bluuebunny/crossref_metadata_2025 huggingface dataset:
Periodic Versus “Can-Order” Policies for Coordinated Multi-Item Inventory Systems
Authors: Atkins Derek R. , Iyogun Paul O.
Published: November 2008

The coordinated multi-item inventory problem refers to the problem of managing inventories where there is a joint fixed cost for replenishing plus an item-by-item fixed cost for each item included in the replenishment order. Given that the optimal solution is likely to be too complex, attention has focused on fixed heuristics, and in particular ‘can-order’ or (s, c, S) policies. This paper makes two contributions. First, a new lower bound on the cost of the optimal policy is proposed in order that the performance of heuristics may be measured. Second, motivated by the lower bound, a simple periodic policy is proposed and shown to be an improvement over ‘can-order’ policies for many data sets.
Note—When Does Lag Structure Really Matter … Indeed?
Authors: Bultez Alain , Naert Philippe
Published: November 2008

Magat et al. (Magat, W. A., J. M. McCann, R. C. Morey. 1986. When does lag structure really matter in optimizing advertising expenditures? Management Sci. 32(February) 182–193.) have correctly pointed out that a high sales elasticity to advertising adds to the flatness of the advertiser's profit objective. Quite consistently, apparently, they deduce that when the goodwill elasticity is huge, as with the famous Lydia Pinkham's vegetable compound, the misidentification of the distribution of advertising dynamic effects should hardly hit the advertiser's performance. But building on their approach, we show here it is just in such cases that the misspecification of the lag pattern is likely to cause the most severe damages. As those losses appear small, we persist in believing that econometric sophistication of lag structures may not pay much.
Reply to “When Does Lag Structure Really Matter … Indeed?”
Authors: Magat Wesley A. , McCann John M. , Morey Richard C.
Published: November 2008

Bultez and Naert (Bultez, A. V., P. A. Naert. 1988. When does lag structure really matter … indeed? Management Sci. 34(July).) provide an analytical example and several simulations that show profits to be more sensitive to advertising lag structure misspecification the higher the advertising goodwill elasticity. We explain how this result is consistent with our (Magat, McCann, and Morey [Magat, W. A., J. M. McCann, R. C. Morey. 1986. When does lag structure really matter in optimizing advertising expenditures? Management Sci. 32(February) 182–193.]) result that a given amount of advertising error induced by misspecification causes greater reductions in profits the lower the advertising goodwill elasticity. We also use their simulation results to identify the pattern of prior advertising used in estimation as an important determinant of when misspecification matters in estimating advertising lag structures.
Lagrangian Relaxation Methods for Solving the Minimum Fleet Size Multiple Traveling Salesman Problem with Time Windows
Authors: Desrosiers Jacques , Sauvé Michel , Soumis François
Published: November 2008

We consider the problem of finding the minimum number of vehicles required to visit once a set of nodes subject to time window constraints, for a homogeneous fleet of vehicles located at a common depot. This problem can be formulated as a network flow problem with additional time constraints.

The paper presents an optimal solution approach using the augmented Lagrangian method. Two Lagrangian relaxations are studied. In the first one, the time constraints are relaxed producing network subproblems which are easy to solve, but the bound obtained is weak. In the second relaxation, constraints requiring that each node be visited are relaxed producing shortest path subproblems with time window constraints and integrality conditions. The bound produced is always excellent.

Numerical results for several actual school busing problems with up to 223 nodes are discussed. Comparisons with a set partitioning formulation solved by column generation are given.
Determining Optimal Reorder Intervals in Capacitated Production-Distribution Systems
Authors: Jackson Peter L. , Maxwell William L. , Muckstadt John A.
Published: November 2008

The problem of determining consistent and realistic reorder intervals in complex production-distribution environments was formulated as a large scale, nonlinear, integer programming problem by Maxwell and Muckstadt (Maxwell, W. L., J. A. Muckstadt. 1985. Establishing consistent and realistic reorder intervals in production-distribution systems. Oper. Res. 33(6, November–December) 1316–1341.). They show how the special structure of the problem permits its solution by a standard network flow algorithm. In this paper, we review the Maxwell-Muckstadt model, provide necessary and sufficient conditions that characterize the solution, and show that the optimal partition of nodes in the production-distribution network is invariant to an arbitrary scaling of the set-up and holding cost parameters. We consider two capacitated versions of the model: one with a single constrained work center, and the other with multiple constrained work centers. For single constraint problems, the invariance corollary provides a simple closed-form solution. For the multiple work center problem, the invariance corollary is exploited in the development of a Lagrange multiplier method of solution. The technique is illustrated by means of a small example problem and a problem taken from a real industrial setting.
Sharp Bounds and Simple Approximations for the Erlang Delay and Loss Formulas
Authors: Harel Arie
Published: November 2008

