Risk pooling in a two-period,two-echelon inventory stocking and allocation problem

The object of this article is to investigate the risk-pooling effect of depot stock in two-echelon distribution system in which the depot serves n retailers in parallel, and to develop computationally tractable optimization procedures for such systems. The depot manager has complete information about stock levels and there are two opportunities to allocate stock to the retailers within each order cycle. We identify first- and second-order aspects to the risk-pooling effect. In particular, the second-order effect is the property that the minimum stock available to any retailer after the second allocation converges in probability to a constant as the number of retailers in the system increases, assuming independence of the demands. This property is exploited in the development of efficient procedures to determine near-optimal values of the policy parameters.     

The optimal linear combination of control variates in the presence of asymptotically negligible bias

The optimal linear combination of control variates is well known when the controls are assumed to be unbiased. We derive here the optimal linear combination of controls in the situation where asymptotically negligible bias is present. The small-sample linear control which minimizes the mean square error (MSE) is derived. When the optimal asymptotic linear control is used rather than the optimal small-sample control, the degradation in MSE is c/n³, where n is the sample size and c is a known constant. This analysis is particulary relevant to the small-sample theory for control variates as applied to the steady-state estimation problem. Results for the method of multiple estimates are also given.     

Revenue maximization in two-station tandem queueing systems

We study optimal pricing for tandem queueing systems with finite buffers. The service provider dynamically quotes prices to incoming price sensitive customers to maximize the long-run average revenue. We present a Markov decision process model for the optimization problem. For systems with two stations, general-sized buffers, and two or more prices, we describe the structure of the optimal dynamic pricing policy and develop tailored policy iteration algorithms to find an optimal pricing policy. For systems with two stations but no intermediate buffer, we characterize conditions under which quoting either a high or a low price to all customers is optimal and provide an easy-to-implement algorithm to solve the problem. Numerical experiments are conducted to compare the developed algorithms with the regular policy iteration algorithm. The work also discusses possible extensions of the obtained results to both three-station systems and two-station systems with price and congestion sensitive customers using numerical analysis.     

The ‘Third’ US Offset Strategy and Europe’s ‘Anti-access’ Challenge

Over the last two decades, a number of countries (most notably China, Russia and Iran) have been developing so-called anti-access and area denial (A2/AD) capabilities, such as ballistic and cruise missiles, offensive cyber-weapons, electronic warfare, etc. The development of A2/AD capabilities by non-Western countries undermines the foundations of US power projection and global military-technological supremacy. In order to overcome, or at least mitigate, the impending A2/AD challenge, the US Department of Defense (DoD) began to roll out its so-called ‘third’ offset strategy in late 2014. The strategy aims to bring about innovative operational concepts and technologies and spur new doctrinal and organisational debates. This article assesses which of the operational concepts and capabilities informing current US discussions on offset may be relevant in the context of the A2/AD challenges Europeans face on their eastern ‘flank‘ and in their ‘extended southern neighbourhood‘, and which may not. Europeans must grapple with the same conceptual puzzle as the US: how to strike the right balance between defeating A2/AD capabilities and hedging against them, i.e. through alternative strategies that are less dependent on unhindered access and resort to asymmetric forms of warfare. However, they must take into account the geographical features of their eastern flank and extended southern neighbourhood, the level of technological maturity of their challengers, and their own military-technological prowess and political limitations. This suggests a somewhat different approach to offsetting A2/AD than that adopted by the US.     

Reinterpreting western use of coercion in Bosnia‐Herzegovina: Assurances and carrots were crucial

This article demonstrates that assurances and carrots accompanied credible threats every time Western coercion succeeded in Bosnia. This finding is hardly surprising as it merely confirms earlier research on coercive diplomacy, but it is nevertheless important because the crucial role played by assurances and carrots has been completely ignored in most analyses to date. It also has important policy implications at a time when Western, and particularly American, policy‐makers tend to ignore this fact at their peril. US policy towards Iraq and Western policy towards Yugoslavia have been based almost exclusively on the stick in recent years, and its lack of success is therefore not surprising. If Western policy‐makers had learned the right lessons from Bosnia, they would have known that strategies coupling credible threats with credible assurances and carrots would have been more likely to succeed.