bluuebunny/crossref_metadata_2025 huggingface dataset:
Effectiveness as Paradox: Consensus and Conflict in Conceptions of Organizational Effectiveness
Authors: Cameron Kim S.
Published: November 2008

Attention to the subject of organizational effectiveness has been increasing in the last several years as popular management books have extolled management excellence, almost two million jobs have been lost due to poor U.S. competitiveness, and economic conditions have put pressure on organizations to become more accountable with their resources. However, despite its popularity, much confusion continues in the organizational literature regarding the definition, circumscription, and appropriate criteria for assessing effectiveness. In this paper, I summarize what areas are becoming consensual among most writers on effectiveness, and I point out continuing areas of disagreement and conflict. The five statements summarizing consensual characteristics of effectiveness and the three statements summarizing areas of continuing conflict point out that agreement about effectiveness is mainly an agreement to disagree. Conflicts center mainly on the incompatibility and inappropriateness of commonly selected criteria. The main theme of the paper, however, is a discussion of an inherent, but largely ignored, characteristic of effectiveness in organizations—the paradoxical nature of effectiveness criteria. This discussion illustrates that the most effective organizations are also those characterized by paradoxes—i.e., contradictions, simultaneous opposites, and incompatibilities. Taking account of this characteristic helps explain one reason why so much confusion and disagreement continues to surround effectiveness, and it uncovers a new set of research questions that can guide future investigations. Some suggestions are provided for how research on paradoxes in effectiveness might be pursued in the future.
Central Problems in the Management of Innovation
Authors: Van de Ven Andrew H.
Published: November 2008

Innovation is defined as the development and implementation of new ideas by people who over time engage in transactions with others within an institutional order. This definition focuses on four basic factors (new ideas, people, transactions, and institutional context). An understanding of how these factors are related leads to four basic problems confronting most general managers: (1) a human problem of managing attention, (2) a process problem in managing new ideas into good currency, (3) a structural problem of managing part-whole relationships, and (4) a strategic problem of institutional leadership. This paper discusses these four basic problems and concludes by suggesting how they fit together into an overall framework to guide longitudinal study of the management of innovation.
Uncertainty, Experience and the “Winner's Curse” in OCS Lease Bidding
Authors: Gilley Otis W. , Karels Gordon V. , Leone Robert P.
Published: November 2008

This paper presents an empirical test of the major hypothesis of the currently-accepted bidding models in two regions of differing tract value uncertainty. The most significant result is an empirical verification that the more bidders that bid on a particular parcel in the face of great uncertainty, the lower the bid levels of individual firms that participate given all else is constant. No such relationship was observed, however, in the sale where there was previous bidding experience and prior ownership of closely related tracks. Prior models have not been able to identify the inverse relationship because of a bias that occurs when only positive bids are employed in these models and the use of data where previous experience reduces uncertainty. In the analysis of the competitive bidding situation, we use a two-stage procedure which adjusts for this “selection bias” by allowing for the incorporation of information from the dichotomous bid/no-bid decision in the modeling of bid level.
A Sequencing Problem with Release Dates and Clustered Jobs
Authors: Posner Marc E.
Published: November 2008

This paper considers a one-machine scheduling problem where the objective is to minimize the sum of weighted completion times subject to release dates. A polynomial time algorithm is developed for the case when the jobs are clustered. The jobs in each cluster must be processed sequentially and the clusters are ordered. The insights developed are used in an efficient heuristic for the weighted completion time problem without clusters. Also, a class of release date problems is described for which the heuristic finds an optimal solution.
The Relation Between Research and Development Project Performance and Technical Communication in a Developing Country—Afghanistan
Authors: Ebadi Yar M. , Dilts David A.
Published: November 2008

This study examines the effects of frequency and centrality of communication on research and development project success. The data used in this study are from 49 government funded R & D projects in Afghanistan during 1979. The results of the multivariate analyses show that frequency of communication is positively correlated with performance for mid and high performing groups, centrality or location of the project within the communications network is negatively related with project performance within the low performance category. The results are consistent with the evidence thus far obtained for developed countries. There appears to be little difference in the effects of centrality and frequency of communication on the performance between research and development projects. This result is not consistent with the available evidence for developed countries. The results of the regressions on the socio-metric data suggest age are negatively correlated with communication centrality. This is due to the particular circumstances found in 1979 in Afghanistan where the older scholars were typically trained in the region while the younger scholars were mostly Western trained. While conceptually this study is indebted to the research concerning developed countries, these results imply that caution is mandated in generalizing the given body of knowledge to developing countries.
Improved Penalties for Fixed Cost Linear Programs Using Lagrangean Relaxation
Authors: Cabot A. Victor , Erenguc S. Selcuk
Published: November 2008