Some sharp bounds and simple approximations are obtained for the Erlang delay formula and for the Erlang loss formula. One of the results is then used to get a simple analytical solution for the Server Allocation Problem.
Joint Determination of Optimal Inventory and Quality Control Policy
Authors: Peters Michael H. , Schneider Helmut , Tang Kwei
Published: November 2008

Typically the operating policy for the inventory control system for a commodity is developed independent of the operating policy for the quality control system for that commodity and vice versa. In many circumstances, these systems are dependent on one another. A cost model that combines a fixed order quantity inventory control system with a Bayesian quality control system for a lot-by-lot attribute acceptance sampling plan is presented along with an algorithm to obtain the operating parameters for the combined systems. Behavior of the combined systems is investigated, and the costs and operating policy determined using this model are compared with the costs and operating policy determined when there is no integration of the two systems and when there is partial integration of the two systems. There are significant cost savings obtained by using the operating policy developed under the combined systems over the operating policy derived from the separate systems.
The Effect of Unions on Productivity: U.S. Surface Mining of Coal
Authors: Byrnes Patricia , Färe Rolf , Grosskopf Shawna , Knox Lovell C. A.
Published: November 2008

The purpose of this paper is to compare the abilities of two competing analytical techniques—mathematical programming and statistical regression—to shed light on the union/nonunion productivity differential in U.S. surface coal mining. The programming approach has the virtues of being nonparametric (and thus extremely flexible) and of being able to provide a decomposition of productivity differentials into three components—differences in technical efficiency, differences in scale efficiency, and differences in congestion. Identification of these three components provides an aid to management in its search for the sources of, and remedies for, productivity gaps. The econometric approach, on the other hand, is neither flexible nor does it provide such a decomposition; its chief virtue lies in the fact that, being stochastic, it allows for the presence of noise and measurement error that plagues most if not all empirical data. Thus, the two approaches have complementary virtues.

The two techniques are used to investigate productivity in two samples of U.S. surface coal mines. The programming approach finds a large and significant positive union/nonunion productivity differential. This differential is due primarily to greater congestion occurring in the smaller nonunion mines in one sample, and to scale inefficiency in the smaller nonunion mines in the other sample. The econometric analysis finds nearly the same union/nonunion productivity differential, but sheds no light on the composition of, and thus the cure for, the differential.
Estimation Risk and Incentive Contracts for Portfolio Managers
Authors: Cohen Susan I. , Starks Laura T.
Published: November 2008

The fiduciary relationship between portfolio managers and the investors they represent may be viewed as a principal-agent relationship, and therefore we have used the methodology from the agency literature in economics and finance to study the impact of existing compensation arrangements on the conflicts of interest between these two groups. In this paper we employ the assumptions of the Capital Asset Pricing Model and of estimation risk concerning beta to develop a model in which portfolio managers can, through effort, choose the parameters of the beta distribution. Our model entails moral hazard because the investor cannot observe the manager's action. Given certain utility functions we show that the presence of estimation risk leads the manager to choose a lower beta portfolio than otherwise and that no first best optimal contract exists. We also show that managerial divergent behavior is related to the divergence in risk preferences between the manager and the investor. By making slightly more stringent assumptions about preferences, we show that there exist some conditions under which the manager will provide more effort but also a riskier portfolio than the investor prefers. Finally we show that the investor will prefer a manager who is less risk averse than the investor.
Rethinking the Product Portfolio: A Generalized Investment Model
Authors: Devinney Timothy M. , Stewart David W.
Published: November 2008

A generalized financial/product portfolio theory is developed, based on the underlying economic factors determining product profitability and risk, for applications involving the firm's product investment decisions. The model developed provides a means for differentiating market related risk and return from firm specific risk and return for each product. Two hypothetical illustrations of the model are described and the managerial implications are discussed.
A One-Sided Double Screening Procedure Using Individual Unit Misclassification Error
Authors: Moskowitz Herbert , Tsai Hsien-Tang
Published: November 2008

