bluuebunny/crossref_metadata_2025 huggingface dataset:
Note—A Note on Economic Models for R&D Project Selection in the Presence of Project Interactions
Authors: Goldstein Paula M. , Singer Howard M.
Published: November 2008

In their paper, “Economic Models for R&D Project Selection in the Presence of Project Interactions,” Fox, Baker, and Bryant (Fox, G. E., N. R. Baker, J. L. Bryant. 1984. Economic models for R and D project selection in the presence of project interactions. Management Sci. 30 (July) 890–902.) proposed a model that included benefit interactions, called present value (PV) interactions, between R&D projects. Several computational errors in this paper invalidated the illustrative example which sought to demonstrate that ignoring the PV interactions could result in both nonoptimal project selections and resource allocations. However, a single correction yields an example that supports the authors' central premise. Furthermore, we believe that the model itself can prove useful in real applications.
Note—An Improved Conditional Monte Carlo Technique for the Stochastic Shortest Path Problem
Authors: Adlakha Veena G.
Published: November 2008

This paper describes a simulation procedure for estimating the distribution function of the shortest path length in a network with random arc lengths. The method extends the concept of conditional Monte Carlo utilizing special properties of the Uniformly Directed Cutsets and the unique arcs. The objective here is to reduce the sampling effort and utilize known probability information to derive multivariate integrals of lower dimension. The experimental results show that the proposed method is substantially cost effective and performs better than traditional Monte Carlo and conditional methods.
The Accuracy of Combining Judgemental and Statistical Forecasts
Authors: Lawrence M. J. , Edmundson R. H. , O'Connor M. J.
Published: November 2008

Judgement based forecasts are widely used in practice either alone or in conjunction with computer prepared forecasts. This study empirically examines the improvement in accuracy which can be gained from combining judgemental forecasts, either with other judgemental or with quantitatively derived forecasts. Two judgemental forecasting approaches are used by each of two different groups in a laboratory setting to give four sets of judgemental forecasts for the 68 monthly time series of the M-competition. These are combined either with each other or with forecasts from deseasonalised single exponential smoothing. Combined forecasts are found to be more accurate than single forecasts with the greatest benefit realised at short forecast horizons and for easier (as opposed to harder) forecast series. Averaging was observed to be a far better way of combining judgemental forecasts than a judgemental, nonsystematic combination.
Batch Size and Stocking Levels in Multi-Echelon Repairable Systems
Authors: Moinzadeh Kamran , Lee Hau L.
Published: November 2008

In multi-echelon repairable inventory systems with high set-up cost for order and/or high demand rates, the use of batch ordering may be more cost-effective than the common (S − 1, S) ordering policy. This paper addresses the issue of determining the optimal order batch size and stocking levels at the stocking locations in such a system. A power approximation is used to estimate the total system stock and backorder levels from which the optimal batch size can be readily determined. A search routine involving “one-pass” searches are then followed to obtain the stocking levels at the depot and the local sites of the system. This procedure has been evaluated using 900 test cases and has been found to be very effective. The power approximation approach also results in a simple analytical relationship to test whether or not (S − 1, S) is an optimal ordering policy for repairable items in a multi-echelon environment.
Comment on “Multi-Object Auctions: Sequential vs. Simultaneous Sales”
Authors: Rothkopf Michael H. , Dougherty Elmer , Rose Marshall
Published: November 2008

The purpose of this brief comment is to provide some empirical data to support the relevance of the theoretical arguments put forward in Donald Hausch’s paper (Hausch, Donald B. 1986. Multi-object auctions: sequential vs. simultaneous sales. Management Sci. 32.). There are two different kinds of evidence. One is the results of a small “natural experiment” that occurred in 1965. The other is the first-hand report by one of us of the considerations taken into account in the design of outer continental shelf (OCS) oil auctions.
A Multiobjective Methodology for Selecting Subsystem Automation Options
Authors: Bard Jonathan F.
Published: November 2008

When designing large-scale systems, managers and engineers must often balance the desire for optimality with the need for analytic tractability. When new technologies are involved the problem may be further complicated by the need to conduct local tradeoffs among risk, cost, and time factors. In order to formally deal with these issues, this paper presents a decomposition scheme in which individual subsystems may be evaluated separately and a representative set of alternatives obtained for each. In the development, a set of multiple objectives is introduced to account for the range of organizational priorities underlying the decision making process. Pareto-optimal solutions are then found with a general purpose parametric programming algorithm and ranked with the help of the Analytic Hierarchy Process. The methodology is demonstrated with an example centering on the selection of automation options for the upcoming Space Station, but is general enough to be applicable to the design of any complex system.
Note—A Note on the Reversibility and Duality of Some Tandem Blocking Queueing Systems
Authors: Melamed Benjamin
Published: November 2008

