Invited Note—Some References for the Ellipsoid AlgorithmWolfe, Philip
doi: 10.1287/mnsc.26.8.747pmid: N/A
From personal interest and also on behalf of the Mathematical Programming Society I have been trying to keep afloat in the flood of writing that followed Khachian's “Polynomial Time Algorithm for Linear Programming” (Khachian, L. G. 1979. A polynomial algorithm in linear programming. Dokl. Akad. Nauk SSSR 244 (5) 1093–1096; 1979. Soviet Math. Dokl. 20 191–194.)—or, more precisely, that followed the article “A Soviet discovery rocks world of mathematics” on the front page of the New York Times for November 7, 1979; 41 of the 44 post-Khachian papers I have seen are dated November, 1979 or later. (They are listed and briefly annotated in the bibliography (Wolfe, P. 1980. A bibliography for the ellipsoid algorithm. (29 April) 6.), along with relevant background items and some 30 press reports, etc.) The present note, portions of which are taken from an article to appear in the first issue of Optima, Newsletter of the Mathematical Programming Society, points to a few items of this considerably overlapping literature which may be of use to the curious reader.
An Evaluation of the Initial Year of Zero-Base Budgeting in the Federal GovernmentSherlekar, Virendra S.; Dean, Burton V.
doi: 10.1287/mnsc.26.8.750pmid: N/A
This paper presents a comprehensive evaluation of the strengths and weaknesses of the Zero-Base Budgeting (ZBB) process during the initial year of its implementation in the Federal Government. The evaluation includes ten Departments and six agencies of the Federal Government representing 74 percent of the total budget authority of 560 billion dollars. It is based on the information received in responses from federal agencies to the Office of Management and Budget Eleven major criteria were formulated for use in evaluating the applicability of the ZBB process and its performance in the individual agencies. A scoring model was used to determine the effectiveness of the ZBB process within each agency, as well as across agencies.ZBB was perceived by federal agencies as an effective tool for use in the allocation of limited resources. The following aspects of ZBB were ranked in the order in which they yield the greatest benefits in producing effective budgets: (a) priority ranking of agency programs, (b) participation of management in decisionmaking, and (c) conducting trade-offs within and across programs. In most cases, the increased participation (extent and quality) resulted in the establishment of a close link with top management and an enhanced understanding of organizational objectives, priorities, and resource allocations to various programs. The use of ZBB was not intended to and did not, in fact, produce significant tangible cost savings in federal agency 1979 budgets, but did result in reallocations of resources to activities with higher priority. Most federal agencies believed that the use of ZBB required excessive expenditures of time and effort.The agencies felt that ZBB was not particularly applicable to “uncontrollable” programs and hence the time and effort spent on using ZBB in these decision units was not beneficial. The agencies faced problems in developing “minimum level” packages which represent lowest level budgets for the organizational units. Most agencies used an arbitrary percentage reduction from the existing level to force uniformity across all decision units. Use of a predefined “minimum level” may have precluded a zero-base analysis of the decision units which is the major cornerstone of ZBB. Priority ranking of decision packages at the subordinate management level was usually carried out by managers using their own independent judgments. At the top agency level, most agencies used formal ranking procedures and collegial panels to produce the initial ranking of agency-wide decision packages. The difficulties agencies faced in determining priorities of the decision packages included ranking those functions/activities that were dissimilar and/or interrelated and considering those activities not having measurable outputs or distinct workload measures.
A Goal Programming Model for Planning Officer AccessionsBres, E. S.; Burns, D.; Charnes, A.; Cooper, W. W.
doi: 10.1287/mnsc.26.8.773pmid: N/A
A goal programming model for planning officer accessions to the U.S. Navy from various commissioning sources is developed and described. Present and future requirements for different career specialty areas in the Navy are considered in terms of years of commissioned service and related to various “choke points” where inventories fall short of requirements in officer force structure. An illustration of the use of this model is provided which involves assessments of the effects of phasing out one comissioning source. Other uses and possible further extensions are also indicated for this model, which now forms a part of the Navy's manpower planning procedures.
