bluuebunny/crossref_metadata_2025 huggingface dataset:
Evolution of Linear Programming Computing Techniques
Authors: Orchard-Hays Wm.
Published: November 2008

While the linear programming concept and the formulation of a specific model have value in themselves, the technique would fall short of its promise without efficient computing procedures. The simplex method has proved to be the most successful approach but it still leaves a wide range for detailed algorithms. At first, the method was applied by hand or with the aid of punched-card equipment. With the advent of internally-stored-program computers, automatic routines were designed. However, the early machines were adequate only for small problems and the original simplex method was not efficient for many LP models. A program of development was started at RAND to provide better computing techniques. Using first the IBM Model II CPC, then the 701 and now the 704, general LP routines of considerable power and flexibility have been developed. Future improvements will probably be possible only from higher level abstractions which take advantage of structure in the model matrix or which produce more efficient forms of the inverse of a sparse matrix.
An Analysis of Decisions
Authors: Salveson M. E.
Published: November 2008

Most analyses of decision making define decision as choosing from among alternative courses of action. Usually, the criterion of choice is assumed to be some function of probability and utility of the different outcomes associated with each course of action.

It is shown here that decision is more realistically concerned with constructive, purposive, or creative aspects of human behavior. In addition to the usual decisions of action, other classes of decision include decisions of understanding, of recognition, and of enterprise. These classes are interdependent and their members interrelated in any realistic situation.

Organization planning is shown to be concerned largely with interrelating decisions and with providing criteria for decision. The quality of organization planning affects the quality of decisions, the degree of human satisfaction, and the effectiveness of the organization.
Towards a Behavioral Theory of Communication
Authors: Ackoff Russell L.
Published: November 2008

This paper presents a conceptualization of information as related to the decision problems of the recipient. The orientation is toward a formal definition of behavioral elements in an individual's “purposeful state”: specifically, these elements are his objectives, his valuation of each objective, his possible courses of action, the efficiency of each course of action in achieving each objective, and his probability of choice for each course of action.

The amount of information in a purposeful state is explicitly defined in terms of the probabilities of choice of the available courses of action. The amount of information in a message is defined as the difference between the amount of information in the purposeful state following the message, and the amount of information in the purposeful state preceding the message. The amount of instruction in a purposeful state is defined in terms of the efficiencies of the available courses of action; and the amount of motivation is defined in terms of the values of the objectives. The amounts of instruction and motivation in a message are defined, just as information is, by comparing the amounts in a purposeful state before and after receipt of the message.

The value of a purposeful state to an individual is defined as a function of the amount of information, the amount of instruction, and the amount of motivation in the state. This concept can be generalized to express the value of the state to some other individual.
A Computational Approach to the Economic Lot Scheduling Problem
Authors: Rogers Jack
Published: November 2008

In practice, the economic lot quantity problem and the scheduling problem often are treated separately in production planning. However, when a number of items must be supplied continuously and the same means of production must be employed for several of the items non-concurrently, the “economic lot scheduling problem” may have to be dealt with. Addressing itself to a reduced version of this problem, the article outlines a computational approach to finding a feasible and minimum cost (set-up plus storage) production schedule for a group of items which must be available continuously though produced consecutively in a single production center.
A Model for the Location of a Railroad Classification Yard
Authors: Mansfield Edwin , Wein Harold H.
Published: November 2008

The evaluation of alternative locations for an automatic classification yard has become an important problem for railroad managements. Because of the lower classification costs in these yards and the importance of such costs, many railroads have installed these newer facilities. An automatic yard represents an investment of $5,000,000 or more. Hence, the decision to install such a yard and the question regarding its location merit considerable thought and attention.

In this paper, a simple model is constructed to aid a railroad management in choosing among alternative locations. This model is being used by one firm, and it should prove useful to many operations researchers interested in the industry. Although it was constructed primarily to deal with the problem of yard location, the model seems sufficiently flexible to deal with other railroad problems. A few of these other problems are also discussed briefly.

