Progress payments and cost overruns in defence contracts

In recent years military procurement agencies have used “progress payments” in contracting. Although, overall, the adoption of such a policy may well have contributed to a decrease in total costs of procurement, we identify a class of inefficiencies that are likely to have been generated by it.     

The impact of defense and non‐defense public spending on growth in Asia and Latin America∗

For a three‐sector Feder‐Ram framework, we present time‐series, cross‐sectional estimates for two cohorts, consisting of Asian and Latin American countries. The estimates indicate that private investment, and defense and non‐defense public spending are growth promoting for alternative error components representations. For the best error components representation, greater growth enhancement is associated with the two forms of public spending in Asia than in Latin America, while the opposite comparison characterizes private investment. Although defense is growth promoting, an opportunity cost exists insofar as non‐defense spending, financed by defense spending, appears to give a small net boost to growth in Latin America.     

Statistical equivalency and optimality of simple step‐stress accelerated test plans for the exponential distribution

Accelerated life testing (ALT) is commonly used to obtain reliability information about a product in a timely manner. Several stress loading designs have been proposed and recent research interests have emerged concerning the development of equivalent ALT plans. Step‐stress ALT (SSALT) is one of the most commonly used stress loadings because it usually shortens the test duration and reduces the number of required test units. This article considers two fundamental questions when designing a SSALT and provides formal proofs in answer to each. Namely: (1) can a simple SSALT be designed so that it is equivalent to other stress loading designs? (2) when optimizing a multilevel SSALT, does it degenerate to a simple SSALT plan? The answers to both queries, under certain reasonable model assumptions, are shown to be a qualified YES. In addition, we provide an argument to support the rationale of a common practice in designing a SSALT, that is, setting the higher stress level as high as possible in a SSALT plan. © 2012 Wiley Periodicals, Inc. Naval Research Logistics, 2013     

Bayesian selling problem with partial information

We introduce an optimal stopping problem for selling an asset when the fixed but unknown distribution of successive offers is from one of n possible distributions. The initial probabilities as to which is the true distribution are given and updated in a Bayesian manner as the successive offers are observed. After receiving an offer, the seller has to decide whether to accept the offer or continue to observe the next offer. Each time an offer is observed a fixed cost is incurred. We consider both the cases where recalling a past offer is allowed and where it is not allowed. For each case, a dynamic programming model and some heuristic policies are presented. Using simulation, the performances of the heuristic methods are evaluated and upper bounds on the optimal expected return are obtained. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013     

Book reviews

Norman Cigar, Genocide in Bosnia: The Policy of “Ethnic Cleansing”. College Station, Texas: Texas A&M University Press, 1995. Pp.xiv + 247; app., map, notes, cartoon.

Maria Jose Moyano, Argentina's Lost Patrol: Armed Struggle, 1969–1979. New Haven: Connecticut Yale University Press, 1995. Pp.xiii + 226, biblio., abbreviations, 10 figures, 1 map, tables, index; $25/£16.95. ISBN 0–300–01622–6.

Donald E. Schulz and Deborah Sundloff Schulz, The United States, Honduras, and the Crisis in Central America, Westview Thematic Studies in Latin America, Boulder, Co: Westview, 1994. Pp.368, map, figure, select biblio., abbreviations, index. $52.50/£37.50; (cloth) $17.95/£11.95 (paper). ISBN 0–8133–1324–4 and 1323–6.

Joseph H. Alexander and Merrill L. Bartlett, Sea Soldiers in the Cold War: Amphibious Warfare 1945–1991. Annapolis, Maryland: Naval Institute Press, 1995. Pp.iii + 178, 1 map, 29 illus, biblio, index. $32.95. ISBN

Gary P. Cox, The Halt in the Mud: French Strategic Planning from Waterloo to Sedan. Westview Press, 1994. Pp.258, maps, notes, biblio, index. £33.50. ISBN 0–133–1536–0.     

A produce‐to‐stock system with advance demand information and secondary customers

We consider a manufacturer (i.e., a capacitated supplier) that produces to stock and has two classes of customers. The primary customer places orders at regular intervals of time for a random quantity, while the secondary customers request a single item at random times. At a predetermined time the manufacturer receives advance demand information regarding the order size of the primary customer. If the manufacturer is not able to fill the primary customer's demand, there is a penalty. On the other hand, serving the secondary customers results in additional profit; however, the manufacturer can refuse to serve the secondary customers in order to reserve inventory for the primary customer. We characterize the manufacturer's optimal production and stock reservation policies that maximize the manufacturer's discounted profit and the average profit per unit time. We show that these policies are threshold‐type policies, and these thresholds are monotone with respect to the primary customer's order size. Using a numerical study we provide insights into how the value of information is affected by the relative demand size of the primary and secondary customers. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007     

Network disconnection problems in a centralized network

We consider three network disconnection problems in a centralized network where a source node provides service to the other nodes, called demand nodes. In network disconnection problems, each demand node gets a certain benefit when connected to a source node and a network attacker destroys edges to prevent demand nodes from achieving benefits. As destroying edges incurs expenses, an attacker considers the following three different strategies. The first is to maximize the sum of benefits of the disconnected nodes while keeping the total edge destruction cost no more than a given budget. The second is to minimize the total destruction cost needed to make a certain amount of benefits not accomplished. The last is to minimize the ratio of the total destruction cost to the benefits not accomplished. In this paper, we develop exact algorithms to solve the above three problems. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007