Applications of management science : in productivity, finance, and operations

Volume 12 of the "Applications of Management Science" series is directed toward the applications of management science to: Multi-Criteria Decision Making, Operations and Supply Chain Management, Productivity Management (DEA), and Financial Management. This volume will prove valuable to researchers, practitioners and students of management science and operations research. It provides an overview of some of the most essential aspects of the discipline and is an excellent point of reference for persons interested in management or management science. It focuses on four key applications of management science, and is targeted towards a wide audience of researchers, practitioners, and students. Applications of Management Science: In Productivity, Finance, and Operations 4 Contents 6 List of Contributors 10 Dedication 14 Editorial Board 16 Part I: Data Envelopment Analysis 18 Measuring Organizational Efficiency with Data Envelopment Analysis: The Horace Mann Insurance Company 20 Data Envelopment Analysis 21 The Horace Mann Insurance Group 22 Conclusion 27 References 28 Consumer-Packaged Freight Delivery Evaluation: A Multiple Criteria Data Envelopment Analysis Approach 30 Introduction 31 Data Envelopment Analysis 32 Multiple Criteria DEA 33 An Example 35 Conclusions 37 References 37 Evaluating the Operational Efficiency of Railway Systems with Sensitivity Analyses to Sampling Variations 40 Introduction 41 DEA and the Bootstrap 42 Data Envelopment Analysis 42 The Bootstrap 46 An Application to Railway Operations 48 Model Result 48 Conclusion 53 References 54 Input-Output Variable Evaluation for Studying DEA Efficiency Performance in Electric Utilities 58 Introduction 58 Performance 59 Performance Measurement 59 Evolution of DEA 59 Prior Utility Studies 61 Future Research Proposal 63 References 64 Part II: Multi-Criteria Applications 66 A Survey of Multi-Objective Scheduling Techniques Applied to the Job Shop Problem (JSP) 68 Introduction 68 Single Objective Optimization Approaches 69 Multi-Objective Optimization Problems 71 Efficient Schedules 73 Integer Programming Approaches 74 Multiple-Attribute Value Function Approaches 75 Recent Approaches 76 References 77 A Multi-Objective Mathematical Programming Model for Audit Samples of Balances for Accounts Receivable 80 Introduction 80 Auditing 80 The Audit Sample of Accounts Receivable 81 Audit Sampling 83 Representative Sampling 83 Dollar Units Sampling 84 Attribute Sampling 85 A Multi-Objective Nonlinear Model for Audit Sampling 85 An Example Problem 87 Conclusions 91 References 92 A Multi-Criteria Fixed Charge Problem: Location of Service Centers 94 Introduction 94 A Multicriteria Fixed Charge Problem and its Applications to Service Centers 95 Decision Variables 95 Goal constraints 96 Total Cost Goal 96 Demand Satisfaction Goal jth Customer Districts 96 Objective Function of the Goal Programming Model 97 Hard Constraints Guarantee that Demand is Stratified 97 Example problem 97 Converting into a LP Problem 101 Preemptive 103 Goals 103 Conclusion 103 References 104 Identifying Compounds for Pharmaceutical Companies’ Development Tracks Using a Multi-Criteria Decision Model 106 Introduction 107 A Review of the Literature 108 The AHP 109 An Application of AHP to the Identification of Potential First-In-Class Patentable Drugs 111 Model Validation 123 Summary and conclusions 124 Notes 124 References 125 Calculating Disassembly Yields in a Multi-Criteria Decision-Making Environment for a Disassembly-to-Order System 126 Introduction 127 Literature Review 127 Heuristic Procedure 129 One-to-One Heuristic 129 One-to-Many Heuristic 130 Mathematical Model 131 The Goals 132 Total Profit Value and Related Terms 133 Constraints 134 Disassembly Process 134 Reuse Process 135 Recycle Process 136 Store Process 136 Disposing Process 137 The GP Model 137 Procedure to Solve the GP Model 138 Case Example 140 Conclusions 141 References 141 Part III: Operational Applications 144 Selection Criteria for a Network Design Model with Uncertain Demand 146 Introduction