Showing papers in "Management Science in 1975"
TL;DR: In this article, the authors present new formulation techniques for capturing the essential nonlinearities of the problem of interest, while producing a significantly smaller problem size than the standard techniques, which can be used to reduce the number of variables and constraints.
Abstract: A variety of combinatorial problems (e.g., in capital budgeting, scheduling, allocation) can be expressed as a linear integer programming problem. However, the standard devices for doing this often produce an inordinate number of variables and constraints, putting the problem beyond the practical reach of available integer programming methods. This paper presents new formulation techniques for capturing the essential nonlinearities of the problem of interest, while producing a significantly smaller problem size than the standard techniques.
730 citations
TL;DR: The authors recommend and describe a structured interview process that utilizes a trained interviewer and a number of techniques designed to reduce biases and aid in the quantification of judgment.
Abstract: This paper presents the present philosophy and practice used in probability encoding by the Decision Analysis Group at Stanford Research Institute. Probability encoding, the process of extracting and quantifying individual judgment about uncertain quantities, is one of the major functions required in the performance of decision analysis. The paper discusses the setting of the encoding process, including the use of sensitivity analyses to identify crucial state variables for which extensive encoding procedures are appropriate. The importance of balancing modeling and encoding techniques is emphasized and examples of biases and unconscious modes of judgment are reviewed. A variety of encoding methods are presented and their applicability is discussed. The authors recommend and describe a structured interview process that utilizes a trained interviewer and a number of techniques designed to reduce biases and aid in the quantification of judgment.
621 citations
TL;DR: In this paper, the authors show that classic marginal pricing is far from optimum for a rapidly evolving business, and more appropriate dynamic models can be formulated if one has some feeling for the dominant evolutionary forces in the business environment; and, planning based on the dynamic model can lead to a significant improvement in the long run profit performance.
Abstract: The major points established in this paper are: classic marginal pricing is far from optimum for a rapidly evolving business; more appropriate dynamic models can be formulated if one has some feeling for the dominant evolutionary forces in the business environment; and, planning based on the dynamic models can lead to a significant improvement in the long run profit performance. Two developments in the management science literature, the experience curve phenomenon and market-penetration models, are used to illustrate the nature of the dynamic feedback between market and production activity which causes a new growth business to evolve. A specific illustrative example is offered which demonstrates the fact that dynamic price models can be used to test the long run consequences of specific pricing rules or to determine the optimum long run pricing scenario within the context of any constraints which a manager might wish to impose. As opposed to the conventional static theory which emphasizes the instantaneous profit flow, the dynamic models use an appropriately discounted accumulated profit as the major parameter for making value judgments. The specific example considered emphasizes the importance of these ideas for a growth market and suggests that dynamic models can lead to as much as an order of magnitude more profit in the long run than the conventional static theory. More modest, but significant, improvements in long run performance can be obtained in a moderate growth business.
572 citations
TL;DR: A comparison of eight different heuristic scheduling rules, including those found most effective in previous research on this problem, to find the rules most effective relative to an optimum solution.
Abstract: The problem addressed is that of scheduling the activities of a project network to minimize project duration under conditions of multiple limited resource requirements and availabilities. Various heuristic sequencing rules have been applied to this problem, and the effectiveness of these rules relative to one another has been previously compared in the literature. However, there have been no previous comparisons of the effectiveness of these rules relative to an optimum solution. This paper makes such a comparison of eight different heuristic scheduling rules, including those found most effective in previous research on this problem. Results are presented for a total of eighty-three different multi-resource problems.
486 citations
TL;DR: There are also disclosed a new desoldering tool, a power cylinder, clamping fixtures and suction cups operable with the vacuum pump of the invention.
Abstract: This paper studies an M/G/1 queue where the idle time of the server is utilized for additional work in a secondary system. As usual, the server is busy as long as there are units in the main system...
398 citations
TL;DR: The results confirm the general relationships among classes of variables in the model, but specific relations among variables are complex and depend heavily on the environment of the organization.