The most commonly used penalty in branch and bound approaches to integer programming is the Driebeek–Tomlin penalty. It has been used successfully in solving fixed cost linear programs by Kennington and Unger and by Barr, Glover and Klingman. It is well known that the Driebeek–Tomlin penalty can be derived from a Lagrangean relaxation of the integer programming problem. We show, however, that the Lagrangean relaxation for fixed cost problems not only yields the Driebeek–Tomlin penalty, but two penalties which sometimes dominate it. We show the strength of the new penalties by solving a series of text problems and comparing the number of nodes generated on the branch and bound tree and the total computer time needed to solve each problem.
True Interest Cost in Municipal Bond Bidding: An Integer Programming Approach
Authors: Nauss Robert M.
Published: November 2008

Over $47 billion of tax exempt debt issues were sold to the public in 1982. A portion of this total was offered to municipal bond underwriters under a competitive bidding system using the criterion of minimum true interest cost (internal rate of return). The TIC bidding problem may be formulated as a nonlinear integer program. We develop a linearization which is embedded in a special purpose integer linear branch and bound algorithm. Computational results for several actual bidding problems are presented.
A Game Theoretic Approach to Collections and Disbursements
Authors: Orgler Yair E. , Tauman Yair
Published: November 2008

Many firms use lock boxes serviced by local depository banks in an attempt to reduce collection float. Likewise, an increasing number of large firms use controlled disbursing to pay their bills, in order to increase and control their disbursement float. Almost all the literature treats the lock box location problem and the disbursement bank location problem separately.

The purpose of this paper is to examine simultaneously the optimal collection strategies of sellers and the optimal payment strategies of buyers. Our analysis involves multiple periods where the decisions of each party take into consideration the potential strategies of the other. That is, the collection-payment problem is analyzed both as a two-party and a multiple-party game. The rationale for casting the problem in a game theoretic framework is quite simple: When a seller selects lock boxes and depository banks he takes into consideration the fact that his buyers may use controlled disbursing banks. Likewise, when buyers select disbursing banks or branches they realize that the seller may shift the location of the designated lock boxes in response. Obviously, our analysis is relevant primarily for firms that manage large amounts of payments and collections and use sophisticated cash management techniques.
Inventory Service-Level Measures: Convexity and Approximation
Authors: Zipkin Paul
Published: November 2008

We argue that standard approximations for two often-used inventory service-level measures may perform poorly in many situations. Then we confirm the long-standing conjecture that the (relatively) exact formulas for these quantities are convex functions of the relevant control variables. Both results suggest the exact expressions should be seriously considered in practical work.
The Effect of Commonality on Safety Stock in a Simple Inventory Model
Authors: Baker Kenneth R. , Magazine Michael J. , Nuttle Henry L. W.
Published: November 2008

We examine the effects of component commonality on optimal safety stock levels in a two-product, two-level inventory model. The criterion is to minimize system safety stock subject to a service level constraint. Although our model is specialized, its analysis provides insights not available in other multilevel inventory models.
Heuristics for Multilevel Lot-Sizing with a Bottleneck
Authors: Billington Peter J. , McClain John O. , Thomas L. Joseph
Published: November 2008

In this paper we present a heuristic method, based on Lagrangian relaxation, for multilevel lot-sizing when there is a single bottleneck facility. A series of Lagrangian relaxations (one for each item in the product structure) is imbedded in a branch and bound procedure. The objective is to find a production schedule that fits within available capacity at minimum cost. The method has two solution phases, dual and primal. In the dual phase of the procedure, implied costs of setups and production are determined based on a tentative schedule. The primal phase is repeated with these new prices and we iterate to reach a good solution.

The solution procedure is first tested on two special cases: uncapacitated multilevel lot-sizing and the capacitated, single-level multi-item lot sizing problem. The results show that the solution procedure can provide better solutions than some heuristics designed especially for those problems. Test results on the bottleneck problem indicate that good feasible solutions are found for problems too difficult to solve with exact methods.
Optimal Residence Times for a Batch Biomass-to-Methane Conversion System
Authors: Deuermeyer Bryan L. , Lee Hwaki , Curry Guy L.
Published: November 2008

Biomass conversion processes have the potential for satisfying approximately 25% of the national demand for methane gas. At the present time, very little analytical work has been done to optimally design and operate the production facilities associated with these processes. This study was motivated by the high cost of these systems and the attendant need for efficient operation. While in storage, biomass decays (exponentially) over time, and gas production declines (exponentially) with time. The basic operational problem is to determine the optimal residence times for batches in the anaerobic digester to maximize total production over a fixed planning horizon. This paper provides analysis to characterize the form of the optimal policy and presents an efficient algorithm for obtaining the solution. An example problem, based upon realistic biomass and digester data, is used to illustrate the algorithm as well as the behavior of the optimal solution.
Value Functions for Infinite-Period Planning
Authors: Harvey Charles M.
Published: November 2008