The plan of the paper is as follows. Sections I and II contain some introductory material concerning freight yards and some definitions of terms. Section III contains a full description of the location problem we consider. Sections IV–VI deal with the model and procedure we propose. Section VII contains a numerical example, and Section VIII contains some concluding remarks.
Some Observations on the Business School of Tomorrow
Authors: Bach G. L.
Published: November 2008

Business school training needs to consider the managerial needs of a quarter century hence. This implies greater emphasis in designing business school curricula and teaching methods on the development of fundamental analytical tools and on the use of these tools in identifying, solving, and implementing decisions on managerial problems. Fundamental analytical tools will come especially from the behavioral sciences, economics, and quantitative methods (including the use of mathematics). The “applied” fields of business (marketing, production, finance, and so on) should, at least now, be viewed primarily as important problem areas where best solutions depend on the effective application of such fundamental tools. This approach implies elimination of much of the current subject matter of business school curricula.
A Model for Diversification
Authors: Ansoff H. I.
Published: November 2008

During the past few years, many interesting papers have been written on the subject of product-market diversification. A majority of the writers have dealt with either case histories of successful diversification or with qualitative check-off lists to be used in analyzing specific diversification opportunities. A much smaller group of papers has been devoted to formulation of a systematic approach which a company can use to compare alternative diversification decisions.

This paper falls in the latter category. As a first step, diversification is defined and distinguished from other company growth alternatives. Typical growth perspectives are described which may motivate a company to diversify. Diversification objectives are established and related to the company's long-range objectives.

A two-step evaluation scheme is proposed for selection of the preferred diversification strategy. The first is a qualitative step, which narrows a wide field of diversification opportunities to a selected few which are consistent with the company's diversification objectives and long-range policy. In the second step, a quantitative procedure is outlined for evaluating the relative profit potential of the selected alternatives. Finally, limitations of the present method are discussed.
Inventory Depletion Management
Authors: Derman Cyrus , Klein Morton
Published: November 2008

Consideration is given to problems of choosing the order of issue of items from a stockpile of material whose utility characteristics are changing with time. Conditions are given under which either LIFO (last in, first out) or FIFO (first in, first out) is an optimal issue policy.
Cross-National “Laws” and Differences in Market Response
Authors: Farley John U. , Lehmann Donald R.
Published: November 2008

International differences in general, and cultural differences in particular, exert profound influence on what people buy. In modeling market response, highly visible international differences in purchase behavior seem to lead to an assumption by management scientists that there are large parallel international differences in market response to such things as price and advertising. In an interpretive review of market response models, we do find international differences in response parameters, but we also find that parameter differences due to cross-national factors tend to be smaller than differences related to technical characteristics of the model or to product/market specifics. We suggest two new intermediate categories of generalizability between the extremes of “everything is the same” and “everything is different.” We also argue that one promising approach to international generalization is through appropriate statistical adjustment of parameters from existing models.
Management Scientists Are Human
Authors: Hofstede Geert
Published: November 2008

The culture of the national environment in which an organization operates affects the management process through the collective mental programming of its members, its managers, and the management scientists who offer their theories. Four dimensions of national culture differences have been found. Among other things, they affect the implicit models in people's minds of what the act of organizing means. Among the pioneers in management science around 1900, differences along these dimensions are already noticeable. A fifth dimension was added when the research instrument used was designed exclusively by Chinese scholars, and it provides a cultural explanation for the economic success of East Asian countries in the past quarter century. At the same time, it highlights the influence of the culture of the management scientist on the research questions and the resulting theories.
Paradoxes of Organizational Theory and Research: Using the Case of China to Illustrate National Contingency
Authors: Shenkar Oded , von Glinow Mary Ann
Published: November 2008

Chinese organizations are used in this paper to assess the universality of the macro and micro theories of organization that have been largely developed in North America. The analysis suggests that the theories vary in their degree of applicability to the Chinese context. While some theories, such as population ecology, seem to be clearly inapplicable, others, such as the equity theory of motivation, are more suitable, though they all require significant adjustment before they can be used to study and interpret the structure and processes of Chinese enterprises, and the attitudes and behavior of those employed in them. Making the adjustment, however, is likely to lead to positive developments in organizational theory.
Interunit Communication in Multinational Corporations
Authors: Ghoshal Sumantra , Korine Harry , Szulanski Gabriel
Published: November 2008

In this paper we investigate some of the organizational factors that influence subsidiary-headquarters and intersubsidiary communication in multinational companies. Our study is based on data collected from 164 senior managers working in 14 different national subsidiaries within the consumer electronics division of Matsushita, a Japanese company, and 84 senior managers working in nine different national subsidiaries within the same business of N.V. Philips, the Holland-based competitor of Matsushita. We show that while subsidiary autonomy has no discernable influence on interunit communication, interpersonal relationships developed through lateral networking mechanisms such as joint work in teams, taskforces, and meetings have significant positive effects on the frequency of both subsidiary-headquarters and intersubsidiary communication. The findings are consistent in the two companies, one Japanese and the other European, and the underlying theoretical propositions appear applicable across borders.
Stochastic Optimization by Simulation: Numerical Experiments with the M/M/1 Queue in Steady-State
Authors: L'Ecuyer Pierre , Giroux Nataly , Glynn Peter W.
Published: November 2008

