefficiets of the equation are updated as new information becomes available. The final section of the paper describes a successful application of the two-stage model to a demand deposit forecasting problem.
Transient Behaviour of a Tandem Queue
Authors: Prabhu N. U.
Published: November 2008

Customers arrive in a Poisson process at a queueing system with two counters in series, with an infinite queue allowed before the first counter and no queue allowed before the second. The steady-state behaviour of this system was studied by earlier authors. In this paper the transient behaviour of the stochastic processes underlying the model is investigated.
Extensions of Amoroso-Robinson's Formula
Authors: Jensen Ernst Lykke
Published: November 2008

This paper deals with the problem of price-fixing from the standpoint of an individual firm in a heterogeneous market. The elementary Amoroso-Robinson formula is generalized within a deterministic as well as a probabilistic set-up. In the probabilistic case it is shown that the price-solution depends on the standard deviation of demand as a function of the price parameters. From the models considered it is, in particular, deduced that the optimum price is at a lower level than the corresponding deterministic price if the standard deviation is constant, but at a higher level if the coefficient of variation is constant.
Optimum Production Planning by the Maximum Principle
Authors: Hwang C. L. , Fan L. T. , Erickson L. E.
Published: November 2008

This study deals with the problem of optimum production planning with certainty in sales forecasting. The objective to be minimized is the sum of the costs derived from holding inventories, stockouts, and the deviation of the production rate from the optimal rate for the plant. Pontryagin's maximum principle is employed to obtain an optimal production policy.
The Extension of the Cascade Algorithm to Large Graphs
Authors: Land A. H. , Stairs S. W.
Published: November 2008

Large graphs for which the calculation of the shortest distances between all vertices is required often consist of several parts with limited interconnections. This paper shows how this characteristic may be used to reduce computer storage for a matrix type calculation, to reduce calculations] labour, and to provide results in a form which is particularly convenient if a subsequent assignment of commodity flow to shortest paths is needed. The technique presented here allows the partition to be arbitrary, save for a single, easily achieved, condition.
Inter-Temporal Portfolio Analysis Based on Simulation of Joint Returns
Authors: Cohen Kalman J. , Elton Edwin J.
Published: November 2008

An inter-temporal quadratic programming model for selecting portfolios of risky assets is formulated. The model's application to capital budgeting is discussed in considerable detail. This is followed by briefer discussions of its application in other areas. The paper develops a new and more efficient way of using simulation to calculate the variance-covariance elements required as input to Markowitz-type models; this new procedure makes no further demands on the decision maker than do other simulation models that have been suggested. The paper also shows how such models can be made inter-temporal. Finally, the paper analyzes the potentials for extending such models to include other theoretical considerations that have been proposed in the literature.
On the Analysis of Critical Path Time Estimating Behavior
Authors: King William R. , Wittevrongel Donald M. , Hezel Karl D.
Published: November 2008

This paper presents some results of an analysis of time estimating behavior on critical path networks used in large scale development projects. The general results appear to confirm the validity of the tentative conclusions previously reported by King and Wilson [King, W. R., T. A. Wilson. 1967. Subjective time estimates in critical path planning—-A preliminary analysis. Management Sci. 13(5, January).]. The objective of the historical analysis is to test the potential of adjustment models based on historical estimating behavior. If such models can be developed, the utility of critical path techniques should be greatly enhanced.
Capacity Expansion for India's Nitrogenous Fertilizer Industry
Authors: Erlenkotter Donald , Manne Alan S.
Published: November 2008

A massive investment program is under way to meet the increased demand for chemical fertilizers in India. This paper reports on a preinvestment survey of that program. Such a survey cannot be viewed as a master plan for the development of the entire chemical fertilizers industry. Rather, it is intended to provide a rough framework within which to draw up a detailed proposal on the next few units to be built. The conculsions are intended to serve as the initial premises for a specific project: when, where, and how large a plant to construct. Necessarily, a preinvestment survey will contain fewer engineering details and will be less realistic than a report on a specific unit.
Optimal Capacities of Production Facilities
Authors: Jen Frank C. , Pegels C. Carl , Dupuis Terrence M.
Published: November 2008

