THE DETAIL SCHEDULING OF A PART-TIME WORK FORCE: A CASE STUDY OF TELLER STAFFING

This paper presents a comparison of two heuristic methods for assigning a part-time work force to meet varying daily work loads. The authors use actual operating data from Purdue National Bank, Lafayette, Indiana, to make teller staffing decisions. The performance criteria for comparison of the two heuristics is the minimum number of workers employed, minimum number of interbranch transfers, and computer time necessary to attain a solution.     

EMPIRICAL INVENTORY SIMULATION: A CASE STUDY*

An empirical simulation was used to investigate the economics of minimum-buy policies in the U.S. Army management of spare-parts inventory. An empirical simulation makes use of historical data as direct input to the simulation rather than randomly generated data based on a characterization of the historical data. Empirical simulation alleviates the drawbacks of characterizing historical data with a theoretical distribution; however, because steady-state conditions are not reached, a methodological problem arises in the evaluation of inventory assets at the end of the simulation. Our solution was to minimize this problem by use of a cyclic approach.     

A TEACHING NOTE ON THE USE OF ASSUMPTIONS IN CASE STUDY

This note describes a modification in the conventional case method of instruction. The modification, which deals with the problem caused by each student making a different set of assumptions for a given case, has successfully met the test of classroom use.     

STATISTICAL VERSUS SALES FORCE–EXECUTIVE OPINION SHORT RANGE FORECASTS: A TIME SERIES ANALYSIS CASE STUDY

This paper presents a comparison of statistical techniques versus a sales force-executive opinion approach to forecasting single item demand over a five year period for a single company. Three statistical techniques are used: Winter's three parameter exponential smoothing model, Brown's harmonic model, and Box-Jenkins methodology. These techniques are compared against the company's forecasts and actual sales for a five year period. The results indicate an interesting area for further research.     

EXCELLENCE AT ROHM AND HAAS KENTUCKY: A CASE STUDY OF WORK-TEAM INTRODUCTION IN MANUFACTURING

Over the past few years we have witnessed a sharp decline in the domestic and international market share of U.S. manufacturing organizations. The decline in U.S. manufacturing has provided an avalanche of criticism and attention in the literature and popular press. Recently, however, several organizations have implemented new work-force management policies to reverse the decline. We describe the case of Rohm and Haas Kentucky, Incorporated, a plant that has implemented work teams. The outcomes of these innovations include a decline in worker grievances and turnover, an improvement in the safety record of the plant, as well as an increase in productivity.     

FREQUENCY OF REPLANNING IN A ROLLING HORIZON MASTER PRODUCTION SCHEDULE FOR A PROCESS INDUSTRY ENVIRONMENT: A CASE STUDY

This study addresses the problem of replanning frequency for a rolling horizon master production schedule (MPS) in a process industry environment under demand certainty. The major contribution of this paper is the demonstration of how the appropriate replanning frequency for a MPS can be determined under the conditions of minimum batch-size production restrictions in a rolling planning horizon setting. In addition, the problem environment for this study is an actual MPS operation that includes features such as multiple production lines, multiple products, capacity constraints, minimum inventory requirements, and multiple goals. Actual data from a paint company are used to determine the appropriate replanning frequency for a rolling horizon MPS. Results indicate that a 2-month replanning frequency was the best at this firm because of the significant cost savings it provided when compared to actual company performance and the other replanning intervals.     

SCHEDULING FLEXIBILITY IN THE SERVICE SECTOR: A POSTAL CASE STUDY

This is a case study of workforce scheduling in the U.S. postal system. We use it to analyze the benefits of scheduling flexibility at postal distribution systems, which can come from several sources. We focus on the additional flexibility deriving from increasing the proportion of part-time employees, as well as from increasing the cross-training of part-time employees. These two dimensions of scheduling flexibility are decision points of particular interest to the postal management. We used a large-scale simulation model of the dynamic functioning of the postal distribution system in conjunction with a staff-scheduling model to obtain insights into policy issues of interest. Our results show that the operating environment at a distribution station affects cost and customer service performance, and that gains from greater scheduling flexibility are situationally dependent. The benefit of cross-training part-time workers is modest over the range of levels considered realistic for distribution stations. Our overall recommendation is for postal managers to increase the proportion of part-time employees, allowing more efficient matching of resources with the varying demands for mail delivery on different routes. For the range of conditions we modeled, cost reductions from more part-time workers average over six percent when capacity utilization is low. Customer service improvements are even larger, and range between 20 and 43% when capacity utilization is high. Improvements at the upper end of the range are achieved when demand variability is also at its highest.     

