The value of observing the condition of a deteriorating machine

We examine a small lot production setting in which a machine may go out of control and begin producing defective units. Traditionally, managers have had to rely upon observations of the quality of the output to determine whether the machine is in or out of control. However, with advances in technology such as vibration analysis, it is increasingly possible to obtain much more accurate information about the state of the machine. In this paper, we model and analyze a deteriorating machine in order to gain insight into the conditions under which investments in such technology are most beneficial. © 1999 John Wiley & Sons, Inc. Naval Research Logistics 46: 790–808, 1999     

Optimal nonmyopic gambling strategy for the generalized Kelly criterion

We consider the optimal wagers to be made by a gambler who starts with a given initial wealth. The gambler faces a sequence of two-outcome games, i.e., “win” vs. “lose,” and wishes to maximize the expected value of his terminal utility. It has been shown by Kelly, Bellman, and others that if the terminal utility is of the form log x, where x is the terminal wealth, then the optimal policy is myopic, i.e., the optimal wager is always to bet a constant fraction of the wealth provided that the probability of winning exceeds the probability of losing. In this paper we provide a critique of the simple logarithmic assumption for the utility of terminal wealth and solve the problem with a more general utility function. We show that in the general case, the optimal policy is not myopic, and we provide analytic expressions for optimal wager decisions in terms of the problem parameters. We also provide conditions under which the optimal policy reduces to the simple myopic case. © 1997 John Wiley & Sons, Inc. Naval Research Logistics 44: 639–654, 1997     

Measuring newness

This article deals with “newness,” an important characteristic of research-and-development (R&D) projects. Newness consumes resources and provides effectiveness or profit, and is mainly considered to be of a qualitative nature yielding only to an expert's intuition. This article is focused on a numerical measure of newness and the closely connected concept of technological advance. The measure is described in a technical parameter space against a set of analogous objects, presented by its center, eigenvalues and eigenvectors. Specific features and behavior of the selected measure of newness are analyzed. A numerical example is also included. © 1996 John Wiley & Sons, Inc.     

An algorithm for optimal shipments with given frequencies

This article deals with the problem of minimizing the transportation and inventory cost associated with the shipment of several products from a source to a destination, when a finite set of shipping frequencies is available. A mixed-integer programming model—shown to be NP-hard—is formulated for that problem. The computational complexity of some similar models applied to different problems is also investigated. In particular, whereas the capacitated plant location problem with operational cost in product form is NP-hard, the simple plant location problem with the same characteristics can be solved in polynomial time. A branch-and-bound algorithm is finally worked out, and some computational results are presented. © 1996 John Wiley & Sons, Inc.     

Modified fictitious play

We describe a modification of Brown's fictitious play method for solving matrix (zero-sum two-person) games and apply it to both symmetric and general games. If the original game is not symmetric, the basic idea is to transform the given matrix game into an equivalent symmetric game (a game with a skew-symmetric matrix) and use the solution properties of symmetric games (the game value is zero and both players have the same optimal strategies). The fictitious play method is then applied to the enlarged skew-symmetric matrix with a modification that calls for the periodic restarting of the process. At restart, both players' strategies are made equal based on the following considerations: Select the maximizing or minimizing player's strategy that has a game value closest to zero. We show for both symmetric and general games, and for problems of varying sizes, that the modified fictitious play (MFP) procedure approximates the value of the game and optimal strategies in a greatly reduced number of iterations and in less computational time when compared to Brown's regular fictitious play (RFP) method. For example, for a randomly generated 50% dense skew-symmetric 100 × 100 matrix (symmetric game), with coefficients |a_ij| ≤ 100, it took RFP 2,652,227 iterations to reach a gap of 0.03118 between the lower and upper bounds for the game value in 70.71 s, whereas it took MFP 50,000 iterations to reach a gap of 0.03116 in 1.70 s. Improved results were also obtained for general games in which the MFP solves a much larger equivalent symmetric game. © 1996 John Wiley & Sons, Inc.     

A bayesian approach to environmental stress screening

The article presents a Bayesian analysis for the environmental stress screening problem. The decision problem of deriving optimal stress screen durations is solved. Given a screen duration, the optimal stress level can also be determined. Indicators of the quality of a screen of any duration are derived. A statistical model is presented which allows a posterior density for the rate of early failures of the production process to be calculated. This enables the user to update his opinion about the quality of the process. © 1994 John Wiley & Sons, Inc.     

Modeling and analyzing multiple station baggage screening security system performance

In the aftermath of the tragic events of 11 September 2001, numerous changes have been made to aviation security policy and operations throughout the nation's airports. The allocation and utilization of checked baggage screening devices is a critical component in aviation security systems. This paper formulates problems that model multiple sets of flights originating from multiple stations (e.g., airports, terminals), where the objective is to optimize a baggage screening performance measure subject to a finite amount of resources. These measures include uncovered flight segments (UFS) and uncovered passenger segments (UPS). Three types of multiple station security problems are identified and their computational complexity is established. The problems are illustrated on two examples that use data extracted from the Official Airline Guide. The examples indicate that the problems can provide widely varying solutions based on the type of performance measure used and the restrictions imposed by the security device allocations. Moreover, the examples suggest that the allocations based on the UFS measure also provide reasonable solutions with respect to the UPS measure; however, the reverse may not be the case. This suggests that the UFS measure may provide more robust screening device allocations. © 2004 Wiley Periodicals, Inc. Naval Research Logistics, 2005.     

Cultural Conflict within Civil-Military Cooperation: A Case Study in Bosnia

In peace-support operations, employees of international humanitarian organisations often clash with those of the military. A lack of familiarity with each other's practices and values, embedded in their respective organisational cultures, is often seen as the culprit. This article presents and illustrates a road map to manage such cultural differences between cooperating organisations. We found that the military culture, in our Bosnian case study, was seen to operate as a hierarchical culture (characterised by formalisation, stability, predictability and efficiency). The culture of international humanitarian organisations, on the other hand, was depicted as clan-type (characterised by teamwork, participation and consensus). To facilitate the creation of cultural awareness as well as respect for, and reconciliation of, cultural differences we recommend several concrete actions that could improve civil-military cooperation.     

Revenue management: A real options approach

Revenue management is the process of actively managing inventory or capacity to maximize revenues. The active management typically occurs through managerial levers such as price, promotion, or availability. We present a novel real options approach to revenue management that is specifically suited to the car rental business. We illustrate the concept with actual car rental data. The model produces minimally acceptable prices and inventory release quantities (number of cars available for rent at a given price) as a function of remaining time and available inventory. The pricing and inventory release recommendations of the developed model confirm earlier empirical analysis that suggested current practises discount too deeply early in the booking cycle. © 2004 Wiley Periodicals, Inc. Naval Research Logistics, 2004