This paper gives numerical illustrations of the behavior of stochastic approximation, combined with different derivative estimation techniques, to optimize a steady-state system. It is a companion paper to L'Ecuyer and Glynn (1993), which gives convergence proofs for most of the variants experimented here. The numerical experiments are made with a simple M/M/1 queue, which while simple, serves to illustrate the basic convergence properties and Possible pitfalls of the various techniques.
Extensions to Class Dominance Characteristics
Authors: Balachandran Kashi R. , Radhakrishnan Suresh
Published: November 2008

Balachandran and Schaefer (1979) show that if in the individual optimum class A dominates with a first come first serve queue, there could exist cases where in the public optimum class B dominates. We derive conditions under which providing a nonpreemptive priority allows both classes of users to use the facility and get a higher expected public net benefit than the first come first serve queue. The class that is provided the higher priority may or not be the class that dominates in the public optimum under the first come first serve queue. That means that introducing a priority scheme may switch the class that is given preference in the public optimum.

It is shown that there exist situations where the class that is granted the higher priority for service could be levied a lower price than the class that is granted the lower priority. In the case where the users alone have perfect information on the value from using the facility, we derive conditions under which a non preemptive priority is superior to the first come first serve queue.

The preemptive priority resume queue is not necessarily always superior to the first come first serve queue. We derive conditions under which the superiority of the preemptive priority resume queue over the first come first serve queue holds.
The U-line Line Balancing Problem
Authors: Miltenburg G. J. , Wijngaard J.
Published: November 2008

The traditional line balancing (LB) problem considers a production line in which stations are arranged consecutively in a line. A balance is determined by grouping tasks into stations while moving forward (or backward) through a precedence network. Recently many production lines are being arranged in a “U-line,” as a consequence of the use of just-in-time production principles in many factories. In this paper the U-line LB problem is introduced and modelled, and solution procedures are developed. It more complex than the traditional LB problem because tasks can be grouped by moving forward, backward, or simultaneously in both directions, through the precedence network. We also show how solution techniques developed for the traditional LB problem can be adapted for use with the new problem. Some computational results for well-known problems from the literature are given.
Note: Due-date Assignment to Multi-Job Customer Orders
Authors: Bagchi Uttarayan , Julien François M. , Magazine Michael J.
Published: November 2008

The paper addresses deterministic, nonpreemptive scheduling of jobs that are immediately available for processing on a single machine. The jobs are partitioned into several multi-job customer orders. The problem is to determine a due-date for each customer order and to schedule all the jobs such that a total penalty function is minimized. The total penalty function is the sum of penalties for job earliness, penalties for job tardiness, and penalties associated with the lead times of customer orders. The main results is that there is an optimal solution in which the jobs within each customer order are processed contiguously. This is an appealing feature in terms of implementation. Efficient algorithms are presented for solving special cases of this problem.
Evaluating Probabilities: Asymmetric Scoring Rules
Authors: Winkler Robert L.
Published: November 2008

Proper scoring rules are over evaluation measures that reward accurate probabilities Specific rules encountered in the literature and used in practice are invariably symmetric in the sense that the expected score for a perfectly-calibrated probability assessor (or model generating probabilities) is minimized at a probability of one-half. A family of asymmetric scoring rules that provide better measures of the degree of skill inherent in the probabilities and render scores that are more comparable in different situations is developed here. One member of this family, a quadratic asymmetric rule, is applied to evaluate an extensive set of precipitation probability forecasts from the U.S. National Weather Service. Connections to previous characterizations of proper scoring rules are investigated, and some relevant issues pertaining to the design of specific asymmetric rules for particular inferential and decision-making problems are discussed briefly.
Productivity and Information Technology: The Elusive Connection
Authors: Kelley Maryellen R.
Published: November 2008

This study analyzes the effect of information technology on the efficiency of production operations in a specific manufacturing process. Survey data from 584 establishments engaged in the machining process in 21 different industries are used to construct and test an empirical model that takes into account product characteristics, the type of technology (computer-programmable automation or conventionally controlled) machines, the extent of technological change at the plant, process-specific characteristics such as the scale of operations and degree of customization, labor policies, and structural features of the organization of work. The results indicate that there is a significant efficiency advantage from using programmable automation technology and that technological advantages accumulate with experience and with the repeated opportunities for learning associated with large volume and frequent product changes. The most efficient use of this technology occurs in plants with work practices that involve a higher ratio of machines to workers (as in a cellular approach to manufacturing) and allow production workers to perform programming tasks to a greater degree. Unionized plants are also significantly more efficient than non-union plants.
Lower Bounds for Multi-Echelon Stochastic Inventory Systems
Authors: Chen Fangruo , Zheng Yu-Sheng
Published: November 2008