In a previous paper Yamazaki et al. (Yamazaki, G., T. Kawashima, H. Sakasegawa. 1983. Reversibility of tandem blocking queueing systems. Kogakuin University, Tokyo, Japan.) prove that a certain tandem blocking queueing system and its reversed counterpart have the same capacity (throughput). The purpose of this note is to offer an alternative viewpoint based on a concept of duality. This leads to a more intuitive methodology and provides additional insight into the original and reversed systems.
An LP Planning Model for a Mental Health Community Support System
Authors: Leff H. Stephen , Dada Maqbool , Graves Stephen C.
Published: November 2008

In this paper we develop a resource planning and allocation model for a mental-health community-support system. The intent of the model is to provide a tool to system managers and planners to support resource planning and allocation decision-making. More and more, mental health care is being delivered by a variety of community-based service agencies instead of single, comprehensive institutions. The service needs of a client population are continually changing, and depend upon the relative functioning of the population, which depends upon the efficacy of the services provided. The availability of resources is becoming scarcer, and is more closely scrutinized. Consequently, the system manager must attempt to apply the available resources as effectively as possible.

We develop a conceptual framework for planning that includes aggregating patients according to their functional level and service needs, and defining “service package options” for each aggregate patient group. We also estimate the effect of giving a particular service package to a patient group, in terms of functional improvement or regression. The planning problem is then to assign service packages to aggregate groups over a multi-period planning horizon to maximize some measure of system welfare within the available resources. This planning problem is a linear programming problem that we illustrate using representative data.
Note—Comment on “A Perturbation Scheme to Improve Hillier's Solution to the Facilities Layout Problem”
Authors: Kaku Bharat K. , Thompson Gerald L.
Published: November 2008

This note points out that three of the facilities layout problems solved by Picone and Wilhelm (Picone, C. J., W. E. Wilhelm. 1984. A perturbation scheme to improve Hillier's solution to the facilities layout problem. Management Sci. 30 1238–1249.) are different from the test problems given in Nugent, Vollmann and Ruml (Nugent, C. E., T. E. Vollmann, J. Ruml. 1968. An experimental comparison of techniques for the assignment of facilities to locations. Oper. Res. 16 150–173.). Comparison with results obtained by other researchers to these test problems is, therefore, not valid.
Note—“A Perturbation Scheme to Improve Hillier's Solution to the Facilities Layout Problem”: A Clarification
Authors: Picone Christopher J. , Wilhelm Wilbert E.
Published: November 2008

Solutions to Nugent's plant location problems may be improved by using square plant shapes. These improved results were inadvertently reported by Picone and Wilhelm (Picone, C. J., W. E. Wilhelm. 1984. A perturbation scheme to improve Hillier's solution to the facilities layout problem. Management Sci. 30 1238–1249.) as solutions to Nugent's problems, which involve rectangular plants. Hopefully, this clarification will stimulate research to define optimal relationships between plant shape and layout.
Forecasting When Pattern Changes Occur Beyond the Historical Data
Authors: Carbone Robert , Makridakis Spyros
Published: November 2008

Forecasting methods currently available assume that established patterns or relationships will not change during the post-sample forecasting phase. This, however, is not a realistic assumption for business and economic series. This paper describes a new approach to forecasting which takes into account possible pattern changes beyond the historical data. This approach is based on the development of two models: one short, the other long term. These models are then reconciled to produce the final forecasts by setting certain parameters as a function of the number, extent, and duration of pattern changes that have occurred in the past. The proposed method has been applied to the 111 series used in the M-Competition. Post-sample forecasting accuracy comparisons show the superiority of the proposed approach over the most accurate methods in the M-Competition.
A Parametric Approach to Stochastic Dominance: The Lognormal Case
Authors: Kroll Yoram , Levy Haim
Published: November 2008

Mixing the risky asset with the riskless asset. Levy and Kroll have developed stochastic dominance rules with borrowing and lending (SDR). These rules can be easily applied to discrete distributions (e.g., ex-post data). However, an infinite number of comparisons is involved when the distributions under consideration are continuous. This study suggests a method for applying the SDR criteria to continuous distributions where, in general, a small number of comparisons is involved. For some distributions (e.g., lognormal) the SDR relationship is stated in terms of the distributions' parameters, and hence only one comparison is required. These SDR relationships enable us to establish the lognormal efficient frontier.
Using Order Statistics to Estimate Real Estate Bid Distributions
Authors: Brown Keith C. , Brown Deborah J.
Published: November 2008

In order to determine an optimum sales strategy for a property it is useful to estimate the distribution of bids which will be received for the property. The more accurate the estimate of the distribution, the higher the expected return will be from following the optimal strategy. This paper presents a technique for estimating the parameters of that distribution based on order statistics. It also describes how a posted list price might affect the sale price data used in this estimation technique, and how the technique can be modified to deal with this type of censored data.
Another Look at an Axiomatic Approach to Expert Resolution
Authors: Lindley Dennis V.
Published: November 2008