and notation 147 Mathematical Programming Formulation 148 Tree-Based Cost Functions 149 Characteristics of the Optimal Spectrum 152 Selecting a Network Design 154 Efficient Schemes for Generating Design Alternatives 155 References 158 Appendix. Finding the Optimal Spectrum 159 A Novel Approach to the Continuous Flow Truckload Routing Problem 162 Introduction 162 Truckload routing problem 163 Background 164 Previous Solution Methods 165 TRP Triplet Formulation 166 Complete Deterministic Formulation 168 Cost Specification 169 Sample Problem 170 Conclusion 170 Notes 171 References 171 Vertical Cooperative Advertising in a Manufacturer-Retailer Supply Channel 174 Introduction 175 Assumptions 177 Classical co-op Advertising Model 178 Full Coordinated Vertical co-op Advertising Model 181 Concluding Remarks 186 References 187 Proof of Results 188 Deterministic Hybrid and Stochastic Combinatorial Optimization Treatments of an Electronic Product Disassembly Line 192 Introduction 193 Literature Review 194 The DLBP Model Description 194 NP-Hardness Proof 202 The Greedy and AEHC Heuristics 203 The DLBP genetic algorithm 207 DLBP-Specific GA Architecture 207 DLBP-Specific GA Qualitative Modifications 208 DLBP-Specific GA Quantitative Modifications 209 Electronic Product Case Study 209 Numerical results 210 Conclusions 212 Notes 213 References 213 Using ‘‘Mirror Worlds’’ to Support Supply Network Management 216 Introduction 216 Is There an Interest in Mirror Worlds for the Supply Chain? 217 Dynamic Supply Networks 217 Purpose of This Paper 218 This Paper 218 Mirror Worlds (Gelernter, 1992) 218 Supply Chains or Supply Networks? 219 Complex Adaptive Systems 220 Limitations of Supply Network Integration 220 Supply Network Event Types 221 Accounting Events 221 Delivery Interruption 221 Carrier, Trailer, and Loading Events (e.g., Maloney, 2005) 222 Other Types of Events 222 Importance of Event Definitions 223 Intelligent Agents 223 Generic Supply Network Roles 223 Example - Cisco (1998) 224 Mirror World Data Sources for Supply Networks 224 Accounting Data 224 GPS and RFID 225 Internet-Based Data 225 Integrating Intelligent Agents, Event Monitoring, and Data Sources 226 Intelligent Agents and Event Monitoring 226 Intelligent Agents and Data Sources 226 Event Monitoring and Data Sources 227 Bringing it all Together: Procter & Gamble 227 Procter & Gamble’s Modeling Supply Networks 227 Procter & Gamble’s Proactive Use of Intelligent Agents 228 Summary 228 Selected Web Addresses 229 References 229 An Analytic Network Process Model for Internal Auditor Selection 232 Introduction 233 The Analytic Network Process 234 The Decision Network Hierarchy 235 Illustrative Example 243 Sensitivity Analysis 248 Summary, Conclusions and Implications 248 References 250 Part IV: Financial and Other Applications 230 A Two-Dimensional Minimal-Repair Warranty Policy 252 Introduction 252 Literature Review 254 Model Development 256 Relationships between Warranty Attributes 256 Distribution Function of Usage Rate 256 Failure Rate 257 Minimal-Repair Cost Function 257 Expected Warranty Costs 259 Results 260 Discussion 265 Conclusions 267 References 268 A Cost Variance Investigation Using Belief Functions 270 Introduction 270 This Paper 271 Cost Variance Analysis 271 Decision Making with Belief Functions 272 Background: Belief Functions 272 Differences between Probability Theory and Belief Functions 272 Obtaining m Values 273 Dempster’s Rule of Combination 273 Statistical Information and Belief Information 274 Applications of Belief Functions 274 Applications of Belief Functions to Business Decisions 274 Applications of Belief Functions to Auditing 274 Applications of Belief Functions to Management Accounting 275 Microprocessor Chip Production Process 275 Belief Functions and Cost Variance Investigations 276 Summary and Conclusions 279 References 279 Chance-Constrained Programming with Skewed Distributions of Matrix Coefficients and Applications to Environmental Regulatory Activities 282 Introduction 283 Air Pollution Modeling 284 Transfer Coefficients 287 CCP Model with Empirical Distribution 293 Conclusions 