This paper presents a general cost model and the methods of solution for determining the optimum combination of capacities of the production facilities of a steady-state production system. The model is applied to the practical problem of finding the optimum combination of capacities of the production facilities of an oxygen production and inventory system. Because the cost equations involved are quite complex, the objective function of the formulated model is a very complex non-linear function of two decision variables: the oxygen production rate and the oxygen storage pressure. A computerized gradient method is used to find the optimum values of the two decision variables using parameter values that have been determined empirically. The paper finally studies the effect of variations in some of the parameter values on the optimum values of the decision variables.
Flexible Pricing of Computer Services
Authors: Smidt Seymour
Published: November 2008

This article proposes using a flexible price system to allocate computer time and to determine charges for computer users. The proposal is presented in the context of a central university computing center (UCC) although it may be applicable, with some modifications, to a wide range of queueing problems.

At present, user-charges in most UCC's are based on average costs with little or no attention to speed of service. This leads to high charges and under-utilization when there is excess capacity, low charges and long queues when capacity is short, and to other problems. Under the proposed fiexible price systems, user-charges are dynamically determined by overall system demand and by user selected turn-around priority. The complexity of the price system can be varied to meet the needs of a particular instillation.

The main reason for proposing flexible pricing for computer service is that this approach is consistent with an efficient use of scarce resources, including both the computer and users' time. This conclusion is justified in terms of a formal economic analysis which also serves to clarify the conditions under which revenue from a flexible pricing system would cover the full costs of the computer installation.

The pricing of specialized computer hardware and software is also discussed. Finally, consideration is given to possible applications of fiexible pricing to other problems that have traditionidly been discussed in terms of queueing theory.
Gaming: Costs and Facilities
Authors: Shubik Martin
Published: November 2008

During the past ten years there has been a proliferation in the use of gaming as an experimental, teaching, and operational device. The consensus has been that in all three activities it has been of use. Many hundreds of games have been constructed and have been or are currently in use for a variety of purpose; for example, a recent publication gives summaries of eighty-nine business games. In spite of the considerable activity in gaming, little has been published on its costs. In the activities to which gaming has been applied, there have been or are well established alternatives methods for which the costs and worth are more or less known. It is in the light of these and possibly other alternatives that we must view the developments in gaming.
Non-Stocking Criterion
Authors: Fenske R. W.
Published: November 2008

Contemporary inventory management attempts to make two critical inventory decisions—the order quantity and the order point. This type of analysis presupposes that stocking of the item is economically justified. Quite obviously this will not always be the case and inventory managers have had to turn to rules of thumb which are highly inflexible and consequently these rules often suggest exactly the opposite decision from that which should be made.

The profit under conditions of both stocking and non-stocking can be analytically determined and then compared in a breakeven-type analysis. The intersection point or inventory cutoff level determines the minimum demand which will justify stocking the item and is derived along with a graphical representation. Two variations are provided—one for the manufacturer who produces to stock and one for the wholesaler or retailer who orders to stock.
Systems Analysis in Government Operations
Authors: Black Guy
Published: November 2008

Non-defense Federal government departments and agencies are in the second year of program development and budgetary review in the context of a program packaging structure, in which activities with related objectives are grouped in common packages for analytical and budgetary purposes. One advantage in this approach is that activities can then be cost-benefit traded relative to a simplified objective structure. Where activities are complex and interrelated, it is particularly useful to develop a system concept as the framework for analysis.