Morris proposed a set of axioms for combining experts’ probability assessments. It is here argued that one of these axioms is unsatisfactory. Its use leads to a conflict between the discrete and continuous cases which disappears in a coherent approach.
The Multi-Item Capacitated Lot Size Problem: Error Bounds of Manne's Formulations
Authors: Bitran Gabriel R. , Matsuo Hirofumi
Published: November 2008

We discuss an approximation scheme for the multi-item lot size problem. It is based on an optimal basic solution of a linear programming problem derived from the original problem. The approximate solution is obtained by taking a linear convex combination of the optimal solution of the linear programming problem. We express error bounds of the approximation as a function of some parameters that can be easily estimated in practice. When set-up times are positive, the approximation may result in an infeasible solution. We take the same approach to show that the infeasibility of the approximation is small. The analysis is extended to a variable capacity problem with overtime. As an auxiliary result, we provide a bound on the duality gap of the Lagrangian dual problem.
Note—Rolling Back Decision Trees Requires the Independence Axiom!
Authors: LaValle Irving H. , Wapman Kenneth R.
Published: November 2008

The Herstein–Milnor independence axiom is a necessary condition for recursion analysis of decisions in extensive (=tree) form.
Erratum to: “Piecewise Loglinear Estimation of Efficient Production Surfaces”
Authors: Banker Rajiv D. , Maindiratta Ajay
Published: November 2008

Erratum to: “Piecewise Loglinear Estimation of Efficient Production Surfaces”, Management Sci. 32 (1, January) (1986) 126–135.
A Comparison of Strategies to Dampen Nervousness in MRP Systems
Authors: Blackburn Joseph D. , Kropp Dean H. , Millen Robert A.
Published: November 2008

This research examines the effectiveness of alternative strategies for dealing with the problem of order instability, or nervousness, which occurs in Material Requirements Planning systems. Nervousness can be particularly disruptive in multi-level production processes where a change in order size or timing at one level can result in changes at other levels.

This study proposes and evaluates five different strategies for treating nervousness caused by the interaction of lot-sizing decisions and the planning horizon. Not evaluated here are the effects on order instability caused by demand uncertainty or supply and lead-time uncertainty. The five strategies examined are: (1) Freezing the schedule within the planning horizon, (2) Lot-for-Lot after stage 1, (3) Safety stocks, (4) Forecast beyond the planning horizon, and (5) Change cost procedure.

A series of simulation experiments was conducted to test the effectiveness of the five strategies on schedule stability and system costs. The experiments were constructed to evaluate the impacts of various lot-sizing methods, the length of the planning horizon, setup and holding cost parameters and product assembly structure.

The results indicate that when the source of nervousness is due to changes in decisions caused by a rolling planning horizon, safety stock and lot-for-lot approaches are not cost effective. Under most conditions, the strategies of incorporating a change cost to discourage schedule changes or freezing the schedule within the planning horizon appear to be dominant.
Forecasting Data Published at Irregular Time Intervals Using an Extension of Holt's Method
Authors: Wright David J.
Published: November 2008

In practice many data series contain observations at irregular times whereas most forecasting methods are restricted to the case of equal time intervals between data points. This paper provides extensions of Single Exponential Smoothing and Holt's Method to the case of irregularly spaced data and shows them to be highly efficient computationally. The new methods are applied to six published series, and their performance is analyzed via four error measures with respect to changes in the smoothing parameters.
Virtual Positions and Power
Authors: Mackenzie Kenneth D.
Published: November 2008

This paper discusses a class of natural organizational phenomena called virtual positions and links them to the enactment of power. Virtual positions involve three or more persons from different parts of an organization working together on a recurring (and usually major) task process. A virtual position is contrasted to a regular position in which an incumbent performs a set of task processes. There is no regular position for the task processes performed by a virtual position. Instead the set of individuals act as if they are a composite position. There are two types of virtual positions: regulated and unregulated. Regulated virtual positions usually take the form of committees, standing committees, and task forces. Unregulated virtual positions involve task processes which have been neither rationalized nor integrated with the Organizational Architecture.

Virtual positions arise out of attempts to cope with organizational changes without having to redesign the organization. Given enough time a virtual position can be used to analyze change and to determine how it should be handled. But when changes occur at a more rapid rate than the virtual positions can be absorbed, they can spread rapidly. Thus an informal adaptive mechanism can lead to an accumulation of problems which can become maladaptive.

