OPTIMAL PLANNING: THE USE OF SALES FORECASTS

Budgets are established and decisions in a firm are made on the basis of the sales forecast. In the majority of firms this forecast is a single value estimate of sales. The decisions made on the basis of the single value estimate frequently fall short of optimal strategies because of costs that occur when actual sales differ from forecast sales. These costs, measured in terms of opportunity losses, can be minimized when considered in conjunction with a probability distribution of sales. Three methods for determining the probability distribution of sales are considered in this paper. These are regression analysis Schlaifer's approach for establishing a subjective distribution, and Bayesian regression. The use of the distribution in conjunction with linear and quadratic loss functions is illustrated.     

An environmentally conscious robust closed-loop supply chain design

Strategic network planning activities of national and even more of multinational companies are recently influenced by an increasing number of laws and regulations regarding environmental issues. On top of that non-governmental bodies pose additional pressures on companies to comply with environmental as well as social standards. Therefore, this paper presents a multi-objective and robust optimization-based closed-loop supply chain design model. In the objective function both expected total costs as well as carbon dioxide equivalents (CO₂e) are to be minimized. Customer demands and used-product return ratio are considered to be uncertain. The model supports the decision makers to better understand the influence of parameters and their values as well as the interrelationship between these when deciding on the structure of the entire value chain.     

Multimodal hub location and hub network design

Through observations from real life hub networks, we introduce the multimodal hub location and hub network design problem. We approach the hub location problem from a network design perspective. In addition to the location and allocation decisions, we also study the decision on how the hub networks with different possible transportation modes must be designed. In this multimodal hub location and hub network design problem, we jointly consider transportation costs and travel times, which are studied separately in most hub location problems presented in the literature. We allow different transportation modes between hubs and different types of service time promises between origin–destination pairs while designing the hub network in the multimodal problem. We first propose a linear mixed integer programming model for this problem and then derive variants of the problem that might arise in certain applications. The models are enhanced via a set of effective valid inequalities and an efficient heuristic is developed. Computational analyses are presented on the various instances from the Turkish network and CAB data set.     

Internationalization, innovation and entrepreneurship: business models for new technology-based firms

New technology-based firms, particularly those that develop their business around a new technological platform, are likely to be impacted by globalization, in terms of both pace of innovation and pressure of competition. For these firms, strategic decisions and growth processes are characterized by a deep inter-relationship amongst the processes of internationalization, innovation and entrepreneurship; processes which have tended to be examined independently in distinct bodies of literature. In practice strategic decisions concern each of these processes and address issues such as organizational boundaries, location of the operational activities, what activities to focus on and selection of value partners. The business model by which firms operate needs also to accommodate the spatial dimensions indicated by globalization; and the emergence of global technology markets. Little is known to date about the extent to which business models accommodate or are adapted to internationalization, innovation and entrepreneurship. This paper presents a review of the business model literature from which a generic business model framework is derived, identifying and introducing the main elements of these processes as the firms?? focus, modus and locus. This contribution makes a clear distinction between the business model and the strategy concepts and highlights the relevance of location decisions??not considered by extant business model literature to date. While our discussion draws on the high technology new venture as our primary example, we believe our business model conceptualization has general applicability.     

Replacement Decisions for Potentially Hazardous Substances

As public awareness of environmental hazards increases, a growing concern for corporations is the potential negative environmental impact of their products and the chemicals these products contain. In this study, we analyze the optimal decisions of a firm when a substance within its product is identified as potentially hazardous. Although the substance is not currently regulated, regulation may occur in the future. Therefore, the firm must devise a strategy for the development and implementation of a replacement substance. In an environment where replacement costs can be millions of dollars, regulation is uncertain, and both consumer and non‐governmental organization pressures exist, a carefully developed plan that balances costs and risks is critical for a firm. Our results demonstrate that as long as a threat of regulation exists, a firm should always dedicate resources toward developing a replacement substance. However, it is not always optimal for a firm to implement a developed replacement. Regarding competitive dynamics, we find that competition between firms can offset a low chance of a shift in consumer perception about a substance and compel firms to replace; however, competition can lead to inefficient outcomes in which firms incur avoidable costs to implement ahead of potential regulation.     