This paper seeks to introduce the concepts and methodology of systems analysis as applied to non-defense government operations. It places systems analysis in the context of an overall systems approach intended to develop and implement the best possible system configuration. A broad overview is presented of the problems of objectives, model building, quantification of system parameters, ambiguities in concepts of benefit, cost, and optimization. The organizational problem of integrating system analysis and program packaging concepts is discussed, particularly for an agency characterized by bottom up planning, extensive and detailed routine budgeting, including comments on control of suboptimization of systems analytical capability directly supporting top management and supporting analytical capability throughout the organization.
Line Balancing-Sequencing for Mixed-Model Assembly
Authors: Thomopoulos Nick T.
Published: November 2008

Mixed-model assembly occurs when more than one model of the same general product are intermixed on one assembly line. The amount of work required to assemble units can vary from model to model, creating an uneven flow of work along the line. This paper describes a procedure of adapting single-model line balancing techniques to mixed-model schedules. The paper also introduces a sequencing procedure for determining the order in which models are to flow down the line. Because the line balancing and sequencing procedures consider a wide variety of factors, they are applicable to many types of assembly lines.
Games with Incomplete Information Played by “Bayesian” Players, I–III Part I. The Basic Model
Authors: Harsanyi John C.
Published: November 2008

The paper develops a new theory for the analysis of games with incomplete information where the players are uncertain about some important parameters of the game situation, such as the payoff functions, the strategies available to various players, the information other players have about the game, etc. However, each player has a subjective probability distribution over the alternative possibilities.

In most of the paper it is assumed that these probability distributions entertained by the different players are mutually “consistent”, in the sense that they can be regarded as conditional probability distributions derived from a certain “basic probability distribution” over the parameters unknown to the various players. But later the theory is extended also to cases where the different players' subjective probability distributions fail to satisfy this consistency assumption.

In cases where the consistency assumption holds, the original game can be replaced by a game where nature first conducts a lottery in accordance with the basic probability distribution, and the outcome of this lottery will decide which particular subgame will be played, i.e., what the actual values of the relevant parameters will be in the game. Yet, each player will receive only partial information about the outcome of the lottery, and about the values of these parameters. However, every player will know the “basic probability distribution” governing the lottery. Thus, technically, the resulting game will be a game with complete information. It is called the Bayes-equivalent of the original game. Part I of the paper describes the basic model and discusses various intuitive interpretations for the latter. Part II shows that the Nash equilibrium points of the Bayes-equivalent game yield “Bayesian equilibrium points” for the original game. Finally, Part III considers the main properties of the “basic probability distribution”.
Some Special P-Models in Chance-Constrained Programming
Authors: Charnes A. , Kirby M. J. L.
Published: November 2008

This paper establishes sufficient conditions for decision rules to be optimal for two n-penod P-models of chance-constrained programming. The models considered are the triangular model with total probability constraints and the block triangular model with conditional probability constraints. It is shown that, for both these models, a sufficient condition for optimality is that the decision rule be the optimal piecewise linear rule. Proofs of theorems are based on results contained in earlier papers by the authors, on n-penod E-models of chance-constrained programming.
Multiple (s, S) Policies and the n-Period Inventory Problem
Authors: Boylan Edward S.
Published: November 2008

In a previous paper the concept of a multiple (s, S, policy, generalizing the well-known (s, S) policy, was introduced, and it was shown that for a broad class of situations some multiple (s, S) policy would minimize costs when a single decision was to be made whether or not to order goods to add to inventory. In the present paper it is shown that when n such decisions must be made, some multiple (s, S) policy will minimize total (discounted) costs, though under slightly more restrictive conditions.
A Primal Method for Minimal Cost Flows with Applications to the Assignment and Transportation Problems
Authors: Klein Morton
Published: November 2008

A simple procedure is given for solving minimal cost flow problems in which feasible flows are maintained throughout. It specializes to give primal algorithms for the assignment and transportation problems. Convex cost problems can also be handled.
Management Misinformation Systems
Authors: Ackoff Russell L.
Published: November 2008

Five assumptions commonly made by designers of management information systems are identified. It is argued that these are not justified in many (if not most) cases and hence lead to major deficiencies in the resulting systems. These assumptions are: (1) the critical deficiency under which most managers operate is the lack of relevant information, (2) the manager needs the information he wants, (3) if a manager has the information he needs his decision milking will improve, (4) better communication between managers improves organizational performance, and (5) a manager does not have to understand how his information system works, only how to use it. To overcome these assumptions and the deficiencies which result from them, a management information system should be imbedded in a management control system. A procedure for designing such a system is proposed and an example is given of the type of control system which it produces.
Linear Progamming Models for Water Pollution Control
Authors: Loucks Daniel P. , Revelle Charles S. , Lynn Walter R.
Published: November 2008