Each virtual position involves the control of some task process and the possible leverage of this task process on others. Each virtual position participant has opportunity for access to information, other persons, and the possibility of enhancing his own position or preventing the enhancement of another's. When the virtual position involves major, recurring vulnerabilities, this control can be parlayed into organizational power. Virtual positions are viewed as arenas for power struggles in organizations. An example is given of the virtual positions in an actual community bank.

The theory underlying the virtual positions is based on the continuing evolution of a theory of group structures. The concepts of process and task process are defined. A recently developed operationalization of the concept of interdependence is introduced. The notion of uncertainty is generalized. This leads to the development of uncertainty interdependence. Power is seen as the control of uncertainty interdependence. Virtual positions are viewed as the arenas in which uncertainty interdependencies can be resolved. Thus virtual positions are linked to the distribution and enactment of power in organizations.

The theoretical discussion is based on a technology which is used in organizational design. Consequently, there exist means by which virtual positions can be identified and analyzed in real organizations. This paper links these analyses of virtual positions to the process of designing an organization.
Market Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Implications
Authors: Urban Glen L. , Carter Theresa , Gaskin Steven , Mucha Zofia
Published: November 2008

An empirical analysis indicates that the order of entry of a brand into a consumer product category is inversely related to its market share. Market share is modeled as a log linear function of order of entry, time between entries, advertising, and positioning effectiveness. The coefficients of the entry, advertising, and positioning variables are significant in a regression analysis on an initial sample of 82 brands across 24 categories. These findings are confirmed by predictions on 47 not previously analyzed brands in 12 categories. Managerial implications for pioneers and later entrants are identified.
Unstable Weights in the Combination of Forecasts
Authors: Kang Heejoon
Published: November 2008

The weights used in the combination of forecasts are shown to be very unstable. They are generally so unstable that the combined forecasts often do not perform better than some of the individual forecasts or a simple average of the forecasts in practice. The instability is found from a series of Monte Carlo experiments as well as from the nominal GNP forecasts from four well-known macro forecasters. The Monte Carlo experiments also show that when the underlying models are known, a composite forecast from a composite model is generally more accurate than the combination of the individual forecasts. A simple average is shown to be the best technique to use in practice, because the weights in the combination are so unstable.
The Bias of Schedules and Playoff Systems in Professional Sports
Authors: Weiss Howard J.
Published: November 2008

We examine the method used for seeding teams in professional sports leagues after the regular season has ended. In particular, we are interested in which teams are in the playoffs and which of these playoff teams get the home field advantage and/or a first round bye. We show that the regular season schedule is biased against good teams (since teams are separated into divisions) and that in addition to the current schedules and their inherent biases the playoff systems add more bias against good teams (since division winners are typically ranked higher than nondivision winners). The amount of bias in various cases is presented. Furthermore, we present necessary and sufficient conditions for a schedule to be completely unbiased. Using this condition we develop schedules which maximize intradivision rivalries while maintaining no bias.
A Two-Moment Approximation for the Mean Waiting Time in the GI/G/s Queue
Authors: Kimura Toshikazu
Published: November 2008

We provide a simple two-moment approximation formula for the mean waiting time in a GI/G/s queue. This formula has the form of a certain combination of the exact mean waiting times for the D/M/s, M/D/s and M/M/s queues, and hence it can be easily calculated by using some queueing tables. The quality of the approximation is tested by comparing it with known solutions in particular cases.
Note—Patience is a Virtue in a Simple Model of Repetitively Joining a Queue
Authors: Bell Colin E.
Published: November 2008

Each of n members of a finite customer population must weigh the rewards of service completion against the cost of waiting in a single exponential server queuing system. After completing service, a customer may re-enter the system. In attempting to maximize average return per unit time over an infinite horizon each customer must make a single decision, a choice of arrival rate which must then be used to determine the time until re-entry whenever the customer finishes being served.

Equilibrium behavior in the resulting n person game is investigated. Equilibria exist involving a subset of the players who re-enter instantaneously after service while all others abstain from entry. In instances where all customers re-enter instantaneously, everyone could be made better off if it were possible to impose a non-instantaneous arrival rate.
Note—A Remark on Optimality of Control Limit Rules
Authors: Lešanovský Antonín
Published: November 2008

A system with a single activated unit subject to Markovian deterioration is considered. It is shown by a numerical example that the optimality of control limit rules is not sufficient for the validity of two assertions of the paper by P. Kolesar (Kolesar, P. 1966. Minimum cost replacement under Markovian deterioration. Management Sci. 12 (9, May) 694–706.).
Inventory Optimization in the U.S. Petroleum Industry: Empirical Analysis and Implications for Energy Emergency Policy
Authors: Hubbard R. Glenn , Weiner Robert J.
Published: November 2008

