A PRESENT VALUE FORMULATION OF THE CLASSICAL EOQ PROBLEM*

The usual analysis of the deterministic economic order quantity problem seeks to minimize the average cost of inventory ordering and holding costs per unit time. An alternative approach described in this paper examines the present value of discounted costs over an infinite horizon. Differences in the solutions and implications of errors using the two methodologies are discussed.     

ACROSS-INDIVIDUAL,WITHIN-INDIVIDUAL AND RETURN ON EFFORT VERSIONS OF EXPECTANCY THEORY1

The author reviewed the conceptual, methodological, and empirical problems associated with across-individual tests of expectancy theory predictions of work behavior. Based on the literature it was hypothesized that within-individual expectancy theory predictions would be superior to across-individual predictions. Using a sample of 159 college students, results were generally supportive: mean across-individual and mean within-individual correlations were r=.24 and r=.35, respectively. Also, in light of the widespread use of incremental (marginal) decision algorithms in various disciplines, it was hypothesized that a return on effort (ROE) predictor would yield better correlations than the conventional maximum expected benefits predictor. As hypothesized, correlations using the ROE predictor consistently exceeded correlations using the maximum expected benefits predictor in both the across- and within-individual paradigms r=.27 versus r=.18, and r=.52 versus r=.35, respectively.     

A RETROSPECTIVE STUDY ON THE INFLUENCE OF A STATE PARK-LAKE ON LAND VALUE,FROM THE TIME OF LAND ACQUISITION TO RESERVOIR FILLING

A new multiple purpose park-lake facility is being developed in the sub urbanrural fringe of the Philadelphia, Pennsylvania metropolitan region. This study assesses the impact of the new park-lake upon surrounding land values in order to provide information for improved planning and decision making in such a context. The investigation covers the period from the time of land acquisition to that of near-completion of dam construction. The results of the study provide a “baseline” from which it will later be possible to assess changes in land values as the park-lake becomes fully operational as a major public recreational facility. Two geographic zones of impact on surrounding land value are identified by the analysis, and variations in the impact of the park-lake over time are identified. The importance of these new findings to public organizations involved in recreational decision making is discussed and areas for future research are suggested.     

THE CAPITAL MARKET VALUE OF A MULTIPERIOD INVESTMENT WITH THE OPTION OF PREMATURE ABANDONMENT

Conventional approaches to determining optimal abandonment of a project under uncertainty either assume risk-neutrality or impose a mean-variance criterion. Risk-neutrality is unrealistic while the mean-variance criterion precludes determination of the optimal strategy without consideration of covariances of returns among projects. Further, the use of variance of present value as a risk measure may result in the “optimality” of a time 0 strategy that involves maintaining a position at time t that will be “suboptimal” and would not be maintained. The use of the multiperiod capital asset pricing model (CAPM) as a decision criterion is consistent with contemporary theory of market behavior and remedies the deficiencies of the mean-variance approach noted above. Computationally, the optimal strategy for abandonment, when the commitment must be made at time 0 (a lease, say), can be determined with little difficulty beyond that of mean-variance models. When time of abandonment can remain unspecified, the value of the prospect that abandonment will occur at the optimal time can be determined, though the technique necessary is considerably more complicated. In both cases, the marginal costs of commitments that limit discretion over abandonment can be determined and attributed to those commitments.     

USING A LATE-START RESOURCE-CONSTRAINED PROJECT SCHEDULE TO IMPROVE PROJECT NET PRESENT VALUE*

Although literature on the achievement of monetary objectives in a resource-constrained project environment is limited, the maximization of project net present value (NPV) is an important criterion of project success. This paper presents a procedure for developing a late-start resource-constrained project schedule using the critical path method-material requirements planning. Using an extensive set of problems from the literature, we show that this procedure yields a higher NPV and lower average duration than schedules derived with heuristics that schedule each activity as early as possible. In addition, while the late-start schedule on average was significantly longer than the optimal-duration resource-constrained schedule, no significant difference occurred in the average NPVs of the two scheduling methods.     