Two linear programming models are presented for determining the amount of wastewater treatment required to achieve at minimum cost any particular set of stream dissolved oxygen standards within a river basin. Derived from the generalized Streeter-Phelps differential equations used to describe the rates of dissolved oxygen depletion and recovery of streams, these models are adaptable to any river basin configuration. They can be used not only in determining system costs for various quality standards but also for measuring the cost sensitivity to changes in the design stream and wastewater flows and treatment facility location. An example illustrates the use of these models.
Heuristic Scheduling in a Woolen Mill
Authors: Hurst E. Gerald , McNamara Aidan B.
Published: November 2008

The scheduling procedure of a particular production planner in a woolen mill is investigated. A model is developed which attempts to describe the planner's average behavior. Schedules are generated by this model and are compared with the corresponding schedules of the planner. Discrepancies between the planner's and the model's schedules are interpreted with respect to both the adequacy of the model and the consistency of the planner. Suggestions are made for application of the technique to real-time scheduling.
A Replenishment Model for Radioactive Nuclide Generators
Authors: Emmons Hamilton
Published: November 2008

The nuclide generator is a radioactive element of long half life which is used to produce a short-lived daughter, or decay product, useful in medical diagnosis. This paper discusses the inventory problem for such exponentially decaying substances. Methods are proposed for finding the optimizing replenishment size when the reorder point, replenishment cost function, and other parameters are given. The reorder point is determined by certain medical requirements which give rise to a rather complicated model. A simple method is presented for finding close bounds on the required solution.
Games with Incomplete Information Played by “Bayesian” Players Part II. Bayesian Equilibrium Points
Authors: Harsanyi John C.
Published: November 2008

Part I of this paper has described a new theory for the analysis of games with incomplete information. It has been shown that, if the various players' subjective probability distributions satisfy a certain mutual-consistency requirement, then any given game with incomplete information will be equivalent to a certain game with complete information, called the “Bayes-equivalent” of the original game, or briefly a “Bayesian game.”

Part II of the paper will now show that any Nash equilibrium point of this Bayesian game yields a “Bayesian equilibrium point” for the original game and conversely. This result will then be illustrated by numerical examples, representing two-person zero-sum games with incomplete information. We shall also show how our theory enables us to analyze the problem of exploiting the opponent's erroneous beliefs.

However, apart from its indubitable usefulness in locating Bayesian equilibrium points, we shall show it on a numerical example (the Bayes-equivalent of a two-person cooperative game) that the normal form of a Bayesian game is in many cases a highly unsatisfactory representation of the game situation and has to be replaced by other representations (e.g., by the semi-normal form). We shall argue that this rather unexpected result is due to the fact that Bayesian games must be interpreted as games with “delayed commitment” whereas the normal-form representation always envisages a game with “immediate commitment.”
Transfer Pricing in a Decentralized Firm
Authors: Hass Jerome E.
Published: November 2008

Ronald Howard's editorial comments in the June, 1967 volume of this journal stressed the power of the pricing mechanism in the control and optimization of social systems. This article illustrates how such a concept can be applied via a decomposition algorithm for quadratic programming. A set of artificial markets for scarce resources and transfer goods is introduced into a model of a divisionalized firm and a quadratic decomposition algorithm is used to find the optimal (profit maximizing) set of prices for these goods. The algorithm requires a minimal amount of information transmission from the divisions to corporate headquarters and can be applied to divisionalized firms operating in imperfect markets. It also has significant behavioral implications not found in other decomposition algorithms for the firm which employs a profit-center method of control. The value of the algorithm is evident in those situations where decentralization is either desirable or a necessity and where interdependencies exist.
An Appreciation of Industrial Dynamics
Authors: Ansoff H. Igor , Slevin Dennis P.
Published: November 2008