We establish lower bounds on the minimum cost of managing certain production-distribution networks with setup costs at all stages and stochastic demands. These networks include serial, assembly, and one-warehouse multi-retailer systems. We obtain the bounds through novel cost-allocation schemes. We evaluate the bounds' performance for one-warehouse multi-retailer systems by comparing them with simple, heuristic policies. The bounds are quite tight for systems with a small number of retailers. We also present simplified proof of known optimality results for serial and assembly systems.
Flexibility Ratios and Manufacturing Strategy
Authors: Ettlie John E. , Penner-Hahn Joan D.
Published: November 2008

In this exploratory, empirical study of modernizing durable goods plants, it was found that typical measures of flexibility (e.g., number of unique parts and part families) are independent. More importantly, plants and firms with greater strategic manufacturing focus, regardless of specific emphasis (e.g., cost or quality), scheduled fewer part numbers on new flexible automation systems. This suggests that product focus and strategic focus are related in plants producing discrete parts. When flexibility is emphasized as a strategic manufacturing focus, new automation systems are significantly more likely to have shorter change-over times per part family. In general, part family-changeover time ratios appear to have the greatest potential of measures evaluated for building a useful theory of flexibility in discrete parts manufacturing. An evaluation of changes made in part types and part families during the implementation period showed that product flexibility is pursued as a way to reduce high labor costs in manufacturing. These plants accomplished this end by increasing the number of parts scheduled on new systems. Implications for strategic management of flexibility and scope are presented.
Design for Synchronized Flow Manufacturing
Authors: Ahmadi Reza H. , Wurgaft Herman
Published: November 2008

Firms that build flexibility into their manufacturing system gain a competitive edge from their ability to efficiently produce a mid-variety of products at mid-volumes. In order to realize the competitive edge of flexible systems, manufacturing management has to deal effectively with the greater complexity that flexibility brings about. One of the key factors for the success of a flexible system is the management of the product set flow. If the product flow is poorly managed, products may have long manufacturing lead times, and materials may spend a large amount of time in queues as work in process. In such a situation, most of the competitive potential of the flexible system may be lost. But if the flow of materials through the production/assembly stations is carefully synchronized, with materials moving smoothly and continuously from one operation to the next, then it is possible to attain short manufacturing lead times and little waiting. We refer to this operating condition as synchronized flow. In this paper, we study how to attain a synchronized flow for product sets with different characteristics regarding process flexibility and consistency.
Competitive Market Structures: A Subset Selection Analysis
Authors: Kannan P. K. , Sanchez Susan M.
Published: November 2008

Market structure models are used to identify submarkets or to test for the presence of submarkets where within-group competition is much stronger than across group competition. The implicit assumption in such models is that the brands in a submarket compete on the basis of their shared product features. However, if significant variety-seeking effect exist in the market, such an assumption may not be valid. We present a model based on a subset selection procedure for analyzing competitive market structures and develop tests of significance for variety-seeking effects present in the market. For each brand in the market, the subset selection procedure identifies sets (submarkets) of brands that are in “close” competition. The competitive market structure is defined by the possibly overlapping submarkets that are identified for each brand and the model provides insights on whether the brands in a submarket are of a reinforcing or a variety-seeking kind. The application of our model to two different consumer packaged goods markets highlights its contribution relative to extant methods.
Feedforward Artificial Neural Networks for Solving Discrete Multiple Criteria Decision Making Problems
Authors: Malakooti Behnam , Zhou Ying Q.
Published: November 2008

Decision making involves choosing some course of action among various alternatives. In almost all decision making problems, there are several criteria for judging possible alternatives. The main concern of the Decision Maker (DM) is to fulfill his conflicting goals while satisfying the constraints of the system. In this paper, we present an Adaptive Feedforward Artificial Neural Network (AF-ANN) approach to solve discrete Multiple Criteria Decision Making (MCDM) problems. The AF-ANN is used to capture and represent the DM's preferences and then to select the most desirable alternative. The AF-ANN can adjust and improve its representation as more information from the DM becomes available.