Much of the rapid increases in the price of crude oil during two of the last three supply shocks has been attributed to increased private inventory demand stimulated by the expectation of speculative profits. Government intervention in any future disruption is likely to take the form of releases from the Strategic Petroleum Reserve (SPR). Given that the SPR accounts for but a small fraction of U.S. oil inventories, the reaction of the private sector is critical in evaluating its impact. We incorporate inventory behavior in a model of the world oil market, which is then linked to a short-run macroeconometric model of the U.S. economy. Our model simulations support the view that substantial inventory accumulation accompanies a supply disruption. In the debate over whether the SPR is potentially a potent or impotent resource in an emergency, we lean toward potency. Our model suggests that public releases will not be absorbed in private stockpiles; indeed, their dampening price effects will serve, albeit slightly, to discourage speculative stock build.
Lead Users: A Source of Novel Product Concepts
Authors: von Hippel Eric
Published: November 2008

Accurate marketing research depends on accurate user judgments regarding their needs. However, for very novel products or in product categories characterized by rapid change—such as “high technology” products—most potential users will not have the real-world experience needed to problem solve and provide accurate data to inquiring market researchers. In this paper I explore the problem and propose a solution: Marketing research analyses which focus on what I term the “lead users” of a product or process.

Lead users are users whose present strong needs will become general in a marketplace months or years in the future. Since lead users are familiar with conditions which lie in the future for most others, they can serve as a need-forecasting laboratory for marketing research. Moreover, since lead users often attempt to fill the need they experience, they can provide new product concept and design data as well.

In this paper I explore how lead users can be systematically identified, and how lead user perceptions and preferences can be incorporated into industrial and consumer marketing research analyses of emerging needs for new products, processes and services.
The Marriage Tax
Authors: Fraser Jane M.
Published: November 2008

The design of tax laws is difficult because we have conflicting goals concerning our tax system. Policy makers often struggle to meet the demands of various groups without knowing exactly what tradeoffs are logically possible or impossible. The relative taxation of married couples and single persons is one area where tax design is difficult. This paper proves that it is impossible to have a tax system that simultaneously (1) is marriage neutral, (2) pools incomes within a married couple, and (3) maintains a nonlinear tax function. The paper explores the logical implications of abandoning any one of these three principles.
A Generalized Network Formulation of the Pairwise Comparison Consensus Ranking Model
Authors: Barzilai Jonathan , Cook Wade D. , Kress Moshe
Published: November 2008

One of the best known and most widely referenced models for representing ordinal preferences is that due to Kemeny and Snell (Kemeny, J. G., L. J. Snell. 1962. Preference ranking: an axiomatic approach. Mathematical Models in the Social Sciences. Glnn, New York, 9–23.). This model is designed to accommodate pairwise comparison data with an l1 norm used to measure voter disagreement. While this model possesses many of the necessary properties for a social choice function, solution procedures developed to date have been capable of handling only small problems due to the difficulty of modelling the transitivity requirements of an optimal consensus ranking. This paper shows how the consensus formation problem for strict linear orderings can be modelled as a generalized network. Since efficient computer codes already exist for handling this special structure, this approach will permit the solution of much larger problems than has been the case previously.
A Survey of Exact Algorithms for the Simple Assembly Line Balancing Problem
Authors: Baybars İlker
Published: November 2008

In this survey paper we discuss the development of the simple assembly line balancing problem (SALBP); modifications and generalizations over time; present alternate 0-1 programming formulations and a general integer programming formulation of the problem; discuss other well-known problems related to SALBP; describe and comment on a number of exact (i.e., optimum-seeking) methods; and present a summary of the reported computational experiences. All models discussed here are deterministic (i.e., all input parameters are assumed to be known with certainty) and all the algorithms discussed are exact. The problem is termed “simple” in the sense that no “mixed-models,” “subassembly lines,” “zoning restrictions,” etc. are considered.

Due to the richness of the literature, we exclude from discussion here (a) the inexact (i.e., heuristic/approximate) algorithms for SALPB and (b) the algorithms for the general assembly line balancing problem (including the stochastic models).
Financial Futures Hedging Via Goal Programming
Authors: Sharda Ramesh , Musser Kathryn D.
Published: November 2008

This paper presents multiperiod, multiple objective goal programming as an alternative to the more conventional hedge ratio approaches to financial futures hedging. The described model offers the potential benefits of: (i) simultaneous achievement of multiple hedge-related objectives (i.e., minimization of transactions and margin opportunity costs; regulation of cash flow, and maximization of profits accruing from both the cash and futures positions); and (ii) periodic modification and updating of the futures position, as suggested by actual, observed prices and interest rates, throughout the hedging period.