Industrial Dynamics is a recently developed and fast moving area of management analysis. Since its inception it has gained both staunch opponents and severe critics. This paper is an attempt at an impartial appreciation of Industrial Dynamics. The model-building process employed in ID is briefly described. The ID is discussed as a simulation approach to problem solving. The strengths, the apparent shortcomings and areas of applicability are discussed. Next a question is raised regarding ID's claim to the status of a “general systems theory.” It is suggested that little evidence to date qualifies ID to be viewed as a distinctive body of theory about behavior of firms.
Industrial Dynamics—After the First Decade
Authors: Forrester Jay W.
Published: November 2008

Industrial dynamics, described as the application of feedback concepts to social systems, is evolving toward a theory of structure in systems as well as being an approach to corporate policy design. In high-order, nonlinear systems, with multiple loops and both positive and negative feedback, are found the modes of behavior which have been so puzzling in management and economics. The time is at hand when more sharply defined concepts and principles can form a core through management education to interrelate the functional areas and to move from static to dynamic understanding of systems. To do so should help close the gap between what the management school can now teach and what the manager must understand if he is to successfully cope with the increasing complexity of our society.
Information Processing Model of Executive Decision
Authors: Howard John A. , Morgenroth William M.
Published: November 2008

Company information systems demand a better understanding of the nature of the executive's decision process. Above all his information requirements must be specified. The capacity to specify these requirements is the hallmark of the information-processing model. An example of the form of the simulation of a pricing decision process is presented. The model, a binary flow chart type, simulates the pricing decision in a differentiated oligopolistic market. The validity of the model is established by comparing the two kinds of predictions that it makes—output and process—with reality. A number of problems encountered in developing models of this type are discussed. Some of the broader implications of these models are described and others are briefly mentioned.
Games with Incomplete Information Played by ‘Bayesian’ Players, Part III. The Basic Probability Distribution of the Game
Authors: Harsanyi John C.
Published: November 2008

Parts I and II of this paper have described a new theory for the analysis of games with incomplete information. Two cases have been distinguished: consistent games in which there exists some basic probability distribution from which the players' subjective probability distributions can be derived as conditional probability distributions; and inconsistent games in which no such basic probability distribution exists. Part III will now show that in consistent games, where a basic probability distribution exists, it is essentially unique.

It will also be argued that, in the absence of special reasons to the contrary, one should try to analyze any given game situation with incomplete information in terms of a consistent-game model. However, it will be shown that our theory can be extended also to inconsistent games, in case the situation does require the use of an inconsistent-game model.
Observations & Opinions The Practicality Gap
Authors: Howard Ronald A.
Published: November 2008

The topic, “The Interface Between Management Science and Managers,” sounds as if it should make a certain amount of sense, and yet sometimes I worry. If I referred to “The Interface Between Physics and the Motorist,” “The Interface Between Aeronautical Science and the Airline Pilot,” or “The Interface Between Nuclear Science and the Reactor Owner,” you would say, “ Well, it seems to me that there is such a gap in these cases, that we almost need a whole new profession to fill it.” Well, that's the point of my letter.
Optimal Maintenance Policy and Sale Date of a Machine
Authors: Thompson Gerald L.
Published: November 2008

A machine is to be bought, used for productive purposes for a length of time, and then sold. It is possible to do preventive maintenance while the machine is being used, if desired, in order to slow down the degradation of the machine's capability. The value of owning the machine is the sum of the discounted value of its production while it is owned plus its discounted value when sold. In this paper a modification of a model due to B. Naslund for the problem is discussed. Using Pontryagin's maximum principle, the problem is treated as one of optimal control with the control variables being the use or nonuse of preventive maintenance and the selection of the sale date. It is shown that the optimal maintenance policy is bang-bang, and methods for finding the optimal sale date are determined. Simply examples show the various kinds of solutions that can be obtained with varying assumptions concerning the actual functions used in the model.
Stochastic Sensitivity Analysis of Maximum Flow and Shortest Route Networks
Authors: Wollmer Richard D.
Published: November 2008