A double screening procedure (DSP), which controls for individual unit misclassification error (IME) as well as average outgoing quality (AOQ), for quality control applications is developed. Screening involves selecting items whose performance is within specifications based on observing one or more correlated surrogate (screening) variables in lieu of the performance variable directly. In double screening, two screening variables, which are correlated to a performance variable, are observed sequentially, rather than simultaneously as in a single screening plan (SSP); namely, (l) one screening variable is used first to make one of three decisions—accept, reject, or undecided—according to the magnitude of the individual nonconforming probability (equivalent to the IME for an accepted item); (2) after this first screening, the second screening variable is employed to screen the undecided items. Assuming conditions of normality, formulae for computing the selection ratio (proportion of accepted items) and AOQ are derived for a DSP. The impact of the intercorrelation between two screening variables on the sequencing of a DSP and the performance between an SSP versus DSP are examined. A DSP reduces inspection cost considerably relative to an SSP employing two screening variables. Producer's risk is also diminished at a nominal sacrifice in consumer's risk. Implementation of a DSP requires only the use of several simple formulas and readily available standard normal tables.
Airline Safety: The Last Decade
Authors: Barnett Arnold , Higgins Mary K.
Published: November 2008

The paper presents safety data for the period 1977–86 from more than 30 U.S. domestic airlines and 80 international flag carriers. These statistics are examined in conjunction with others from an earlier MIT study about the previous two decades. The primary safety measure used is “death risk per flight,” which weights each fatal accident by the proportion of passengers killed and exploits statistical evidence that the risk arising from a nonstop flight is uncorrelated with its route length.

The main conclusions of the analysis are:

(1) The U.S. domestic trunklines can continue to lay claim to being the safest group of airlines in the world. In 1977–86, the death risk per flight on these carriers was roughly one in eleven million. This represents a factor-of-four improvement since the early 1970's and a factor-of-ten improvement since the early 1960's.

(2) But while U.S. jet travel has become safer in recent years, the improvement would probably have been greater still in the absence of airline deregulation. The reason for this assessment relates to the new jet carriers spawned by deregulation. Most such carriers have perfect safety records so far but, collectively, the recent entrants averaged twelve times the death risk per flight in 1979–86 of the established trunklines. This statistically significant excess cut by nearly one-half the recent progress in domestic jet safety.

(3) International air travel was also far safer in the last decade than in preceding ones. But the flag carriers of Communist bloc and Third-World nations averaged eight times the death risk per flight as those from industrialized First-World nations. This factor-of-eight discrepancy, which has persisted with little change throughout the last quarter century, cannot be explained by differences in route structure.
On Stochastic Dominance and Decreasing Absolute Risk Averse Option Pricing Bounds
Authors: Ritchken Peter , Kuo Shyanjaw
Published: November 2008

Merton, Perrakis and Ryan, Levy, and Ritchken have established option pricing bounds under first and second stochastic dominance preferences. These bounds are particularly important for valuing contingent claims when continuous trading in the claim and/or underlying security does not exist. This article provides option bounds under higher orders of dominance. Specifically, option bounds are obtained by solving mathematical programs where preference structures on prices are represented by constraints. For first, second, third and higher orders of stochastic dominance preferences, the special linear structure of the mathematical programs allow analytical solutions to be obtained for the bounds. For DARA preferences, third order stochastic dominance, while being necessary, is not sufficient and additional constraints must be imposed. Unfortunately these additional constraints are nonlinear. While in this case closed form analytical solutions for the option bounds are not obtained, numerical examples are presented to illustrate their strength.
Choosing Between Risky Prospects: The Characterization of Comparative Statics Results, and Location Independent Risk
Authors: Jewitt Ian
Published: November 2008

We consider expected utility maximizers choosing from a family of risky prospects and examine how choice is influenced by the decision makers attitude to risk. If the family of risky prospects can be ordered so that as decision makers are more risk tolerant they choose a gamble higher in the ordering, then it is natural to say that the family of risky prospects admit a comparative static result. The paper characterizes when comparative static results of this sort exist. An application is to propose a criterion of location independent riskiness.
Maintaining Project Networks in Automated Artificial Intelligence Planning
Authors: Bell Colin E.
Published: November 2008

AI automated plan synthesis programs (“planners”) typically represent plans as a partially ordered network whose nodes are instants in time and whose arcs are precedence constraints. Such representations are essentially PERT charts. This paper provides an introduction to AI planners and illustrates the fact that many such PERT chart representations are created by a planner as it attempts to find a suitable plan. A planner's search must be guided if it is to produce suitable plans in realistic problem domains. One form of guidance is the imposition of constraints which must be satisfied by a valid plan. This paper concentrates on representing and reasoning about such constraints.

Successful planning in some domains, e.g. job-shop scheduling, requires the recognition and satisfaction of constraints which prevent the simultaneous use of a shared resource by multiple agents. Such requirements can be expressed as disjunctive precedence constraints. In addition, the search for a valid plan is often structured so that rough plans are successively refined into plans with increased detail. In this refinement process, new constraints are often discovered. It should therefore be easy to add such new constraints. Finally, it is helpful to be able to express upper bound constraints on the elapsed time between two nodes in a PERT chart representation of a plan. Thus, this paper reports on knowledge representation and reasoning processes which facilitate: (1) disjunctive constraints, (2) the introduction of new constraints, and (3) upper bound constraints.