To assess its overall effectiveness, the model was applied to develop appropriate hedging strategies for three separate time periods, each representing a unique interest rate trend (i.e., upward movement, downward movement, and no change). Since real-world implementation of the model requires the use of forecast data, independent forecasts of both cash and futures prices were generated via (1) moving average, (2) exponential smoothing, and (3) random walk techniques. In progressing through each of the 13-week time periods, all forecasts were updated with the previous weeks' actual price data. Revised forecasts and actual price data were then incorporated into the model constraints on a weekly schedule. This approach, in essence, provided weekly futures activity recommendations based on the most recent price and interest rate developments observed at any point during the hedging period. The realized gains or losses were then compared to the previously-derived “perfect foresight” model results and to the traditional hedge ratio results. This allowed for evaluation of the model's effectiveness under varying forecast methods and varying interest rate trends. The results show that the goal programming model outperformed other strategies in most cases.
A Model for the Distribution of the Number of Bids on Federal Offshore Oil Leases
Authors: Engelbrecht-Wiggans Richard , Dougherty Elmer L. , Lohrenz John
Published: November 2008

Not all Outer Continental Shelf (OCS) federal oil leases receive the same number of bids. Indeed, while some leases receive over a dozen bids, many others receive no bids at all. This leads to uncertainty in the number of bids a lease will receive—uncertainty of potential concern to both bidders and bid takers.

We develop a model that suggest there are three fundamentally different types of leases—those with “no,” “low,” and “high” competition. This provides a basis for bidders and bid takers to explicitly account for some of the differences among leases when preparing bids and when evaluating the bidding. Although we specifically study only OCS federal oil leases, our overall approach and insights should apply equally well to many other situations with uncertain numbers of bids, including mineral leasing in general, as well as military procurement and construction contracting.
The Channel Intermediary Selection Decision: A Model and an Application
Authors: Rangan V. Kasturi , Zoltners Andris A. , Becker Robert J.
Published: November 2008

Distribution channel design is a complex decision involving (a) the strategic choice of the appropriate channel structure, and (b) the tactical selection of the appropriate intermediaries. This paper presents a decision framework and a model to aid management in the tactical selection of the channel intermediaries and the target markets they should serve. The proposed model-based decision approach is illustrated with an actual industrial marketing application. The optimal intermediary network selected by the model is compared to an intuitive network recommended by sales management.
Cash Transfer Scheduling for Concentrating Noncentral Receipts
Authors: Anvari M.
Published: November 2008

Cash concentration is a routine cash management activity that concerns transfer of funds from bank accounts in remote locations to the firm's central bank accounts. Substantial savings can accrue to the company as a result of properly scheduling these transfers, i.e. determining the optimal timing and amount of cash transfers. In this paper an easy to implement model is developed to aid management in this activity. The transfer policy is shown to be a day-specific (s, S) policy which is amenable to efficient computerization. This result is shown to hold under a set of realistic assumptions regarding deposit patterns, various cost functions, and institutional arrangements.
Note—Response to “Use of Sample Information in Stochastic Recourse and Chance-Constrained Programming Models”: On the “Bayesability” of CCP's
Authors: LaValle Irving H.
Published: November 2008

Jagannathan's (Jagannathan, R. 1985. Use of sample information in stochastic recourse and chance-constrained programming models. Management Sci. 31 96–108.) invocation of a utility function for a chance-constrained programming problem [CCPP] produces a Bayesian utility maximation problem [BUMP] which is not equivalent to the given CCPP. Therefore, the nonanomalous behavior shown to characterize information value in the BUMP does not refute examples such as Blau's (Blau, R. A. 1974. Stochastic programming and decision analysis: An apparent dilemma. Management Sci. 21 271–276.).
Pricing Policies for Quantity Discounts
Authors: Dada Maqbool , Srikanth K. N.
Published: November 2008

In this paper we analyze the seller's decision to offer quantity discounts to the buyer. We build on an existing model as follows. We first characterize the range of order sizes and prices which reduce costs for the buyer and seller, and develop related pricing schemes. The model is then extended to allow inventory carrying costs to be a function of price.
A Model for Relating Advertising Media Exposures to Purchase Incidence Behavior Patterns
Authors: Zufryden Fred S.
Published: November 2008

A stochastic model is proposed to study the effect of advertising on consumer purchase dynamics by specifically relating the distribution of exposures, from a brand's media schedule, to brand purchase incidence behavior patterns over time. The approach is based on underlying individual consumer behavior assumptions that reflect the dynamics of exposures to advertising and brand purchase behavior, conditional on the level of advertising exposure received. Moreover, a population-based model is derived by aggregating over individual consumers who may be heterogeneous with respect to exposure probability, purchase rate, and sensitivity to advertising.

