bluuebunny/crossref_metadata_2025 huggingface dataset:
Explaining Organizational Diseconomies of Scale in R&D: Agency Problems and the Allocation of Engineering Talent, Ideas, and Effort by Firm Size
Authors: Zenger Todd R.
Published: November 2008

The comparative efficiency and success of small firms in R&D remains largely unexplained. This paper empirically examines scale diseconomies in offering employment contracts as an explanation for diseconomies of scale in R&D. The paper argues that small firms more efficiently resolve the severe agency problems of hidden information and hidden behavior in R&D. Small firms more efficiently offer contracts that reward performance than large firms, and consequently, small firms attract and retain engineers with higher ability and skill. Further, small firms through these more performance-contingent contracts induce higher levels of effort than large firms. The study tests and generally confirms these hypotheses using data collected from 912 current and former engineering employees of two large high-technology companies.
When Mean Square Error Becomes Variance: A Comment on “Business Risk and Return: A Test of Simultaneous Relationships”
Authors: Ruefli Timothy W. , Wiggins Robert R.
Published: November 2008

In a recent article, Oviatt and Bauerschmidt (1991) investigated risk-return relationship by employing the square root of the mean square error of returns as a measure of risk and found no significant relationship existed in those terms. Ruefli (1991) has suggested that under the assumption of stable distributions there is the possibility of spurious correlation in estimating the risk-return relationship in mean-variance terms. This comment identifies the commonalities between mean square error and variance measures, shows that the former measure is subject to many of the problems of the latter, and presents further evidence regarding the likelihood of spurious correlation in industry studies of risk and return. The results suggest an alternative and more parsimonious explanation for Oviatt and Bauerschmidt's findings as well as for the findings reported in the wider strategic management research literature.
Certainty Equivalents for Three-Point Discrete-Distribution Approximations
Authors: Keefer Donald L.
Published: November 2008

Three-point discrete-distribution approximations are often used in decision and risk analyses to represent probability distributions for continuous random variables—e.g., as probability nodes in decision or probability trees. Performance evaluations of such approximations have generally been based on their accuracies in estimating moments for the underlying distributions. However, moment-based comparisons for recently proposed approximations have been limited. Moreover, very little research has addressed the accuracies of any such approximations in representing expected utilities or certainty equivalents of the underlying distributions. This is of potential concern since recent research shows three-point discrete-distribution approximations exist that match the first several moments of an underlying distribution exactly while, counterintuitively, approximating its certainty equivalents poorly. This paper compares the best two approximations for estimating means and variances identified in an earlier study with promising approximations proposed more recently. Specifically, it examines how accurately six simple general-purpose three-point approximations represent certainty equivalents for continuous random variables as the level of risk aversion is varied, as well as how accurately they estimate means and variances. The results show that several of these are quite accurate over a variety of test distributions when the level of risk aversion and the characteristics of the distributions are within reasonable bounds. Their robust performance is significant for decision analysis practice.
Selection of Product Line Qualities and Prices to Signal Competitive Advantage
Authors: Balachander Subramanian , Srinivasan Kannan
Published: November 2008

We investigate a firm's choice of prices and qualities of a product line to signal competitive advantage to potential entrants and to discourage entry. The market consists of customer segments with different valuations for product quality. We demonstrate that a higher quality and a higher price of each product in the line convey the firm's advantage to potential competition and prevents entry. We discuss implications for optimal product line selection when customers ‘self-select’ a product from the line.

When product quality change is costly, the superior incumbent continues to select a higher quality and price for each product in the line to credibly substantiate its competitive advantage, though the distortions necessary from the optimal values are lower than before. After informative signalling and deterring entry, the firm retains the higher quality product line.
Modeling and Heuristic Worst-Case Performance Analysis of the Two-Level Network Design Problem
Authors: Balakrishnan Anantaram , Magnanti Thomas L. , Mirchandani Prakash
Published: November 2008