Abstract: The purpose of this paper is to explore the contributions of information systems to the organization. A descriptive model is presented which identifies (1) expected predictors of performance and the use of an information system and (2) the relationship between the use of a system and performance. The results of a study of sales force performance and the use of a sales information system are presented to provide empirical evidence to support the model. The results confirm the general relationships among classes of variables in the model, but specific relations among variables are complex and depend heavily on the environment of the organization.
356 citations
TL;DR: In this paper, a new type of risk aversion found only in muitivariate utility functions is defined and certain behavioral assumptions, which are necessary and sufficient for one of three forms of separable utility functions including the well-known additive form, are given.
Abstract: This paper concerns utility functions for more than one attribute. A new type of risk aversion found only in muitivariate utility functions is defined. Certain behavioral assumptions, which are necessary and sufficient for one of three forms of separable utility functions including the well-known additive form, are given. It is shown that only one of these separable forms, the “negative multiplicative form,” possesses this new type of risk aversion and in particular that the additive form does not.
278 citations
TL;DR: In this article, the authors present a simple and quick method for obtaining approximate solutions to large scale zero-one programming problems, which does not use enumeration and does not require any knowledge of the source code.
Abstract: This paper is intended to present a simple and quick method for obtaining approximate solutions to large scale zero-one programming problems. The method does not use enumeration. Instead, it assign...
269 citations
TL;DR: In this article, the authors address the problem of constructing a group cardinal social welfare function whose arguments are the individual utility functions of group members, and give representation theorems which show that the social welfare functions are restricted to special forms if certain "reasonable" conditions hold.
Abstract: This paper addresses the problem of constructing a group cardinal social welfare function whose arguments are the individual utility functions of group members. Representation theorems are given which show that the social welfare function is restricted to special forms if certain “reasonable” conditions hold. The appropriateness of these conditions for different types of group decision problems is discussed.
229 citations
TL;DR: In this paper, the authors provide a current assessment of the literature addressed to quantitative models of the R and D project selection and resource allocation decision, in order to facilitate the critique and assessment.
Abstract: The purpose of this paper is to provide a current assessment of the literature addressed to quantitative models of the R and D project selection and resource allocation decision. In order to facilitate the critique and assessment the literature is somewhat arbitrarily divided into benefit measurement and resource allocation methods. The strengths and limitations of existing knowledge are identified with an emphasis on empirical investigations. Several research areas are identified and briefly described.
208 citations
TL;DR: In this article, a dynamic or multi-period location-allocation formulation is developed from the static problem of locating G facilities among M possible sites to serve N demand points, and a dynamic model provides a tool for analyzing tradeoffs among present values of static distribution costs in each period and costs of relocating facilities.
Abstract: A dynamic or multiperiod location-allocation formulation is developed from the static problem of locating G facilities among M possible sites to serve N demand points This dynamic model provides a tool for analyzing tradeoffs among present values of static distribution costs in each period and costs of relocating facilities The objective is to specify the plan for facility locations and relocations and for attendant allocations of demands which minimize these costs Two methods of solution are presented First, a mixed-integer programming approach is used to solve sample problems From computational results reported for structurally-similar problems, it seems that efficient general purpose codes for this method would be capable of solving problems with at least 5 periods, 5 potential sites, and 15 demand points The second method, dynamic programming, is capable of increasing the size of problems that are computationally feasible The dynamic programming approach is quite attractive when the relative va
TL;DR: This paper describes the results of a laboratory experiment to compare from a human decision-maker's point of view the performance of the interactive methods for multicriterion optimization recently developed by Geoffrion and Benayoun et al. (STEP-method), and a simple trial-and-error procedure for solving the multiple criteria problem.
Abstract: This paper describes the results of a laboratory experiment the purpose of which was to compare from a human decision-maker's point of view the performance of the interactive methods for multicriterion optimization recently developed by Geoffrion and Benayoun et al. (STEP-method), and a simple trial-and-error procedure for solving the multiple criteria problem. All the methods were tested on a time-sharing system using as subjects both business school students and managers recruited from industry. The experimental context chosen is a problem of planning production, inventory and labour for a fictitious company.
