AN EVALUATION OF FORECAST ERROR IN MASTER PRODUCTION SCHEDULING FOR MATERIAL REQUIREMENTS PLANNING SYSTEMS.

Typical forecast-error measures such as mean squared error, mean absolute deviation and bias generally are accepted indicators of forecasting performance. However, the eventual cost impact of forecast errors on system performance and the degree to which cost consequences are explained by typical error measures have not been studied thoroughly. The present paper demonstrates that these typical error measures often are not good predictors of cost consequences in material requirements planning (MRP) settings. MRP systems rely directly on the master production schedule (MPS) to specify gross requirements. These MRP environments receive forecast errors indirectly when the errors create inaccuracies in the MPS. Our study results suggest that within MRP environments the predictive capabilities of forecast-error measures are contingent on the lot-sizing rule and the product components structure When forecast errors and MRP system costs are coanalyzed, bias emerges as having reasonable predictive ability. In further investigations of bias, loss functions are evaluated to explain the MRP cost consequences of forecast errors. Estimating the loss functions of forecast errors through regression analysis demonstrates the superiority of loss functions as measures over typical forecast error measures in the MPS.     

Social ties and subjective performance evaluations: an empirical investigation

We empirically investigate possible distortions in subjective performance evaluations. A key hypothesis is that evaluations are more upward biased the closer the social ties between supervisor and appraised employee. We test this hypothesis with a company data set from a call center organization which contains not only subjective assessments but also several more objective measures of performance. Controlling for these performance measures, we find strong evidence that evaluations are upwards biased in smaller teams and some evidence that supervisors give better ratings to employees they themselves have evaluated before.     

Quantile and mean value measures of search process complexity

Performance measures of metaheuristic algorithms assess the quality of a search process by statistically analysing its performance. Such criteria serve two purposes: they provide the verdict on which algorithm is better for what task, and they help applying an algorithm on a given task in the most effective way. The latter goal may be achieved by an appropriate restart strategy of the search process. Furthermore, these criteria are traditionally based on analysis of the search step mean value. Our aim is to elaborate the mean value analysis as well, but via a novel and more general quantile-based analytic approach, which can be used to define new measures. We prove and demonstrate this purpose on three quantile-based performance measures.     

Leader errors and the influence on performance: An investigation of differing levels of impact

Errors will inevitably occur when one is involved in decision making tasks with complex, ill-defined problems. Qualitative research on this topic has illuminated the complex nature of problems faced by many leaders and organizations as they make decisions. Although this research has answered many questions about the nature of errors, empirical research on errors among leaders remains scarce. To further explore this topic, 170 undergraduates were assigned to one of five work conditions and asked to read three cases with initiating structure problems and three cases with consideration problems while taking on the role of the CEO in the scenario. Errors committed by leaders were examined to answer questions about how work conditions influence errors committed. Additionally, how these errors influence performance outcomes was also examined. Results indicated that work conditions paired with errors made by leaders influenced levels of performance. Under certain conditions, most notably process overload, errors led to negative performance. We also discuss the implications of these findings for understanding the influence of work conditions on errors committed and their combined influence on performance outcomes.     

New Uses of Outcomes Measures Under Austerity: the Case of Danish Municipalities

This article argues that the use of performance information may change according to economic circumstances. In a fiscal crisis, policy-makers likely demand less documentation of service quality, but under longer-term term austerity they can use performance information, including outcomes measures, to target and reallocate scarce resources across organizational boundaries. The argument is tested in an analysis of six Danish municipalities after the financial crisis. In these cases, performance information was used in new ways. For instance, outcomes measures were linked to overall strategies and used in the budgeting process to promote the reallocation of resources towards more effective services.     