We begin with the assumption that an AF-ANN topology is given, i.e., specific numbers of nodes and links are predetermined. To adjust the parameters of the AF-ANN, we present an iterative learning algorithm consisting of two steps. (a) generating a direction, and (b) a one-dimensional search along that direction. We then present a methodology to obtain the most appropriate AF-ANN topology and set its parameters. The procedure starts with a small number of nodes and links and then adaptively increases the number of nodes and links until the proper topology is obtained. Furthermore, when the set of training patterns (alternatives with their associated evaluations by the DM) changes, the AF-ANN model can adapt itself by re-training or expanding the existing model. Some illustrative examples are presented.

To solve discrete MCDM problems by an AF-ANN, we show how to incorporate basic properties of efficiency, concavity, and convexity into the AF-ANN. We formulate the MCDM problems and use the AF-ANN to rank the set of discrete alternatives where each alternative is associated with a set of conflicting and noncommensurate criteria. We present a method for solving discrete MCDM problems through AF-ANNs which consists of. (a) formulating and assessing the utility function by eliciting information from the DM and then training the AF-ANN, and (b) ranking a rating alternatives by using the trained AF-ANN model. Some computational experiments are presented to show the effectiveness of the method.
Development of Measures to Assess the Extent to Which an Information Technology Application Provides Competitive Advantage
Authors: Sethi Vijay , King William R.
Published: November 2008

In order to measures the extent to which information technology provides competitive advantages, the construct “Competitive Advantage Provided by an Information Application” (CAPITA) was operationalized. A field survey gathered data from 185 top information systems executives regarding information technology applications which had been developed to gain competitive advantage. A confirmatory analysis revealed that CAPITA may be conceptualized in terms of nine dimensions which satisfy key measurement criteria including unidimensionality and convergent validity, discriminant validity, predictive validity, and reliability.

The nine dimensions from the basis of a preliminary multidimensional measure or index of competitive advantage which has practical uses for competitive assessment. These include justifying and evaluating applications and acting as dependent variables in empirical competitive advantage research.

Extensions entail formulating alternative measures of CAPITA to clarify the theoretical foundations of the construct, validating the latent-structure model on another data set, use of multiple informants for data collection, and exploring complex factor structures for the construct.
Safety Stock versus Safety Time in MRP Controlled Production Systems
Authors: Buzacott J. A. , Shanthikumar J. G.
Published: November 2008

The two management set parameters which determine the performance of a material requirements planning (MRP) system are the lead time and the safety stock. The appropriate values of these parameters are influenced by the accuracy of forecasts over the lead time, the variability of processing time and the degree of congestion, together with the costs of inventory and shortages. These influences are explored using stochastic models of a single stage manufacturing system for which work release is controlled using MRP. The major conclusion is that safety time is usually only preferable to safety stock when it is possible to make accurate forecasts of future required shipments over the lead time, otherwise safety stock is more robust in coping with changes in customer requirements in the lead time or with fluctuations in forecasts of lead time demand.
Single Machine Scheduling with Deadlines to Minimize the Weighted Number of Tardy Jobs
Authors: Hariri A. M. A. , Potts C. N.
Published: November 2008

This paper considers as single machine scheduling problem in which jobs have due dates and deadlines. A job may be completed after its due date, but not after its deadline, in which case it is tardy. A branch and bound algorithm is proposed to find a schedule which minimizes the weighted number of tardy jobs. It uses lower bounds which are derived using the dynamic programming state-space relaxation method. Computational experience with test problems having up to 300 jobs indicates that the lower bounds are extremely effective in restricting the size of the branch and bound search tree.
Distribution-Free Confidence Intervals for Conditional Probabilities and Ratios of Expectations
Authors: Alexopoulos Christos
Published: November 2008

Many simulation experiments are concerned with the estimation of a ratio of two unknown means, the estimation of a conditional probability being an example. We propose confidence intervals for the case in which the ratio is estimated by using independent, identically distributed random pairs with bounded and ordered components. Emphasis is given to the case in which each component can be expressed as the product of a Bernoulli and a bounded random variable. The proposed intervals result from distribution-free bounds on error probabilities, are valid for every sample size, and their asymptotic width decreases at the same rate as that of confidence intervals based on the central limit theorem. We evaluate their performance by means of two experiments. The first considers the estimation of the probability that a path in a directed a network is shortest while the second considers the estimation of the distribution of the inventory level in a stationary inventory system with periodic review. The experiments show that the intervals are conservative with superior coverage for small sample sizes (≤50).
What Common Ground Exists for Descriptive, Prescriptive, and Normative Utility Theories?
Authors: Luce R. Duncan , von Winterfeldt Detlof
Published: November 2008