Responding to community expectations on corporate environmental performance: How to develop effective citizen advisory panels

Corporations are facing increasing pressure to improve their environmental performance. Many are turning to citizen advisory panels (CAPs) as a way improve their decision- making and enhance their public accountability. CAPs are committee of citizens who meet regularly with managers to discuss environmental and other community issues associated with their companies. These panels allow organizations to recieve the type proactive environmental decisions. CAPs also can enble a company to communicate to and receive input from the community in a more controlled and confidential mannier than many other public processes.While CAPs offer many potential advantages, there are also a number of challenges that must be met before their benefits can be realized. This article describes a number of steps that companies should take to develop effective CAPs, including: forming the panels, selecting members, conducting meetings and communicating to citizen members. In addition, the authors discuss some of the lessons learned, including how to ensure that CAPs are operated in a manner that truly serves the interests of both the community and the company.     

Developing a company's strategic management capability

Companies vary widely in their strategic management capabilities. Some still rely almost entirely on ‘fire-fighting’. Many others are slowly developing their capabilities but there are only a few which do give due attention to strategic issues and implement their decisions effectively. To be effective a corporate planner must assist this process of development of strategic ability and must adapt his role as the company's capability changes. In the most successful corporate planning units it is clear that this change in role is occuring, but is there not also a largely untapped market for consultants to assist companies in developing these capabilities?     

Framework for making resource use decisions: An application to subdivision development

Resource use decisions such as those involving subdivision development often have been made with limited consideration of socioeconomic and physical resource impacts. Indeed, many social and environmental difficulties have stemmed from the narrow confines of decision criteria which have centered on immediate production costs with a lesser regard for physical and biological effects and social costs. How, then, do we incorporate total resource assessment into the decision making process?To date, many have suggested what must be done. Yet, few have attempted to illustrate with specific examples. The authors of this article in suggesting two major dimensions to traditional benefit cost analysis have attempted to consolidate various concepts currently developing from regional efforts in techniques for land use planning.     

ON THE COST OF NEW ISSUES OF COMMON STOCK: AN AMENDMENT TO THE CONSTANT GROWTH MODEL

Expansion decisions by corporate managements are importantly influenced by their perceptions of the firm's cost of capital and especially the cost of common equity. Their decision making is then influenced by the common perception that new issues of common stock are more costly than retained earnings because of the flotation costs inherent in new issues. Thus a rate of expansion that requires new issues is downgraded in decision making. In this paper the authors show that in actuality new issues of common equity may be less costly than retained earnings. Thus different decision-making implications are clearly involved.     

Characterizing Environmental Harm: Developments in an Approach to Strategic Risk Assessment and Risk Management

Environmental policymakers and regulators are often in the position of having to prioritize their actions across a diverse range of environmental pressures to secure environmental protection and improvements. Information on environmental issues to inform this type of strategic analysis can be disparate; it may be too voluminous or even absent. Data on a range of issues are rarely presented in a common format that allows easy analysis and comparison. Nevertheless, judgments are required on the significance of various environmental pressures and on the inherent uncertainties to inform strategic assessments such as “state of the environment” reports. How can decisionmakers go about this type of strategic and comparative risk analysis? In an attempt to provide practical tools for the analysis of environmental risks at a strategic level, the Environment Agency of England and Wales has conducted a program of developmental research on strategic risk assessment since 1996. The tools developed under this program use the concept of “environmental harm” as a common metric, viewed from technical, social, and economic perspectives, to analyze impacts from a range of environmental pressures. Critical to an informed debate on the relative importance of these perspectives is an understanding and analysis of the various characteristics of harm (spatial and temporal extent, reversibility, latency, etc.) and of the social response to actual or potential environmental harm from a range of hazards. Recent developments in our approach, described herein, allow a presentation of the analysis in a structured fashion so as to better inform risk‐management decisions.     

A framework of decision making for technological change

The first article in this series2 drew a distinction between the costs of line operations- or current outputs—and those costs devoted to investment, or future outputs. As investment encompasses technological change—in practice it is dominated by it—this article examines some of the broader issues underlying decisions to invest and describes in outline a study being made of the economic criteria that are relevant to such decisions. In the longer term the objective is to develop a procedure or framework of criteria to assist the process of decision making; and this would include a frame of reference—a set of statistical time-series and analyses designed for the purpose.     

