Designing and pricing menus of extended warranty contracts

Extended warranties provide “piece of mind” to a consumer in that product failures which occur after the base warranty expires are rectified at little or no cost. They also provide an additional source of revenue for manufacturers or third‐party providers, such as retailers or insurance providers, and help cultivate consumer loyalty. In this article, we analyze a number of extended warranty contracts which differ in design, including restrictions on deferrals and renewals. With the use of dynamic programming, we compute the optimal strategy for a consumer with perfect information and determine the optimal pricing policy for the provider given the consumer's risk characterization. We also provide insight into when different contracts should be issued. Finally, we illustrate how profits can be dramatically increased by offering menus of warranty contracts, as opposed to stand alone contracts, with the use of integer programming. Surprisingly, risk‐taking consumers provide the greatest benefit to offering menus. These insights can help a company develop a comprehensive warranty planning strategy for given products or product lines. © 2009 Wiley Periodicals, Inc. Naval Research Logistics 2009     

Single‐machine scheduling with deadlines to minimize the total weighted late work

We consider scheduling a set of jobs with deadlines to minimize the total weighted late work on a single machine, where the late work of a job is the amount of processing of the job that is scheduled after its due date and before its deadline. This is the first study on scheduling with the late work criterion under the deadline restriction. In this paper, we show that (i) the problem is unary NP‐hard even if all the jobs have a unit weight, (ii) the problem is binary NP‐hard and admits a pseudo‐polynomial‐time algorithm and a fully polynomial‐time approximation scheme if all the jobs have a common due date, and (iii) some special cases of the problem are polynomially solvable.     

Polynomial‐time approximation scheme for concurrent open shop scheduling with a fixed number of machines to minimize the total weighted completion time

In this article, we consider the concurrent open shop scheduling problem to minimize the total weighted completion time. When the number of machines is arbitrary, the problem has been shown to be inapproximable within a factor of 4/3 ‐ ε for any ε > 0 if the unique games conjecture is true in the literature. We propose a polynomial time approximation scheme for the problem under the restriction that the number of machines is fixed. © 2011 Wiley Periodicals, Inc. Naval Research Logistics, 2011     

Managing components for assemble‐to‐order products with lead‐time‐dependent pricing: The full‐shipment model

We study a component inventory planning problem in an assemble‐to‐order environment faced by many contract manufacturers in which both quick delivery and efficient management of component inventory are crucial for the manufacturers to achieve profitability in a highly competitive market. Extending a recent study in a similar problem setting by the same authors, we analyze an optimization model for determining the optimal component stocking decision for a contract manufacturer facing an uncertain future demand, where product price depends on the delivery times. In contrast to our earlier work, this paper considers the situation where the contract manufacturer needs to deliver the full order quantity in one single shipment. This delivery requirement is appropriate for many industries, such as the garment and toy industries, where the economies of scale in transportation is essential. We develop efficient solution procedures for solving this optimization problem. We use our model results to illustrate how the different model parameters affect the optimal solution. We also compare the results under this full‐shipment model with those from our earlier work that allows for multiple partial shipments. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007     

Indian Military Modernization and Conventional Deterrence in South Asia

In recent years, headline grabbing increases in the Indian defense budget have raised concerns that India’s on-going military modernization threatens to upset the delicate conventional military balance vis-à-vis Pakistan. Such an eventuality is taken as justification for Islamabad’s pursuit of tactical-nuclear weapons and other actions that have worrisome implications for strategic stability on the subcontinent. This article examines the prospects for Pakistan’s conventional deterrence in the near to medium term, and concludes that it is much better than the pessimists allege. A host of factors, including terrain, the favorable deployment of Pakistani forces, and a lack of strategic surprise in the most likely conflict scenarios, will mitigate whatever advantages India may be gaining through military modernization. Despite a growing technological edge in some areas, Indian policymakers cannot be confident that even a limited resort to military force would achieve a rapid result, which is an essential pre-condition for deterrence failure.     

Index policies for the routing of background jobs

Arriving (generic) jobs may be processed at one of several service stations, but only when no other (dedicated) jobs are waiting there. We consider the problem of how to route these incoming background jobs to make best use of the spare service capacity available at the stations. We develop an approximative approach to Whittle's proposal for restless bandits to obtain an index policy for routing. The indices concerned are increasing and nonlinear in the station workload. A numerical study testifies to the strong performance of the index policies developed. © 2004 Wiley Periodicals, Inc. Naval Research Logistics, 2004