Synchronizing pricing and replenishment to serve forward-looking customers

We incorporate strategic customer waiting behavior in the classical economic order quantity (EOQ) setting. The seller determines not only the timing and quantities of the inventory replenishment, but also the selling prices over time. While similar ideas of market segmentation and intertemporal price discrimination can be carried over from the travel industries to other industries, inventory replenishment considerations common to retail outlets and supermarkets introduce additional features to the optimal pricing scheme. Specifically, our study provides concrete managerial recommendations that are against the conventional wisdom on “everyday low price” (EDLP) versus “high-low pricing” (Hi-Lo). We show that in the presence of inventory costs and strategic customers, Hi-Lo instead of EDLP is optimal when customers have homogeneous valuations. This result suggests that because of strategic customer behavior, the seller obtains a new source of flexibility—the ability to induce customers to wait—which always leads to a strictly positive increase of the seller's profit. Moreover, the optimal inventory policy may feature a dry period with zero inventory, but this period does not necessarily result in a loss of sales as customers strategically wait for the upcoming promotion. Furthermore, we derive the solution approach for the optimal policy under heterogeneous customer valuation setting. Under the optimal policy, the replenishments and price promotions are synchronized, and the seller adopts high selling prices when the inventory level is low and plans a discontinuous price discount at the replenishment point when inventory is the highest.     

Optimal ordering policies when anticipating parameter changes in EOQ systems

The classical Economic Order Quantity Model requires the parameters of the model to be constant. Some EOQ models allow a single parameter to change with time. We consider EOQ systems in which one or more of the cost or demand parameters will change at some time in the future. The system we examine has two distinct advantages over previous models. One obvious advantage is that a change in any of the costs is likely to affect the demand rate and we allow for this. The second advantage is that often, the times that prices will rise are fairly well known by announcement or previous experience. We present the optimal ordering policy for these inventory systems with anticipated changes and a simple method for computing the optimal policy. For cases where the changes are in the distant future we present a myopic policy that yields costs which are near-optimal. In cases where the changes will occur in the relatively near future the optimal policy is significantly better than the myopic policy.     

论教育现代化的价值取向

教育现代化有两个基本的价值取向 ,即“为了国家的发展”和“为了个体的发展” ,人们只有深刻认识这两种价值取向的实质关系即效率与平等的关系才能使二者的关系处于一种“适度”的状态 ,从而更好地贯彻执行科教兴国的大政方针 ,促进国家的全面发展     

Kernel estimation of quantile sensitivities

Quantiles, also known as value‐at‐risks in the financial industry, are important measures of random performances. Quantile sensitivities provide information on how changes in input parameters affect output quantiles. They are very useful in risk management. In this article, we study the estimation of quantile sensitivities using stochastic simulation. We propose a kernel estimator and prove that it is consistent and asymptotically normally distributed for outputs from both terminating and steady‐state simulations. The theoretical analysis and numerical experiments both show that the kernel estimator is more efficient than the batching estimator of Hong 9 . © 2009 Wiley Periodicals, Inc. Naval Research Logistics 2009     

Reconciling strategic studies … with itself: a common framework for choosing among strategies

Three distinct, and seemingly irreconcilable, schools of thought are identified within the strategic studies literature. One which searches for “universal principles of war,” a second, “context-dependent,” approach that seeks to embed each instance of warfare within its concurrent social, political, technological milieu and, finally a “paradoxical logic” school, which equates strategy with the generation of uncertainty. The author offers some intuitive concepts from non-cooperative game theory to develop a “dominate-mix” approach to strategy choice. In doing so, he helps to reconcile these disparate approaches and provides a simple framework to assist researchers in framing military decisions as well as to assist planners in choosing among strategies.     

A cost analysis of sampling inspection under Military Standard 105D

Military Standard 105D has been almost universally adopted by government and private consumers for the lot-by-lot sampling inspection of product which may be inspected on a dichotomoun basis The plan specifies, for each lot size, a random sample size and set of acceptance numbers (maximum allowable number of defectives in each sample). The acceptance numbers are based upon the binomial distribution and depend upon the quality required by the purchaser. Where several consecutive lots are submitted, a shift to less severe (“reduced”) inspection or more severe (“tightened”) inspection is specified when the ongoing quality is very high or low. Further experience permits a return to normal sampling from either of these states This paper examines the long range costs of such a sampling scheme. The three inspection types are considered as three distinct Markov chains, with periodic transitions from chain to chain. The expected sample size and the expected proportion of rejected product are determined as a function of the two parameters under control of the manufacturer, lot size and product quality. Some numerical examples are given which illustrate how to compute the overall cost of sampling inspection. Suggestions are made concerning the choice of parameters to minimize this cost.     