Cost-benefit and risk analysis studies that model tradeoffs between the present and the distant future by means of present value discounting have been criticized for according the future, and thus future generations, far too little importance. This paper presents an alternative means of modeling tradeoffs between different periods that accords the future far more importance than present value discounting, and that is no more difficult to apply. The paper also presents a means of modeling the preference issue of concern for equity or stability between different periods.
Incorporating Learning Curve Analysis into Medium-Term Capacity Planning Procedures: A Simulation Experiment
Authors: Smunt Timothy L.
Published: November 2008

The purpose of this paper is to determine the type of company which can benefit from incorporating learning curve analysis into its medium-term capacity planning procedures and the effect of information aggregation on learning curve capacity projections. The research into these two issues uses a simulation study that describes the relevant production and information characteristics. Four production characteristic variables are investigated: (1) average learning rate, (2) run-time variance, (3) learning rate mix, and (4) run-time distribution. A fifth variable, level of data aggregation, is an information characteristic and is also investigated.

The results of this study indicate that there are significant increases possible in the accuracy of medium-term capacity projections from the incorporation of learning curve analysis in firms with high rates of learning or with low noise levels in their data. However, when a company has either low to moderate rates of learning or moderate noise, a standard analysis, which uses the sample mean of the last planning horizon's data, provides projections approximately as accurate as a learning curve estimate.
Detection of Nonstationarity in Hydrologic Time Series
Authors: Rao A. Ramachandra , Yu G. H.
Published: November 2008

Detection of changes in hydrologic time series due to intervention by man or natural causes is an important problem. Although intervention analysis has been used in the recent past to analyze nonstationary hydrologic time series, the necessity to specify a model of change and an initial time at which the time series has started to change are obvious disadvantages of intervention analysis. An alternative to intervention analysis is a method which is based on spectral characteristics and an exponential moving average model.

The basic objective of the research discussed in the present paper is to test this alternative method. The model is tested by using synthetic uncorrelated and correlated data with step and gradual changes as well as by using real hydrologic time series. The sensitivity of the model to different parameters is also explored. The alternative model is found to be quite accurate in detecting changes in hydrologic time series.
Adaptive Coordination of a Learning Team
Authors: Lounamaa Pertti H. , March James G.
Published: November 2008

Contemporary research on organizations has cast doubt on the extent to which organizations can be expected to adapt to their environments through rational, anticipatory action. Incremental experiential learning has been suggested as an alternative form of organizational intelligence, less demanding cognitively yet capable of considerable power. This paper examines such learning in the context of a model of a team involving two learning members, each of whom modifies beliefs about the other on the basis of experience, and an adaptive coordinator who adjusts a coordination control variable. It is shown that although learning is a powerful mechanism for improving organizational performance, it can often be confounded by the effects of attributional biases on the part of members, by the interactions of simultaneous learning by the members and the coordinator, and by errors in perceiving or interpreting experience. These complications lead to consideration of possible heuristics to overcome such learning liabilities. It is suggested that the effectiveness of incremental learning can often be improved by slowing the rate of learning and adaptation, by reducing the simultaneity of behavioral changes, and by scaling the size of the changes.
Comment on “A Dynamic Programming Algorithm for Joint Replenishment Under General Order Cost Functions”
Authors: Queyranne Maurice
Published: November 2008

The Dynamic Programming algorithm proposed by Rosenblatt and Kaspi (Rosenblatt, M. J., M. Kaspi. 1985. A dynamic programming algorithm for joint replenishment under general order cost functions. Management Sci. 31(March) 369–373.) for an optimum partition problem is shown to be incorrect. An alternative Dynamic Programming algorithm is presented for this problem.
Comment on “A Dynamic Programming Approach for Joint Replenishment Under General Order Cost Functions”
Authors: Goyal S. K.
Published: November 2008

Rosenblatt and Kaspi (Rosenblatt, M. J., M. Kaspi. 1985. A dynamic programming algorithm for joint replenishment under general order cost functions. Management Sci. 31 (March) 369–373.) suggested a dynamic programming algorithm for partitioning a number of items ordered from a single supplier. It was assumed that items belonging to a group have a fixed common ordering cycle. Queyranne (Queyranne, M. 1987. Comment on a dynamic programming algorithm for joint replenishment under general order cost. Management Sci. 33 (1, January) 131–133.) in his comments on Rosenblatt and Kaspi described the correct dynamic programming algorithm for this optional partitioning problem.
From EOQ Towards ZI
Authors: Zangwill Willard I.
Published: November 2008

Zero Inventory (ZI) is a new and powerful concept to improve production efficiency. Underpinning ZI is set up reduction and this paper examines what eventuates when set up costs are cut. The folklore is that set up reduction lowers inventory and costs. We obtain results contrary to that. Reducing set up costs need not reduce inventory, for example. Likewise lowering set up costs need not necessarily lower total production and inventory costs. Furthermore, most investments produce marginally decreasing returns. Set up cost reduction prompts the opposite; it produces marginally increasing (not decreasing) returns. A parametric algorithm that calculates the benefit of set up cost reduction is provided.