This paper presents an algorithm that can be used to solve two types of network sensitivity problems. In the first, arcs are subject to breakdowns that degrade their capacities. It is required, within certain confidence limits, to find the maximum possible effect of n breakdowns on maximum flow. In the second, arcs are subject to improvements that reduce their lengths. It is required, also within certain confidence limits, to find the maximum possible effect n total improvements can have on shortest path length. Capacities resulting from breakdowns and lengths resulting from improvements are random variables specified by their mean values and variances.
On (s, S) Policies
Authors: Johnson Ellis L.
Published: November 2008

For the infinite horizon, single item inventory problem, assume an ordering cost M(i) + K(j) for changing the stock level from i to j (for example, M(i) + K(j) = c · (j − i) + K), a holding plus shortage cost l(j), and a probability φ (j, k) of demand j − k when the stock level is j. New conditions for optimality of (s, S) policies are given, and a computational method is given. Both the total discounted cost and the average cost criteria are treated. The method is simplified when the demand distribution is Bernoulli or geometric. When, in addition, the costs K(j) = K, and l(x) is −Lx for x > 0, zero for 0 ≦ x ≦ I, for some I ≧ 0, and H(x − I) for x > I, then conditions are given for an optimal policy (s*, S*) to have s* = −1 or S* = I. Further, for the same assumptions but without the integrality restriction on s and S, specific formulas are given for s* and S* when the criterion is average cost; and equations, which can be solved for s* and S*, are given when the criterion is total discounted cost.
Catalog Advertising Allocation
Authors: Sokolick W. D. , Hartung Philip H.
Published: November 2008

The catalog advertising allocation problem is one of allocating space (pages) in a catalog to products. Different allocations of space will have different catalog preparation costs and will produce different total catalog sales. This paper presents a model to forecast the sales results of different space allocations, reports on the empirical validity of the forecasts, and then presents a model to maximize sales subject to a total catalog cost constraint.
Determination of Warranty Reserves
Authors: Menke Warren W.
Published: November 2008

Cost of warranty claims for failure of a product is an identifiable business cost. Methods of calculation are presented for determining this cost item for a linear prorata rebate plan and for a lump sum rebate plan where the customer receives a fixed amount for any failures within the warranty period. It is shown that a calculable amount, usually modest for good products, can be allocated by the manufacturer to a warranty reserve fund to cover the expected risks of warranty claims. Additionally, it is shown that the insight gained by a manufacturer about the components contributing to warranty reserve funding can furnish him with new marketing strategies.
A Computer Aided Approach to Employment Service Placement and Counseling
Authors: Holt Charles C. , Huber George P.
Published: November 2008

An employment service ideally should enable workers to maximize their monetary and psychic job satisfactions and employers to maximize their productivity for each dollar or labor cost. Electronic computers can make their greatest contribution to this effort if they are programmed so as to maximize the extent to which the objectives of workers and employers are fulfilled. This paper seeks to develop a formal optimizing approach using functional estimates of the satisfactions and productivities and of the probabilities of job offers and acceptances. Making these concepts operational appears feasible, but substantial research will be needed. The socio-economic payoffs appear to justify the cost of such research. The employment service operations proposed in the article include a man-machine system in which the computer serves as aide to the placement counselor.
Decision Making in a Complex Environment: The use of Similarity Judgements to Predict Preferences
Authors: Klahr David
Published: November 2008

Judgments of the relative similarity of pairs of alternatives are used to construct a model of the decision space of a group of college admissions officers. This model is then used to predict the preferences of the officers. The accuracy of the predictions supports the hypothesis that preference judgments are made on the basis of the similarity of given alternatives to an “ideal” alternative. A nonmetric multidimensional scaling procedure is used to construct the space. This procedure yields a dimensional representation based upon very few assumptions about the nature of the similarity measures.
A Markovian Replacement Model with a Generalization to Include Stocking
Authors: Ross Sheldon M.
Published: November 2008

