The impact of exponential smoothing forecasts on the bullwhip effect

An important phenomenon often observed in supply chain management, known as the bullwhip effect, implies that demand variability increases as one moves up the supply chain, i.e., as one moves away from customer demand. In this paper we quantify this effect for simple, two‐stage, supply chains consisting of a single retailer and a single manufacturer. We demonstrate that the use of an exponential smoothing forecast by the retailer can cause the bullwhip effect and contrast these results with the increase in variability due to the use of a moving average forecast. We consider two types of demand processes, a correlated demand process and a demand process with a linear trend. We then discuss several important managerial insights that can be drawn from this research. © 2000 John Wiley & Sons, Inc. Naval Research Logistics 47: 269–286, 2000     

Explicit modeling of detection within a stochastic duel

Many mathematical models have been formulated to describe combat between two weapon systems. However, until recently duel models did not explicitly represent target detection within a duel, leading to the necessity for the development of new model for each tactical situation. An earlier article by two of the authors described a duel between weapons with constant firing times and explicit modeling of detection. This article enhances the study of this form of duel between weapons by introducing a variable parameter for firing times. This enhancement removes the discontinuities evident during parametric analysis of the earlier model and hence provides a more coherent model of this combat situation. © 1993 John Wiley & Sons, Inc.     

Timing replacement decisions under discontinuous technological change

We consider the problem of deciding whether to keep a piece of equipment or replace it with a more advanced technology in an environment of technological change. Our model assumes that the costs associated with the presently available technology and future technologies are known, but that the appearance times of future technologies are uncertain. We develop a procedure for computing the optimal keep-or-replace decision that iteratively incorporates a technological forecast. For a certain class of situations, we show that our approach requires the minimum possible amount of forecasted data.     

A note on “resource flexibility with responsive pricing”

We revisit the capacity investment decision problem studied in the article “Resource Flexibility with Responsive Pricing” by Chod and Rudi [Operations Research 53, (2005) 532–548]. A monopolist firm producing two dependent (substitutable or complementary) products needs to determine the capacity of one flexible resource under demand risk so as to maximize its expected profit. Product demands are linear functions of the prices of both products, and the market potentials are random and correlated. We perform a comparative statics analysis on how demand variability and correlation impact the optimal capacity and the resulting expected profit. In particular, C&R study this problem under the following assumptions/approximations: (i) demand intercepts follow a bivariate Normal distribution; (ii) demand uncertainty is of an additive form; (iii) and under approximate expressions for the optimal capacity and optimal expected profit. We revisit Propositions 2, 3, 4, 5, and 10 of C&R without these assumptions and approximations, and show that these results continue to hold (i) for the exact expressions for the optimal expected profit and optimal capacity, and (ii) under any arbitrary continuous distribution of demand intercepts. However, we also show that the additive demand uncertainty is a critical assumption for the C&R results to hold. In particular, we provide a case of multiplicative uncertainty under which the C&R results (Propositions 2 and 3) fail. © 2010 Wiley Periodicals, Inc. Naval Research Logistics 2010     

Humanitarian response to hurricane disasters: Coordinating flood‐risk mitigation with fundraising and relief operations

To alleviate flooding, caused by hurricanes, governments build structural barriers called levees. In addition, relief providers such as the nongovernmental organizations and charities raise funds, and procure and deliver supplies (food, water, and medicines) for humanitarian relief. The strategy for managing disasters must, therefore, weigh the costs and benefits of building levees as well as procuring and delivering supplies. We use a three‐stage decision making framework to study how the investment in levee capacity can be integrated with supply procurements, fundraising, and rapid response. One of our major findings is that a large fundraising cost discourages postdisaster funding, implying relatively large investments in levee and prepositioned supplies. That notwithstanding, a large social value (of saving life) can tilt the balance in favor of postdisaster funding. If the levee capacity increases, funding for predisaster procurement is reduced without affecting postdisaster funding. For a sufficiently large increase in capacity, however, postdisaster response becomes superfluous. We also find that hurricane uncertainty motivates levees with large capacity. In contrast, levee‐failures motivate levees with small capacity.     

Revenue management with aircraft reassignment flexibility

A well‐studied problem in airline revenue management is the optimal allocation of seat inventory among different fare‐classes, given a capacity for the flight and a demand distribution for each class. In practice, capacity on a flight does not have to be fixed; airlines can exercise some flexibility on the supply side by swapping aircraft of different capacities between flights as partial booking information is gathered. This provides the airline with the capability to more effectively match their supply and demand. In this paper, we study the seat inventory control problem considering the aircraft swapping option. For theoretical and practical purposes, we restrict our attention to the class of booking limit policies. Our analytical results demonstrate that booking limits considering the swapping option can be considerably different from those under fixed capacity. We also show that principles on the relationship between the optimal booking limits and demand characteristics (size and risk) developed for the fixed‐capacity problem no longer hold when swapping is an option. We develop new principles and insights on how demand characteristics affect the optimal booking limits under the swapping possibility. We also develop an easy to implement heuristic for determining the booking limits under the swapping option and show, through a numerical study, that the heuristic generates revenues close to those under the optimal booking limits. © 2011 Wiley Periodicals, Inc. Naval Research Logistics, 2011     

Bounded flexibility in days‐on and days‐off scheduling

This article presents a flexible days‐on and days‐off scheduling problem and develops an exact branch and price (B&P) algorithm to find solutions. The main objective is to minimize the size of the total workforce required to cover time‐varying demand over a planning horizon that may extend up to 12 weeks. A new aspect of the problem is the general restriction that the number of consecutive days on and the number of consecutive days off must each fall within a predefined range. Moreover, the total assignment of working days in the planning horizon cannot exceed some maximum value. In the B&P framework, the master problem is stated as a set covering‐type problem whose columns are generated iteratively by solving one of three different subproblems. The first is an implicit model, the second is a resource constrained shortest path problem, and the third is a dynamic program. Computational experiments using both real‐word and randomly generated data show that workforce reductions up to 66% are possible with highly flexible days‐on and days‐off patterns. When evaluating the performance of the three subproblems, it was found that each yielded equivalent solutions but the dynamic program proved to be significantly more efficient. © 2013 Wiley Periodicals, Inc. Naval Research Logistics 60: 678–701, 2013     

Basra's not Belfast: the British Army, ‘Small Wars’ and Iraq

This article examines British Army operations in Iraq. It focuses on the causes of the army's apparent failure to live up to its reputation for the conduct of small wars. The paper discusses the British experience of small wars in the context of Iraq, the influence of doctrine and strategy, and the political and moral factors that shaped the army's performance. The paper's conclusions suggest that the Iraq War may cause a significant reappraisal, not just of military doctrine and strategy, but also of Britain's role in future small wars.     

Optimal versus required defence expenditure: The case of the Greek-Turkish arms race

The aim of this paper is to indicate the extent to which the arms race against Turkey, in which Greece and Cyprus have been entangled, imposes a defence expenditure burden that is tough for the two allies to bear. To do so we have resorted to evaluating the optimal military expenditure for the two countries, allied in the context of the Integrated Defence Doctrine, which is compatible with the constraints imposed by the resources of their economies. All experiments and scenarios examined lead to the conclusion that the current defence burden of the two allies seems to be driving their economies beyond capacity limits. The fact remains, however, that under the circumstances, a one-sided disarmament policy like the one currently followed by Greece, is a risky choice given that the long-term armament programmes pursued by Turkey, whose role in this arms race has been proven as leading, leave very small room to the Greek and Cypriot sides to reduce their own defence expenditure.