Most presentations of ZI have been descriptive with very few mathematical models of it yet untaken. By modeling certain ZI concepts mathematically, we scrutinize their validity and sometimes invalidity.
Note—Response
Authors: Jagannathan R.
Published: November 2008

LaValle (LaValle, I. H. 1987. Response to ‘Use of sample information in stochastic recourse and chance-constrained programming models:’ On the ‘Bayesability’ of CCP's. Management Sci. 33 1224–1228.) claims that the utility function U(z, F1, …, Fn) I have assumed in Jagannathan (Jagannathan, R. 1985. Use of sample information in stochastic recourse and chance-constrained programming models. Management Sci. 31 96–108.) must be linear in F1, and consequently my results pertaining to chance-constrained programming are not valid. In this note, I show through a simple counterexample that LaValle's claim is based on an erroneously stated result.
Note—Blau's Dilemma Revisited
Authors: Nau Robert F.
Published: November 2008

The issue of equivalence between chance-constrained programming problems (CCPP's) and Bayesian utility-maximization problems (BUMP's), and the anomalous evaluation of information in CCPP's, are re-examined in light of a recent paper by Jagannathan and the ensuing exchange between Jagannathan and LaValle. Difficulties in “explaining” value of information within the framework of chance-constrained programming are illustrated in a numerical example due to Jagannathan.
An Empirical Evaluation of Alternative Forecasting Combinations
Authors: Russell Thomas D. , Adam Everett E.
Published: November 2008

Combining naive forecasting models as an alternative to using any one model has shown promise for improving forecasting accuracy at reasonable additional cost. This study extends previous combination modeling by selectively including models in combination rather than using all individual models in a set, evaluating six new model combinations and comparing them to three previously investigated model combinations, investigating the impact of forecasting time horizon, and investigating alternative error measures to mean square error (MSE). Results support using a model-combination that (1) selects the best 3 to 5 models from the 10 models studied and (2) weights the selected models based upon the inverse proportion of their individual accuracy as measured by MSE.
Warnings of Malfunction: The Decision to Inspect and Maintain Production Processes on Schedule or on Demand
Authors: Paté-Cornell M. E. , Lee H. L. , Tagaras G.
Published: November 2008

In this paper we study different maintenance policies for the control of production systems that are subject to deterioration over time. A Markov model is used to characterize the deterioration process. Two types of basic maintenance policies are considered: scheduled preventive maintenance and maintenance on demand. The former deals with scheduled maintenance procedures performed on the process at fixed intervals, regardless of its status. In the latter, maintenance procedures are performed in response to signals observed from the production process, and are thus a function of the condition of the process over time. For both approaches the policies can be further classified, based on the mode of observation: the process itself or the outputs of the process. Thus we can have preventive maintenance of the process, scheduled inspection of the outputs of the process, maintenance in response to signals given by the process, and maintenance in response to signals as indicated by the quality of the outputs. We analyze the performances of these four policies, and derive their long-run disutilities. Numerical examples show that, by monitoring the process with the appropriate optimal maintenance policy, significant savings can be achieved.
Setup Reduction and Increased Effective Capacity
Authors: Spence Anne M. , Porteus Evan L.
Published: November 2008

Setup reduction is an important aspect of the Just-In-Time (JIT) and Zero Inventory (ZI) concepts. This paper looks at the increased effective capacity that results from setup reduction. A certain amount of time, as well as expense, is required for each setup within a multiproduct firm. By reducing the time required for setups, less time is required to carry out those setups. That time can either be used to reduce lot sizes or to reduce overtime. We use an EOQ-like setting with stationary deterministic demand rates for each product. This simple model allows explicit solutions to be derived, not only for optimal setup time reduction, but for optimal overtime as well. Numerical examples illustrate the results.
A Dynamic Planning Technique for Continuous Activities Under Multiple Resource Constraints
Authors: Ozden Mufit
Published: November 2008

The solution technique developed in this paper integrates the simplex search algorithm into the recursive calculations of dynamic programming in order to mitigate the “curse-of-dimensionality.” Since differentiation is not required as a means of optimization procedure, it is expected that this technique will have an important impact on planning problems, such as the multiple resource allocation problems which involve nondifferentiable and/or highly nonlinear performance functions. Applications of the technique to very complex problems seem to confirm the anticipated polynomial average performance.
Consumer Protection Laws: Violator Detection and Enforcement Strategy
Authors: Labarbera Priscilla A. , Melnick Edward L.
Published: November 2008

A methodology is proposed for both the assessment and enforcement of consumer protection laws and regulations. An assessment model is presented to determine the effect of a law (e.g., violation rate, characteristics and/or profile of violators) and then a cost efficient law enforcement strategy is described that is aimed at the violator population identified by the assessment model. This methodology consists of a short enforcement campaign, directed mainly against the violators, and is then followed by an inexpensive maintenance program.

