bluuebunny/crossref_metadata_2025 huggingface dataset:
New Product Strategy in Small Technology-Based Firms: A Pilot Study
Authors: Meyer Marc H. , Roberts Edward B.
Published: November 2008

A pilot test is reported on a method for relating the degree of “newness” within a firm's portfolio of products and the firm's economic success. The embodied technology and market applications newness is measured in the sequences of 79 products developed and released by a sample of 10 small technology-based companies, each under $50 million in most recent sales. A two-dimensional “technology newness/market newness” grid is prepared for the product set of each firm, based on the conditions existent at the time of each product's development. Alternative weighting schemes are used to generate a “newness index” for each firm. The degree of “strategic focus” is shown to relate directly to corporate growth in that small firms with more restricted degrees of technological and market change in their successive products outperform companies with wide diversity. The evidence suggests, however, that some product “newness” is better than no “newness,” and that more technological change can be effectively employed in small company product strategy than market change.
Risk Preferences for Gains and Losses in Multiple Objective Decision Making
Authors: Fischer Gregory W. , Kamlet Mark S. , Fienberg Stephen E. , Schkade David
Published: November 2008

Payne, Laughhunn, and Crum (Payne, J. W., D. J. Laughhunn, R. Crum. 1984. An experimental study of multiattribute risky choice. Management Sci. 30 1350–1361.) found that managers were multiattribute risk averse for gains, but multiattribute risk prone for losses, a pattern that is inconsistent with both the additive and the multiplicative multiattribute utility models. In this paper we develop the reference risk-value (RRV) model, which is simple in structure yet capable of representing the kinds of multiattribute reference effects observed by Payne et al. We also report the results of two experiments that compare the descriptive validity of the RRV model with that of the additive and multiplicative utility models. Experiment 1 involved choices between risky multiperiod cash flows; Experiment 2 choices between risky job alternatives described by change in salary and change in type of work. In Experiment 1, subjects were multiattribute risk averse for gains, but multiattribute risk neutral for losses. In Experiment 2, subjects were multiattribute risk averse for both gains and losses, but significantly more so for losses. Because both experiments produced significantly different multiattribute risk preferences for gains than losses, both favor the RRV model over the widely used additive and multiplicative models. However, because the patterns of multiattribute risk preferences for gains and losses were strikingly different in the two experiments, these results argue against any direct generalization of the “reflection effect” to a multiattribute context.
Price Indexes for R and D Inputs, 1969–1983
Authors: Mansfield Edwin
Published: November 2008

This paper presents the first R and D price indexes based largely on actual prices and expenditures reported by firms. The results, based on a carefully designed sample of about 100 firms, show that the GNP deflator, which is used in the official government R and D statistics, has tended to underestimate the rate of inflation in R and D. For managerial and economic purposes, such as R and D budgeting and productivity studies, these indexes should be of widespread use.
Errata & Comments—Departmental Editor's Introduction
Authors: Schwarz Leroy B.
Published: November 2008

Rosenblatt and Kaspi (Rosenblatt, M. J., M. Kaspi. 1985. A dynamic programming algorithm for joint replenishment under general order cost functions. Management Sci. 31 (March) 369–373.) proposed a dynamic programming algorithm for determining joint ordering policies for a class of items with EOQ-like demands and holding costs and “general order cost functions.” Comments that follow by Queyranne and Quernheim and Bastian provide some counter-examples.
Portfolio Analysis with Partial Information: The Case of Grouped Data
Authors: Elton Edwin J. , Gruber Martin J.
Published: November 2008

Almost all of the literature in finance analyzing the selection of optimum portfolios assumes that the agent making the decision has a full set of estimates of the expected return for each security and the variance covariance matrix between securities. In actual practice most decision makers simply receive a list of stocks with ranking on each stock and perhaps some partial risk information. The purpose of this paper is to determine what we can learn from portfolio theory about optimum decisions if all the investor knows is the grouping of stocks plus at best the average characteristics of the stocks in a group. This analysis is important because these are the data most investors utilize to make their portfolio decisions.
Modeling Coordination in Organizations and Markets
Authors: Malone Thomas W.
Published: November 2008

This paper describes a simple set of coordination structures that model certain kinds of information processing involved in organizations and markets. Four generic coordination structures are defined: product hierarchies, functional hierarchies, centralized markets, and decentralized markets. Then tradeoffs among these structures are analyzed in terms of production costs, coordination costs, and vulnerability costs. This model is unusual in that it includes detailed definitions of the structures at a micro-level and mathematical derivations of comparisons among them at a macro-level. In the final section of the paper, several connections are made between these formal results and previous work on organizational design.
Reply—A Note on PERT Assumptions
Authors: Gallagher Charles
Published: November 2008