Optimal Sizing of Records Used to Store Messages of Various LengthsErickson, Ranel E.; Luss, Hanan
doi: 10.1287/mnsc.26.8.796pmid: N/A
In many computer applications messages of various lengths need to be stored in some storage device. In this paper we examine the problem in which a fixed number of record lengths can be used to store messages. Whenever a message arrives, it is stored in the smallest possible record which is at least as large as the message. If a message cannot be stored in any single record, it is divided into segments and stored in several records of the same length. Each record is accompanied by a header which contains overhead information. Furthermore, in some applications records of the same length are stored in larger units, called blocks. If so, some space may be wasted at the end of a block. The objective is to find the optimal record lengths so that the expected total space used to store a message is minimized A dynamic programming algorithm that finds the optimal record lengths is developed for a general message length distribution. Numerical examples are discussed.
A Comparison of Optimal and Adaptive Decision Mechanisms in an Organizational SettingNeave, Edwin H.; Petersen, Edward R.
doi: 10.1287/mnsc.26.8.810pmid: N/A
This paper uses simulation experiments to compare optimal and adaptive decision mechanisms for firms modelled as operating in a duopoly. Optimal decision policies are derived using a dynamic programming approach based on the Cyert-DeGroot (Cyert, R. M., M. H. DeGroot. 1970. Muhiperiod decision models with alternating choice as a solution to the duopoly problem. Quart J. Econom. 84 410–429.) duopoly models, while the adaptive decision mechanism uses the Cyert-March behavioral theory of the firm (Cyert, Richard, James March. 1963. A Behavioral Theory of the Firm. Prentice-Hall, Englewood Cliffs, New Jersey.). Using a cetera paribus approach that unequivocally establishes causality, the simulations develop conditions under which adaptive decision processes generate profit performance comparable to that generated by normative models. The simulations suggest that good organizational performance requires both good decision making processes and efficient operation of the organization, that good performance can be achieved in at least three ways: by employing optimal decision processes; by the use of adaptive processes in a highly competitive environment; or by the use of adaptive processes when management has high aspirations. The implications of these findings for implementing management science studies of organization decision-making are considered.
Accounting Applications—IntroductionRonen, Joshua
doi: 10.1287/mnsc.26.8.823pmid: N/A
Introduction to special issue on accounting applications. By publishing these papers together in one issue of Management Science we wish to accomplish the dual purpose of exposing management scientists to the application of their discipline to important accounting problems and of allowing management scientists and accountants to interact in areas of research and problem-solving, thus stimulating the interest of readers who are concerned with the problems of accounting.
An Activity Analysis Approach to Unit Costing with Multiple Interactive ProductsItami, Hiroyuki; Kaplan, Robert S.
doi: 10.1287/mnsc.26.8.826pmid: N/A
Average variable costs are not directly defined for multiple products produced in complex production settings. An activity analysis model can be used for basic cost measurement and for building a linear programming model of manufacturing operations. The model can then be used not only to compute the optimal production plan and associated marginal costs but also to assign average costs to final products. The activity analysis framework enables many overhead costs, such as maintenance, overtime, shift premiums, and indirect labor and materials, to be treated within the model. Thus, they are absorbed directly into the cost of final products rather than allocated indirectly through an overhead charge.Three average costing methods based on sacrifice value (marginal costs) and benefit value (marginal revenue) of products are considered. The method based entirely on the market value of products has less desirable properties than allocation methods which use the dual variables (marginal costs) from the programming model. Another benefit is that various cost allocation methods using input-output analysis can be considered as special cases of average costing methods presented in this paper.
Variance Analysis Procedures as Motivational DevicesBaiman, Stanley; Demski, Joel S.
doi: 10.1287/mnsc.26.8.840pmid: N/A
Traditional standard cost variance analysis procedures are examined as motivational devices in a principal-agent model. The reexpressing of a cost realization into components (such as individual factor price and quantity variances) is shown to be useful if an incentive problem exists and if the separate components are differentially correlated with the agent's behavior. Similarly, the investigation of selected variances is shown to have desirable motivational effects. However, the optimal variance investigation policy is shown to be far more subtle than those found in single-person analyses.