Estimation of distribution algorithms using Gaussian Bayesian networks to solve industrial optimization problems constrained by environment variables

Many real-world optimization problems involve two different subsets of variables: decision variables, and those variables which are not present in the cost function but constrain the solutions, and thus, must be considered during optimization. Thus, dependencies between and within both subsets of variables must be considered. In this paper, an estimation of distribution algorithm (EDA) is implemented to solve this type of complex optimization problems. A Gaussian Bayesian network is used to build an abstraction model of the search space in each iteration to identify patterns among the variables. As the algorithm is initialized from data, we introduce a new hyper-parameter to control the influence of the initial data in the decisions made during the EDA execution. The results show that our algorithm improves the cost function more than the expert knowledge does.

     

The ethical dilemmas of risky decisions

Even in a pandemic there seem to be inherent conflicts of interest between the individual and societal consequences of remedial actions and strategies. Actions taken in the sole interests of patients, as required by the Hippocratic oath, can have broadly inconvenient economic implications for the State. (“Average” benefits for a population can impose individual inconveniences for the vulnerable.). Understandably these decisions are not normally made explicitly and transparently by governments. This leads to seemingly illogical and inhumane strategies which are not understood and hence mistrusted and often ignored by the public. Vaccination sentiments on social media are often an unwanted symptom of this dilemma. This article outlines and discusses a number of examples of such situations with a focus on ethical aspects. It concludes that each case must be considered individually as to the issues that need to be weighed in these difficult decisions; and that there are no clear and universally acceptable ethical solutions. What can be learned from the COVID-19 crisis is that short term utilitarianism has consequences that in the eyes of the population are unacceptable. This lesson seems equally valid for cost benefit evaluations regarding other risks, such as from hazardous industries, flood defenses, and air transport. Decisionmakers and politicians can learn that persuasion only goes so far. In the end the people appear to prioritize in terms of deontology.     

Intergenerational Considerations Affecting the Future of Nuclear Power: Equity as a Framework for Assessing Fuel Cycles

Alternative fuel cycles are being considered in an effort to prolong uranium fuel supplies for thousands of years to come and to manage nuclear waste. These strategies bring with them different benefits and burdens for the present generation and for future generations. In this article, we present a method that provides insight into future fuel cycle alternatives and into the conflicts arising between generations within the framework of intergenerational equity. A set of intersubjective values is drawn from the notion of sustainable development. By operationalizing these values and mapping out their impacts, value criteria are introduced for the assessment of fuel cycles, which are based on the distribution of burdens and benefits between generations. The once‐through fuel cycle currently deployed in the United States and three future fuel cycles are subsequently assessed according to these criteria. The four alternatives are then compared in an integrated analysis in which we shed light on the implicit tradeoffs made by decisionmakers when they choose a certain fuel cycle. When choosing a fuel cycle, what are the societal costs and burdens accepted for each generation and how can these factors be justified? This article presents an integrated decision‐making method, which considers intergenerational aspects of such decisions; this method could also be applied to other technologies.     

Environmental pollution and economic growth: Implications for corporate planning with an Indian case study

This article attempts to analyze the implications for Corporate planning, in developing societies, of the ecological debate. The emerging nations desperately need growth to raise the base living standards of the vast majority of their populace. Yet, the ‘backlash’ of the western movement for environmental preservation has spread to the third world. How is the dilemma resolved? Can growth and environmental balance coexist? A distinction must be made between the degradation caused by squalor or lack of growth and that emanating from growth. The spread of the basic amenities of life will reduce the former. The latter can be controlled by planned location and regulation of industrial growth. The corporate planner, therefore, needs to scrutinize the ecological implications of any project carefully before arriving at any value judgement. ‘Pollution scanning’ is now part of environmental scanning. An Indian case study highlights some of the issues involved.     

Ecological Risks and Community Perceptions of Fairness and Justice: A Cross-Cultural Model

Intergenerational justice is implicit in international commitments to sustainability. If ecological, economic, and social components of sustainability are to be achieved, there is a necessity for intergenerational justice considerations to be included in decision making. The present generation's risk judgments should include consideration of the possible outcomes for their children. But intergenerational issues cannot be considered in isolation from other current risk and fairness concerns. This article reports on a community-based integrative model that describes justice and other attitudes and motivations that determine community and individual proenvironmental behavior in two nations: Germany and Australia. This model can account for a considerable amount of the variance in political compliance as well as various proenvironmental behaviors. Group or individual self-interests have nearly no effects on global protective behavior. It is shown that universal as well as contextual principles, including distributive (within or between generations), procedural, and interactive justice, play a crucial role in fairness judgments. Other principles are also taken into account, such as efficiency, environmental rights, and rights to economic welfare. The results are discussed in relation to the importance of complex community fairness judgments in predicting and evaluating acceptance of political decisions, and for promoting proenvironmental behavior.     