Littlefield and Randolph (Littlefield, T. K., Jr., P. H. Randolph. 1987. Another note on PERT times. Management Sci. 33 1357–1359.) present the historical derivation of the PERT equations. A second derivation is possible, however, using a different set of assumptions.
Competitive Procurement Under Demand Uncertainty
Authors: Nti Kofi O.
Published: November 2008

Stockpilers of commodities in short supply must frequently contend with game-theoretic ramifications arising from the fact that unit purchasing cost increases with aggregate requirements. In this paper, a competitive inventory procurement model for countries facing uncertain demand is analyzed as a game of strategy. Noncooperative and cooperative aspects of the problem are examined. There are significant incentives for cooperating. Some implications of this analysis for strategic petroleum stockpiling models are discussed.
Strategy Maps: A Spatial Representation of Intra-Industry Competitive Strategy
Authors: Day Diana L. , DeSarbo Wayne S. , Oliva Terence A.
Published: November 2008

We introduce an integrative tool, called a strategy map, for describing the nature of a given competitive environment. The approach can also suggest specific courses of actions for competing businesses in those environments. The strength of the method is its ability to capture and communicate visually through a map the complex relations among competitive strategy variables and performance simultaneously. This article focuses on theory from the strategy field to develop a basic model that ties together the key elements in the development of any competitive strategy map. This theoretical development is followed with an examination of some of the important methodological developments in the field. The article then goes into the statistical development of the methodology. Then the maps are developed through a methodology which captures the simultaneous, multidimensional, and interrelated nature of business strategy and performance for a group of businesses within an industry. Specifically, we (a) present a multidimensional scaling methodology for describing the competitive nature of a given industry, (b) examine the necessary tradeoffs that a competitor must make in targeting its performance goals, and (c) explore the relative importance the different strategy variables have for achieving these performance goals in the given competitive environment. An empirical application using PIMS data is presented—strategy maps are derived for a mature, industrial supplier to illustrate how the method can be employed as a descriptive tool in competitive strategy. The findings are then validated for a randomly selected business.
Optimal Use and the Value of Water Resources in Electricity Generation
Authors: Efthymoglou Prodromos G.
Published: November 2008

Econometric and dynamic programming analysis is used to derive optimal operating rules for water resources used in electricity generation. The methodology is applied to an actual mixed power system with interconnected thermal and hydro plants. Results obtained are compared with the electricity utility's operating practices. Short-run marginal costs and water values are also derived. The implications of these to efficient pricing of both electricity and water supply are discussed and net effective costs for new generating plants are derived. These costs are important in determining the optimal plant mix.
A Mathematical Programming Approach to a Deterministic Kanban System
Authors: Bitran Gabriel R. , Chang Li
Published: November 2008

In this paper we present a mathematical programming model for the Kanban system in a deterministic multi-stage capacitated assembly-tree-structure production setting. We discuss solution procedures to the problem and address three special cases of practical interest.
An Introduction to Structured Modeling
Authors: Geoffrion Arthur M.
Published: November 2008

The discipline of modeling has advanced only slowly compared to disciplines concerned with analyzing and solving models once they are brought into being. Structured Modeling is an attempt to redress this imbalance.

Structured Modeling aims to provide a formal mathematical framework and computer-based environment for conceiving, representing, and manipulating a wide variety of models. The framework uses a hierarchically organized, partitioned, and attributed acyclic graph to represent the semantic as well as mathematical structure of a model. The computer-based environment is evolving via experimental prototypes that provide for ad hoc query, immediate expression evaluation, solving simultaneous systems, and optimization.

If successful, Structured Modeling will enable model-based work to be done with greater productivity and acceptance by nonspecialists, will exploit important developments in small computers, and will cross-fertilize management science/operations research, artificial intelligence, database management, programming language design, and software engineering.

This paper is an introduction and status report on a long term project. The presentation is based largely on examples; rigorous development and details are left to a series of technical reports.
PAM—A Practitioner's Approach to Modeling
Authors: Welch James S.
Published: November 2008

Many Linear Programming (LP) practitioners formulate and document their models with block schematics of LP matrices. They subscribe to neither the column-wise emphasis of commercial matrix generators nor to the constraint orientation of recently proposed “modelling languages.” PAM is a nonprocedural modeling language in which the practitioner describes an LP matrix with a set of two-dimensional tables: a table representing the block schematic of the matrix and supporting data tables. A computer program processes these tables to produce an LP matrix ready for optimization.

