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2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2762
Recently, the lengthy waiting time in public hospitals (called the public system) under the free healthcare policy has become a serious problem. To address this issue, motivated by the Japanese healthcare system, this paper investigates a two‐tier co‐payment healthcare system under a uniform pricing and subsidy coordination mechanism. In such a setting, the public system and the private system (i.e., the private hospitals) compete for market share with different objectives, whereas the government uniformly sets the service price and the subsidy rate to maximize social welfare under a total budget constraint. Compared with two free healthcare policy cases implemented in the Canadian and Australian healthcare systems respectively in terms of social welfare, the results show that when the market demand (or the patient service quality sensitivity) is sufficiently high (sufficiently low), the uniform pricing and subsidy coordination mechanism is better and worse otherwise; and when the patient's waiting sensitivity (or the total government budget) is in an appropriate middle range (sufficiently low or high), the mechanism can outperform than the free policy cases.
Pesch, Tim; Polpo, Adriano; Cripps, Edward; Cramer, Erhard
2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2764
In this article, we will address the complexity of non‐identical components in multi‐component systems. Most technical systems can be described as such since either component types or component functions within the system vary amongst components. While most reliability related work resorts to the assumption of homogeneous components, we aim to address the often more realistic assumption of heterogeneous components extending the model of Extended Sequential Order Statistics by two inferential methods. Firstly, the derivation of Maximum Likelihood Estimates including a simulation study demonstrating their good performance for large enough sample size. Secondly, we introduce a likelihood ratio test to test whether components can be assumed identical accompanied by a power study. Both methods are powerful tools in reliability contexts. The former increases our understanding of component behaviour, especially upon failure of other components. This knowledge empowers system operators to make better decisions regarding maintenance schedules and failure time prediction. The latter supports operators in their quest of identifying component equivalence. Therefore, both methods can be used to achieve meaningful results in real life applications.
Marena, Marina; Romeo, Andrea; Semeraro, Patrizia
2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2766
This paper builds a multivariate Lévy‐driven Ornstein‐Uhlenbeck process for the management of non‐maturing deposits, that are a major source of funding for banks. The contribution of the paper is both theoretical and operational. On the theoretical side, the novelty of this model is to include three independent sources of randomness in a Lévy framework: market interest rates, deposit rates and deposit volumes. The choice of a Lévy background driving process allows us to model rare but severe events. On the operational side, we propose a procedure to include severe volume outflows with positive probability in future scenarios simulation, explaining its implementation with an illustrative example using Italian banking sector data.
Carannante, Maria; D'Amato, Valeria; Fersini, Paola; Forte, Salvatore; Melisi, Giuseppe
2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2767
Dependence among different cyber risk classes is a fundamentally underexplored topic in the literature. However, disregarding the dependence structure in cyber risk management leads to inconsistent estimates of potential unintended losses. To bridge this gap, this article adopts a regulatory perspective to develop vine copulas to capture dependence. In quantifying the solvency capital requirement gradient for cyber risk measurement according to Solvency II, a dangerous paradox emerges: an insurance company does not tend to provide cyber risk hedging products as they are excessively expensive and would require huge premiums that it would not be possible to find policyholders.
Zhou, Xiao‐Dong; Wang, Yun‐Juan; Wu, Lin; Yue, Rong‐Xian
2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2773
In this article, we study data analysis methods for accelerated life test (ALT) with blocking. Unlike the previous assumption of normal distribution for random block effects, we advocate the use of Weibull regression model with gamma random effects for making statistical inference of ALT data. To estimate the unknown parameters in the proposed model, maximum likelihood estimation and Bayesian estimation methods are provided. We illustrate the proposed methods using real data examples and simulation examples. Numerical results suggest that distribution of random effects has minimal impact on the estimation of fixed effects in the Weibull regression models. Furthermore, to demonstrate the advantage of our proposed model, we also provide methods to compare ALT plans and thus identify the optimal ALT plans.
Fang, Rui; Li, Chen; Li, Xiaohu
2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2785
Krakowski (Rev Fr Autom Inform Rech Opèr. 1973;7:107–120.) introduced the relevation transform for component and active redundancy with independent lifetimes, and except for Johnson and Kotz (Am J Math Manag Sci. 1981;1:155–165; Nav Res Logist. 1983;30:163–169.) most subsequent researches were conducted under this framework. However, it is not uncommon that a component and its active redundancy bear some common stresses due to the environment and thus they have dependent lifetimes. In this note, we equip the involved lifetimes with a survival copula and then clarify the potential difference between the new and classical versions through making stochastic comparison. Moreover, by ordering the lifetime of system with relevation redundancy we also study the way of allocating a relevation redundancy at component level to ultimately improve the system reliability. The present results on series and parallel systems serve as a generalization of the corresponding ones of Belzunce et al. (Appl Stoch Models Bus Ind. 2019;35:492–503.). Several numerical examples are presented to illustrate these findings as well.
Snee, Ronald D.; Bailey, Steven P.
2023 Applied Stochastic Models in Business and Industry
doi: 10.1002/asmb.2768
When faced with a problem to be solved by running designed experiments we should first think of what strategy should be used for the experimentation. One aspect of successful experimental strategy is how to use screening experiments in practice. In this article the authors share their combined experiences of more than 90 years in using designed experiments in which screening experiments are an integral part of the strategy. Along the way the benefits of running screening experiments and why they work are discussed. Topics such as the Pareto principle applied to experimentation and the robustness of screening designs to assumptions are addressed. Case studies, tips, traps, and guidelines are provided. What emerges is a holistic approach to experimentation that results in practicing scientists and engineers getting the right data in the right amount at the right time.
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