This paper studies a multi-facility network synthesis problem, called the Two-level Network Design (TLND) problem, that arises in the topological design of hierarchical communication, transportation, and electric power distribution networks. We are given an undirected network containing two types of nodes—primary and secondary—and fixed costs for installing either a primary or a secondary facility on each edge. Primary nodes require higher grade interconnections than secondary nodes, using the more expensive primary facilities. The TLND problem seeks a minimum cost connected design that spans all the nodes, and connects primary nodes via edges containing primary facilities; the design can use either primary or secondary edges to connect the secondary nodes. The TLND problem generalizes the well-known Steiner network problem and the hierarchical network design problem. In this paper, we study the relationship between alternative model formulations for this problem (e.g., directed and undirected models), and analyze the worst-case performance for a composite TLND heuristic based upon solving embedded subproblems (e.g., minimum spanning tree and either Steiner tree or shortest path subproblems). When the ratio of primary to secondary costs is the same for all edges and when we solve the embedded subproblems optimally, the worst-case performance ratio of the composite TLND heuristic is 4/3. This result applies to the hierarchical network design problem with constant primary-to-secondary cost ratio since its subproblems are shortest path and minimum spanning tree problems. For more general situations, we express the TLND heuristic worst-case ratio in terms of the performance of any heuristic used to solve the embedded Steiner tree subproblem. A companion paper develops and tests a dual ascent procedure that generates tight upper and lower bounds on the optimal value of a multi-level extension of this problem.
Efficient Interactive Methods for a Class of Multiattribute Shortest Path Problems
Authors: Henig Mordechai I.
Published: November 2008

Given an acyclic network and a preference-order relation on paths, when and how can Bellman's principle of optimality be combined with interactive programming to efficiently locate an optimal path? We show that if preferences are defined via a collection of attributes, then, under common conditions, the principle of optimality is valid if and only if the preferences can be represented by a linear (value) function over the attributes. Consequently, an interactive programming method is suggested which assesses the value function while using the principle of optimality to efficiently search for an optimal path.
Capacity Acquisition and Disposal with Discrete Facility Sizes
Authors: Rajagopalan S. , Soteriou Andreas C.
Published: November 2008

We consider some key features of capacity acquisition, disposal, and replacement decisions in this paper that are seldom captured in capacity expansion models in the literature. First, capacity is often purchased in the form of equipment which comes only in a few discrete sizes. Second, some or all of the capacity may be replaced periodically due to the availability of better and cheaper equipment, or due to deterioration and increased operating costs of older equipment. Finally, some capacity may be disposed due to declining demand. We present integer programming formulations that model all of these aspects. We identify special structures in these formulations that are then exploited to develop efficient procedures for solving the linear relaxation optimally. The solution to the linear relaxation together with a heuristic interchange procedure are used in a branch-and-bound procedure to obtain optimal solutions. Computational results are presented that establish the effectiveness of the procedures in solving realistic problems to optimality.
An Improvement-Type Layout Algorithm for Single and Multiple-Floor Facilities
Authors: Bozer Yavuz A. , Meller Russell D. , Erlebacher Steven J.
Published: November 2008

In this paper we introduce the use of spacefilling curves in facility layout, and we extend a well-known facility layout algorithm () to facilities with multiple floors. Spacefilling curves make it possible to exchange any two departments and to use more powerful exchange routines than two-way or three-way exchanges. We also further enhance CRAFT by controlling department shapes, and (with multiple floors) by allowing “flexible” departmental area requirements. Although the algorithm we present can be used for any single-floor or multi-floor facility layout problem, its primary target is production facilities. A tailored version of the algorithm was successfully tested and used in a large, multi-floor production facility. The algorithm differs significantly from two previous extensions of to multi-floor facilities.
The Flexibility of Production Processes: A General Framework
Authors: de Groote Xavier
Published: November 2008

Various models have been developed over the years to analyze the many facets of the flexibility of production and operations systems. This paper proposes a general framework for the modeling and analysis of flexibility. The argument hinges upon the distinction between flexibility—a property of the technology—and diversity—a property of the environment in which the technology is operated. Flexibility is characterized as a hedge against diversity. Intuitive strategic properties that are conventionally attributed to flexibility are shown to follow directly from this framework. As illustrated by the different examples that are discussed, many existing models can be naturally interpreted in this context. As an application, the effect of load imbalance on a set of parallel machines is analyzed. The problem sheds light on the role of flexibility in queuing network and lot-sizing models of production.
Creating Policy Alternatives Using Stakeholder Values
Authors: Gregory Robin , Keeney Ralph L.
Published: November 2008

Choices that require multiple stakeholders to balance conflicting objectives are among today's most controversial decisions. Although many techniques exist for helping decision makers to select among projects, little attention has been given to processes for identifying improved alternatives based on clearly articulated stakeholder values. In this paper we describe a general process to inform controversial social decisions by first structuring stakeholder objectives and then using this information to create policy alternatives. We also report the results of a workshop in Sabah, Malaysia which used the proposed approach as the basis for multiple stakeholder negotiations.
Equipment Selection and Machine Scheduling in General Mail Facilities
Authors: Jarrah Ahmad I. Z. , Bard Jonathan F. , deSilva Anura H.
Published: November 2008

With the goal of fiscal self-sufficiency, the United States Postal Service (USPS) has embarked upon a 10-year program to modernize, and in some cases radically alter, the way it manages and processes the mail. At the heart of this effort is the goal of automating virtually all of the letter mail by 1995. This means reading, sorting, and then sequencing each mail piece to the order in which it will be delivered by the carrier with only a minimum of manual labor. In support of this goal, a series of long-term planning models has been developed to help select equipment and plan for its use at the more than 250 general mail facilities (GMF) throughout the nation. This paper reports on one of the central studies underlying this effort.