This paper describes block-wise model formulation, discusses the relationships of the data to the model, presents an overview of PAM's matrix generation language, and gives some experience with a prototype system.
Cost Allocation and Opportunity Costs
Authors: Miller Bruce L. , Buckman A. G.
Published: November 2008

One explanation for the widespread use of allocated fixed costs is that they can serve as a proxy for difficult-to-calculate opportunity costs. This explanation is pursued by modeling a service department as an M/M/s/s queueing system. Two main results are that the expected value of opportunity costs equals both the incremental productivity of capacity and the optimal transfer price. When the cost of capacity is of the form C(s) = asα and α is close to one, we show that allocated fixed costs are a good proxy for average opportunity costs. However, if there are great economies of scale (α is close to zero), then a method which charges users only for the variable costs of the service department is recommended. Finally, the economic efficiency of transfer prices based on either variable cost or full cost is compared with optimal transfer pricing policies.
Discounted and Per Unit Costs of Product Warranty
Authors: Mamer John W.
Published: November 2008

This paper proposes a detailed model of the costs and benefits to producers and consumers of product warranty. Three common types of product warranty contract are considered. In addition, we explicitly allow for randomness in consumer repurchase behavior and for the possibility of an independent damage process acting on products sold under warranty. The cost criteria considered are discounted costs (profits) and per unit costs (and profits). The model is used to analyze the trade-off between warranty and quality control, and to illustrate the sensitivity of warranty costs to environmental variables.
Note—Comment on “The Dynamics of Plant Layout”
Authors: Batta Rajan
Published: November 2008

This note establishes a class of best possible upper bounds for the Dynamic Plant Layout Problem (DPLP) examined by Rosenblatt (Rosenblatt, M. J. 1986. The dynamics of plant layout. Management Sci. 32 76–86.) in this journal. We use the notation of that paper.
The Generalized Stein/Rubinstein Covariance Formula and Its Application to Estimate Real Systematic Risk
Authors: Wei K. C. John , Lee Cheng F.
Published: November 2008

This paper generalizes Stein's (Stein, C. 1973. Estimation of the mean of a multivariate normal distribution. Proc. Prague Sympos. Asymptotic Statistics, September 1973.), Rubinstein's (Rubinstein, M. 1973b. A comparative static analysis of risk premiums. J. Bus. 46(October) 604–615; Rubinstein, M. 1976. The valuation of uncertain income streams and pricing of options. Bell J. Econom. Management Sci. 7(Autumn) 407–425.), and Losq and Chateau's (Losq, E., J. P. D. Chateau. 1982. A generalization of the CAPM based on a property of covariance operator. J. Financial and Quant. Anal. 17(December) 783–797.) covariance formula to the case where both variables are functions of multivariate normal random variables. The resulting formula is extremely useful for either implicit functions of, or nonpolynomials of, multivariate normal random variables, such as exponential functions. An application of the use of the generalized Stein/Rubinstein covariance formula to the estimation of real systemic risk is provided to illustrate the results.
Dynamically Updating Relevance Judgements in Probabilistic Information Systems Via Users' Feedback
Authors: Lenk Peter J. , Floyd Barry D.
Published: November 2008

A decision maker's performance relies on the availability of relevant information. In many environments, the relation between the decision maker's informational needs and the information base is complex and uncertain. A fundamental concept of information systems, such as decision support and document retrieval, is the probability that the retrieved information is useful to the decision maker's query. This paper presents a sequential, Bayesian, probabilistic indexing model that explicitly combines expert opinion with data about the system's performance. The expert opinion is encoded into probability statements. These statements are modified by the users' feedback about the relevance of the retrieved information to their queries. The predictive probability that a datum in the information base is applicable to the current query is a logistic function of the expert opinion and the feedback. This feedback enters the computation through a measure of association between the current query-datum pair with previous, relevant query-datum pairs. When this measure is based on the proportional matching of multiple attributes, the predictive probabilities have a recursive formula that makes the model computationally feasible for large information bases.
Optimally Balancing Large Assembly Lines with “Fable”
Authors: Johnson Roger V.
Published: November 2008

A new algorithm for optimally balancing assembly lines is formulated and tested. Named “FABLE,” it obtains proven optimal solutions for ten 1000 task lines, which each possess the computationally favorable conditions of an average of at least 6 tasks per work station and a small number of between-task precedence requirements, in less than 20 seconds of IBM 3033U CPU time for each problem. FABLE also performs very favorably on a benchmark group of 64 test problems drawn from the literature, which are of up to 111 tasks each. FABLE finds and proves an optimal solution to the 64 problems in a total of 3.16 seconds of IBM 3090 CPU time.

FABLE is a ‘laser’ type, depth-first, branch-and-bound algorithm, with logic designed for very fast achievement of feasibility, ensuring a feasible solution to any line of 1000 or even more tasks. It utilizes new and existing dominance rules and bound arguments.