A comparison of simplified value function approaches for treating uncertainty in multi-criteria decision analysis

Uncertainty is present in many decisions where an action's consequences are unknown because they depend on future events. Multi-attribute utility theory (MAUT) offers an axiomatic basis for choice, but practitioners may prefer to use simpler decision models for transparency, ease of use, or other practical reasons. We identify some ‘simplified’ models currently in use and use a simulation experiment to evaluate their ability to approximate results obtained using MAUT. Our basic message is that avoiding assessment errors in the application of a simplified model is more important than the choice of a particular type of model, but that the best performance over a range of decision problems is from a model using a small number of quantiles.     

The relationship between Type A Behaviour Pattern (TABP) and in-basket performance: recognition as moderator

The relationship between Type A Behaviour Pattern (TABP) and performance on an in-basket task was examined. Some of the subjects (n=40) were told that they would be recognized for superior performance, while others (n=22) were not given this information. Results indicated no relationship between a global TABP measure and all the measures of in-basket performance. Achievement Strivings (AS), a component of TABP, was positively related to overall effort, overall quality of performance, and interpersonal sensitivity. None of these relations was moderated by recognition. However, it was found that the relation between AS and use of delegation was moderated by recognition. AS was strongly and negatively related to delegation only among those who were told they would be recognized for superior performance. Impatience-Irritability (I-I), another component of TABP, was unrelated to measures of in-basket performance, although the relation between I-I and interpersonal sensitivity was moderated by recognition. I-I was strongly and negatively related to interpersonal sensitivity only among those not told that they would be recognized for superior performance. Implications of these findings are discussed and future research on TABP is suggested.     

Master Production Rescheduling Policy in Capacity-Constrained Just-In-Time Make-To-Stock Environments

This paper describes a simulation experiment to evaluate the relative effectiveness of rescheduling policies in capacity-constrained, just-in-time (JIT) make-to-stock production environments. Three performance measures were analyzed: average finished goods inventory, total units of sales lost, and a measure of schedule instability. Among the three loading methods we studied (level loading, front loading, and back loading), none was superior across all three performance measures. Level loading was the most robust, while back loading had an interaction effect with forecasting model and capacity level. Time fence scenario was found not to be as significant a factor in system performance as reported by previous research. Once an acceptable time fence scenario is selected, attempts to optimize this factor do not appear to offer significant improvement. It was found that higher demand variation, larger forecast errors, and tight capacity lead to the degradation of system performance. Judicious use of slack capacity helps a system to incorporate the periodic schedule changes typical of JIT systems.     

Objectives, missions and performance measures in multinationals

This article examines performance evaluation systems of fifteen multinationals — five German, five UK and five US — and how they relate to corporate strategy or mission statements in each case. The technique of analysis used is the multilayered case study approach, and includes ‘face-to-face’ interviews.The results, by authors Jeffrey Coates, Edward Davis, Stephen Longden, Raymond Stacey (Aston University) and Clive Emmanuel (University of Glasgow), are very instructive. The cases show a consistent use of missions/strategies, objectives and performance measures within the companies, but wide variation between them. Detailed tables are presented which show clearly the range of variation between the companies and countries concerned.     

Performance Management,Job Satisfaction and Organizational Commitment1

A number of investigations have focused on aspects of human resource management policy and their impact on employees. The study reported here examines the extent to which the main elements of performance management systems are associated with positive employee attitudes. Questionnaire measures of performance management variables and of employee attitudes were obtained from 860 staff in nine organizations, all of which had been ascertained to be operating performance management systems. The findings indicate that most elements of performance management did contribute to positive employee attitudes, and that between them they accounted for a substantial proportion of the variance in measures of organizational commitment and (especially) job satisfaction. Some differences in the data from public and private-sector organizations were found.     

A performance measurement paradigm for integrating strategy formulation: A review of systems and frameworks

Measuring organizational performance plays a very important part in translating corporate strategy into results. Various emerging (non-traditional) performance systems have recently been devised to aid firms in selecting and implementing measures. This paper discusses the strategy/measurement initiatives and compares ten emerging performance measurement systems with respect to a list of performance dimensions, the characteristics of performance measures, and the requirements of development process. Although these systems have constraints borne with their own application domains, they stand by themselves empirically and/or theoretically, and provide guidance about what to measure and how to design performance measures that could be linked to the corporate strategy and objectives of an organization. This paper concludes that there is a need to develop a paradigm for integrating strategy formulation and performance measurement in organizations.     