TL;DR: In this paper, an optimal and near-optimal policy for multi-echelon production/inventory assembly systems under continuous review with constant demand over an infinite planning horizon is proposed.
Abstract: In this paper optimal and near optimal policies are proposed for multi-echelon production/inventory assembly systems under continuous review with constant demand over an infinite planning horizon. Costs at each stage consist of a fixed charge per order or production setup plus a linear holding cost on “echelon” inventory. The objective is minimization of average cost per unit time. The major results of this paper are: a mathematically simple, often optimal, “system myopic” solution, a lower bound on the closeness to optimality of this solution, and a branch and bound algorithm which usually finds the optimal solution quickly.
TL;DR: In this article, the authors show that the optimal policy for single-product periodic ordering systems with proportional holding and stockout costs and zero lead time is myopic for both stationary and nonstationary demand processes as described by Box and Jenkins.
Abstract: This paper shows that the optimal policy for single-product periodic ordering systems with proportional holding and stockout costs and zero lead time is myopic for both stationary and nonstationary demand processes as described by Box and Jenkins. The proof of optimality is based on a theorem by Veinott showing that the myopic policy is optimal in each period if the beginning inventory for that period is less than the critical number which is the optimal policy for that period considered in isolation.
TL;DR: In this paper, the standard form treated here is the ratio of two normally distributed variables, and it is found that a suitable transformation of this ratio is approximately normally distributed provided that the coefficient of variation of the denominator is less than 0.39.
Abstract: This note is a continuation of a previous paper on normal approximations of standard forms. The standard form treated here is the ratio of two normally distributed variables. It is found that a suitable transformation of this ratio is approximately normally distributed provided that the coefficient of variation of the denominator is less than 0.39.
TL;DR: In this paper, the existence of an optimal stationary policy that can be obtained from the usual functional equation is again established in the presence of a bound (not necessarily polynomial) on the one-period reward of a semi-Markov decision process.
Abstract: Using the technique employed by the author in an earlier paper, the existence of an optimal stationary policy that can be obtained from the usual functional equation is again established in the presence of a bound (not necessarily polynomial) on the one-period reward of a semi-Markov decision process. This is done for both the discounted and the average cost case. In addition to allowing an uncountable state space, the law of motion of the system is rather general in that we permit any state to be reached in a single transition. There is, however, a bound on a weighted moment of the next state reached. Finally, we indicate the applicability of these results.
TL;DR: In this paper, a dynamic programming approach is presented to determine the allocation which minimizes the duration of the project (critical path) in order to solve the problem of time-cost tradeoff.
Abstract: To solve the problem of time-cost tradeoff in project management with available models, a choice must be made between heuristic approaches and algorithms based upon restrictive assumptions about the shape of the cost-time functions of the activities. The algorithm presented in this article involves a dynamic-programming approach to determine the allocation which minimizes the duration of the project (critical path). The main advantage of this model is its ability to determine the optimum allocation among activities with arbitrary cost-time functions. Also, computational shortcuts for functions with special properties can be used to increase the efficiency of the model. Objective functions of networks with special structures decompose into sequences of one-dimensional optimization problems. Although some complex networks have objective functions which cannot be fully decomposed, the dimensions of these functions are considerably less than the number of activities involved. If the activities have nonincreas...
TL;DR: In this article, the authors present a model which treats the manufacturing cycle time as a function of the lot size in a multi-stage production system and uses this functional relationship to determine the magnitude of the work-in-process inventory.
Abstract: This paper presents a model which treats the manufacturing cycle time as a function of the lot size in a multi-stage production system. Using this functional relationship to determine the magnitude of the work-in-process inventory, a model is developed to calculate the economic production quantity EPQ. The model assumes that a uniform lot size is manufactured through several operations, with only one set-up at each stage, and that transportation of sub-batches allows an overlap between operations to reduce the manufacturing cycle time. Constant fixed costs per lot, linear inventory holding costs and a constant and continuous demand of finished products are assumed over an infinite horizon. The lot size is considered “economic” when the sum of the fixed costs per lot and the inventory holding costs of both the work-in-process and finished product inventories is minimized. The model is a valid alternative to the conventional production lot size ELQ model which only accounts for the finished product inventory. A cost sensitivity analysis reveals the large potential savings from using the suggested EPQ model instead of the conventional ELQ model in multi-stage production systems.