A total of 549 problems of various characteristics are solved to determine conditions under which FABLE performs most and least favorably. Performance is sensitive to average number of tasks per work station, number of between-task precedence requirements (measured by ‘order strength’), and the total number of tasks per problem. A heuristic variant of FABLE is also described.
The Shifting Bottleneck Procedure for Job Shop Scheduling
Authors: Adams Joseph , Balas Egon , Zawack Daniel
Published: November 2008

We describe an approximation method for solving the minimum makespan problem of job shop scheduling. It sequences the machines one by one, successively, taking each time the machine identified as a bottleneck among the machines not yet sequenced. Every time after a new machine is sequenced, all previously established sequences are locally reoptimized. Both the bottleneck identification and the local reoptimization procedures are based on repeatedly solving certain one-machine scheduling problems. Besides this straight version of the Shifting Bottleneck Procedure, we have also implemented a version that applies the procedure to the nodes of a partial search tree. Computational testing shows that our approach yields consistently better results than other procedures discussed in the literature. A high point of our computational testing occurred when the enumerative version of the Shifting Bottleneck Procedure found in a little over five minutes an optimal schedule to a notorious ten machines/ten jobs problem on which many algorithms have been run for hours without finding an optimal solution.
Economic Contests with Incomplete Information and Optimal Contest Design
Authors: Singh Nirvikar , Wittman Donald
Published: November 2008

This paper analyzes contests where contestants have private information about their abilities, and these abilities may be correlated. It differs from previous work chiefly in that it allows for such imperfect correlation, and that it restricts attention to a discrete output space. The latter aspect enables a complete characterization of possible equilibria. The analysis draws special attention to the possibility that equilibrium may involve lower ability contestants choosing higher effort and winning the contest. It is demonstrated that it may be optimal for the contest designer to induce such equilibria, and some conditions for this are derived. Different possible objectives of the contest designer are also discussed.
A New Algorithm for the 0-1 Knapsack Problem
Authors: Martello Silvano , Toth Paolo
Published: November 2008

We present a new algorithm for the optimal solution of the 0-1 Knapsack problem, which is particularly effective for large-size problems. The algorithm is based on determination of an appropriate small subset of items and the solution of the corresponding “core problem”: from this we derive a heuristic solution for the original problem which, with high probability, can be proved to be optimal. The algorithm incorporates a new method of computation of upper bounds and efficient implementations of reduction procedures. The corresponding Fortran code is available. We report computational experiments on small-size and large-size random problems, comparing the proposed code with all those available in the literature.
Component Commonality with Service Level Requirements
Authors: Gerchak Yigal , Magazine Michael J. , Gamble A. Bruce
Published: November 2008

This paper extends recent results of Baker et al. (Baker, K. R., M. J. Magazine, H. L. W. Nuttle. 1986. The effect of commonality on safety stocks in a simple inventory model. Management Sci. 32 982–988.) in understanding the impact of component commonality on stocking levels under service level constraints. A model is formulated for an arbitrary number of products with general joint demand distribution. The results obtained are not all intuitive. While utilizing commonality is beneficial, nothing general can be said about the resulting change in the components' stock levels. When the cost structure is of a particular simple form, though, some interesting general patterns do emerge. We also discuss the case of using a service-level measure where rationing of common components might be required, and characterize the implied rationing rule.
Algorithms for Scheduling a Single Machine to Minimize the Weighted Number of Late Jobs
Authors: Potts C. N. , Van Wassenhove L. N.
Published: November 2008

This paper considers the problem of scheduling n jobs, each having a processing time, a due date and a weight, on a single machine to minimize the weighted number of late jobs. An O(n log n) algorithm is given for solving the linear programming problem obtained by relaxing the integrality constraints in a zero-one programming formulation of the problem. This linear programming lower bound is used in a reduction algorithm that eliminates jobs from the problem. Also, a branch and bound algorithm that uses the linear programming lower bound is proposed. Computational results with branch and bound algorithms that use this and other lower bounds and with a dynamic programming algorithm for problems with up to 1000 jobs are given.
Mitigating End Effects in the Dynamic Vehicle Allocation Model
Authors: Hughes Richard E. , Powell Warren B.
Published: November 2008

A class of network models developed for optimizing the use of a fleet of vehicles can be viewed as time-staged optimization models. Such models which have linear objective functions suffer particularly from end effects, the distortions introduced by employing a finite planning horizon. This paper brings together the end effects literature and the vehicle allocation literature to find a finite linear programming problem that gives an approximation to the first stage optimal solution of the infinite model. In addition, we develop another method of approximation and show that both methods can be formulated as generalized networks. Numerical results are presented for each method for comparison.
Note—On the Minimum of a Nonconvex Inventory Function
Authors: Das Chandrasekhar
Published: November 2008