Uniformly minimum variance unbiased estimates of operational readiness and reliability in a two-state system

This paper obtains the uniformly minimum variance unbiased estimates of two indices of performance of a system which alternates between two states “up” or “down” in accordance with a Markov process. The two indices are (1) operational readiness, which measures the probability that the system will be up when needed; and (2) operational reliability, which measures the probability that the system will be up during the entire time of need. For the purpose of obtaining these estimates, two types of observations are considered: (a) those which reveal only the state of system at isolated time-points, and (b) those which continuously record the duration of the “up” and “down” times of the system.     

Unpacking the various meanings of redundancy: from refining the concept to military planning

The authors engage in the debate over waste in military force structure planning by rigorously deconstructing the concept of “redundancy.” First, a typology of redundancy is constructed that provides a common framework for identifying variety among redundant structures. These are labeled “true redundancy,” “expanded capacity,” “portfolio diversification,” and “mission overlap.” Further, a number of mechanisms are identified that produce these types of structures, and show the conditions under which planners may utilize redundant structure in the search for optimization. In sum, the article provides refined concepts for analysts and planners to identify when redundancy is deleterious or beneficial.     

An inventory model with finite-range stochastic lead times

This article considers an inventory model with constant demand and stochastic lead times distributed over a finite range. A generalization of the EOQ formula with backorders is derived and ranges for the decision variables are obtained. The results are illustrated with the case of uniformly distributed lead time.     

On two nonprobabilistic utility measures for weapon systems

In this paper an attempt is made to derive two interval utility measures for public goods. The domain of the measures is partitioned into priority classes in such a way that each class contains an element, called a kernel, which can be moved by parameter variation to the immediately preceding class. The “expansion path” from priority class to priority class is determined by an optimality criterion. The measures themselves are based on optimality conditions that are similar to the familiar first-order conditions of consumer analysis. One is a product measure and the other one is additive.     

Alternatives for defense in the Post‐Soviet World: A guide for economists to the U.S. debate

The defense establishments of all major powers are changing to reflect changes in the foundations of national security strategy and resource allocation. The authors believe economists should play an active role in formulating these changes and offer an orientation to the U.S. debate, presenting three major alternatives: the “Base Force” (Bush Administration), Mr. Aspin's Force “C,” and the “Low” Alternative (Prof. Kaufmann and Dr. Steinbruner). These alternatives are compared using first‐order measures of capabilities, budgets and risk. Budgetary estimates are based on newly‐developed analytical tools.     

Life in the “Gray Zone”: observations for contemporary strategists

The term “Gray Zone” is gaining in popularity as a way of describing contemporary security challenges. This article describes the “short-of-war” strategies – the fait accompli, proxy warfare, and the exploitation of ambiguous deterrence situations, i.e. “salami tactics” – that are captured by the term and offers several explanations for why state and non-state actors are drawn to these strategies. The analysis highlights why defense postures based on deterrence are especially vulnerable to the short-of-war strategies that populate the “Gray Zone.” The article concludes by suggesting how defense officials might adapt defense policies to life in the “Gray Zone.”     

Population transfers in counter-insurgency: a recipe for success?

Since control over the population constitutes the most crucial determinant for victory in irregular warfare, how should a state authority isolate the insurgents (the “fish” in Maoist terms) from the population (the “sea” in which the “fish” thrive)? Should a state authority simply drain the “sea” by diverting its “water” elsewhere? Does the forcible transfer of the local people who support an insurgency truly work? This article studies how the royalist regime of Greece forcibly transferred thousands of villagers (over 10% of the total population) to counter the communist insurgency during the Greek Civil War (1946–1949) and shows whether and how these deportations could be crowned with success.     

Volume discount decisions: Wealth maximization or EOQ approach?

A recent paper finds that when volume discounts are available, in some cases, reliance on the Economic Order Quantity (EOQ) model can induce purchasers to make wealth reducing decisions, and the Present Value (PV) approach should be preferred. While this finding is theoretically correct, the magnitudes of wealth reductions suggested by the paper's numerical examples seem to be questionable. Furthermore, the paper also finds that, in some other cases, a purchaser using the EOQ approach realizes a net increase in current wealth compared to a purchaser using the PV approach. Logic suggests that such a finding cannot be correct, since by its very definition, it is the PV approach that seeks to maximize the current wealth. We offer an alternative frame of comparison and a modified model to show that, under the paper's assumptions, the EOQ approach can never realize a net increase in current wealth compared to the current wealth generated by the PV approach. On the other hand, we also show that when typical values of the relevant parameters prevail, the additional costs imposed by the EOQ approach are not significant. Finally, we suggest that insofar as the PV approach requires greater administrative costs to implement, it may even be counterproductive to the goal of wealth maximization. © 1998 John Wiley & Sons, Inc. Naval Research Logistics 45: 377–389, 1998     