A planner must backtrack when it is evident that further refinement of its current skeletal plan would be fruitless. Such an inconsistent state can be recognized when a plan's PERT chart representation contains an illegal cycle of positive overall length. When backtracking is required, dependency-directed backtracking is facilitated by recording “Nogood sets” of arcs whose simultaneous presence would result in such an illegal cycle. By using dependency-directed backtracking, chronological backtracking can be avoided.
Analyzing Trade-Offs Between Machine Investment and Utilization
Authors: Vander Veen David J. , Jordan William C.
Published: November 2008

Analyzing machine investment opportunities from a systems perspective requires an understanding of interdependencies between machine investment and utilization decisions. Machine investment decisions involve determining the number of machines to purchase and their types. Machine utilization decisions involve determining part allocations and production cycles. Interdependencies between these decisions result in trade-offs between investment and operating costs.

This paper develops an analytical approach for studying machine investment opportunities in a broad systems context. It begins with a discussion of the interdependencies between investment and utilization decisions. The focus of this research and a review of existing literature related to machine investment decisions are then discussed. Next a mathematical model that quantifies these interdependencies is formulated. The paper ends with a simple example that demonstrates the usefulness of the model and highlights the importance of using a systems approach. The main contribution of this work is the simultaneous consideration of trade-offs between machine investment and utilization decisions.
Optimizing Profits from a System of Accounts Receivable
Authors: Stanford Robert E.
Published: November 2008

We develop a model of the period-by-period maintenance cost and interest income accumulation resulting from charges to a system of accounts receivable, and establish conditions under which the present value of the expected profit generated by the charges reaches its greatest attainable levels. The profit measure is expressed as a function of the rate at which active accounts are paid off, which is initially treated as an independent variable, then as a function of the rate of interest charged to the active accounts. In the first case we find that profitable operation of the accounts is possible only if the ratio of the charge amount to the fixed account maintenance cost is no smaller than a specific critical value which is dependent upon the rate at which charges are lost as bad debts, the interest rate charged to active accounts, and the discount rate applied to future payments on the debts. In this case the lowest allowable payoff rate maximizes the present value of expected profits. If the payoff rate is allowed to increase with the interest rate, creating a condition of decreasing marginal efficiency of increases in the interest rate, both the income-maximizing interest rate and its associated payoff rate may occur at nonextreme values within the range of definition of these measures. The form of our model and its analysis have much in common with the Optimal Dividends Problem investigated in the Finance literature.
Cost Allocation Revisited: An Optimality Result
Authors: Whang Seungjin
Published: November 2008

The resource manager of a firm is faced with capacity and pricing decisions with regard to a congestion-prone system such as computer/communication facilities. Difficulties arise since the manager is uninformed of the system demand when the capacity decision is to be made. A game-theoretic model is developed to analyze the effects of different accounting rules on the elicitation of relevant information and ex-post efficiency in acquisition and allocation decisions. The key result is that the cost allocation method (aided by an anonymous reporting scheme) is indeed, as asserted by Zimmerman (Zimmerman, J. 1979. The costs and benefits of cost allocations. Accounting Rev. 54(July) 504–521.), a full-information-efficient rule achieving optimality both in acquisition and allocation decisions. Discussions of the main assumptions underlying this result are provided.
The Problem of Dimensionality in Stratified Sampling
Authors: Cheng Russell C. H. , Davenport Teresa
Published: November 2008

Stratified sampling is perhaps the most natural of the variance reduction techniques. However its use is often frustrated by the high dimensionality of the sample space. This paper investigates the difficulty and suggests a basic sampling scheme for use in such problems. The accuracy of estimators when this method of sampling is used is examined in detail. A way of implementing the scheme in practice is suggested which makes use of shadow response variables (variables which have similar properties to control variables). This reduces the dimensionality of the sample space to a tractable size. Two detailed examples are given for which a 10% to 90% reduction in variance is obtained compared with crude Monte Carlo.
A Variant of the Conditional Expectation Variance Reduction Technique and Its Application to the Simulation of the GI/G/1 Queues
Authors: Minh Do Le
Published: November 2008

In this paper, we introduce the Partial Conditional Expectation (PCE) variance reduction technique, derived by modifying the well-known Conditional Expectation (CE) technique to make it more widely applicable.