Data for the assessment model are collected based upon an interrupted stratified time series design where the stratification scheme is selected by satisfying a minimum variance criterion. The stratification rule may vary so that a dynamic representation of the changing characteristics of the violator population is obtained.
A Network Decomposition Approach for Approximating the Steady-State Behavior of Markovian Multi-Echelon Reparable Item Inventory Systems
Authors: Gross Donald , Kioussis Leonidas C. , Miller Douglas R.
Published: November 2008

We develop a method for obtaining approximate steady-state probabilities for large multi-echelon reparable item inventory systems modeled as non-Jacksonian Markovian networks with finite state space. The approximation involves decomposing the network model into smaller overlapping local subnetwork models, solving them in “isolation” and iterating back and forth among the subnetwork models until convergence is obtained. Numerical results show that the method is quite accurate and efficient for this application.
On Optimal Competitive Contracting
Authors: Engelbrecht-Wiggans Richard
Published: November 2008

We present an example of risk neutral bid-taker and bidders in which the bid-taker obtains a greater expected revenue from auctioning an inefficient contract than from auctioning an efficient contract. This occurs because in going from the efficient contract to an inefficient (but almost efficient) contract, the winning bidder's expected profit decreases faster than the value of the output produced under the contract (net of production costs) decreases. Therefore, the bid-taker's expected revenue—the value of the output less the winning bidder's expected profit—increases.

The competitive letting of a contract introduces a factor not present when somehow letting a contract noncompetitively. In particular, changing the contract not only affects the efficiency of the contract, but also affects the amount of the contract's value that will be captured by the contract winner as profit. Therefore, for competitively let contracts, the optimal contract for the bid-taker to offer turns out less efficient than can be explained solely by any benefits from risk sharing.
A Bicriteria Mathematical Programming Model for Nutrition Planning in Developing Nations
Authors: Benson Harold P. , Morin Thomas L.
Published: November 2008

Mathematical programming models for nutrition planning in developing nations typically involve the optimization of a single criterion function subject to resource and nutritional constraints. The nutritional constraints specify that the amount available of each nutrient for human consumption should meet or exceed some prechosen nutrient requirement level. However, fixed nutrient requirement levels are difficult to prespecify. In this paper, a bicriteria mathematical programming model is proposed which does not require planners to prespecify nutrient requirement levels for several key nutrients. Instead, the model generates an entire set of efficient nutrition plans which supply various amounts of these nutrients. To demonstrate the use and potential benefits of this model, an illustrative application to Colombia, South America is included.
Multi-Item, One-Warehouse, Multi-Retailer Distribution Systems
Authors: Muckstadt John A. , Roundy Robin O.
Published: November 2008

In this paper we study the problem of coordinating the purchase and shipment of I items in a one-warehouse, N-retailer inventory system. The model includes positive echelon holding costs, fixed costs for ordering and shipping each item, and a fixed joint item order cost at each retailer. Demand for each item at each retailer is assumed to occur at a constant and continuous rate. A mathematical model is developed based on these assumptions and the assumption that a stationary nested policy is followed. An efficient algorithm is presented based on the problem's structure that involves only sorting and runs in O(NI log NI) time. The cost of the policy computed is proven to be within 6% of the cost of an optimal nested policy. An example is presented to illustrate the problem structure and the proposed algorithm.
A Semi-Markov Model for Primary Health Care Manpower Supply Prediction
Authors: Trivedi Vandan , Moscovice Ira , Bass Richard , Brooks John
Published: November 2008

In this paper we develop a semi-Markov formulation for modelling transitions of physicians, nurse practitioners, and physician assistants between different settings and locations within a geographic area. The model predicts the supply of primary care providers over a planning horizon. We then compare the model predictions with estimates of future demand and need for primary care for a community. Statistical tests for validation and sensitivity analysis of the model are also performed to establish the appropriateness of the semi-Markov approach. With the likelihood of an oversupply of physicians during this decade, the model offers a useful tool for health planners, administrators, legislators, and regulators, for objective decision making.
Preferences for Proxy Attributes
Authors: Fischer Gregory W. , Damodaran Nirmala , Laskey Kathryn B. , Lincoln David
Published: November 2008