298 References 299 Optimal Advertising Pulsation Policy for a Continuous Model of Advertising Competition 302 Introduction 303 Mathematical Model 304 Dynamic Programming Formulation 307 A Numerical Illustration 312 Summary and Conclusions 320 References 321 Derivation of Firm 1’s Sales Revenue for the Infinite Period Following the Planning Horizon 322 Applications of Management Science: In Productivity, Finance, and Operations......Page 4 Contents......Page 6 List of Contributors......Page 10 Dedication......Page 14 Editorial Board......Page 16 Part I: Data Envelopment Analysis......Page 18 Measuring Organizational Efficiency with Data Envelopment Analysis: The Horace Mann Insurance Company......Page 20 Data Envelopment Analysis......Page 21 The Horace Mann Insurance Group......Page 22 Conclusion......Page 27 References......Page 28 Consumer-Packaged Freight Delivery Evaluation: A Multiple Criteria Data Envelopment Analysis Approach......Page 30 Introduction......Page 31 Data Envelopment Analysis......Page 32 Multiple Criteria DEA......Page 33 An Example......Page 35 References......Page 37 Evaluating the Operational Efficiency of Railway Systems with Sensitivity Analyses to Sampling Variations......Page 40 Introduction......Page 41 Data Envelopment Analysis......Page 42 The Bootstrap......Page 46 Model Result......Page 48 Conclusion......Page 53 References......Page 54 Introduction......Page 58 Evolution of DEA......Page 59 Prior Utility Studies......Page 61 Future Research Proposal......Page 63 References......Page 64 Part II: Multi-Criteria Applications......Page 66 Introduction......Page 68 Single Objective Optimization Approaches......Page 69 Multi-Objective Optimization Problems......Page 71 Efficient Schedules......Page 73 Integer Programming Approaches......Page 74 Multiple-Attribute Value Function Approaches......Page 75 Recent Approaches......Page 76 References......Page 77 Auditing......Page 80 The Audit Sample of Accounts Receivable......Page 81 Representative Sampling......Page 83 Dollar Units Sampling......Page 84 A Multi-Objective Nonlinear Model for Audit Sampling......Page 85 An Example Problem......Page 87 Conclusions......Page 91 References......Page 92 Introduction......Page 94 Decision Variables......Page 95 Demand Satisfaction Goal jth Customer Districts......Page 96 Example problem......Page 97 Converting into a LP Problem......Page 101 Conclusion......Page 103 References......Page 104 Identifying Compounds for Pharmaceutical Companies’ Development Tracks Using a Multi-Criteria Decision Model......Page 106 Introduction......Page 107 A Review of the Literature......Page 108 The AHP......Page 109 An Application of AHP to the Identification of Potential First-In-Class Patentable Drugs......Page 111 Model Validation......Page 123 Notes......Page 124 References......Page 125 Calculating Disassembly Yields in a Multi-Criteria Decision-Making Environment for a Disassembly-to-Order System......Page 126 Literature Review......Page 127 One-to-One Heuristic......Page 129 One-to-Many Heuristic......Page 130 Mathematical Model......Page 131 The Goals......Page 132 Total Profit Value and Related Terms......Page 133 Disassembly Process......Page 134 Reuse Process......Page 135 Store Process......Page 136 The GP Model......Page 137 Procedure to Solve the GP Model......Page 138 Case Example......Page 140 References......Page 141 Part III: Operational Applications......Page 144 Selection Criteria for a Network Design Model with Uncertain Demand......Page 146 Introduction and notation......Page 147 Mathematical Programming Formulation......Page 148 Tree-Based Cost Functions......Page 149 Characteristics of the Optimal Spectrum......Page 152 Selecting a Network Design......Page 154 Efficient Schemes for Generating Design Alternatives......Page 155 References......Page 158 Appendix. Finding the Optimal Spectrum......Page 159 Introduction......Page 162 Truckload routing problem......Page 163 Background......Page 164 Previous Solution Methods......Page 165 TRP Triplet Formulation......Page 166 Complete Deterministic Formulation......Page 168 Cost