Because of the size and complexity of the facility design problem, a hierarchical approach was followed. Three interrelated models were developed starting with a mixed integer linear program to derive equipment needs and initial machine schedules. The latter are post-processed in two stages to produce implementable schedules that reflect current practice. An auxiliary linear program and a heuristic were constructed for this purpose. The models and analysis conducted are demonstrated with data obtained from the Providence GMF. The results indicate savings over the 10-year planning horizon.
The Growth of Interorganizational Systems in the Presence of Network Externalities
Authors: Riggins Frederick J. , Kriebel Charles H. , Mukhopadhyay Tridas
Published: November 2008

We develop a model of network growth in the presence of network externalities for the case where a buyer initiates an interorganizational system with its suppliers. In our two-stage model, suppliers joining the network in the first stage can gain economic benefit from increased market share or higher price for the primary product. Suppliers encounter negative externalities since the economic benefit accruing to participating suppliers is less for increasingly larger networks. In the first stage, the buyer may experience initial supplier adoption of the network followed by a “stalling” problem due to negative externalities. In order to overcome this stalling problem, the buyer may find it optimal to subsidize some suppliers' costs to join the network in the second stage. We characterize the buyer's optimal second stage subsidy policy and show the conditions under which the buyer will find it optimal to offer a subsidy. If the suppliers have some positive ex ante expectation of a second stage subsidy, the growth of the network will be retarded in the first stage resulting in suboptimal profits for the buyer.
Information Systems Innovation Among Organizations
Authors: Swanson E. Burton
Published: November 2008

In an era of revolutionary new developments in basic information technology, innovation in its employment among organizations is increasingly crucial to competitive survival and success. The Information Systems (IS) unit within the business is largely responsible for meeting this challenge. Yet, current theory explains little about IS innovation and its role in organizational innovation in general. We suggest some needed foundations. IS innovations are posited to be of three types: Type I innovations confined to the IS task; Type II innovations supporting administration of the business; and Type III innovations imbedded in the core technology of the business. Diffusion among organizations is conjectured to occur by means of a communication circuit in which each IS unit is linked to its professional and business environments. Systematic differences in adoption and evolution patterns among IS innovation types are expected. Three specific IS innovations—data administration, the information center, and material requirements planning (MRP)—illustrate.
Fairness and Social Risk I: Unaggregated Analyses
Authors: Fishburn Peter C. , Sarin Rakesh K.
Published: November 2008

This paper is the first of a two-paper study of fairness issues for decisions that affect the benefits received and the risks encountered by a population. The study examines fairness for individuals and for homogeneous groups within the population. It considers fairness both for population benefit-risk profiles and for probability distributions over profiles that reflect uncertainty about outcomes of decisions.

The present paper focuses on fairness for profiles in which benefits and risks are not aggregated within groups or across the population. It ties fairness to notions of envy among individuals and groups that are based on individuals' preferences. The sequel will discuss aggregation of benefits and risks along with fairness from an aggregated perspective.
Two-Stage Stopping Procedures Based on Standardized Time Series
Authors: Nakayama Marvin K.
Published: November 2008

We propose some new two-stage stopping procedures to construct absolute-width and relative-width confidence intervals for a simulation estimator of the steady-state mean of a stochastic process. The procedures are based on the method of standardized time series proposed by Schruben and on Stein's two-stage sampling scheme. We prove that our two-stage procedures give rise to asymptotically valid confidence intervals (as the prescribed length of the confidence interval approaches zero and the size of the first stage grows to infinity). The sole assumption required is that the stochastic process satisfy a functional central limit theorem.
Decision Analytic Networks in Artificial Intelligence
Authors: Matzkevich Izhar , Abramson Bruce
Published: November 2008