Descriptive and normative modeling of decision making under risk and uncertainty have grown apart over the past decade. Psychological models attempt to accommodate the numerous violations of rationality axioms, including independence and transitivity. Meanwhile, normatively oriented decision analysts continue to insist on the applied usefulness of the subjective expected utility (SEU) model. As this gap has widened, two facts have remained largely unobserved. First, most people in real situations attempt to behave in accord with the most basic rationality principles, even though they are likely to fail in more complex situations. Second, the SEU model is likely to provide consistent and rational answers to decision problems within a given problem structure, but may not be invariant across structures. Thus, people may be more rational than the psychological literature gives them credit for, and applications of the SEU model may be susceptible to some violations of invariance principles.

This paper attempts to search out the common ground between the normative, descriptive, and prescriptive modeling by exploring three types of axioms concerning structural rationality, preference rationality, and quasi-rationality. Normatively the first two are mandatory and the last, suspect. Descriptively, all have been questioned, but often the inferences involved have confounded preference and structural rationality. We propose a prescriptive view that entails full compliance with preference rationality, modifications of structural rationality, and acceptance of quasi-rationality to the extent of granting a primary role to the status quo and the decomposition of decision problems into gains and losses.
Parallel Replacement under Capital Rationing Constraints
Authors: Karabakal Nejat , Lohmann Jack R. , Bean James C.
Published: November 2008

Contrary to serial replacement, parallel replacement problems require a decision maker to evaluate a portfolio of replacement decisions in each time period because of economic interdependencies among assets. In this paper, we describe a parallel replacement problem in which the economic interdependence among assets is caused by capital rationing. The research was motivated by the experience gained from a vehicle fleet replacement study where solutions to serial replacement problems could not be implemented since they violated management's budget plan. When firms use budgets to control their expenditures, competition for the limited funds creates interdependent problems. In this paper, we formulate the problem as a zero-one integer program and develop a branch-and-bound algorithm based on Lagrangian relaxation methodology. A multiplier adjustment method is developed to solve one Lagrangian dual.
Importance Sampling for the Simulation of Highly Reliable Markovian Systems
Authors: Shahabuddin Perwez
Published: November 2008

In this paper we investigate importance sampling techniques for the simulation of Markovian systems with highly reliable components. The need for simulation arises because the state space of such systems is typically huge, making numerical computation inefficient. Naive simulation is inefficient due to the rarity of the system failure events. Failure biasing is a useful importance sampling technique for the simulation of such systems. However, until now, this technique has been largely heuristic. We present a mathematical framework for the study of failure biasing. Using this framework we derive variance reduction results which explain the orders of magnitude of variance reduction obtained in practice. We show that in many cases the magnitude of the variance reduction is such that the relative errors of the estimates remain bounded as the failure rates of components tend to zero. We also prove that the failure biasing heuristic in its original form may not give bounded relative error for a large class of systems and that a modification of the heuristic works for the general case. The theoretical results in this paper agree with experiments on the subject which have been reported in a previous paper.
Economic Development of Groundwater in Arid Zones with Applications to the Negev Desert, Israel
Authors: Brimberg Jack , Mehrez Abraham , Oron Gideon
Published: November 2008

A mixed binary integer linear program is formulated to determine the economic development of marginal groundwater sources at local demand sites in an arid region. These marginal sources are required to augment the supply from an overloaded regional source. The model accounts for variable costs of supply, fixed investment costs, capacity constraints at the regional and local levels, and water quality requirements at the local sites. A Lagrangian relaxation reduces the model to a series of simple local problems, the solution of which provides an optimal sequence for developing the marginal groundwater sources while reducing the demands on the regional source. A heuristic and an exact procedure are also proposed to solve the problem for arbitrary levels of supply from the regional source. The exact procedure uses characteristics of the optimal solution to reduce the model to a series of knapsack-type problems. The theory is applied to a small case study taken from the Negev Desert in southern Israel.
Investment Strategies under Transaction Costs: The Finite Horizon Case
Authors: Gennotte Gerard , Jung Alan
Published: November 2008