Specification......Page 169 Conclusion......Page 170 References......Page 171 Vertical Cooperative Advertising in a Manufacturer-Retailer Supply Channel......Page 174 Introduction......Page 175 Assumptions......Page 177 Classical co-op Advertising Model......Page 178 Full Coordinated Vertical co-op Advertising Model......Page 181 Concluding Remarks......Page 186 References......Page 187 Proof of Results......Page 188 Deterministic Hybrid and Stochastic Combinatorial Optimization Treatments of an Electronic Product Disassembly Line......Page 192 Introduction......Page 193 The DLBP Model Description......Page 194 NP-Hardness Proof......Page 202 The Greedy and AEHC Heuristics......Page 203 DLBP-Specific GA Architecture......Page 207 DLBP-Specific GA Qualitative Modifications......Page 208 Electronic Product Case Study......Page 209 Numerical results......Page 210 Conclusions......Page 212 References......Page 213 Introduction......Page 216 Dynamic Supply Networks......Page 217 Mirror Worlds (Gelernter, 1992)......Page 218 Supply Chains or Supply Networks?......Page 219 Limitations of Supply Network Integration......Page 220 Delivery Interruption......Page 221 Other Types of Events......Page 222 Generic Supply Network Roles......Page 223 Accounting Data......Page 224 Internet-Based Data......Page 225 Intelligent Agents and Data Sources......Page 226 Procter & Gamble’s Modeling Supply Networks......Page 227 Summary......Page 228 References......Page 229 An Analytic Network Process Model for Internal Auditor Selection......Page 232 Introduction......Page 233 The Analytic Network Process......Page 234 The Decision Network Hierarchy......Page 235 Illustrative Example......Page 243 Summary, Conclusions and Implications......Page 248 References......Page 250 Part IV: Financial and Other Applications......Page 230 Introduction......Page 252 Literature Review......Page 254 Distribution Function of Usage Rate......Page 256 Minimal-Repair Cost Function......Page 257 Expected Warranty Costs......Page 259 Results......Page 260 Discussion......Page 265 Conclusions......Page 267 References......Page 268 Introduction......Page 270 Cost Variance Analysis......Page 271 Differences between Probability Theory and Belief Functions......Page 272 Dempster’s Rule of Combination......Page 273 Applications of Belief Functions to Auditing......Page 274 Microprocessor Chip Production Process......Page 275 Belief Functions and Cost Variance Investigations......Page 276 References......Page 279 Chance-Constrained Programming with Skewed Distributions of Matrix Coefficients and Applications to Environmental Regulatory Activities......Page 282 Introduction......Page 283 Air Pollution Modeling......Page 284 Transfer Coefficients......Page 287 CCP Model with Empirical Distribution......Page 293 Conclusions......Page 298 References......Page 299 Optimal Advertising Pulsation Policy for a Continuous Model of Advertising Competition......Page 302 Introduction......Page 303 Mathematical Model......Page 304 Dynamic Programming Formulation......Page 307 A Numerical Illustration......Page 312 Summary and Conclusions......Page 320 References......Page 321 Derivation of Firm 1’s Sales Revenue for the Infinite Period Following the Planning Horizon......Page 322 Is a blind refereed serial publication published on an annual basis. The objective of this research annual is to present state of the art studies in the application of management science to the solution of significant managerial decision making problems. It is hoped that this research annual will significantly aid in the dissemination of actual applications of management science in both the public and private sectors. Volume 12 is directed toward the applications of management science to (1) Multi-Criteria Decision Making, (2) Operations and Supply Chain Management, (3) Productivity Management (DEA), (4) Financial Management. Its use can be found both in university classes in management science and operations research, (management and engineering schools), as well as to both the researcher and practitioner of management science and operations research.