COST,PRICE, AND THE CONTRACTING RELATION: A CASE STUDY

The paper describes the failure of a project in which a group of computer specialists tried to help a group of scholars by automating a conference registration system. Although there was a warm and personal relationship between the group liaisons, difficulties arose because there was no agreed-on mechanism to allocate priorities and resources. The author analyzes the price and cost mechanisms which might have been used to communicate complex trade-offs and thus avert the ensuing disaster.     

UPSTREAM VOLATILITY IN THE SUPPLY CHAIN: THE MACHINE TOOL INDUSTRY AS A CASE STUDY

Cyclicality is a well‐known and accepted fact of life in market‐driven economies. Less well known or understood, however, is the phenomenon of amplification as one looks “upstream” in the industrial supply chain. We examine the amplification phenomenon and its implications through the lens of one upstream industry that is notorious for the intensity of the business cycles it faces: the machine tool industry. Amplification of demand volatility in capital equipment supply chains, e. g., machine tools, is particularly large relative to that seen in distribution and component parts supply chains. We present a system dynamics simulation model to capture demand volatility amplification in capital supply chains. We explore the lead‐time, inventory, production, productivity, and staffing implications of these dynamic forces. Several results stand out. First, volatility hurts productivity and lowers average worker experience. Second, even though machine tool builders can do little to reduce the volatility in their order streams through choice of forecast rule, a smoother forecasting policy will lead companies to retain more of their skilled work force. This retention of skilled employees is often cited as one of the advantages that European and Japanese companies have had relative to their U. S. competitors. Our results suggest some insights for supply chain design and management: downstream customers can do a great deal to reduce the volatility for upstream suppliers through their choice of order forecast rule. In particular, companies that use smoother forecasting policies tend to impose less of their own volatility upon their supply base and may consequently enjoy system‐wide cost reduction.     

STRATEGIC ASPECTS OF QUALITY: A THEORETICAL ANALYSIS

This paper investigates the relationship between aspects of quality and long run profitability and growth of a firm. The paper first determines whether a stable relationship among price, aspects of quality, and the sales rate exists, by examining the equilibrium properties of a dynamic model. Then, we use the derived equilibrium expressions to develop insights into the strategic nature of “quality reputation” and, how to integrate marketing (i.e., pricing) and quality related decisions. The paper shows under certain conditions it might be more advantageous to manipulate “quality reputation” through advertising and product innovations than to increase product quality. We comment on quality based strategic options a firm must consider to ensure long run growth and profitability.     

INFLATION STABILIZATION AND WELFARE: THE CASE OF A DISTORTED STEADY STATE

This paper considers the appropriate stabilization objectives for monetary policy in a micro‐founded model with staggered price‐setting. Rotemberg and Woodford (1997) and Woodford (2002) have shown that under certain conditions, a local approximation to the expected utility of the representative household in a model of this kind is related inversely to the expected discounted value of a conventional quadratic loss function, in which each period's loss is a weighted average of squared deviations of inflation and an output gap measure from their optimal values (zero). However, those derivations rely on an assumption of the existence of an output or employment subsidy that offsets the distortion due to the market power of monopolistically competitive price‐setters, so that the steady state under a zero‐inflation policy involves an efficient level of output. Here we show how to dispense with this unappealing assumption, so that a valid linear‐quadratic approximation to the optimal policy problem is possible even when the steady state is distorted to an arbitrary extent (allowing for tax distortions as well as market power), and when, as a consequence, it is necessary to take account of the effects of stabilization policy on the average level of output. We again obtain a welfare‐theoretic loss function that involves both inflation and an appropriately defined output gap, though the degree of distortion of the steady state affects both the weights on the two stabilization objectives and the definition of the welfare‐relevant output gap. In the light of these results, we reconsider the conditions under which complete price stability is optimal, and find that they are more restrictive in the case of a distorted steady state. We also consider the conditions under which pure randomization of monetary policy can be welfare‐improving, and find that this is possible in the case of a sufficiently distorted steady state, though the parameter values required are probably not empirically realistic. (JEL: D61, E52, E61)     