Researchers in artificial intelligence and decision analysis share a concern with the construction of formal models of human knowledge and expertise. Historically, however, their approaches to these problems have diverged. Members of these two communities have recently discovered common ground: a family of graphical models of decision theory known as influence diagrams or as belief networks. These models are equally attractive to theoreticians, decision modelers, and designers of knowledge-based systems. From a theoretical perspective, they combine graph theory, probability theory and decision theory. From an implementation perspective, they lead to powerful automated systems. Although many practicing decision analysts have already adopted influence diagrams as modeling and structuring tools, they may remain unaware of the theoretical work that has emerged from the artificial intelligence community. This paper surveys the first decade or so of this work.
Measuring Systematic Risk Using Implicit Beta
Authors: Siegel Andrew F.
Published: November 2008

A new technology is proposed for estimating the systematic (beta) risk of a firm's stock. Just as the implicit volatility of an asset is revealed by an ordinary call option, the “implicit beta” of a stock would be revealed by the price of an option to exchange shares of stock for shares of a market index. Considerable benefits would accrue to those involved with the theory and practice of finance, if and when these exchange options begin trading, due to the availability of instantaneous, up-to-the-minute, precise indicators of firms' systematic risk levels.
The Demand for Parimutuel Horse Race Wagering and Attendance
Authors: Thalheimer Richard , Ali Mukhtar M.
Published: November 2008

There has been a long history of patron participation in parimutuel horse race wagering and attendance, which are major recreational products in consumer budgets. In this paper, the demand for parimutuel horse race wagering and attendance has been specified and estimated for both Thoroughbred and Standardbred racetracks in a multistate market area. The data are annual over the period 1960–1987. It is found that demand is price elastic in every case. Racing quality, personal income, the number of racing days, competition from a state lottery, and from professional sports (baseball, basketball, football) are all significant determinants of these demands. Both attendance and wagering are found to increase with an increase in racing quality. However, it seems that the new patrons, attracted by quality racing, tend to wager less than those who attend regularly. The presence of a state lottery is found to have resulted in a substantial loss in attendance as well as in wagering at each of the racetracks. This, in turn, has resulted in a loss in both attendance and wagering-related revenue to racetracks, horsemen at those racetracks, and state governments. Professional sports are estimated to have a negative impact on attendance and wagering demands. For example, an additional 10 days of competition from professional sports in 1987 would have resulted in a 4% decrease in both attendance and wagering. Both attendance and wagering can be increased by lowering the takeout rate from present levels or by offering more quality races.
Decentralized Regulation of a Queue
Authors: Hassin Rafael
Published: November 2008

A bidding machanism for determining priorities in a service system is analyzed. It is shown that when all customers have the same exponential service demand, this mechanism induces both the socially optimal arrival process and the service order. It is also shown that the profit-maximizing service rate in this model is smaller than or equal to the socially optimal one.
Holt-Winters Method with Missing Observations
Authors: Cipra Tomáš , Trujillo José , Robio Asunción
Published: November 2008

The paper presents a simple procedure for interpolating, smoothing, and predicting in seasonal time series with missing observations. The approach suggested by Wright (Wright, D. J. 1986. Forecasting data published at irregular time intervals using extension of Holt's method. Management Sci. 32 499–510.) for the Holt's method with nonseasonal data published at irregular time intervals is extended to the Holt-Winters method in the seasonal case. Numerical examples demonstrate the procedure.
Note: On the Efficiency of Imbalance in Multi-Facility Multi-Server Service Systems
Authors: Green Linda V. , Guha Debashis
Published: November 2008

We consider the problem of simultaneously allocating servers and demands in a service system with independent multiple facilities. We assume a fixed number of facilities and total servers which must service a given Poisson arrival stream. We also assume that service times are identically distributed and independent of the server or facility. The allocation decision is one of simultaneously determining the number of servers and the fraction of the total arrival stream for each facility in order to optimize a given performance measure. Several performance measures are considered including minimizing expected system delay and equalizing delays across facilities. Our findings demonstrate that the overall system performance improves as the individual facilities become more unbalanced in the number of allocated servers. More formally, we show that if there is a server allocation that is maximal under the partial order of majorization, then it is optimal.
Risk, Return, and Utility
Authors: Bell David E.
Published: November 2008

Expected utility theory is widely acknowledged to be a rational approach to making decisions involving risk. Yet the methodology gives no explicit role to measures of risk and return. In this paper we identify those families of utility functions that are compatible with a risk-return interpretation. From these families we deduce utility-compatible measures of risk.
Noise and Learning in Semiconductor Manufacturing
Authors: Bohn Roger E.
Published: November 2008

Rapid technological learning is critical to commercial success in VLSI semiconductor manufacturing. This learning is done through deliberate activities, especially various types of experimentation. Such experiments are vulnerable to confounding by process noise, caused by process variability. Therefore plants with low noise levels can potentially learn more effectively than high noise plants.