MANUFACTURING STRATEGY: AT THE INTERSECTION OF TWO PARADIGM SHIFTS

The concept of “manufacturing strategy” is still, in human terms, barely past adolescence. In years, it is younger than most of the MBAs who study it today. So it is not surprising that–like them–it has been undergoing almost continual growth and elaboration throughout its short life, as it tested itself against the real world and as that world evolved. Today it is facing perhaps the greatest challenge in its short history, as it finds itself in the crossfire of debates about core aspects of its two parent disciplines: manufacturing management and competitive strategy. This paper begins by briefly reviewing some of the key steps in the conceptual development of the manufacturing strategy paradigm, then describes the attacks now being directed at both the manufacturing management and the competitive strategy paradigms, and finally discusses the new perspectives that these two paradigm shifts are shedding on some familiar problems.     

THE EFFECT OF BENEFIT SANCTIONS ON THE DURATION OF UNEMPLOYMENT

This paper investigates the effectiveness of unemployment benefit sanctions in reducing unemployment duration. Swiss data on benefit sanctions allow us to separate the effect of a warning that a person is not complying with eligibility requirements from the effect of the actual enforcement of a benefit sanction. Moreover, public employment services are given substantial leeway in setting the monitoring intensity. Results indicate that both warning and enforcement have a positive effect on the exit rate out of unemployment, and that increasing the monitoring intensity reduces the duration of unemployment of the nonsanctioned. (JEL: J64, J65, J68)     

USING A SIMPLE FEEDBACK PROCEDURE TO REINFORCE THE SUBMISSION OF WRITTEN SUGGESTIONS BY MENTAL HEALTH EMPLOYEES

No abstract available for this article.     

THE EFFECTS OF TWO NORMATIVE STRUCTURAL INTERVENTIONS ON ESTABLISHED AND AD HOC GROUPS: IMPLICATIONS FOR IMPROVING DECISION MAKING EFFECTIVENESS1

This paper focuses on a direct comparison of consensual, nominal, and conventional decision making techniques in established and ad hoc groups. The impact of the structural interventions on group decision quality and group attitudes is examined, and the appropriateness of the techniques in various situations is discussed.     

THE EFFECT OF LEARNING ON THE OPERATION OF MIXED-MODEL ASSEMBLY LINES

The common approach to balancing mixed-model assembly lines assumes that the line operators are well trained and that the learning effect is negligible. The assumption is that the line operates in steady state over a long period of time. Time-based competition and frequent design changes in many products make this assumption incorrect, and the effect of learning on mixed-model lines should not be neglected. We defined start-up period and developed a model for the line design during start-up. It can be used to evaluate a proposed line design or to develop a feasible line design and to estimate its cost. This proposed model integrates mixed-model learning curves with aggregate planning under learning and a mixed-model line design into a comprehensive framework designed to minimize the total cost of the line during the start-up period.     

ON THE ROBUSTNESS OF MAJORITY RULE

We show that simple majority rule satisfies five standard and attractive axioms—the Pareto property, anonymity, neutrality, independence of irrelevant alternatives, and (generic) decisiveness—over a larger class of preference domains than (essentially) any other voting rule. Hence, in this sense, it is the most robust voting rule. This characterization of majority rule provides an alternative to that of May (1952). (JEL: D71)     

ON THE THEORY OF ETHNIC CONFLICT

When considering engaging in conflict to secure control of a resource, a group needs to predict the amount of post‐conflict leakage due to infiltration by members of losing groups. We use this insight to explain why conflict often takes place along ethnic lines, why some ethnic groups are more often in conflict than others (and some never are), and why the same groups are sometimes in conflict and sometimes at peace. In our theory ethnic markers help enforce group membership: in homogeneous societies members of the losing group can more easily pass themselves as members of the winning group, and this reduces the chances of conflict as an equilibrium outcome. We derive a number of implications of the model relating social, political, and economic indicators such as the incidence of conflict, the distance between ethnic groups, group sizes, income inequality, and expropriable resources. One of the insights is that the incidence of ethnic conflict is nonmonotonic in expropriable resources as a fraction of total resources, with a low incidence for either low or high values. We use the model’s predictions to interpret historical examples of conflict associated with skin pigmentation, body size, language, and religion.     

THE MARBLE-DROP TECHNIQUE: A PROCEDURE FOR GATHERING SENSITIVE INFORMATION

This study investigates the efficiency of a ballot technique in reducing bias caused by nonsampling errors in studies designed to gather sensitive information. Findings reveal that the technique produces population estimates more accurate than conventional interviewing and as accurate as the randomized-response technique.     