We apply this PCE technique to obtain a consistent estimator for the expected waiting time in queue in a single-server queueing system. We then derive an improved version of this estimator, taking into consideration further properties of the system. Empirical results show that these two estimators always perform better than the classical estimator. When the traffic intensity is low, the variance reductions obtained by these two estimators become very significant.
Asset Stocks and Sustained Competitive Advantage: A Comment
Authors: Barney Jay B.
Published: November 2008

In their paper, Dierickx and Cool suggest that the strategic factor markets model developed in Barney (Barney, J. B. 1986a. Strategic factor markets: Expectations, luck, and business strategy. Management Sci. (October) 1231–1241.) cannot be applied in the analysis of sustained competitive advantages due to asset stocks accumulated over time. In this comment, it is shown that the discussion of asset stocks extends and complements, rather than limits, the strategic factor markets model. This is done by analyzing how the strategic factor markets model can be used to examine the cost of accumulating asset stocks over long periods of time, and how these costs will compare to the value of strategies that are implemented exploiting these asset stocks.
Note—Deriving the Optimal Boundaries for Class-Based Automatic Storage/Retrieval Systems
Authors: Rosenblatt Meir J. , Eynan Amit
Published: November 2008

The optimal boundaries for class-based AS/RS systems are determined. A solution procedure is developed which requires only a one-dimensional search procedure. It is shown that most of the potential improvement in the expected one-way travel time can be obtained when the warehouse is divided into a relatively small number of regions. Thus, there is no need to use the full-turnover approach, which is difficult to implement.
The Single Machine Early/Tardy Problem
Authors: Ow Peng Si , Morton Thomas E.
Published: November 2008

We examine the problem of scheduling a given set of jobs on a single machine to minimize total early and tardy costs. Two dispatch priority rules are proposed and tested for this NP-complete problem. These were found to perform far better than known heuristics that ignored early costs. For situations where the potential cost savings are sufficiently high to justify more sophisticated techniques, we propose a variation of the Beam Search method developed by researchers in artificial intelligence. This variant, called Filtered Beam Search, is able to use priority functions to search a number of solution paths in parallel. A computational study showed that this search method was not only efficient but also consistent in providing near-optimal solutions with a relatively small search tree. The study also includes an investigation of the impacts of Beam Search parameters on three variations of Beam Search for this problem.
On Credible Delegation by Oligopolists: A Discussion of Distribution Channel Management
Authors: Coughlan Anne T. , Wernerfelt Birger
Published: November 2008

Several papers in the recent marketing literature have suggested that delegation in distribution (e.g., the use of independent middlemen) helps manufacturers to precommit strategically to profit-enhancing competitive actions. Further, the literature suggests that the profitability of such actions depends on market structure. We challenge these conclusions here. This is done in two steps. First, we perform an analysis of the entire class of models which have been used in the literature. Using internally consistent assumptions about market structure and contracting, the only subgame perfect equilibrium is one in which all distribution channels have infinitely many levels of delegation. Obviously, this is not what we see in the real world. Next, we relax a key hidden assumption, namely that all intra-channel agreements are observable to competitors. Without this assumption, the usual results unravel. Unless channel members can offer credible guarantees that unobservable agreements do not exist, the strategic effects of delegation disappear. Since these guarantees are virtually impossible to maintain credibly, we would expect to reject the hypothesis in the earlier literature relating channel structure to competition in an empirical study controlling for observability. We conclude that mechanisms other than strategic ones must be responsible for the existence of delegated channels, and make some suggestions about promising avenues for future theory research in channel structure.
Characterizations of Optimal Portfolios by Univariate and Multivariate Risk Aversion
Authors: Li Yuming , Ziemba William. T.
Published: November 2008

In a portfolio selection model with two risky investments having bivariate normally distributed returns, we show that Rubinstein's measures of risk aversion can yield the desirable characterizations of risk aversion and wealth effects on the optimal portfolios. These properties are analogous to those of the Arrow-Pratt measures of risk aversion in the portfolio selection model with one riskless and one risky investment. If investors' preferences are represented by multi-attributed utility functions and returns on different investments and other relevant factors have a joint normal distribution, we show that optimal portfolios can be characterized by a matrix measure of risk aversion.
Forgetting and the Learning Curve: A Laboratory Study
Authors: Bailey Charles D.
Published: November 2008

The industrial learning curve is widely used to predict costs and labor requirements wherever learning is taking place. Little is known, however, about the reverse of this process: the forgetting that occurs during production interruptions. The ability to estimate cost increases due to forgetting would be useful for economic lot size determinations, bidding on repeat orders, estimating the cost of strikes, and so on.

Empirical studies apparently have not been published. Field data are difficult to obtain and easily confounded by extraneous variables. Thus a laboratory experiment was undertaken to test selected variables that should (or should not) affect forgetting.