Detailed die yield data from five semiconductor plants were examined to estimate process noise levels. A bootstrap simulation was used to estimate the error rates of identical controlled experiments conducted in each plant. Absolute noise levels were high for all but the best plants, leading to lost learning. For example, the probability of overlooking a three percent yield improvement was above twenty percent in all but one plant. Brute-force statistical methods are either expensive or ineffective for dealing with these high noise levels. Depending on the criterion used, there was a four- to ten-fold difference among the plants.
A Maximum Decisional Efficiency Estimation Principle
Authors: Troutt Marvin D.
Published: November 2008

This paper proposes a systematic approach to certain parameter estimation problems relevant to applied optimization models. A context-specific measure of decision maker performance called decisional efficiency is defined as a function of the unknown parameter vector. The values of this measure are considered to be distributed according to a performance density. Then a principle of Maximum Decisional Efficiency (MDE) is proposed and its relationship to the Maximum Likelihood principle of statistics is discussed. The principle is first illustrated on a problem of group ideal point estimation. Next, estimation of the ratio of ordering and holding costs in inventories managed by the EOQ model is considered. The results in both these examples are intuitively appealing, suggesting face validity of the principle. A more detailed illustration is developed for the problem of deriving a consensus scoring model for credit applicants which combines the data of more than one loan officer.
The One-Machine Problem with Delayed Precedence Constraints and its Use in Job Shop Scheduling
Authors: Balas Egon , Lenstra Jan Karel , Vazacopoulos Alkis
Published: November 2008

We study the one machine scheduling problem with release and delivery times and the minimum makespan objective, in the presence of constraints that for certain pairs of jobs require a delay between the completion of the first job and the start of the second (delayed precedence constraints). This problem arises naturally in the context of the Shifting Bottleneck Procedure for the general job shop scheduling problem, as a relaxation of the latter, tighter than the standard one-machine relaxation. The paper first highlights the difference between the two relaxations through some relevant complexity results. Then it introduces a modified Longest Tail Heuristic whose analysis identifies those situations that permit efficient branching. As a result, an optimization algorithm is developed whose performance is comparable to that of the best algorithms for the standard one-machine problem. Embedding this algorithm into a modified version of the Shifting Bottleneck Procedure that uses the tighter one-machine relaxation discussed here results in a considerable overall improvement in performance on all classes of job shop scheduling problems.
The Delivery and Control of Quality in Supplier-Producer Contracts
Authors: Reyniers Diane J. , Tapiero Charles S.
Published: November 2008

We model the effect of contract parameters such as price rebates and after-sales warranty costs on the choice of quality by a supplier, the inspection policy of a producer, and the resulting end product quality. Both noncooperative and cooperative settings are explored. The paper’s contribution is to highlight the importance of strategic and contractual issues in quality management.
Minimizing Resource Availability Costs in Time-Limited Project Networks
Authors: Demeulemeester Erik
Published: November 2008

We consider the problem of minimizing renewable resource availability costs in an activity-on-the-node project network subject to a project due date. Project activities have fixed durations and may require the use of multiple renewable resources in constant amounts throughout their duration. Various assumptions may be made about the type of precedence relations, ready times, due dates, and task interruptability. Given a discrete, non-decreasing cost function of the constant resource availability for every resource type, the objective is to determine the resource availability levels in order to minimize the sum of the availability costs over all resource types. An effective optimal algorithm is described and extensive computational experience is reported.
Customer-Order Information, Leadtimes, and Inventories
Authors: Hariharan Rema , Zipkin Paul
Published: November 2008

We have an inventory to manage. The scenario is standard in all respects save one. Instead of arriving unannounced, customers provide advance warning of their demands. How should we use this information, and what is its effect on system performance? The answers turn out to be strikingly simple. There are very simple policies which perform effectively, in some cases optimally. Also such “demand leadtimes” improve performance, in precisely the same way that replenishment leadtimes degrade it.
Demand Signalling Under Unobservable Effort in Franchising: Linear and Nonlinear Price Contracts
Authors: Desai Preyas S. , Srinivasan Kannan
Published: November 2008