A proxy attribute is an indirect measure of an ultimate decision objective. Keeney and Raiffa (Keeney, R. L., H. Raiffa. 1976. Decisions with Multiple Objectives: Preferences and Value Tradeoffs. John Wiley, New York.) argued that assessing utility functions over proxy attributes requires complex inferences that may exceed the human capacity for consistent judgment, thus biasing utility assessments. This hypothesis was tested in an experimental study of preferences for pollution control alternatives. Each decision maker made two sets of utility assessments: the first regarding outcomes described by the fundamental attributes “pollution control cost” and “pollution related illness”; the second regarding outcomes described by the fundamental attribute “pollution control cost” and the proxy attribute “pollution emissions level” (which served as an indirect measure of illness). The subjects displayed a near universal bias to overweight the proxy attribute relative to the prescriptions of expected utility theory. The bias was large, resulting in a substantial loss of expected utility in a simulated policy decision making scenario. To account for this bias, we developed three heuristic models of preferences for proxy attributes: the best guess, worst case, and relative importance models. The results strongly favored the relative importance model, according to which decision makers assess scaling constants by relying on general attitudes regarding the relative importance of different decision objectives rather than on well-articulated preferences for rates of substitution between pairs of attributes.
Application of Game Theoretic Analysis to a Problem in Demography
Authors: Owen Guillermo
Published: November 2008

Governments in certain countries have tried over the last two decades to draw most industry to the largest cities. The effect has generally been a large increase in both the population and land area of the cities, as the nearby rural areas are taken out of agricultural production and urbanized. Where the land is especially fertile, this can represent a definite loss to the country's agricultural capabilities.

By studying the Nash equilibria we show that, given political pressures, there is a very real danger that this process will continue until all, or practically all of the land has been urbanized.
Simulating the Response of a Small Open Politico-Economic System to International Crises: The Case of Switzerland
Authors: Luterbacher Urs , Clarke T. Michael , Allan Pierre , Kessler Nicolas
Published: November 2008

This paper applies some traditional management science tools to the study of Switzerland—a small country characterized by the openness of its politico-economic system to the outside world. Despite its apparent vulnerability to external influences, Switzerland has been able to maintain a remarkable degree of stability throughout the political and economic difficulties of the 1970’s and 1980’s. In order to help understand the main elements of this ability to absorb major international fluctuations as well as provide decision-makers with ways to analyze them and to investigate the impact of other possible developments, a simulation model of Switzerland has been constructed. This model (SIMSWISS) is based on a representation of the most important sectors of the Swiss politico-economic system, with special emphasis on their connections to the outside. SIMSWISS is constructed via a combination of dynamic simulation and optimization techniques which allow its user to check its accuracy as a representation of reality and to engage in the analysis of possible scenarios and alternative policies. An energy crisis scenario is used to illustrate how the model works and how it can be used to understand the functioning of the Swiss politico-economic system. We hope that this model will serve as the basis for a broader use of management science techniques in the study of other politico-economic systems.
Note—A Re-Examination of the Results of Hogarth and Makridakis' “The Value of Decision Making in a Complex Environment: An Experimental Approach”
Authors: Ross William T.
Published: November 2008

This note raises questions about two of the results of Hogarth and Makridakis (Hogarth, R. M., S. Makridakis. 1981. The value of decision making in a complex environment: An experimental approach. Management Sci. 27 93–107.) based on a lack of statistical support and inadequate consideration of the effect of team starting position on performance. Using bootstrapping simulation and regression analyses which specifically consider team starting position, we find (1) support for Hogarth and Makridakis' finding that a consistent strategy outperforms a random one, and (2) statistical disconfirmation for their second finding, that consistently managed arbitrary teams perform quite well in comparison with human management teams.
The Efficiency of the Simplex Method: A Survey
Authors: Shamir Ron
Published: November 2008

The Linear Programming Problem is by far the most widely used optimization model. Its impact on economic and government modeling is immense. The Simplex Method for solving the Linear Programming (LP) Problem, due to George Dantzig, has been an extremely efficient computational tool for almost four decades. The method has been the subject of intense investigations for many years, but some major aspects of its behavior are not fully understood yet.

The purpose of this paper is to survey the body of knowledge on the efficiency of the Simplex Method, from both practical and theoretical points of view. Adopting the number of iterations (pivot steps) as the yardstick for efficiency, we survey four aspects of the issue:

1. Reports on practical experience of the method's performance on real-life LP problems.

2. Results on controlled (Monte-Carlo) experiments solving LP problems which were randomly generated according to some predetermined distributions.

3. Complexity results, including theoretical analyses on both upper and lower bounds for the performance of the Simplex as well as non-Simplex algorithms for LP.