Locating Emergency Warning Sirens

In this paper, we report on the application of set covering and maximal covering location models to the problem of locating emergency warning sirens in a midwestern city. Two siren types are available, each having different costs and covering radii. Using a modified version of the set covering location model, we analyze the cost implications of several policy options being considered by the city's planners. Results of the study indicate that location covering models can be powerful and efficient tools in the design of such systems, and their use can lead to significant cost savings. In addition, such models provide decision makers the flexibility to examine the inherent costs associated with various policy options.     

The Role of Geographic Scale in Monitoring Environmental Justice

Utilizing the concept of environmental justice, this paper examines the differential burdens of toxic and hazardous waste facilities locations in low income minority communities. The association between the presence of facilities and socioeconomic characteristics of places are examined for the state of South Carolina at three different spatial scales: counties, census tracts, and census block groups. Three different types of hazardous waste/toxic facilities are also examined: Toxic Release Inventory (TRI) sites, Treatment, Storage, and Disposal sites (TSD), and inactive hazardous waste sites. At the county level, there was some association between the presence of toxic/hazardous waste facilities and race and income. In South Carolina, this translates to a disproportionate burden on White, more affluent communities in metropolitan areas, rather than low income minority communities. At both the census tract and block group levels, there is no association between race and the location of toxic/hazardous waste facilities. There are slight differences in the income levels between tracts and block groups with facilities and those without. This localized ecology of hazard sources must be expanded to include emission/discharge data in order to adequately address environmental justice issues on who bears the burdens of environmental contamination.     

A Stochastic Goal Program for Employee Scheduling*

Deterministic goal programs for employee scheduling decisions attempt to minimize expected operating costs by assigning the ideal number of employees to each feasible schedule. For each period in the planning horizon, managers must first determine the amount of labor that should be scheduled for duty. These requirements are often established with marginal analysis techniques, which use estimates for incremental labor costs and shortage expenses. Typically, each period in the planning horizon is evaluated as an independent epoch. An implicit assumption is that individual employees can be assigned to schedules with as little as a single period of work. If this assumption violates local work rules, the labor requirements parameters for the deterministic goal program may be suboptimal. As we show in this research, this well-known limitation can lead to costly staffing and scheduling errors. We propose an employee scheduling model that overcomes this limitation by integrating the labor requirements and scheduling decisions. Instead of a single, externally determined staffing goal for each period, the model uses a probability distribution for the quantity of labor required. The model is free to choose an appropriate staffing level for each period, eliminating the need for a separate goal-setting procedure. In most cases this results in better, less costly decisions. In addition, the proposed model easily accommodates both linear and nonlinear under- and overstaffing penalties. We use simple examples to demonstrate many of these advantages and to illustrate the key techniques necessary to implement our model. We also assess its performance in a study of more than 1,700 simulated stochastic employee scheduling problems.     

Energy modelling for technology assessment: the MARKAL approach

The primary objective of energy policy in many countries is to change the structure of their energy systems so as to reduce the dependence on imported oil. A large amount of funds is spent on energy research and development. The technologies competing for such funds have widely varying characteristics. These relate to costs and benefits, technical performance, environmental effects, the requirements for land, water and materials and the impact on employment. It is necessary to analyse these effects in some detail before decisions on technology programmes can be made. A complete assessment of the possible value of a particular technology cannot be made on an individual basis. It is necessary to consider many technologies simultaneously, competing against each other for various shares of the energy market. However, analysing the behaviour of the entire energy system requires the handling of an extensive amount of data and can only be done effectively with the help of a computerised system. The model, MARKAL, described in this paper is a multi-period linear programming model which has been developed and applied by 15 OECD countries for the purpose of energy technology research and development planning. Examples of the use of the model for this purpose are given both for the group as a whole and for individual countries. The model is structured so that an exogenously specified set of end-use demands must be satisfied given available technologies and energy supplies. The model allows for substitution possibilities in both the energy supply and demand sectors. A feature of the model is the use of varying objective functions such as minimum discounted costs, oil imports, or environmental effluents. These can be used individually or in combination in trade-off situations. The broader question of the use of energy modelling for technology assessment, including its limitations, is also discussed with particular reference to the insights that can be gained from the MARKAL model. Information from the MARKAL model has been used by the International Energy Agency to assist it in formulating a strategy for energy research development and demonstration.