Self-Efficacy Beliefs and Sales Performance

Self-efficacy theory predicts that people will perform better when they believe they have the skills necessary for success. It also suggests, however, that believing in long-term rewards for success ("response-outcome expectations") does not correlate with adequate performance. This paper supports the generality of self-efficacy theory and provides evidence that self-efficacy beliefs predict insurance sales performance, whereas response-outcome expectations did not. A questionnaire was developed to measure self-efficacy beliefs and response-outcome expectations using 200 insurance sales representatives. Regression analyses were computed on a different sample of 97 insurance sales representatives using four separate dependent variables (calls-per-week; number of policies sold; sales revenue and a composite performance index on which actual sales commission was based). (1) These analyses established a correlation (but no causal relationship) between self-efficacy beliefs and sales performance. (2) The generality of self-efficacy theory in a business setting is suggested by the relationship between self-efficacy and objective measures of sales performance. (3) The relevance of these results, and the importance of integrating them into the practice of organizational behavior modification is discussed.     

Towards sustainability by aligning operational programmes and sustainable performance measures

Abstract

In the last decades, sustainable concerns have increasingly gained importance to organizational survival, and Lean/Six Sigma approaches are becoming more and more outstanding in order to improve sustainability performance. This article aims to evaluate the degree of importance of sustainable performance measures of Brazilian organizations and to propose guidelines to achieve sustainability by aligning these measures with operational improvement programmes. Multiple data collection methods were applied as theoretical literature review, questionnaire survey and semi-structured interviews with industry professionals and academic researchers. The findings show that it is the corporate responsibility to focus their efforts on both operational improvement programmes and sustainable initiatives in order to achieve better environmental protection, corporate reputation, quality management, cost performance and suppliers relations, as they are considered to be more important on organizational sustainability.     

Assessing the Construct Validity of Strategic and SIC‐Based Measures of Corporate Diversification

Several new methods of measuring corporate diversification have been developed since Rumelt's (1974) seminal work. These methods use varying criteria but they have not been backed up by construct validity. The present study investigates the content, convergent, discriminant, unidimensionality, and predictive validity by comparing 54 Fortune 500 companies on Rumelt's classification (self‐reported and calculated), entropy, Berry‐ Herfindahl index, and broad and mean narrow spectrum diversification measures. Results indicate only mild support for convergence, discriminant and predictive validity, and no evidence of unidimensionality amongst these measures. This raises problems in the measurement of diversification and subsequent relationships to performance linkages.     

Organizational Environments and Performance: A Linear or Nonlinear Relationship?

The external circumstances that organizations confront are an important influence upon their prospects of success. The resources available within the environment, the multiplicity of stakeholder demands to be addressed and the rates of change in these, each have serious implications for organizational functioning. Nevertheless, it remains conceivable that the effects of different dimensions of the environment are not straightforwardly positive or negative, but may follow nonlinear patterns posing very different challenges at different levels. To draw lessons for public organizations seeking to understand how best to respond the circumstances that they face, this paper examines linear and nonlinear effects of different dimensions of the organizational environment on the performance of over 500 organizations using both objective and subjective measures of the environment. Strong support is found for the presence of linear relationships between each environmental dimension and type of measure and performance, but no evidence of statistically significant nonlinear environmental effects. The theoretical and practical implications of the findings are discussed.     