4. Results of recent theoretical studies using probabilistic analysis to derive bounds on the average behavior of the Simplex Method.

We discuss the consequences and limitations of the various studies. Special emphasis is given to open questions.
Combination of Forecasts: An Extension
Authors: Gupta Sunil , Wilton Peter C.
Published: November 2008

Existing approaches to combining multiple forecasts generally offer either theoretical richness or empirical robustness, but not both together. In this paper, we propose a new method for combining forecasts which attempts to overcome this imbalance. The method allows easy inclusion of relevant subjective and empirical information about the forecasts, while providing weights which are: (i) intuitively meaningful, and (ii) not dependent upon large numbers of observations of prior forecast accuracy. Results of a simulation experiment show the method to be highly robust, and significantly superior to existing approaches under many conditions.
The Financing Threshold Effect on Success and Failure of Biomedical and Pharmaceutical Start-Ups
Authors: Roberts Edward B. , Hauptman Oscar
Published: November 2008

The theories of technological innovation are examined in the context of the formation and growth of biomedical and pharmaceutical firms. Analyses are based on detailed data gathered from 26 firms, founded between 1968 and 1975 in Massachusetts, supplemented by a three-member expert panel evaluation of the risk associated with use of each firm's products.

A positive relationship was established between the level of technological sophistication of the firm and the risk associated with use of its products. Consequently, technological advancement of the firm has not necessarily resulted in high economic performance, in part because of the high demands put upon the firm's resources and time by the U.S. Food and Drug Administration approval process.

The study indicates that the initial financial inputs have a threshold effect on subsequent economic performance of biomedical and pharmaceutical new firms. In the sample studied, unless these inputs reached the $850,000 to $1,000,000 mark (in 1970–1975 dollars), technological innovation was negatively mediated by the risk associated with the use of firm's products and by the FDA quality control procedures. Consequently, attempts at technological innovativeness are unfortunately detrimental to the economic performance of underfinanced new firms in the biomedical and pharmaceutical industry.
A Stochastic Dynamic Nash Game Analysis of Policies for Managing the Strategic Petroleum Reserves of Consuming Nations
Authors: Murphy Frederic H. , Toman Michael A. , Weiss Howard J.
Published: November 2008

In this paper we present a Nash dynamic game model of interactions among oil inventory and tariff policies for oil importing countries. The inventory policies consist of the rates for building up and drawing down strategic oil reserves, while the tariff policies consist of setting tariffs as a function of the state of the world oil market. The model represents a stochastic game in which countries are grouped into two players, where each player in the game chooses its individual policies to maximize expected social welfare. We use the model to present empirical results about the sizes of the stockpiles as a function of disruption probabilities, tariff policies and cooperation versus noncooperation between nations. In addition to results regarding the build-up and draw down rates as a function of the amount of disruption or probability of future disruption our central conclusion is that build-up and drawdown policies are essentially the same with or without international cooperation, due to the current inventory limits on U.S. and Foreign Strategic Petroleum Reserves.
Notes—Discovering Personal Probabilities When Utility Functions are Unknown
Authors: Allen Franklin
Published: November 2008

Standard scoring rules require knowledge of the expert's utility function. This note shows how basic reference lottery tickets can be used to develop scoring rules which do not require this information.
Optimal Average Cost Policies for the Two-Terminal Shuttle
Authors: Deb Rajat K. , Schmidt Charles P.
Published: November 2008

In this paper we consider a transportation system consisting of a carrier with capacity Q ≤ ∞, operating between two terminals. Passengers arrive at these terminals according to independent Poisson processes and are transported by the carrier from one terminal to the other terminal. Under a fairly general cost structure we show that the optimal operating policy which minimizes the expected average cost is a monotone decreasing function of the number of customers waiting at each terminal. Bounds are derived for the optimal average cost policy and a method to compute these optimal policies using linear programming is presented.
Note—Does Rolling Back Decision Trees Really Require the Independence Axiom?
Authors: Hazen Gordon B.
Published: November 2008

In a recent article, LaValle and Wapman argue that the recursion analysis of decision trees in extensive form requires the Herstein-Milnor independence axiom. I claim that most extensive form analyses are perfectly proper in the absence of independence, but that the transformation from extensive to normal form is impermissible.
Multiperiod Financial Planning
Authors: Brown David P.
Published: November 2008

A new algorithm for asset allocation is developed. The algorithm provides consistent approximations to the optimal savings allocations which are dependent upon personal characteristics such as age and income. Numerical analysis is used to solve an individual's lifetime consumption-investment problem on an annual basis within a context of complete markets and nonmarketable income. The investment opportunity set approximates that which was available (expost) during the 1926–1981 period. Relative risk aversion in wealth is highest for the elderly, lowest for the middle aged (less than ½ of that of the elderly) with young adults in the midrange despite the imposition of additive isoelastic utility of consumption. Moreover, the sensitivity of optimal portfolio proportions to changes in the opportunity set is greatest for the middle aged.
Approximation of the Overflow Process from a G/M/N/K Queueing System
Authors: Pourbabai Behnam
Published: November 2008