The approach can be implemented with experimentally-based data and estimation procedures that seek to isolate the effect of advertising and also permit the evaluation of advertising influences on purchase behavior patterns. For the purpose of model implementation, parameter estimation procedures are outlined and applied to empirically evaluate three alternative model versions that reflect different advertising exposure behavior assumptions. Both the goodness of fit results presented and prior empirical experience, in connection with past applications to TV media schedule analysis, lend to the model's validity. The paper concludes with an appraisal of the potential strengths and limitations of the proposed model as a tool for advertising media analysis and planning in practice.
A Multi-Echelon Inventory Model for Repairable Items with Emergency Lateral Transshipments
Authors: Lee Hau L.
Published: November 2008

In multi-echelon inventory systems that cover extensive geographical regions, emergency lateral transshipment between bases is commonly practiced to provide improved service support for products. In these systems, since neighboring bases are at shorter distances than to the depot, the base may seek stock from them to satisfy its demands when it is out of stock. In this paper we develop a continuous-review multi-echelon model for repairable items when emergency lateral transshipments between identical bases are allowed. Approximations are derived and tested for the expected level of backorders and the quantity of emergency lateral transshipments in cases where fairly high service levels are required. These approximations are used to determine the optimal stocking levels in such a system. A procedure to find these stocking levels is given. Numerical examples illustrate the application of the procedure and the tradeoffs involved in emergency lateral transshipment.
Note—The Bierman-Hausman Credit Granting Model: A Note
Authors: Srinivasan Venkat , Kim Yong H.
Published: November 2008

To date, the Bierman-Hausman (Bierman, H., Jr., W. H. Hausman. 1970. The credit granting decision. Management Sci. 16 B519–B532.) model remains the most rigorous normative effort in credit granting. This note points out that the procedure suggested by Bierman and Hausman for considering the time value effect is valid only under the extremely unrealistic assumption of a firm being able to simultaneously collect its receivables and make payments to its suppliers. A simple modification is presented to incorporate more realistic cash flow timing assumptions.
Managerial Perspectives on Risk and Risk Taking
Authors: March James G. , Shapira Zur
Published: November 2008

This paper explores the relation between decision theoretic conceptions of risk and the conceptions held by executives. It considers recent studies of risk attitudes and behavior among managers against the background of conceptions of risk derived from theories of choice. We conclude that managers take risks and exhibit risk preferences, but the processes that generate those observables are somewhat removed from the classical processes of choosing from among alternative actions in terms of the mean (expected value) and variance (risk) of the probability distributions over possible outcomes. We identify three major ways in which the conceptions of risk and risk taking held by these managers lead to orientations to risk that are different from what might be expected from a decision theory perspective: Managers are quite insensitive to estimates of the probabilities of possible outcomes; their decisions are particularly affected by the way their attention is focused on critical performance targets; and they make a sharp distinction between taking risks and gambling. These differences, along with closely related observations drawn from other studies of individual and organizational choice, indicate that the behavioral phenomenon of risk taking in organizational settings will be imperfectly understood within a classical conception of risk.
R&D Management and Corporate Financial Policy
Authors: Guerard John B. , Bean Alden S. , Andrews Steven
Published: November 2008

The hypothesis that firms simultaneously determine their research and development, investment, dividend, and new debt policies generally is substantiated in the financial literature. The determinants of research and development, dividend, investment and financing decisions of 140 firms are estimated econometrically during the 1978–1982 period. Management gains insights into the interactions of pursuing research and development expenditures, paying dividends, and undertaking investments.
Efficient Market Adjustment of Odds Prices to Reflect Track Biases
Authors: Canfield Brian R. , Fauman Bruce C. , Ziemba William T.
Published: November 2008

Biases that reflect the economic worth of uncertain contingent claims occur in many financial markets. Parimutuel betting at racetracks is one such market with ample data to investigate such biases. The total wagering market is about $10 billion per year in North America. The configuration of racetracks leads to an advantage for horses breaking from post positions near the rail, especially for tracks with small circumferences. Can the bettor make profits with knowledge of this bias? To investigate, we utilize data from 3,345 races involving over $300 million in wagers from 1982, 1983 and 1984 on win and exotic bets at Exhibition Park in Vancouver where this bias should be strong. The results indicate that the bias exists but the prices adjust to fully negate the potential gains from the bias.
Note—Analyzing Total Factor Productivity with ROI as a Criterion
Authors: Miller David M.
Published: November 2008

This research note concerns total factor productivity measurement at the firm level. Specifically the purpose of the note is to describe a means for incorporating return on investment (ROI) as the improvement criterion in profit-linked total factor productivity measurement procedures. The expressions presented here provide a mechanism to explain changes in profits due to productivity performance beyond the level associated with an ROI goal. This is an extension of existing measurement procedures that utilize gross profit margin rather than ROI as the improvement criterion. The formulation presented here is more appropriate than the margin approach when ROI is the primary financial yardstick of the firm. In presenting this formulation, the ROI based expressions for calculating the type of information derived in a profit-linked total factor productivity measurement procedure will first be given. Then the use of these expressions will be illustrated through a case study.
Tests of the Efficiency of Racetrack Betting Using Bookmaker Odds
Authors: Bird Ron , McCrae Michael
Published: November 2008