The paper deals with a nonconvex, bivariate minimization problem arising in a heuristic inventory model of Hadley and Whitin (Hadley, G., T. M. Whitin. 1963. Analysis of Inventory Systems. Prentice-Hall, Inc., Englewood Cliffs, NJ.). An approach is suggested whereby the existence and uniqueness of the solution can be determined even though the model does not fulfill the standard second-order conditions. It is observed that the global minimum for this model can be identified by means of the first-order conditions and the shape of the lead time demand distribution. In particular, the local minimum is also the global minimum for this model when lead time demand distribution is either unimodal or J-shaped.
Multipass Seasonal Adjustment Filter
Authors: Sastri Tep
Published: November 2008

A state-space seasonal time series model and a new seasonal decomposition algorithm, based on the Kalman filter, are introduced. The time series model is statistically equivalent to the multiplicative seasonal model, ARIMA (0, 1, 1)(0, 1, 1)s, of Box and Jenkins. It is shown that the steady-state filter's forecasts of this model are identical to the Box and Jenkins' values.

The seasonal adjustment and decomposition algorithm is based on a multipass filtering technique for back forecasting and smoothing in order to correct start-up transients and replace lost filter's estimates during the initialization phase. The in-sample performances of this multipass seasonal adjustment filter (MSAF) are compared with the Census X-11 procedure, using real time series. The empirical results clearly show the superiority of the proposed method for all time series in the study. Additionally, a sample from the Makridakis-Hibon's 111 time series is used for ex-post forecasting evaluation of the proposed method in comparison to the Winters and simple ratio-to-moving-average methods. It is observed that the MSAF forecasts are better than its competitors in most cases, especially when leadtimes are at least one season length.
Group Process and Conflict in System Development
Authors: Robey Daniel , Farrow Dana L. , Franz Charles R.
Published: November 2008

Information system development projects engage organizational members in a process with potential for conflict. Managing such conflicts in project groups is an important but often neglected aspect of systems development. This research assesses group process during the development of an information system in an insurance company, using questionnaires, recorded transcripts of group meetings, interviews, and archival data. We describe the relationships among four variables in a model of conflict—participation, influence, conflict, and conflict resolution—at five different periods over a 22-month period. Our results show that in every time period participation positively affected influence and that influence positively affected both conflict and conflict resolution. These findings are supported by an analysis of communication patterns within four project meetings and by qualitative data collected during the project. The practical implications of conflict and group processes in system development are discussed.
Planning Queueing Simulations
Authors: Whitt Ward
Published: November 2008

Simple heuristic formulas are developed to estimate the simulation run lengths required to achieve desired statistical precision in queueing simulations. The formulas are intended to help in the early planning stages before any data have been collected. The queueing simulations considered are single replications (one long run) conducted to estimate steady-state characteristics such as expected equilibrium queue lengths. The formulas can be applied to design simulation experiments to develop and evaluate queueing approximations. In fact, this work was motivated by efforts to develop approximations for packet communication networks with multiple classes of traffic having different service characteristics and bursty arrival processes. In addition to indicating the approximate simulation run length required in each case of a designed experiment, the formulas can help determine what cases to consider, what statistical precision to aim for, and even whether to conduct the experiment at all. The formulas are based on heavy-traffic limits for queues (the limiting behavior as the traffic intensity approaches its upper limit for stability) and associated diffusion approximations. In particular, the formulas apply to stochastic processes that can be approximated by reflected Brownian motion, such as the queue-length process in the standard GI/G/1 model.
Multi-Level Production and Distribution Planning with Transportation Fleet Optimization
Authors: Van Roy Tony J.
Published: November 2008

We present an application of mathematical programming for solving a complex multi-level production and distribution network optimization problem faced by a petrochemical company. Two liquified petroleum gas (LPG) products, propane and butane, are produced at refineries, from where they are shipped in bulk to plants for bottling. Then the company distributes the gas bottles to the customers either directly or via depots and transportation breakpoints. Transportation is carried out by the company's own truck fleet or by contract carriers. The own trucks can operate on different shift systems allowing for overtime. The problem is to find the location of the bottling plants and the depots, the production levels at the refineries and the plants, the stock levels at the plants and the depots, the transportation volumes on each link of the distribution network, the number of trucks and drivers, the transportation shift systems and schedules, and the customer assignments so as to meet LPG demand at minimal cost. The actual problem has 2 commodities, 2 refineries, 10 potential bottling plant locations, 40 potential depot locations, 40 breakpoints (transporters), and 200 customer regions. The problem was solved using a matrix generator designed for network-like problems and MPSARX, a state-of-the-art general-purpose mathematical programming software system augmented with advanced automatic reformulation and cut generation features.
An Algorithm for Solving the Job-Shop Problem
Authors: Carlier J. , Pinson E.
Published: November 2008

In this paper, we propose a branch and bound method for solving the job-shop problem. It is based on one-machine scheduling problems and is made more efficient by several propositions which limit the search tree by using immediate selections.