A review of relevant psychological literature reveals two key findings:

(1) Forgetting may be negligible for “continuous control” tasks but considerable for “procedural” tasks. Bicycle riding is representative of continuous control, while operating a computer is clearly procedural.

(2) Forgetting is a function of the amount learned and the passage of time, not of the learning rate or other variables.

The experiment employed paid subjects who worked between four and eight hours to learn both a procedural task and a continuous control task (assembling and disassembling a mechanical apparatus). Each subject returned at an assigned time, up to 114 days later, and repeated the task for about four hours. Thirty-one of 35 subjects produced usable data.

For purposes of the study, “forgetting” was defined as the excess of actual time over learning-curve-predicted time, summed over the first four trials after the interruption. “Amount learned” was defined as the achieved reduction in time-per-unit before interruption. As hypothesized, forgetting was a function of amount learned and elapsed time, with 71 percent of the variance being thereby explained in a regression equation. Forgetting rate does not appear to be related to learning rate, contrary to conventional wisdom in the learning curve literature.

Additional findings are (1) that the relearning rate is not correlated with the learning rate, but may be related to skill factors and the degree of original learning; (2) that subjects have poor insight into their memory states; and (3) that, within the specific task, learning rate is highly correlated with the time taken to complete the first unit.

Further research is indicated to investigate whether the forgetting rate may be constant, and therefore applicable across broad classifications of tasks. The determinants of relearning also are a suggested area of investigation. The results of this study apply to individual learning curves, and questions remain concerning the aggregation of individual performance into group performance.
Implicit Treatment of “Zero or Range” Constraints in a Model for Minimum Cost Foundry Alloys
Authors: Hansen P. , Hugé J.
Published: November 2008

A major problem in foundries is to select scrap alloys and pure metals in order to produce at minimum cost alloy of specified composition. We show that such problems, of realistic size, can be solved optimally by mixed-integer programming. Constraints are that the content of the alloys in various metals must be within given ranges and that the selected amount of each scrap alloy must be either zero or within a given range. The latter “zero or range” constraints can be treated implicitly in a similar way as lower and upper bounds are treated implicitly in bounded variables linear programming. Computation times for representative problems are thus reduced by a factor of three.
Note—Developing a Global Diversification Measure
Authors: Kim W. Chan
Published: November 2008

Previous measures, focusing on either the international market or product dimension of corporate diversification, have been unsatisfactory for analyzing global diversification since both dimensions constitute important elements of a firm's global diversification strategy. This study constructs a measure in which both dimensions can be captured, allowing business strategy researchers to examine corporate diversification in the global context. In accomplishing this task, this study extends the Jacquemin-Berry entropy diversification measure to the global horizon.
Depreciation Policies in Regulated Companies: Which Policies are the Most Efficient?
Authors: Ronen Joshua , Srinidhi Bin
Published: November 2008

Decisions of firms such as whether to purchase new equipment frequently rather than better maintain and purchase less frequently are influenced by the (accounting) depreciation policies they use if they are rate-regulated. It is shown that basing decisions on depreciation policies, while uneconomic without regulation, might become rational under regulation. Regulators can mandate depreciation policies for these firms. This paper identifies a class of depreciation rules which will eliminate management incentives to make uneconomic capital replacement and maintenance decisions under regulation.
Gaussian Influence Diagrams
Authors: Shachter Ross D. , Kenley C. Robert
Published: November 2008

An influence diagram is a network representation of probabilistic inference and decision analysis models. The nodes correspond to variables that can be either constants, uncertain quantities, decisions, or objectives. The arcs reveal probabilistic dependence of the uncertain quantities and information available at the time of the decisions. The influence diagram focuses attention on relationships among the variables. As a result, it is increasingly popular for eliciting and communicating the structure of a decision or probabilistic model.

This paper develops the framework for assessment and analysis of linear-quadratic-Gaussian models within the influence diagram representation. The “Gaussian influence diagram” exploits conditional independence in a model to simplify elicitation of parameters for the multivariate normal distribution. It is straightforward to assess and maintain a positive (semi-)definite covariance matrix. Problems of inference and decision making can be analyzed using simple transformations to the assessed model, and these procedures have attractive numerical properties. Algorithms are also provided to translate between the Gaussian influence diagram and covariance matrix representations for the normal distribution.
On the Maintenance of Systems Composed of Highly Reliable Components
Authors: Katehakis Michael N. , Derman Cyrus
Published: November 2008