We study the signalling strategy of a principal who is privately informed about its high demand potential to an uninformed risk-neutral agent. We analyze the model in the context of a contract between a franchisor and a franchisee. We examine the distortions of a two-part pricing scheme necessary to credibly inform the franchisee (agent). We also study whether the inability of the franchisor (principal) to observe the agent’s effort moderates or exaggerates the distortions from the first-best two-part pricing scheme. A surprising outcome is that even though the principal incurs greater signalling cost, the magnitude of distortion in the two-part scheme is smaller when service is unobservable than when it is not. Thus, a signalling strategy employing the fixed and variable fees is harder to detect under moral hazard. Empirical studies failing to control for moral hazard may incorrectly conclude that signalling strategy does not occur. We later consider a three-part scheme to verify whether or not the scheme reduces signalling cost. Interestingly, we find that there exists a unique three-part scheme that results in the first-best profit even in the presence of two-sided information asymmetries. While the two-part scheme can never achieve the first-best profit, the three-part scheme always achieves the first-best profit. The costless three-part separating scheme relies on variable income to induce the agent to undertake first-best service. The reliance on variable income to alleviate moral hazard contrasts with the two-part scheme’s focus on reducing the variable income to overcome the inability to monitor. The finding provides additional empirical implications.
Forest Management: A Multicommodity Flow Formulation and Sensitivity Analysis
Authors: Gautier Antoine , Granot Frieda
Published: November 2008

We formulate the Forest Management Problem as a Multicommodity Network Flow Problem with a convex cost function. We then show how to transfer the problem to an equivalent Single-Commodity Network Flow formulation in order to address several sensitivity analysis questions using results by Granot and Veinott (Granot, F., A. F. Veinott, Jr. 1985. Substitutes, complements and ripples in network flows. Math. Oper. Res. 10 471–497.). The answers can subsequently be used to help forest managers respond to changes in the environment such as fires or changes in market prices, without any additional computation. Furthermore, the characterization of the response we provide requires no prior knowledge of optimal management policies.
Improving Productivity by Periodic Performance Evaluation: A Bayesian Stochastic Model
Authors: Fernández-Gaucherand Emmanuel , Jain Sanjay , Lee Hau L. , Rao Ambar G. , Rao M. R.
Published: November 2008

We model the situation where the productivity of members of a group, such as a salesforce, is periodically evaluated; those whose performance is sub-par are dismissed and replaced by new members. Individual productivity is modeled as a random variable, the distribution of which is a function of an unknown parameter. This parameter varies across the members of the group and is specified by a prior distribution. In this manner, the heterogeneity in the group is explicitly accounted for. We model the situation as a parameter adaptive Bayesian stochastic control problem, and use dynamic programming techniques and the appropriate optimality equations to obtain solutions. We prove the existence of an optimal policy in the general case. Further, for the case when the sales process can be characterized by a Beta-Binomial or a Gamma-Poisson distribution, we show that the optimal policy is of the threshold type at each evaluation period, depending only on the accumulated performance up to a given period. We present a computational procedure to solve for the optimal thresholds. Results of computational experiments show that an increase in the heterogeneity of the group can lead to more stringent levels of minimal acceptable performance.
Variability Functions for Parametric-Decomposition Approximations of Queueing Networks
Authors: Whitt Ward
Published: November 2008

We propose an enhancement to the parametric-decomposition method for calculating approximate steady-state performance measures of open queueing networks with non-Poisson arrival processes and nonexponential service-time distributions. Instead of using a variability parameter ca2 for each arrival process, we suggest using a variability function ca2ρ, 0 < ρ < 1, for each arrival process i.e, the variability parameter should be regarded as a function of the traffic intensity ρ of a queue to which the arrival process might go. Variability functions provide a convenient representation of different levels of variability in different time scales for arrival processes that are not nearly renewal processes. Variability functions enable the approximations to account for long-range effects in queueing networks that cannot be addressed by variability parameters. For example, the variability functions provide a way to address the heavy-traffic bottleneck phenomenon, in which exceptional variability (either high or low) in the input has little impact in a series of queues with low-to-moderate traffic intensities, and then has a big impact when it reaches a later queue with a relatively high traffic intensity. The variability functions also enable the approximations to characterize irregular periodic deterministic external arrival processes in a reasonable way; i.e., if there are no batches, then ca2ρ should be 0 for ρ near 0 or 1, but ca2ρ can assume arbitrarily large values for appropriate intermediate ρ. We present a full network algorithm with variability functions, showing that the idea is implementable. We also show how simulations of single queues can be effectively exploited to determine variability functions for difficult external arrival processes.
Constructing an Empirically Derived Measure for Customer Contact
Authors: Kellogg Deborah L. , Chase Richard B.
Published: November 2008