It solved for the first time the famous 10 × 10 job-shop problem proposed by Muth and Thompson in 1963.
Models for Managing Secrets
Authors: Steele J. Michael
Published: November 2008

Some elementary probability models are given that help articulate the trade-offs involved in managing secrets. One of these models captures the notion that the likelihood of disclosing a secret increases as the square of the number of people who are aware of it. Also, several classes of countermeasures are examined to determine their ability to increase the time window during which a secret can be held. One model suggests that disinformation countermeasures offer a promising technique for conserving secrets.
The Effect of Task Demands and Graphical Format on Information Processing Strategies
Authors: Jarvenpaa Sirkka L.
Published: November 2008

The designers of decision support systems lack theoretically based principles for designing graphical interfaces. The purpose of the reported research is to take a step toward developing such principles for graphical information presentation formats. Specifically, this paper presents an investigation of the effects of graphical formats and task demands upon decision processes and decision outcomes. In a laboratory setting, research participants made choices under differing task and graphical format conditions, and their information acquisition and evaluation behaviors were recorded. The results suggest that information presentation format influences the decision time and the selection of acquisition and evaluation strategies by influencing the cognitive costs and benefits of the task environment. Other factors influencing the decision time and the choice of strategies include the characteristics of the task and the interactions between the presentation format and the other task demands. The interactions between the task demands and the graphical format appear to be complex and may impact different stages of decision process differently (e.g., acquisition versus evaluation). The findings of the current study extend the results of previous studies on information format into the domain of graphical displays. The findings also suggest that the cognitive cost/benefit framework can provide a robust theoretical foundation for design decisions regarding graphical presentation formats in decision support systems.
Operating Characteristics of the (S − 1, S) Inventory System with Partial Backorders and Constant Resupply Times
Authors: Moinzadeh Kamran
Published: November 2008

In this paper we consider an (S − 1, S) inventory system with Poisson demand and constant resupply times. An arriving customer facing stockout will either backorder or withdraw its order. Expressions describing steady state operating characteristics of the system and the expected total cost rate are developed. Furthermore, the behavior of the expected total cost rate as the function of the relevant parameters is explored.
The Parameter Iteration Method in Dynamic Programming
Authors: Gal Shmuel
Published: November 2008

Many practical problems involve making optimal decisions for systems with state characterized by many components. These problems lead to dynamic programming problems with a very large number of state variables. Thus, an exact derivation of the optimal policy for such problems is not feasible to solve numerically due to the great amount of computer time and storage involved.

This paper presents a practical method, denoted as the Parameter Iteration Method, for obtaining an approximate solution for the above described problem. The computational difficulty caused by the tremendously large dimensionality of the state variable is overcome by means of an iterative method which combines simulation and recursive estimation to compute successive approximations of the value function.

The implementation of the Parameter Iteration Method is illustrated for the problem of optimal replacement policy for a multi-item Markovian system.
Reducing Inventory System Costs by Using Robust Demand Estimators
Authors: Jacobs Raymond A. , Wagner Harvey M.
Published: November 2008

Applications of inventory theory typically use historical data to estimate demand distribution parameters. Imprecise knowledge of the demand distribution adds to the usual replenishment costs associated with stochastic demands. Only limited research has been directed at the problem of choosing cost effective statistical procedures for estimating these parameters. Available theoretical findings on estimating the demand parameters for (s, S) inventory replenishment policies are limited by their restrictive assumptions. The impact on total system cost of using the sample mean and standard deviation as compared to robust parameter estimators has not been tested. This paper explores the circumstances under which the cost due to statistical estimation can be substantially reduced by a better choice of estimators. Specifically, an exponentially smoothed average and a modified exponentially smoothed mean absolute deviation are shown to outperform the sample mean and standard deviation for a wide range of computer simulated and U.S. Air Force empirical demands when the (s, S) policies are calculated using Ehrhardt's Power Approximation. Those situations in which the method of demand parameter estimation has negligible impact on total system cost are also indicated.
A Model for Assessing the Value of Warehouse Risk-Pooling: Risk-Pooling Over Outside-Supplier Leadtimes
Authors: Schwarz Leroy B.
Published: November 2008