A continuous submarine versus submarine game

This paper analyzes, from a game-theoretic standpoint, the simultaneous choice of speeds by a transitor and by an SSK which patrols back and forth perpendicular to the transitor's course. Using idealized acoustic assumptions and a cookie-cutter detection model which ignores counterdetection, we are able to present the problem as a continuous game, and to determine an analytic solution. The results indicate that with these assumptions, there are conditions under which neither a “go fast” nor a “go slow” strategy is optimal. The game provides a good example of a continuous game with a nontrivial solution which can be solved effectively.     

Systems defense games: Colonel blotto,command and control

The classical “Colonel Blotto” games of force allocation are generalized to include situations in which there are complementarities among the targets being defended. The complementarities are represented by means of a system “characteristic function,” and a valuation technique from the theory of cooperative games is seen to indicate the optimal allocations of defense and attack forces. Cost trade-offs between systems defense and alternative measures, such as the hardening of targets, are discussed, and a simple example is analyzed in order to indicate the potential of this approach.     

Testing goodness of fit to the increasing failure rate family

One branch of the reliability literature is concerned with devising statistical procedures with various nonparametric “restricted family” model assumptions because of the potential improved operating characteristics of such procedures over totally nonparametric ones. In the single-sample problem with unknown increasing failure rate (IFR) distribution F, (1) maximum-likelihood estimators of F have been calculated, (2) upper or lower tolerance limits for F have been determined, and (3) tests of the null hypothesis that F is exponential have been constructed. Barlow and Campo proposed graphical methods for assessing goodness of fit to the IFR model when the validity of this assumption is unknown. This article proposes several analytic tests of the IFR null hypothesis based on the maximum distance and area between the cumulative hazard function and its greatest convex minorant (GCM), and the maximum distance and area between the total time on test statistic and its GCM. A table of critical points is provided to implement a specific test having good overall power properties.     

Understanding contemporary conflicts in Africa: a state of affairs and current knowledge

Understanding contemporary conflicts in Africa remains directly dependent on the approaches employed to decipher or interpret them. This article first examines the bias of conventional approaches (inherited from the Cold War) and then those of a series of supposedly “newer” approaches. Relying primarily on West African examples, it offers a brief overview of current knowledge, issues, and avenues for research, based on three apparent characteristics of a “new generation” of conflicts: the regionalization of wars, the privatization of violence and security, and the recourse to extreme forms of brutality. These three major trends bear witness to a rapid transformation of war and armed violence over the past 20 years, but they are not sufficient to establish a radical historical break between “old” and “new” conflicts in Africa. By concealing elements of continuity a priori, the most influential “new” approaches actually make it impossible to ponder their own limits. To that end, fashionability and struggles for influence within the Africanist field play a major role in perpetuating dominant, sensationalistic, or simplistic (and invariably incorrect) portrayals of African conflicts.     

A Lanchester-type aggregated-force model of conventional ground combat

This article develops a Lanchester-type model of large-scale conventional ground combat between two opposing forces in a “sector”. It is shown that nonlinear Helmbold-type equations of warfare with operational losses may be used to represent the loss-rate curves that have been used in many aggregated-force models. These nonlinear differential equations are used to model the attrition of combat capability (as quantified by a so-called firepower index) in conjunction with a rate-of-advance equation that relates motion of the contact zone (or FEBA) between the opposing forces to the force ratio and tactical decisions of the combatants. This simplified auxiliary model is then used to develop some important insights into the dynamics of FEBA movement used in large-scale aggregated-force models. Different types of behavior for FEBA movement over time are shown to correspond to different ranges of values for the initial force ratio, for example, an attack will “stall out” for a range of initial force ratios above a specific threshold value, but it will “break out” for force ratios above a second specific threshold value. Such FEBA-movement predictions are essentially based on being able to forecast changes over time in the force ratio.     

Economic ordering quantities for recoverable item inventory systems

We study a deterministic EOQ model of an inventory system with items that can be recovered (repaired/refurbished/remanufactured). We use different holding cost rates for manufactured and recovered items, and include disposal. We derive simple square root EOQ formulas for both the manufacturing batch quantity and the recovery batch quantity.