Applications and Implementation DETERMINING THE REWARDS SALESPEOPLE VALUE: A COMPARISON OF METHODS*

Although salesmanagers can attempt to motivate salespeople by manipulating their rewards, these manipulations will fail if salespeople do not value the rewards and their levels. Methods for determining valued rewards can therefore be important to those charged with their determination. This study compares three measurement schemes for assessing salespeople's valences for various rewards: functional measurement, conjoint analysis, and thermometer scaling. All three schemes produce similar conclusions as to how rewards are valued and the acceptable tradeoffs among them. Thermometer scaling outperformed the others with respect to the time it took to secure the judgments and the palatability of the task, while conjoint measurement performed least well in these respects.     

MEASURING THE IMPACT OF FEEDBACK ON THE PERFORMANCE OF MENTAL HEALTH TECHNICIANS

No abstract available for this article.     

THE DEPENDENCE OF THE EFFECTS OF LEARNING MODE ON CONCOMITANT FACTORS*

Despite the number of studies comparing the programmed instruction (PI) and text teaching methods, the results to date have been inconclusive. In this paper it is hypothesized that the effects of these two modes of learning on performance are dependent on differences in people and in the material to be learned. In an experiment on 48 subjects it was found that both mode of learning and sex affected performance, but the effect of sex differed for the two modes of learning. Women performed better in the PI mode and men performed better in the text mode. Also, performance on definitional material was dependent on the aptitude of the learner and on inferential material was dependent on the prior knowledge of the learner.     

THE REPLACEMENT PROBLEM IN FRICTIONAL ECONOMIES: A NEAR‐EQUIVALENCE RESULT

We examine how technological change affects wage inequality and unemployment in a calibrated model of matching frictions in the labor market. We distinguish between two polar cases studied in the literature: a “creative destruction” economy, where new machines enter chiefly through new matches and an “upgrading” economy, where machines in existing matches are replaced by new machines. Our main results are: (i) these two economies produce very similar quantitative outcomes, and (ii) the total amount of wage inequality generated by frictions is very small. We explain these findings in light of the fact that, in the model calibrated to the US economy, both unemployment and vacancy durations are very short, i.e., the matching frictions are quantitatively minor. Hence, the equilibrium allocations of the model are remarkably close to those of a frictionless version of our economy where firms are indifferent between upgrading and creative destruction, and where every worker is paid the same market‐clearing wage. These results are robust to the inclusion of machine‐specific or match‐specific heterogeneity into the benchmark model. (JEL: J41, J64, O33)     

RETHINKING THE EFFECT OF IMMIGRATION ON WAGES

This paper calculates the effects of immigration on the wages of native US workers of various skill levels in two steps. In the first step we use labor demand functions to estimate the elasticity of substitution across different groups of workers. Second, we use the underlying production structure and the estimated elasticities to calculate the total wage effects of immigration in the long run. We emphasize that a production function framework is needed to combine own‐group effects with cross‐group effects in order to obtain the total wage effects for each native group. In order to obtain a parsimonious representation of elasticities that can be estimated with available data, we adopt alternative nested‐CES models and let the data select the preferred specification. New to this paper is the estimate of the substitutability between natives and immigrants of similar education and experience levels. In the data‐preferred model, there is a small but significant degree of imperfect substitutability between natives and immigrants which, when combined with the other estimated elasticities, implies that in the period from 1990 to 2006 immigration had a small effect on the wages of native workers with no high school degree (between 0.6% and +1.7%). It also had a small positive effect on average native wages (+0.6%) and a substantial negative effect (−6.7%) on wages of previous immigrants in the long run.     

BOOK TRANSLATIONS AS IDEA FLOWS: THE EFFECTS OF THE COLLAPSE OF COMMUNISM ON THE DIFFUSION OF KNOWLEDGE

We use book translations as a new measure of international idea flows and study the effects of Communism's collapse in Eastern Europe on these flows. Using novel data on 800,000 translations and difference‐in‐differences approaches, we show that while translations between Communist languages decreased by two thirds with the collapse, Western‐to‐Communist translations increased by a factor of 4 and quickly converged to Western levels. Convergence was more pronounced in the fields of applied and social sciences, and was more complete in Satellite and Baltic than in Soviet countries. We discuss how these patterns help us understand how repressive institutions and preferences towards Western European ideas shaped the international diffusion of knowledge.