This paper constructs and analyzes a multi-location inventory model to examine the value of warehouse risk-pooling in high service-level systems. Specifically, risk-pooling over the outside-supplier leadtime is examined. Two alternative systems of N identical retailers are formulated. In System 1, each retailer operates independently: retailers receive goods directly from an outside supplier after a fixed leadtime (Ls + Ltr), where Ls is the outside supplier's own (e.g., manufacturing) leadtime and Ltr is the transportation/receiving leadtime to the retailers. In System 2, the system order is shipped to a warehouse, arriving after a fixed leadtime (Ls + Ltw), where Ltw is the transportation/receiving leadtime to the warehouse. Upon receipt of the goods, the warehouse allocates and ships units to the retailers to equalize their inventory positions. The warehouse does not hold inventory. Allocation and reshipment in System 2 requires a fixed leadtime of (Lpw + Ltr) time periods, where Lpw is the allocation and (re)packaging leadtime at the warehouse. Hence, System 2 pools risk over the outside supplier leadtime, but at the cost of: (1) increased overall leadtime to the retailers; and (2) an ‘internal’ pipeline inventory holding cost. Our analysis asks the question: given equal required service-levels and equal safety stock holding cost (plus pipeline inventory cost for System 2), how large can System 2's extra leadtimes (Ltw, Lpw) be? Our analysis concludes that pipeline inventory-holding cost significantly influences the overall value of these breakeven leadtimes. Specifically, when pipeline inventory holding costs can (somehow) be ignored, the corresponding breakeven leadtimes can be quite large. However, if these costs cannot be avoided, then the corresponding breakeven leadtimes are significantly reduced. Managerial interpretations are provided.
Equivalent Formulations of Nonlinear Integer Problems for Efficient Optimization
Authors: Kettani Ossama , Oral Muhittin
Published: November 2008

The linearization technique of Glover, which seems to be the most efficient one appearing in the literature, requires the addition of n new continuous variables (unconstrained in sign) and 4n new linear constraints to equivalently represent a 0-1 “quadratic” integer problem with n variables. This paper shows that it is still possible to improve such a procedure. In fact, the number of new continuous variables can be kept at n (but constrained in sign) while further reducing the number of new linear constraints from 4n to 2n.
Covering-Location Models for Emergency Situations That Require Multiple Response Units
Authors: Batta Rajan , Mannur Narasimha R.
Published: November 2008

In this paper we propose a new criterion for coverage which is suitable for two kinds of applications: (i) location of fire trucks in a geographical area in which some demands require multiple fire trucks to be within an acceptable distance standard to achieve coverage; and (ii) location of ambulances in an environment in which a large demand volume often leads to the unavailability of the most desirable response unit. The set covering location problem and the maximal covering location problem are examined in the proposed modeling framework. Properties for these models are developed, and limited computational experience is reported.
Implicit Modeling of Flexible Break Assignments in Optimal Shift Scheduling
Authors: Bechtold Stephen E. , Jacobs Larry W.
Published: November 2008

The labor scheduling literature has demonstrated that the use of flexibility in designing employee schedules can result in a substantial improvement in labor utilization. This paper presents a new implicit integer linear programming formulation for the inclusion of meal/rest-break flexibility. Although the use of flexible break assignments in labor staffing decisions has been of research interest since an early article by Segal (1974), due to problem size, the majority of related research has involved the use of heuristics. An experimental analysis using four different labor requirements patterns and ten shift-length combinations demonstrated that, when flexible break assignments were modeled, the implicit formulation was superior to the traditional set-covering formulation with respect to 1) execution time, 2) computer memory requirements, and 3) the ability to produce optimal integer solutions to larger problems incorporating greater flexibility. Finally, a number of possible extensions of the implicit modeling approach for use in other labor scheduling environments are identified.
Are Risk-Attitudes Related Across Domains and Response Modes?
Authors: Schoemaker Paul J. H.
Published: November 2008

This paper examines experimentally the nature of people's risk-attitudes across different payoff domains and response modes. Only simple gambles are examined, entailing just two monetary outcomes. The main issue of interest is to what extent risk-preferences in one domain or response mode predict anything (beyond chance) about risk-preferences in another domain or mode. Three domains are examined: gain, mixed and loss. The three response modes used are certainty equivalence (CE), probability equivalence (PE) and outcome equivalence (OE) judgments.

In general, weak associations were found among ordinal risk-preferences within-subjects across domains, especially with respect to losses. To make the parametric responses (i.e., the CE, PE and OE judgments) comparable across domains and subjects, linear as well as utility-based risk-measures were examined. In the gain and loss domains, the linear risk-premia measures exhibited higher CE-PE correlations (within domain) than the utility-based measures. Using a multitrait-multimethod comparison, the highest correlations were found within domains across response modes.

The main findings are (1) strong risk-aversion for gain and mixed gambles, (2) risk-seeking for symmetric loss gambles, although less pronounced, (3) low correlation of risk-preferences within subjects across domains, (4) high convergent validity of response methods within domain, and (5) increased risk-aversion for loss (but not gain) gambles when using real payoffs.
A Simulation Analysis of Factors Influencing the Attractiveness of Group Technology Cellular Layouts
Authors: Morris John S. , Tersine Richard J.
Published: November 2008

Group Technology (GT) is a multi-faceted approach to batch production that includes the reconfiguration of plant equipment from a functional layout to a series of product-oriented layouts that are referred to as manufacturing cells. The cells are dedicated to process families of parts that have similar machine operations. The purported benefits of GT over traditional functional layouts range from reduced work-in-process inventory and throughput times to increased worker satisfaction and productivity. However, recent simulation studies challenge some of these claims of superior performance for cellular layouts.