The overflow process from a G/M/N/K queueing system with a stationary counting arrival process, Markovian service times, N parallel homogeneous servers, and K waiting spaces, is asymptotically approximated by a two parameter method. Numerical results are presented and approximation outcomes are compared against those from a simulation study.
Does Cheaper, Faster, or Better Imply Sooner in the Timing of Innovation Decisions?
Authors: Lippman Steven A. , McCardle Kevin F.
Published: November 2008

A common myth/conception, based upon the notion of increasing returns to scale in R&D activity, is that large firms account for a disproportionate share of innovations. In this paper we consider three types of informational returns to scale (cheaper, faster, and better) and examine the impact of each on the timing of the firm's innovation decision. Contrary to popular conception, the decision is made later when information is cheaper, and the change in timing is unsignable in the case of faster arrival of information. Only more accurate (better) information leads to earlier decisions.
Estimating Utility Functions in the Presence of Response Error
Authors: Laskey Kathryn Blackmond , Fischer Gregory W.
Published: November 2008

This paper explores the nature and extent of response error when direct multiattribute utility assessment procedures are used as a basis for modeling preferences for risky multiattribute alternatives. The analysis is based on an experimental study of preferences for alternative air pollution control policies whose consequences were characterized by three value attributes: cost to consumers, level of pollution related illness, and level of pollution related mortality. The study generated the following findings: (i) direct assessments of preferences for outcomes were quite reliable and stable over a two-week time period; (ii) parameter estimates for additive utility functions fitted to direct utility assessments were both precise and stable over a two-week time period; (iii) statistically fitted additive utility models provided very accurate predictions of directly assessed preferences two weeks later (or earlier); (iv) ranking outcomes before assigning utilities to them resulted in high levels of serial correlation of errors in direct assessments; and (v) using a parameter estimation procedure that adjusted for serial correlation of errors had little effect on the accuracy of the model's predictions of preferences in a different time period.
Risk and the Relationship Among Strategy, Organizational Processes, and Performance
Authors: Jemison David B.
Published: November 2008

Performance is an important variable in strategic management research. But, although managers must deal with performance on two dimensions, its level (return) and the variation in that level (risk), performance has traditionally been studied only in terms of return. This paper reports the results of a study of business strategy content and processes where performance was operationalized as both return and risk.

In a field study of 20 firms in the banking industry in one state, different strategies were found to be associated with differences in risk but not in return. The effects of processes on performance were varied; some processes were associated with risk only, some with return only, and others with both risk and return.

These results suggest that the relationships among strategy, processes and performance are more complex than most researchers have acknowledged. Further theoretical and managerial insights may be gained into these relationships if risk is included as a dimension of performance in strategic management research.
Optimal Server Allocation in a System of Multi-Server Stations
Authors: Shanthikumar J. George , Yao David D.
Published: November 2008

Consider a closed queueing network (Gordon and Newell [Gordon, W. J., G. F. Newell. 1967. Closed queueing networks with exponential servers. Oper. Res. 15 252–267.]) with a set of stations. The service rate at each station is an increasing concave function of the number of jobs at that station. Suppose there also exists a station that has c (≥1) parallel servers, each of which has a fixed service rate. We show that the throughput of this network is an increasing concave function with respect to c. This result is then applied to solve the optimal server allocation problem in a system of multi-server stations with a fixed buffer capacity (for the total number of jobs) at each station. For a single-station system, the simultaneous optimal allocation of both servers and buffer capacity is also studied.
Simulating GI/G/k Queues in Heavy Traffic
Authors: Minh Do Le
Published: November 2008

This paper proposes a new consistent estimator for the expected waiting time in queue in the simulation of a multiserver queueing system. This estimator is called the “error estimator” because it estimates only the error involved in the use of Kingman's heavy traffic approximation. Not only does this estimator retain all the advantages of the regenerative method, but it also reduces the variance of the estimator substantially when the traffic becomes heavy.
A Study of Graphical and Tabular Displays and Their Interaction with Environmental Complexity
Authors: Remus William
Published: November 2008

Since most interactive systems use either graphical or tabular displays, this experiment contrasts the effectiveness of the two displays in making the production scheduling decision in low and intermediate levels of environmental complexity. The study concludes that tabular aids outperform the graphical aids in environments with low complexity, replicating an earlier study. In intermediate complexity environments, the graphical aids outperform the tabular aids. These findings may resolve many conflicts in the literature on data displays.