We consider the dynamic repair allocation problem for a general multi-component system that is maintained by a limited number of repairmen. Component functioning and repair times are exponentially distributed random variables with known parameters. At most one repairman may be assigned to a failed component and it is possible to reassign a repairman from one failed component to another instantaneously. The objective is to determine repair allocation policies that maximize a measure of performance of the system such as the expected discounted system operation time or the availability of the system. We consider systems composed of highly reliable, i.e., small failure rates, components and study asymptotic techniques for the determination of optimal policies. In the final section we find asymptotically optimal policies for the series, parallel, and a system composed of parallel subsystems connected in series.
Uncertainty and Leontief Systems: An Application to the Selection of Space Station System Designs
Authors: Quirk James , Olson Mark , Habib-Agahi Hamid , Fox George
Published: November 2008

This paper deals with the problem of designing a critical component of a highly interactive technologically advanced system, one in which there is uncertainty as to technological and cost parameters. The particular example discussed in the paper is the choice of an energy module for Space Station, where two alternatives, PV and SD, were under consideration. If the uncertainty associated with technological and cost parameters were ignored, and a choice made solely on the basis of “best guesses” of NASA engineers as to parameter values, then SD, which has been implemented only in small scale laboratory applications, would be a clearcut “design to cost” winner. The situation is different when the “best guess” estimates are replaced by subjective probability distributions over technological and cost parameters. The paper outlines a “safety first” decision making model which suggests that the more reliable PV, which has been used on all previous space missions, becomes the preferred choice for highly risk averse decision makers.
Batching to Minimize Flow Times on Parallel Heterogeneous Machines
Authors: Dobson Gregory , Karmarkar Uday S. , Rummel Jeffrey L.
Published: November 2008

Traditional scheduling models have emphasized sequencing of tasks at machines. At multiple-machine work-centers mean flow times are affected by the allocation of work to machines, as well as the batch-sizes used for processing. An efficient algorithm for computing the optimal solution for the single product case is given. An approximate closed-form solution is available that could be used as a heuristic loading-rule in a dynamic environment. For the special case of equal setup times at machines, the optimal solution is given in closed form. Further, it is demonstrated that the optimal flow time for the work center depends only on the total processing rate at that center.
An N Server Cutoff Priority Queue Where Arriving Customers Request a Random Number of Servers
Authors: Schaack Christian , Larson Richard C.
Published: November 2008

We consider a multi-priority, N-server, Poisson arrival, nonpreemptive queue, motivated by police applications. The number of servers requested by an arrival has a known priority dependent probability distribution. All servers requested by a customer must start service simultaneously; the servers' service times are independent and exponentially distributed with parameter μ, independent of priority, server identity or system state. In order to save available servers for higher priority customers, arriving customers of each lower priority are deliberately queued whenever the number of servers busy equals or exceeds a given priority-dependent cutoff number. Whenever all higher priority queues are empty, the longest waiting priority i customer will enter service the instant there is a service completion from a state having precisely Ni − k + 1 servers busy, where k is the number of servers requested by the customer and Ni is the server cutoff number for priority i. The queueing discipline is in a sense HOL by priorities. We derive the priority i waiting time distribution (in transform domain) and other system statistics. Illustrative computational results are given.
Note—A Note on the Dynamic Lot-Size Model with Uncertainty in Demand and Supply Processes
Authors: Anderson E. J.
Published: November 2008

In this paper we give some extensions of a result of Nevison and Burstein (Nevison, C. H., M. Burstein. 1984. The dynamic lot-size model with stochastic lead times. Management Sci. 30 100–109.), who discuss a dynamic lot-sizing model with stochastic lead times. They consider a situation in which the lead time distribution is unaltered by the amount which is ordered, but is otherwise arbitrary, and characterize the optimal solution in terms of points at which there is zero inventory. Here we give a more precise characterization, and show that these results can be extended to a situation in which the demands are also stochastic, and in which there is uncertainty relating to quantity as well as to the timing of demands and order arrivals. The method of proof that we use is different from that used by Nevison and Burstein.
Analysis of Profit-Linked Total-Factor Productivity Measurement Models at the Firm Level
Authors: Miller David M. , Rao P. Mohan
Published: November 2008

The purpose of the paper is to present the results of a comparative analysis of two main-line productivity measurement procedures: the American Productivity Center's total factor model, and the Ethyl Corporation's “Profitability = Productivity + Price Recovery” model. Several fundamental differences between the two approaches are identified and analyzed. As demonstrated in the paper, differences such as the method of deflation can substantially affect the proper choice of the more appropriate procedure to use in a given corporate setting.
Modeling Integrative, Multiple Issue Bargaining
Authors: Gupta Sunil
Published: November 2008