The following model is considered: A machine is inspected at the beginning of discrete time periods and its operating state (condition) is determined. After each inspection a decision upon whether or not to replace the machine at the end of the period must be made. It is shown that under certain conditions on the costs and the transition distributions the optimal policy has a simple form. A generalisation to the case where one is allowed to stock reserve machines is also given.
Some New Views on the Payback Period and Capital Budgeting Decisions
Authors: Weingartner H. Martin
Published: November 2008

The Payback Period has been dismissed as misleading and worthless by most writers on capital budgeting at the same time that businessmen continue to utilise this concept. This paper seeks to identify the problems which businessmen try to solve by use of the payback period, so that better tools can be provided for solving these, since neither the present value nor the internal rate of return does so.

In the course of the analysis the payback concept is considered in its role as a criterion versus a payback constraint, payback and liquidity of capital assets and the liquidity requirements of the firm, payback as a break-even concept, and payback as a crude measure of the rate of resolution of uncertainty. While payback is not advocated for capital investment decisions, the reasons for its popularity need to be understood before it is possible to develop superior alternatives.
Simulation and Cost-Effectiveness Analysis of New York's Emergency Ambulance Service
Authors: Savas E. S.
Published: November 2008

Computer simulation was used to analyze the possible improvements in ambulance service that would result from proposed changes in the number and location of ambulances. The cost-effectiveness of several alternatives was examined. A particular alternative was shown to be of considerable value and it was concluded that low-cost improvements in service could indeed be achieved by redistributing ambulances in accordance with this alternative.

This marks the first time that the City of New York has utilized computer simulation as an aid to decision-making. In addition, this represents another step in the move to use computers more creatively in municipal management.

More generally speaking, the notion of applying the “space-age methods” of systems analysis, operations research, cost-effectiveness analysis, etc., to solve urban problems is a very popular one, frequently written about, discussed, and presented at conferences. The work reported here has translated this concept into practical results in a vital area of public service. This is a small but significant advance, of potential value to urban governments everywhere.
Fundamental Issues in the Simulation of Human Behavior: A Case in the Strategy of Behavioral Science
Authors: Mitroff Ian I.
Published: November 2008

Every scientific study has its own unique case history. Unfortunately, most scientific papers present a greatly distorted and static image of the true history and sociology of a research project. This paper represents an attempt to report on selected aspects of the actual growth and development of a simulation project, especially as that process affected the development of a novel method for validating simulation models. The paper also represents a philosophical analysis of the concept of simulation, especially as that analysis formed an integral part of the study's development.

One of the paper's main theses is that the teleology or purpose behind the construction of a simulation model is an ever present task-master guiding and influencing all the phases of a model's construction and validation. A general thesis is that a researcher's philosophy of science is as characteristic of him (i.e., his psychology) as it is of the phenomena he typically studies. The implications of these theses are illustrated in terms of the simulation of the engineering design behavior of a practicing mechanical engineer.
The Formulation of Credit Policy Models
Authors: Mehta Dileep
Published: November 2008

This study undertakes to apply the statistical technique of sequential decision process to a specific range of problems of (trade) credit management. In particular, the study examines two problems: first, credit extension policy on a specific request or account; and second, construction of indices measuring the effectiveness of such a policy. The end goal is to establish a control system which has heretofore resisted analytical solution.

Since management exercises its discretion primarily during the credit-extension phase, and since subsequent phases of credit policy are closely related to this particular phase, attention is focused on this aspect of credit policy. However, the analysis does not ignore other important aspects of credit policy, such as bad-debt level, length of the credit period, collection activities, and level of lost sales.

The above situation is then reversed: indices in terms of bad-debt level, receivable level, etc., measure the impact of credit extension procedures on the subsequent phases of credit policy.

The strength of the suggested approach lies in the logical relationship between the operating decision rules, that meaningfully take into account past experience, and the control indices. Thus it helps management in framing the optimal credit policy.