This research examines the influence that factors in a firm's operating environment have on the performance of cellular layouts. A simulation model using hypothetical shop data is used to compare a process layout to a cellular layout using mean throughput time and mean level of work-in-process inventory as performance measures. The operating variables analyzed are (1) the ratio of setup to process time, (2) transfer time of material between work centers, (3) demand stability, and (4) the flow of work within cells.

None of the individual changes in levels of operating variables produced a clear advantage for cellular layouts. However, the results from these experiments were used to postulate an “ideal” environment for cellular layouts. This environment is characterized as having a high ratio of setup to process time, stable demand, unidirectional flow of work within a cell, and a substantial level of material movement times between process departments. When all of these conditions are present, the cellular layout outperforms the process layout on both performance measures.
Industry Investment in Basic Research Assuming Interdependence of Benefits from Appropriable and Inappropriable Activities
Authors: Joglekar Prafulla
Published: November 2008

Using a model of the resource allocation behavior of a group of firms, Joglekar and Hamburg (1983) demonstrate that unaided industry allocation to basic research is suboptimal and that in stimulating this allocation, provision of government seed money is generally counterproductive, while the provision of matching subsidies is not cost-efficient. Using basically the same model, but focusing on the case of a homogeneous industry, Joglekar and Hamburg (1986) further identify several industry characteristics that increase the degree of suboptimality of investment in basic research, and consequently, the need for government intervention. Joglekar and Hamburg (1983), (1986) assume that a firm's benefits from its investment in appropriable activities are independent of its benefits from the industry's total investment in the pertinent basic (i.e., inappropriable) research. Investment theory suggests that a firm's benefits often depend upon its investment portfolio and that an investment in basic research that is not supported by suitable investments in other activities (e.g., plant and equipment, personnel training, etc.) may yield far smaller benefits than could be potentially obtained. Therefore, in this paper, I present a model that assumes such an interdependence of benefits. I find that most of Joglekar and Hamburg's (1983), (1986) conclusions are confirmed by the new model.
Data Envelopment Analysis on a Relaxed Set of Assumptions
Authors: Petersen Niels Christian
Published: November 2008

Data Envelopment Analysis is a procedure for evaluation of the relative efficiency of units in a production system. DEA involves construction of composite units as convex combinations of other units' inputs and outputs under various conditions related to returns to scale. The assumption of convexity is inconsistent with increasing returns to scale and not implied by constant or non-increasing returns to scale. An alternative DEA approach which does not invoke the assumption of a convex production possibility set is developed in this paper. It is implemented in two stages. Stage one is concerned with the spanning of isoquants and stage two with an evaluation of the position of an observed input-output combination compared to the isoquants. Both stages involve linear programming techniques solely.
A New Algorithm for Computing the Maximal Closure of a Graph
Authors: Faaland Bruce , Kim Kiseog , Schmitt Tom
Published: November 2008

A closure in a directed graph is a subset of nodes, all of whose successors belong to the subset. If each node has an assigned weight, which may be positive or negative, the maximal closure problem is one of finding a closure with the largest possible sum of node weights. It can be solved by any maximal flow or minimal cut algorithm. We present a new algorithm for this problem which compares favorably to maximal flow and minimal cut procedures on randomly generated classes of problems.
Note—Sliding Simulation: A New Approach to Time Series Forecasting
Authors: Makridakis Spyros
Published: November 2008

This paper proposes a new approach to time series forecasting based upon three premises. First, a model is selected not by how well it fits historical data but on its ability to accurately predict out-of-sample actual data. Second, a model/method is selected among several run in parallel using out-of-sample information. Third, models/methods are optimized for each forecasting horizon separately, making it possible to have different models/methods to predict each of the m horizons. This approach outperforms the best method of the M-Competition by a large margin when tested empirically with the 111 series subsample of the M-Competition data.
Optimal Reorganization Policies for Stationary and Evolutionary Databases
Authors: Park June S. , Bartoszynski Robert , De Prabuddha , Pirkul Hasan
Published: November 2008

The problem of determining optimal reorganization policies for databases which employ file structures with overflow chaining is studied. The dynamics of the file performance driven by update transactions and reorganizations is formulated as a stochastic control model which incorporates micro-level design parameters of the physical file structure. Various simplifying assumptions employed in past research are relaxed in the model. Polynomial time procedures for solving the optimization models are developed for two cases: when the file size is stationary as in the steady-state and when the file size evolves stochastically with a nonlinear trajectory. The model and the solution procedures are applied to an ISAM file revealing the effectiveness of the solution procedures and the relationship between file design parameters and the optimal policy.