We examine the effect of proportional transaction costs on dynamic portfolio strategies for an agent who maximizes his expected utility of terminal wealth. For portfolios composed of a single risky asset and a single riskless asset, Constantinides (1979) shows that the optimal investment policy is described in terms of a no transaction region, where the optimal policy is to refrain from trading if initial portfolio holdings lie within the region, and to transact to the nearest boundary of the region if portfolio holdings lie outside the region. Because the boundaries could not be derived analytically, we developed an efficient and tractable algorithm to obtain the boundaries, which are expressed as the ratio of the dollar holdings in stocks and bonds. We considered two cases: the same transaction costs for the two assets, and costs incurred on only the risky asset. We derived the optimal trading strategies and utility levels for a large set of realistic parameters. In particular, we show that the no transaction region narrows and converges rapidly to the infinite horizon limit as the time horizon increases.
Explaining the Role of User Participation in Information System Use
Authors: Hartwick Jon , Barki Henri
Published: November 2008

Even though user participation in information system development has long been considered to be a critical factor in achieving system success, research has failed to clearly demonstrate its benefits. This paper proposes user involvement as an intervening variable between user participation and system use. Embedding the constructs of participation and involvement into the theoretical framework of Fishbein and Ajzen, a model is developed and tested in a field study of information system projects. Several key findings emerge from the study. User participation and user involvement represent two distinct constructs, with participation leading to involvement, and involvement mediating the relationship between participation and system use. The critical dimension of user participation is overall responsibility. The role of user participation and involvement is different, depending upon whether system use is mandatory or voluntary.
Coping with the Loss of Pooling Synergy in Cellular Manufacturing Systems
Authors: Suresh Nallan C. , Meredith Jack R.
Published: November 2008

The conversion of a functional layout into a cellular manufacturing system involves the partitioning of several multiserver work centers. The loss of pooling synergy in this process can be significant, and this paper investigates the impact of several measures to overcome the adverse effects on flow time, work-in-process inventory and machine utilization. These can be alleviated to a certain extent through reductions in setup times and lot sizes that has been traditionally emphasized in group technology, but a more concerted effort is required. Analytical models are first utilized to investigate the extent to which these adverse effects can be overcome through (1) reduction in setup time, (2) lot sizing, (3) reduction in the variability of process-times and job arrivals, and, (4) reduction in processing times through productivity improvements, all arising from part family-oriented processing. These insights are verified through a simulation comparison of five cellular manufacturing systems with a functional layout system in which optimal lot sizes, low move times and a part family-oriented scheduling rule are used.
The Adoption of Corporate Governance Mechanisms: A Test of Competing Diffusion Models
Authors: Venkatraman N. , Loh Lawrence , Koh Jeongsuk
Published: November 2008

We develop alternative diffusion models of two corporate governance mechanisms—joint venture and M-form organizational structure—using relevant concepts from the resource-based theory. Using data on joint venture adoption from one homogeneous industry (information technology) sector and employing both linear and nonlinear estimations, we test the explanatory power of the internal-influence model in comparison with a competing model of external-influence. Our empirical results support the internal-influence model in this sector with additional evidence for generalizability provided through a multisector sample of joint venture formation. In contrast, empirical results on the diffusion of M-form structure are more consistent with the external-influence model.
Estimation Methods in Portfolio Selection and the Effectiveness of Short Sales Restrictions: UK Evidence
Authors: Board John L. G. , Sutcliffe Charles M. S.
Published: November 2008

Forecasting the mean returns vector and the covariance matrix is a key feature in implementing portfolio theory. The performance of the Bayes-Stein method for forecasting these parameters for use in the Markowitz model (with and without short sales) was compared with that of seven other estimation methods, and three alternative portfolio selection techniques. This paper represents the first large scale empirical investigation of the usefulness of the Bayes-Stein approach using historical data. This data was drawn from the London Stock Exchange. In contrast to earlier studies, the relative performance of Bayes-Stein was mixed. While it produced reasonable estimates of the mean returns vector, there were superior methods, e.g., overall mean, for estimating the covariance matrix when short sales were permitted. When short sales were prohibited, actual portfolio performance was clearly improved, although there was little to choose between the various estimation methods.
An Option Valuation Analysis of Investment Choices by a Regulated Firm
Authors: Teisberg Elizabeth Olmsted
Published: November 2008

This paper analyzes a utility power plant construction project using an option pricing model of the value of the capital investment. It includes descriptive factors frequently ignored in the valuation of capital investments by regulated firms, including lead time, lumpy and sequential cost outlays, irreversibility of expenditures, and uncertainty about regulatory outcomes for completed projects. The analysis shows the value of shorter lead time technologies, the value of flexibility to delay or abandon construction, the incentive to delay construction under uncertain regulation, and how cost recovery policies, such as possible disallowance of Allow for Funds Used During Construction (AFUDC), create incentives to invest less, but to complete construction quickly. The analysis may also apply in unregulated contexts, where the value of a completed project is affected by taxation, the possibility of nationalization, or possible competitors' actions that create uncertain restrictions on potential profits.
A Dual-Based Algorithm for Multi-Level Network Design
Authors: Balakrishnan Anantaram , Magnanti Thomas L. , Mirchandani Prakash
Published: November 2008