UNDERSTANDING THE EVOLUTION OF THE US WAGE DISTRIBUTION: A THEORETICAL ANALYSIS

In this paper, we propose an analytically tractable overlapping‐generations model of human capital accumulation and study its implications for the evolution of the US wage distribution from 1970 to 2000. The key feature of the model, and the only source of heterogeneity, is that individuals differ in their ability to accumulate human capital. Therefore, wage inequality results only from differences in human capital accumulation. We examine the response of this model to skill‐biased technical change (SBTC) theoretically. We show that in response to SBTC, the model generates behavior consistent with some prominent trends observed in the US data including (i) a rise in overall wage inequality both in the short run and long run, (ii) an initial fall in the education premium followed by a strong recovery, leading to a higher premium in the long run, (iii) the fact that most of this fall and rise takes place among younger workers, (iv) a rise in within‐group inequality, (v) stagnation in median wage growth (and a slowdown in aggregate labor productivity), and (vi) a rise in consumption inequality that is much smaller than the rise in wage inequality. These results suggest that the heterogeneity in the ability to accumulate human capital is an important feature for understanding the effects of SBTC and interpreting the transformation of the US labor markets since the 1970s.     

A CANONICAL ANALYSIS OF MANAGERIAL-ENVIRONMENTAL RELATIONSHIPS: IMPLICATIONS FOR METHODOLOGY AND POLICY*

The present study uses canonical analysis to examine the contingency model of organizations in the nursing home field. Data on environmental pressures and managerial practices relevant to the decision-making process are analyzed. Results support the theory that managerial practices are contingent on environmental pressures. The implications of these results for health-care decision makers and for future assessments of managerial-environmental relationships are discussed.     

APPOINTMENT POLICIES IN SERVICE OPERATIONS: A CRITICAL ANALYSIS OF THE ECONOMIC FRAMEWORK

In this paper we review the literature on appointment policies, specifically in terms of the objective function commonly used and the assumptions made about the behavior of demand. First, we provide an economic framework to analyze the problem. Based on this framework we make a critical analysis of the objective functions used in the literature. We also question the validity of the assumption made throughout the literature that demand is exogenous and independent of customers' waiting times. We conclude that the objective functions used in the literature are appropriate only in the case of a central planner facing a demand that is unresponsive to waiting time. For other scenarios, such as a private server facing a demand that does react to waiting time, these objective functions are only shortcuts for the real objective functions that must be used. A more general model is then proposed that fits these scenarios well. Finally, we determine the impact of using the literature's objective functions on optimal appointment policies.     

A STUDY OF HOW TAX POLICY IS MADE: ADVERTISING TAX,IOWA

Within a two year period, a state government enacted and repealed a tax on advertising service. These two closely related decisions provide a somewhat unique setting to observe if there is a common set of propositions that helps explain both decision processes. The tax enactment scenario serves to provide a set of empirical propositions about the decision process. The second scenario is treated as a modified replication to partially test the reliability of these propositions.     

CAPITAL,LABOR, AND THE FIRM: A STUDY OF GERMAN CODETERMINATION

Under the German corporate governance system of codetermination, employees are legally allocated control rights over corporate assets through seats on the supervisory board—that is, the board of nonexecutive directors. The supervisory board oversees the management board—the board of executive directors—approves or rejects its decisions, and appoints its members and sets their salaries. We empirically investigate the implications of this sort of labor participation in corporate decision making. We find that companies with equal representation of employees and shareholders on the supervisory board trade at a 31% stock market discount as compared with companies where employee representatives fill only one‐third of the supervisory board seats. We show that under equal representation, management board compensation provides incentives that are not conducive to furthering shareholders' interests, possibly because labor maximizes a different objective function than shareholders. We document that, under equal representation, companies have longer payrolls than their one‐third representation peers have. Finally, we provide evidence that shareholders respond to the allocation of control rights to labor by linking supervisory board compensation to firm performance and by leveraging up the firm. (JEL: G32, G34)