Integrative, multiple issue bargaining can be expected to characterize many decision making situations in marketing. In this paper we present a mathematical model specifically appropriate to such negotiations. The central features of the model are: (i) the close relation of the structure of the model to integrative, multiple issue bargaining, (ii) the importance of the reference point as a determinant of the final outcome, and (iii) the property of the solution which implies that the balance of overall power is maintained at the final outcome. The equivalence of this model to an axiomatic model of cooperative bargaining is also shown. Regarding the model's predictive ability, results of the reported multiple issue bargaining experiment provide initial support.
Computing Equilibrium Single Commodity Trade Flows Using Successive Overrelaxation
Authors: Güder Faruk , Morris James G.
Published: November 2008

We consider a market economy that is composed of separate regions, each endowed with linear supply and demand curves and represented as a point on a transportation network. The problem addressed is to determine an equilibrium price in each region so that regional price differences do not exceed unit transportation costs, and when trade takes place between two regions, prices differ by the associated transportation cost.

The problem has several quadratic programming formulations. We adopt an approach based on a net import relation. Properties are then given which lead to reductions in the quadratic program. A successive overrelaxation algorithm is proposed that is particularly well-suited to the task of solving the inherent large-scale instances of the problem, while at the same time is simple to implement.
Approximations for Product Departures from a Single-Server Station with Batch Processing in Multi-Product Queues
Authors: Bitran Gabriel R. , Tirupati D.
Published: November 2008

In this paper we consider a single-server station processing jobs belonging to multiple product classes. The processing at the station is in batches of fixed size, r. Job arrivals in different product classes are independent of the arrivals in other classes. The arrivals within each product class and the service times are assumed to have general, independent and identical distributions. Based on approximate analyses, we present an estimate for the mean number of jobs and provide two complementary characterizations of the product departure streams. We present methods to compute the squared coefficient of variation of the departure intervals and the probability distribution of the lot sizes of product departures.

The computational results reported in this paper demonstrate that the accuracy of the approximations is acceptable in most applications. Based on these results, we identify conditions under which the estimates can be expected to perform well.

The methods developed in this paper complement the decomposition approach for open queueing networks proposed by Shanthikumar and Buzacott (Shanthikumar, J. G., J. A. Buzacott. 1981. Open queueing network models of job shops. Internat. J. Production Res. 19(3) 255–266.) and Whitt (Whitt, W. 1983. The queueing network analyzer. Bell System Tech. J. 62(9) 2779–2815.) and permit analysis of networks with some types of batch processing.
Technological Infrastructure and the Implementation of Technological Strategies
Authors: Weiss Andrew R. , Birnbaum Philip H.
Published: November 2008

Technological change is an important strategic problem for many enterprises. Effectively implementing the technological aspects of a firm's strategy requires an understanding of the nature of the external infrastructure which supports technological change and the strategic capability to continuously interact with this infrastructure. After explaining why this infrastructure is important and how it is organized, we suggest the basic elements needed to implement a technological strategy successfully.
Knowledge Maps
Authors: Howard Ronald A.
Published: November 2008

To get fragmented information out of people's heads, onto paper, and ultimately into a computer is a continually challenging problem. We show how to use the concepts of influence diagrams to construct knowledge maps that capture the diverse information possessed by an individual or a group. We use redundant knowledge maps assessed iteratively to handle cases where the most comfortable way to assess the information does not correspond to any proper assessment order for the diagram. We use disjoint knowledge maps when the particular assessment to be made does not require a complete joint distribution. The necessary inferential calculations are readily performed in simple cases by spreadsheet programs. Knowledge maps facilitate the processes of representing knowledge and of determining its implications.
User Acceptance of Computer Technology: A Comparison of Two Theoretical Models
Authors: Davis Fred D. , Bagozzi Richard P. , Warshaw Paul R.
Published: November 2008

Computer systems cannot improve organizational performance if they aren't used. Unfortunately, resistance to end-user systems by managers and professionals is a widespread problem. To better predict, explain, and increase user acceptance, we need to better understand why people accept or reject computers. This research addresses the ability to predict peoples' computer acceptance from a measure of their intentions, and the ability to explain their intentions in terms of their attitudes, subjective norms, perceived usefulness, perceived ease of use, and related variables. In a longitudinal study of 107 users, intentions to use a specific system, measured after a one-hour introduction to the system, were correlated 0.35 with system use 14 weeks later. The intention-usage correlation was 0.63 at the end of this time period. Perceived usefulness strongly influenced peoples' intentions, explaining more than half of the variance in intentions at the end of 14 weeks. Perceived ease of use had a small but significant effect on intentions as well, although this effect subsided over time. Attitudes only partially mediated the effects of these beliefs on intentions. Subjective norms had no effect on intentions. These results suggest the possibility of simple but powerful models of the determinants of user acceptance, with practical value for evaluating systems and guiding managerial interventions aimed at reducing the problem of underutilized computer technology.