The limitations of the study, such as the implied assumption of linearity of cost data and the neglect of cash discount policy or an integrated investment scheme, do not detract from the operational usefulness of the suggested approach.
Judgment Estimates of the Moments of Pert Type Distributions
Authors: Moder Joseph J. , Rodgers E. G.
Published: November 2008

This paper considers the problem of estimating the moments of a statistical distribution from judgment estimates of various percentiles of the distribution and its mode. The results of this study indicate that 5 and 95 percentiles are superior to the 0 and 100 percentiles used in classical PERT; they lead to estimates that are robust to variations in the shape of the distribution, and also there is some experimental evidence which indicates that they can be estimated more accurately from one's “experience.” It was also found experimentally that the single time estimate used in CPM gave a slightly biased estimate of the mean, whereas the three time estimates used in PERT gave unbiased estimates of the mean.
Optimal Cash Balance Levels
Authors: Girgis Nadia Makary
Published: November 2008

The problem considered in this paper deals with the optimal policies for keeping cash in anticipation of future net expenses. It is an inventory problem in which the inventory level can either decrease or increase, and the decision maker is allowed to change the inventory level in any direction at the beginning of each period. In addition to the usual holding and shortage costs, the problem involves fixed and proportional costs for deciding to change the inventory level. This paper shows the form of the optimal policy if the expected holding and shortage cost is convex and if deciding either to increase or to decrease the inventory level does not involve a fixed cost.
Optimal Ordering and Rationing Policies in a Nonstationary Dynamic Inventory Model with n Demand Classes
Authors: Topkis Donald M.
Published: November 2008

We consider the problems associated with an inventory system in which demands for stock are of n classes of varying importance. When demand from a given class arrives one must decide whether to satisfy it or to not satisfy it and conserve stock for possible use later to satisfy demand from a more important class. Conditions are given under which the optimal rationing policy between successive procurements of new stock is determined by a set of critical rationing levels such that at a given time one satisfies demand of a given class only if no demand of a more important class remains unsatisfied and as long as the stock level does not fall below the critical rationing level for that class at that time. Conditions are also given under which the optimal procurement policy at a given time is determined by a single critical level in the usual manner. Further conditions are given which assure that the optimal rationing and procurement policies may be determined myopically.
An Empirical Study of Computer Maintenance Policies
Authors: Hsu John I. S.
Published: November 2008

This paper reports the findings of the study of maintenance policies for the IBM 1620 system installed at the university's computing center. Three Maintenance policies were investigated by studying the operating characteristics of the system's two functional units, IBM 1620 Processor and IBM 1622 Card-Punch, covering the period of twenty-nine months. Cost minimization approach is used to determine the optimum policy among three alternatives. These three alternatives are: (1) repairs only; (2) scheduled maintenance at a time interval of t hours of operation without failure; (3) performing maintenance procedures at t, 2t, 3t,… regardless of intervening repairs.

The problems of gathering information and the condition of optimum for the alternatives 2 and 3 are discussed. The empirical result of this study is in favor of alternative 1 for servicing both functional units, 1622 and 1620.
An Approach to Linear Programming with 0–1 Variables
Authors: Senju Shizuo , Toyoda Yoshiaki
Published: November 2008

There are many decision making problems in which one seeks to choose the optimal package from a large number of indivisible independent proposals. For instance, jobbing firms have often to choose the most profitable package of orders from hundreds of potential ones under a great many restrictions on available resources, such as working time of different facilities, number of specialists, materials, etc. This article is intended to present a simple approach to obtaining approximate solutions for such problems. The fundamental concept is to make some ordinal scales among proposals. Steps of calculation are illustrated by examples of choosing the optimal mix of orders, one of which involves 60 candidate proposals with 30 restricting conditions. This method may be of great help when (1) the number of candidates and restricting conditions are large; (2) the estimated or raw data on required resources for proposals and their incremental profits contain some errors; and (3) the distribution of incremental profits and required resources of candidates differs greatly, say, week by week, and the limits on resources can be extended in a practical manner by carrying over an inventory of profitable backlog orders, reducing, in effect, the remaining capacity in the future week.