Occupational Safety:

After a feedback condition, assigned (foreman-selected) and participative (worker-selected) goal-setting were examined to determine how they might augment the safety performance of 150 workers in 17 rooms of a paper mill. A statistical comparison of performance under assigned goal-setting, with that under baseline conditions of feedback-alone demonstrated a significant increase in the percentage of nonhazardous conditions but not of safe practices. Goal-setting by workers did not produce significant increases for either practices or conditions, and rates of injuries remained at the same reduced level as during feedback-alone. A visual analysis of a graphic plot of repeated performance measures suggested that trends established during feedback alone could account, in part, for the improvements. Possibly ceiling effects and the stated opinions of workers about various attributes of goal-setting may have been related to the outcomes.     

The effect of public involvement on firm inefficiency: evidence using Japanese private firms

The purpose of this paper is to investigate the effect of public involvement on firm inefficiency. Public involvement is defined as the actions taken by governments to control firm management, as expressed in regulation and public ownership. We make the following three contributions. First, we show public involvement is an important determinant of the inefficiency of private firms. Although public involvement has been shown to influence firm behavior in public or regulated sectors, existing studies in the private sector tend to ignore its effects. Second, we analyze firm inefficiency rather than firm performance by focusing on cost factors. Previous work tends to use performance measures such as return on assets or return on equity rather than inefficiency measures to judge a firm’s management level. Performance measures are problematic, however, in that they are affected by not only cost factors but also demand factors. Therefore, we must separate these factors when we analyze a firm’s management. Third, we use a stochastic cost frontier model for the estimation. Although this is a suitable approach for estimating firm inefficiency, it is rarely used for private firms. Our results suggest that public ownership increases firm inefficiency while regulation decreases firm inefficiency. It is also clear that the effect of public ownership is not significant in the manufacturing industry, while it is strongly significant in the nonmanufacturing industry. This shows the importance of studying the effect of public involvement in the private sector.     

The Effect of Socialization Mechanisms and Performance Measurement on Supplier Integration in New Product Development

This article examines the effect of socialization mechanisms and supplier performance measurement on the level of supplier integration in new product development and subsequent firm performance outcomes. Prior research has found socialization mechanisms and performance measures to be effective in managing supplier relationships, though research examining their impact within a product development context has been limited. Socialization mechanisms, such as supplier conferences and on‐site visits, help establish communication and information‐sharing routines necessary to achieve supplier integration in the product development process. Using performance measures to evaluate a supplier helps focus managerial attention on areas such as innovation and communication that are important to integration success. A structural equation model, using a sample of 142 manufacturing firms based in the United Kingdom, indicates that the level of supplier integration in new product development is positively influenced by socialization mechanisms and innovation‐focused measures of supplier performance, but not significantly associated with the use of communication measures. In turn, increased levels of supplier integration led to improvements in both collaboration outcomes and business performance. Socialization mechanisms were also found to have a direct effect on collaboration outcomes achieved by the firm. Managerial implications and future research directions are discussed.     

Definition and effect of productivity on corporate performance

The discussion of productivity is usually dominated by considerations of the productivity of labour, but in general terms a productivity ratio may be defined as the number of physical units of output per unit of resource input. This gives rise to many productivity ratios and it can be shown that they are inter-connected, so that an improvement in one ratio can be achieved at the expense of others. Furthermore, an improvement in labour productivity need not always result in reduced unit costs and increased profitability. The relationships between all these measures need to be explored through a modelling approach to determine the conditions under which productivity contributes to improved corporate performance. Some examples demonstrate the use of the proposed methodology.     

Incorporating quality into data envelopment analysis of nursing home performance: A case study

When using data envelopment analysis (DEA) as a benchmarking technique for nursing homes, it is essential to include measures of the quality of care. We survey applications where quality has been incorporated into DEA models and consider the concerns that arise when the results show that quality measures have been effectively ignored. Three modeling techniques are identified that address these concerns. Each of these techniques requires some input from management as to the proper emphasis to be placed on the quality aspect of performance. We report the results of a case study in which we apply these techniques to a DEA model of nursing home performance. We examine in depth not only the resulting efficiency scores, but also the benchmark sets and the weights given to the input and output measures. We find that two of the techniques are effective in insuring that DEA results discriminate between high and low quality performance.