TL;DR: A survey of the major results and applications of Markov renewal equations in an informal setting is given in this article, where some real problems are modelled and the lines of attack are indicated; an extensive bibliography is provided to get a further glimpse of the variety of applications.
Abstract: The objective is to survey the major results and applications in an informal setting. The exposition is restricted to finite state spaces; some real problems are modelled and the lines of attack are indicated; and an extensive bibliography is provided to get a further glimpse of the variety of applications. Throughout, the parallels with renewal theory are brought out, and the unity of thought afforded by the formalism of Markov renewal equations is stressed.
TL;DR: In this article, a model is proposed to estimate the long-run share of a new frequently purchased consumer product based on a multidimensional scaling procedure, which is structured as a trial and repeat process that produces an estimate of long run share.
Abstract: The model is structured as a trial and repeat process that produces an estimate of long-run share for a new frequently purchased consumer product. Physical and psychological product attributes are linked to the trial and repeat probabilities through multidimensional scaling procedures. Perceptual maps of existing brands with ideal brand positionings are derived. The product design determines the new brand’s position in the perceptual space, and the distance from the new brand to the ideal brand specifies its probability of purchases. Measurement and estimation procedures are discussed.
TL;DR: In this article, the authors considered a two-location stochastic inventory problem with periodic review, where replenishment may be ordered only at times of periodic review but a provision is made for transfer of stock between the locations at predetermined times within the replenishment cycle.
Abstract: This paper considers a two-location stochastic inventory problem with periodic review. It is assumed that replenishment may be ordered only at times of periodic review but a provision is made for transfer of stock between the locations at predetermined times within the replenishment cycle. Problems of determining jointly optimal stockage and transfer rules according to the expected total cost criterion are investigated. Under certain regularity conditions, the optimality of a simple class of Base Stock Conserving BSC transfer rules is first established. The related optimal stockage rule is then characterized for the single period model of captive sales.
TL;DR: In this article, a finite number of jobs are scheduled on a single machine and the objective is to sequence the jobs so that the time-in-system (or equivalently, the completion time) variance is minimized.
Abstract: There are a finite number of jobs to be scheduled on a single machine. All jobs are available from the start and the objective is to sequence the jobs so that the time-in-system (or equivalently, the completion time) variance is minimized. A number of necessary conditions for an optimal sequencing (which for small jobsets turn out to be sufficient) are presented.
TL;DR: In this article, a class of inventory and distribution policies for scheduled deliveries of perishable products subject to variable demand is modeled as a Markov chain with a manageable number of states.
Abstract: A class of inventory and distribution policies for scheduled deliveries of perishable products subject to variable demand is modeled as a Markov chain with a manageable number of states. From its stationary distribution, such measures as probability of shortage, the average age of the inventory, and the average number discarded per time period are obtained. Easily computable bounds on these measures that indicate how they behave as functions of demand, and inventory policy parameters are developed.
TL;DR: In this paper, a heuristic for solving the multi-item lot size problem given fixed and variable capacity constraints is presented. But the problem is not considered in this paper, and the heuristic is not extended to include variable capacity.
Abstract: The multi-item lot size problem has been a formal management issue for some decades. The lot size decision of how much to produce and when usually considers the trade-off between lost productivity from frequent set-ups and short runs and the higher inventory costs arising from longer runs. When the decision must also consider shared limited production resources, the problem becomes complex.
The paper is presented in two parts. Part I outlines a heuristic for solving the multi-item lot size problem given fixed production resources. The problem is initially structured as a network of unlimited capacity. An arc-cutting criterion is suggested, successively paring the unconstrained lot size optimum in low-cost increments until a feasible integer solution occurs.