This research provides an empirically derived measurement model for customer contact, a widely used construct in service management. The model was created by applying two psychometric scaling techniques, Multidimensional Scaling (MDS) and the method of paired comparisons, and Content Analysis, to the ratings and responses of service research experts. MDS showed that the construct of Customer Contact is multidimensional and complex. An interval scale was developed using the paired comparison methodology, and a measurement model was developed using this contact scale. The central finding was that the degree or level of contact can be measured at the episode level by averaging the normalized values of communication time, the information richness, and the level of intimacy. The uses of the measurement model include refining current research, and reevaluating past research, developing contingency models for service quality and design, and providing practitioners with a richer understanding of customer contact to facilitate service system design.
The Acquisition, Transfer, and Depreciation of Knowledge in Service Organizations: Productivity in Franchises
Authors: Darr Eric D. , Argote Linda , Epple Dennis
Published: November 2008

The paper examines the acquisition, depreciation and transfer of knowledge acquired through learning by doing in service organizations. The analysis is based on weekly data collected over a one and a half year period from 36 pizza stores located in Southwestern Pennsylvania. The 36 stores, which are franchised from the same corporation, are owned by 10 different franchisees. We find evidence of learning in these service organizations: as the organizations gain experience in production, the unit cost of production declines significantly. Knowledge acquired through learning by doing is found to depreciate rapidly in these organizations. Knowledge acquired through learning by doing is found to depreciate rapidly in these organizations. Knowledge is found to transfer across stores owned by the same franchisee but not across stores owned by different franchisees. Theoretical and practical implications of the work are discussed.
Maintaining Quality Standards in Franchise Chains
Authors: Gal-Or Esther
Published: November 2008

In the present paper we identify those characteristics of the markets served by a franchise chain which determine the relative incentives of the owner of the chain to monitor the behavior of individual franchisees. We find that the owner has greater incentives to monitor the outlets that serve the relatively smaller markets and those that are subject to greater fluctuations in the state of the demand confronting them. We also find that the extent of competition with other chains has an ambiguous effect on the incentives to monitor the franchisees:
Understanding User Evaluations of Information Systems
Authors: Goodhue Dale L.
Published: November 2008

Organizations spend millions of dollars on information systems to improve organizational or individual performance, but objective measures of system success are extremely difficult to achieve. For this reason, many MIS researchers (and potentially MIS practitioners) rely on user evaluations of systems as a surrogate for MIS success. However, these measures have been strongly criticized as lacking strong theoretical underpinnings. Furthermore, empirical evidence of their efficacy is surprisingly weak. Part of the explanation for the theoretical and empirical problems with user evaluations is that they are really a measurement technique rather than a single theoretical construct. User evaluations are elicited beliefs or attitudes about something, and they have been used to measure a variety of different “somethings.” What is needed for user evaluations to be an effective measure of IS success is the identification of some specific user evaluation construct, defined within a theoretical perspective that can usefully link underlying systems to their relevant impacts. We propose task-technology fit (TTF) as such a user evaluation construct. The TTF perspective views technology as a means by which a goal-directed individual performs tasks. TTF focuses on the degree to which systems characteristics match user task needs. We posit that higher task-technology fit will result in better performance. Further, we posit that users can successfully evaluate task-technology fit. This latter proposition is strongly supported in a survey of 259 users in 9 companies.
Influence Activities and Strategic Coordination: Two Distinctions of Internal and External Markets
Authors: Poppo Laura
Published: November 2008

This paper examines empirically two distinctions of internal and external markets: influence activities and strategic coordination. Influence activities that arise from decentralization, imperfect monitoring, and a relative performance system are a potential liability of internal markets, coordination may be worse in internal markets than in external markets. However, strategic coordination is an advantage of internal markets, a hierarchy can more effectively implement strategic policies in internal markets than external markets. The results of this study show that profit center managers engage in influence activities by haggling over price adjustments, causing greater renegotiation costs in internal markets than in comparable external markets. However, implementation of cost reduction, which is a strategic policy, appears to be more effective in internal markets the results show that supplying profit centers disclose more private cost information than external market suppliers. Thus cooperation and competition appear to operate simultaneously in internal markets. In addition, the results suggest that internal markets appear to undermine one advantage of a vertical integration strategy the creation of unique assets, as organizational resource that can generate rents. These results, which are based on data gathered from the internal and external markets of one Fortune 100 company, are exploratory and further work is needed to generalize the findings.
Representation and Solution of Decision Problems Using Sequential Decision Diagrams
Authors: Covaliu Zvi , Oliver Robert M.
Published: November 2008