The objective of this study is to evaluate the informational efficiency of the market for betting on horse races. Whereas the price data used in previous studies have been drawn largely from totalizator (parimutuel) odds, the data used in this study are derived from bookmaker odds. The availability of a series of prices throughout betting facilitates the use of filter tests to evaluate market efficiency. We conclude that this gambling market is efficient in the use of information supplied via both the movements in odds during the course of betting and the selections of newspaper tipsters. However, there is evidence to suggest that those with access to private information can earn positive returns from gambling.
Testing Behavioral Simulation Models by Direct Experiment
Authors: Sterman John D.
Published: November 2008

The decision rules in simulation models of human behavior purport to describe decision-making behavior as it is and not as it should optimally be. Without the criterion of optimality to judge the appropriateness of a decision rule, simulation modelers must rely on empirical confirmation of the structure of their models. In models of small organizations, traditional social science methods may be used. But these methods are infeasible in models of larger systems such as industries or the macroeconomy. This paper shows how direct experiment can be used to confirm or disconfirm the decision rules in simulation models. Direct experiment uses interactive gaming in which people play a role in the system being modeled. Subjects play the game in an institutional context corresponding to that of the model to be tested, and are given the same information set, but are free to make decisions any way they wish. The behavior of subjects can then be directly compared against the behavior produced by the assumed decision rules of the model. Differences between experiments to test simulation models and experiments in psychology and economics are discussed. The decision rule for capital investment in a simple macroeconomic model is tested as an example of the experimental approach. The model considers interactions between the multiplier and accelerator, a well-known structure underlying popular theories of business fluctuations, but one which has not been tested experimentally. Through their investment decisions, subjects attempt to balance demand and supply over time. The results strongly support the decision rule of the original model. Both model and subjects produce dysfunctional oscillations. The behavior of the subjects is qualitatively and quantitatively similar to that of the original model. Explanations for the bounded rationality of the subjects' behavior are considered, and the correspondence of the experiment to reality is discussed. The results demonstrate the promise of experimental methods as a complementary approach to econometrics in testing simulation models.
The Effect of Business Interdependencies on Product R&D-Intensive Business Performance
Authors: Horwitch Mel , Thietart Raymond A.
Published: November 2008

One of the major decisions that firms face regarding R&D-intensive businesses is a structural one: establishing the appropriate level of internal strategic interdependency within and among business units. The current discussion over the effectiveness of creating small, independent, and entrepreneurial venture units in multi-business corporations is part of this larger structural concern.

The aim of the present research is to study the efficacy of different structural linkages for achieving market share and ROI objectives in product R&D-intensive businesses. The study focuses on interdependencies between business units in product R&D-intensive businesses that produce consumer products or industrial products.

A sample of 641 businesses (221 consumer products and 420 industrial goods) is drawn from the PIMS data base. A cluster analysis is run to identify natural groups of homogeneous businesses. For each of the seven identified groups (established suppliers, fast movers, high-tech job shops, stalled giants, established diversifiers, dominant specialists, and laggers) a multi-way analysis of variance is performed to study the influence of various interdependencies measured in term of vertical integration, shared facilities, and shared marketing on two criteria of performance: market share and ROI.

The findings indicate, first, that the interdependencies required to achieve high performance are contingent upon the nature of the product R&D-intensive business and its environmental characteristics. Second, for a given business configuration, high performance interdependencies are influenced by the type of performance objectives selected by the business, such as market share or profitability. Finally, the results imply that a multi-business corporation which possesses a portfolio of product R&D-intensive businesses probably requires a more diverse set of interdependencies than, for example, simply mainstream centralized industrial R&D organization, on the one hand, and independent entrepreneurial units on the other hand. Effective competition for a firm with diverse R&D-intensive businesses may often call for a capability to support concurrently multiple levels of internal interdependencies and to reject, create, or modify this set of interdependencies as the situation warrants.
The Structure of Equilibria in Market Share Attraction Models
Authors: Monahan George E.
Published: November 2008

A market share attraction model of competitive effort allocation by two firms is formulated as a constant sum, two-person game. The dependence of optimal competitive effort allocations on factors such as gross profit margins, relative effectiveness of effort, and attraction elasticity of effort is studied. Two versions of the model are developed. In the first version, effort budgets of both competitors are exogenously fixed. In the second, the competitors each choose both budget levels and allocations. In each version of the model, an important function of the parameters, called the competitive advantage ratio, indicates when it is optimal to either increase or decrease effort allocated in a market in response to changes in various measures of effectiveness. Implications of differences in the cost associated with each competitor's budget on equilibrium allocations are derived.