In Part II of this 2 part paper, the heuristic is extended to include variable capacity constraints. Computational results for both the fixed and variable capacity configurations and the bibliography conclude the presentation.
TL;DR: Tests show not only that the computer algorithms do not perform better than selected human subjects in the design of plant layouts, but that the human subjects actually achieve layouts which are stochastically better than those produced by the computer programs.
Abstract: Increasing emphasis on the reduction of materials handling costs in the modern plant has led to research into new methods of planning the process type layout in such a way as to minimize these cost...
TL;DR: In this paper, the authors present alternative, accurate and relatively distribution-free formulae for estimating the mean and standard deviations of subjective probability distributions, which are not limited to the beta distribution when there is no a priori reason why the distribution should be beta.
Abstract: The original PERT formulae [5] employ the mode and endpoints to estimate the mean and standard deviation of subjective probability distributions. Though widely-used, they have met with criticism for their inaccuracy, and for their being limited to the beta distribution when there is no a priori reason why the distribution should be beta ([4], [6]). This note presents alternative, accurate and relatively distribution-free formulae for estimating the means and standard deviations of subjective probability distributions.
TL;DR: In this article, the authors compare multiple measures of research output, both objectively and subjectively, in order to identify those which are effective for evaluation of research professors, and the major conclusion of this research is that effectiveness can be measured by a simple count of the number of publications in respectable journals.
Abstract: The goal of this study was to compare systematically the multiple measures of research output, both objectively and subjectively, in order to identify those which are effective for evaluation of research professors. The study took place at the University of Missouri where a sample of 86 “hard” science professors pursuing funded research in 23 departments were evaluated. The major conclusion of this research is that effectiveness can be measured by a simple count of the number of publications in respectable journals. But because the researchers and their department chairmen do not believe simple counts to be effective, this should be supplemented by weighting the publications with a journal quality index.
TL;DR: In this article, the authors show that if marginal costs are constant, salesman who are paid a commission based on gross margin and who are given control over price will set prices so as to maximize simultaneously their own income and the company's profits.
Abstract: If marginal costs are constant, salesman who are paid a commission based on gross margin and who are given control over price will set prices so as to maximize simultaneously their own income and the company's profits. The result holds even if a salesman can only make a probabilistic estimate of sales.
TL;DR: A methodology for management information systems design which employs a formalized framework for significantly involving manager-users in the design process and develops descriptive and normative system models which are based on the concept of a “linear responsibility chart.”
Abstract: This paper describes a methodology for management information systems design which employs a formalized framework for significantly involving manager-users in the design process. The process seeks to develop a system design on the basis of a criterion which considers both technical cost-benefit considerations and the manager's perception of the potential utility of the system. A key element of the methodology is the development of descriptive and normative system models which are based on the concept of a “linear responsibility chart.” These models serve as the basis for the negotiated development of a consensus system model which defines the framework for the decision-oriented analysis of information requirement. The process of information analysis involves joint manager-analyst activities which are aimed at the explication of the implicit decision models which are used for decision making.
TL;DR: In this paper, the authors considered a single product, finite horizon production planning model with known requirements, and showed that there is an optimal production schedule which has the property that between successive periods in which ending inventories are at inventory breakpoint levels there is at most one period in which production is not at a production breakpoint level.
Abstract: A single product, finite horizon production planning model with known requirements is considered. Production and holding-backorder cost functions are assumed to be piecewise concave, thereby allowing an arbitrarily close approximation to a wide range of cost functions which one might encounter in practice. In each period production, inventories and backlogged orders may not exceed prescribed levels. Production (inventory) breakpoints are the endpoints of the intervals over which the production (holding-backorder) cost functions are concave. It is shown that there is an optimal production schedule which has the property that between successive periods in which ending inventories are at inventory breakpoint levels there is at most one period in which production is not at a production breakpoint level. This property, which is an extension of recent results obtained by Florian and Klein [Florian, Michael, Morton Klein. 1971. Deterministic production planning with concave costs and capacity constraints. Manage...