In this paper we introduce a new graph, the sequential decision diagram, to aid in modeling formulation, and solution of sequential decision problems under uncertainty. While as compact as an influence diagram, the sequential diagram captures the asymmetric and sequential aspects of decision problems as effectively as decision trees. We show that a unified framework consisting of a sequential diagram, an influence diagram, and a common formulation table for the problem’s data, suffices for compact and consistent representation, economical formulation, and efficient solution of (asymmetric) decision problems. In addition to asymmetry, the framework exploits other sources of computational efficiency, such as conditional independence and value function decomposition, making it also useful in evaluating dynamic-programming problems. The formulation table and recursive algorithm can be readily implemented in computers for solving large-scale problems. Examples are provided to illustrate the methodology in both asymmetric and symmetric cases.
Facilitating Coordination in Customer Support Teams: A Framework and Its Implications for the Design of Information Technology
Authors: Rathnam Sukumar , Mahajan Vijay , Whinston Andrew B.
Published: November 2008

The management of coordination gaps is critical to the effective functioning of a customer support team. To address the managerial challenge of designing Information Technology (IT) to facilitate coordination in customer support teams, this paper develops a framework describing the drivers of coordination gaps in customer support teams. Measures for the characteristics of problem resolution processes, the characteristics of IT that assist in the management of coordination gaps, and coordination gaps are developed and validated. Results from a field study administered to 399 respondents from 41 teams in Apple, Dell, Hewlett-Packard, IBM, Seton Hospital, and Southwestern Bell support the proposition that coordination gaps arise from a lack of fit between the characteristics of problem resolution processes used and the characteristics of IT used. What is more important, the results also indicate that processes with differing characteristics require different kinds of IT.
Obtaining Strategic Advantage from Being Imitated: When Can Encouraging “Clones” Pay?
Authors: Conner Kathleen R.
Published: November 2008

An important business strategy research theme concerns finding ways to minimize competition faced by the firm. This paper, however, focuses on a different set of situations: the model developed suggests that an innovator's best strategy may be to encourage “clones” of its product when a network externality is present. Key factors to consider in assessing whether encouraging cloning is the innovator's best strategy are: (1) the benefit to be derived in terms of added user base “contributed” by the clone sales, traded-off against (2) the unit sales that will be lost to the clone(s). These factors in turn depend upon the strength of the network effect and the degree to which the innovator's product quality is perceived by consumers to be superior to the clone's. The model further suggests that both the innovator and clone earn their highest payoffs when the clone takes the lead in price-setting, i.e., when the clone establishes its own price by considering, for each price it might set, how the innovator will react to that price, and the innovator, as price-follower, responds to the price the clone chooses. The paper demonstrates that the clone-leader/innovator-follower situation represents the unique Nash equilibrium in price-setting strategies. A central implication is that when operating in a network externality environment, instead of a problem to be avoided, clones may be valuable assets to an innovating firm, building up the user base for the innovator's technology by bringing lower-valuing consumers into the market, which in turn makes the innovator's product more attractive to high- and medium-valuing purchasers. Thus when the above-described conditions hold, being cloned can be more profitable for an innovating firm than dominating the market alone.
Modeling Strategic Investment Decisions Under Sequential Technological Change
Authors: Nair Suresh K.
Published: November 2008

Strategic decisions to invest in new equipment are critical not only because of the large initial capital costs incurred but even more importantly because they affect future unit production costs, revenues, and the ability of the firm to perform operations that were not possible earlier. Thus these decisions determine the very competitiveness of the firm. Further, decisions regarding the choice of technology are very expensive to correct if incorrect decisions are identified. These decisions have become increasingly urgent and complex because the state of the art in technology is changing rapidly. However, many models available for evaluating these decisions are either too complex and inefficient or too restrictive in the number, types, and the way appearance of future technologies is modeled.

This research attempts to relax some of these restrictions using forecast horizon procedures to model capital investment decisions where any number of technologies may appear in the future with purchase costs and revenues that may vary over time. The appearance of these future technologies are considered uncertain with probabilities that may also vary with time. However, we assume that the order in which they appear is sequential, much like the different generations of microchips for microcomputers. We develop a new approach using nonunique terminal rewards to solve a dynamic programming model of the problem by introducing “converse” difference functions and present an algorithm that is both simple and efficient. Despite the increase in state space from the use of “converse” functions, we show that the computational burden of the algorithm does not increase. Numerical examples are given to illustrate our algorithm. Sensitivity of the optimal decision to changes in probabilities, costs, and revenues are also discussed.