Given an undirected network with L possible facility types for each edge, and a partition of the nodes into L levels or grades, the Multi-level Network Design (MLND) problem seeks a fixed cost minimizing design that spans all the nodes and connects the nodes at each level by facilities of the corresponding or higher grade. This problem generalizes the well-known Steiner network problem and the hierarchical network design problem, and has applications in telecommunication, transportation, and electric power distribution network design. In a companion paper we studied alternative model formulations for a two-level version of this problem, and analyzed the worst-case performance of several heuristics based on Steiner network and spanning tree solutions. This paper develops a dual-based algorithm for the MLND problem. The method first performs problem preprocessing to fix certain design variables, and then applies a dual ascent procedure to generate upper and lower bounds on the optimal value. We report extensive computational results on large, random two-level test problems (containing up to 500 nodes, and 5,000 edges) with varying cost structures. The integer programming formulation of the largest of these problems has 20,000 integer variables and over 5 million constraints. Our tests indicate that the dual-based algorithm is very effective, producing solutions that are within 0.9% of optimality.
Decision Dynamics in Two High Reliability Military Organizations
Authors: Roberts Karlene H. , Stout Suzanne K. , Halpern Jennifer J.
Published: November 2008

In this research we extend theoretical development about decision making in organizations in which many kinds of errors cannot be tolerated. Catastrophic consequences can be associated with faulty decision making in reliability-seeking organizations, a situation which does not occur in most organizations studied in the past. Observations are drawn from two nuclear-powered aircraft carriers. We find decision processes which appear to change often in these organizations. Important decisions can be made by a number of men even at the lowest levels of the organization. Task-related factors such as technical complexity, high interdependence, and catastrophic consequences associated with rare events and more cognitive factors such as accountability and salience affect decision processes. A model is presented that accounts for dynamic change in decision processes in these organizations.
Folding Back in Decision Tree Analysis
Authors: Sarin Rakesh , Wakker Peter
Published: November 2008

This note demonstrates that two minimal requirements of decision tree analysis, the folding back procedure and the interchangeability of consecutive event nodes, imply independence.
Optimal Leadtimes Planning in a Serial Production System
Authors: Gong Linguo , de Kok Ton , Ding Jie
Published: November 2008

Consider an N stage serial production line where the processing times of orders may be random. Since the carrying costs increase from stage to stage, the standard production procedure, that is, to determine a total leadtime for the entire order by taking an appropriate percentile of the distribution of total processing time and then release the order immediately from stage to stage during the process, may not be optimal since it ignores inventory carrying costs. This article studies a per stage planned leadtime dispatching policy for such systems. The order will not be released immediately to the next workstation prior to a predetermined delivery time, or planned leadtime. The vector of planned leadtimes at workstations is to be determined by trading off expected holding costs at all stages and expected penalty costs for exceeding the total planned leadtime. We show that the optimal vector of planned leadtimes may be obtained efficiently by solving an equivalent serial inventory model of the type considered in Clark and Scarf (1960).
Pricing and Delivery-Time Performance in a Competitive Environment
Authors: Li Lode , Lee Yew Sing
Published: November 2008

We present a model of market competition in which customer preferences are over not only price and quality but also delivery speed. This allows a study of market demand and firms' decisions on price, quality, technology and responsiveness in a competitive environment. When demand arises, a customer chooses the firm that maximizes its expected utility of price, quality and response time. The demand function for each firm is derived by analyzing a queueing system with competing servers. We then study price competition among firms with differentiated processing rates. In the equilibrium, the firm with a higher processing rate always enjoys a price premium, and, further, enjoys a larger market share when its opponent also has adequate processing rate to serve all the customers alone.
The Generating Process and an Extension of Jewitt's Location Independent Risk Concept
Authors: Landsberger Michael , Meilijson Isaac
Published: November 2008

A generating process of Jewitt's location independent risk concept is derived in terms of left stretches based on single crossings between distributions. For concave nondecreasing utility functions this stochastic order preserves monotonicity between risk premium and the Arrow-Pratt measure of risk aversion. We show that a stronger order, the Bickel-Lehmann notion of dispersion, preserves this monotonicity for the larger class of nondecreasing utilities.