Measuring Market‐Manufacturing Congruence: Conceptual Reaffirmations and Mathematical Modifications

Narasimhan and Wang (2000) provide a valuable addition to the research base by identifying a limitation in two of the original equations in Bozarth and Berry (1997), which we resolve, and a possible research direction for the calibration of indifference profiles. However, they fall short in their interpretation of key conceptual and methodological issues, including the distinction between indifference and ideal profiles, the difference between individual profile dimensions and overall congruence, and firm versus industry‐level manufacturing strategy research. We use this opportunity to clear up these points of confusion, and to reaffirm the value of the methodology introduced in Bozarth and Berry (1997).     

Measuring the Congruence Between Market Requirements and Manufacturing: A Methodology and Illustration*

This paper presents a measurement methodology, based on existing research in the manufacturing strategy and general strategy areas, for evaluating the congruence between market needs and manufacturing plant capabilities. The proposed methodology has several important advantages over current approaches. First, the methodology uses available data and statistical techniques to measure market-manufacturing congruence. As a result, it is not dependent on assumptions about “classic” process choices. Second, the proposed methodology can evaluate the strategic fit between market needs and manufacturing in light of one or more performance criteria. Third, the methodology can be used to derive scalar measures of market-manufacturing congruence, allowing users to evaluate congruence for a large number of products, customers, or market segments. The theoretical basis, research objectives and major steps of the methodology are discussed, followed by an illustrative example from a North American manufacturer. Finally, the applicability of the methodology to a wide range of strategic manufacturing decisions is discussed.     

A ONE-PERIOD STOCHASTIC INVENTORY PROBLEM WITH A LUMP-SUM PENALTY COST

This paper presents an inventory problem related to the one-period stochastic inventory (or “newsboy”) problem. In this problem, the firm has to decide how much product to order to meet a random one-period demand. The version of the problem presented is novel in two respects. First, demand is explicitly permitted to be negative, and second, the penalty (or shortage) cost is assumed to be independent of the magnitude of the shortage. This situation is shown to change the form of the cost function and to complicate the determination of optimal policies. The form of the optimal policy is developed, and two example problems are presented in some detail.     

A JOINT ECONOMIC-LOT-SIZE MODEL FOR PURCHASER AND VENDOR

In a typical purchasing situation, the issues of price, lot sizing, etc., usually are settled through negotiations between the purchaser and the vendor. Depending on the existing balance of power, the end result of such a bargaining process may be a near-optimal or optimal ordering policy for one of the parties (placing the other in a position of significant disadvantage) or, sometimes, inoptimal policies for both parties. This paper develops a joint economic-lot-size model for a special case where a vendor produces to order for a purchaser on a lot-for-lot basis under deterministic conditions. The focus of this model is the joint total relevant cost. It is shown that a jointly optimal ordering policy, together with an appropriate price adjustment, can be beneficial economically for both parties or, at the least, does not place either at a disadvantage.     

A Note on Determining Optimal Selling Price and Lot Size Under All-Unit Quantity Discounts

A recent study conducted by Abad [1] described a method of determining the optimal price and lot size when the supplier offers all-unit quantity discounts. The author developed a procedure using centralized and decentralized approaches. According to the author's suggestion, further study is necessary to determine if the decentralized approach always provides an optimal solution. In the present study, an attempt is made to investigate the uniformity between the centralized and decentralized approaches and to verify whether the decentralized approach always yields optimal solutions.     

A Hierarchical Production Planning and Scheduling Model

A hierarchical production planning and scheduling system is developed that integrates planning decisions into a unified and consistent framework. A three-tiered approach is used to address long-term inventory control, short-term production planning, and daily scheduling tasks. A product grouping scheme introduces uniformity into the solution process and simplifies overall model complexity. Results of the model implementation are reported.     

A Note on the Effect of Sudden Obsolescence on the Optimal Lot Size

In most management situations, the decision to hold inventory involves some element of obsolescence risk The traditional approach to this problem, in both theory and practice, is to incorporate obsolescence costs in the inventory holding cost. This note explores this issue and demonstrates that the traditional approach is appropriate for items subject to sudden obsolescence; that is, for items with demand lifetimes that are exponentially distributed.     

A Note on SERVQUAL Reliability and Validity in Information System Service Quality Measurement

Today's information system function includes a large service component. Recent research has examined the SERVQUAL instrument as a possible measure to assist managers and researchers in evaluating service quality. To further examine the appropriateness of the SERVQUAL measure, a large industry sample serves to verify the anticipated structure of the instrument. In addition, a high correlation with a common measure of user satisfaction indicates that the SERVQUAL metric may indeed represent accurate views of user perception. As such, the SERVQUAL instrument can serve as a useful indicator for information system managers attempting to identify areas of needed service improvement and to researchers seeking a success measure of information system services.     

THE CLASSIC ECONOMIC PRODUCTION QUANTITY MODEL WITH SETUP COST AS A FUNCTION OF CAPITAL EXPENDITURE*

The formulation of the classic economic production quantity (EPQ) model is extended to include setup cost as a function of capital expense. Additional capital will buy reduced setup cost. Thus, the objective now is to balance holding, setup, and capital expenses. This new formulation is solved under conditions where setup cost varies exponentially and linearly as a function of capital expense. Decision rules are formulated to indicate under what conditions setup cost reduction reduces total cost. For the linear function, it is shown that once the decision to reduce setup cost is justified, the optimal choice is the minimum setup cost that is technologically feasible.     

A Comparative Analysis of the Relative Effectiveness of Four Dynamic Lot-Sizing Techniques on Return on Investment

The relative performance of dynamic lot-sizing techniques has been of considerable interest to researchers in recent years. While research has addressed performance in terms of cost-effectiveness, researchers have not determined the impact of dynamic lot-sizing techniques on return on investment (ROI) as it applies to finished goods' schedules. The purpose of this research is to explore the relative performance of four dynamic lot-sizing techniques with regard to ROI, namely the Wagner-Whitin, Incremental Part Period, Silver-Meal, and Groff techniques. Computer graphics are employed to analyze the relative ROI effectiveness.     

Developing Measures for Assessing the Organizational Impact of Information Technology: A Comment on Mahmood and Soon's Paper

In a recent study, Mahmood and Soon [26] identified and operationalized a set of variables that can be potentially impacted by information technology. The lack of factor analysis to verify the dimensionality of different variables is a notable omission in the study. This paper describes and employs the limited-information factor analysis approach and the minimum average partial criterion for testing the unidimensionality of different variables in the Mahmood and Soon study. While reconfirming the construct validity of eight variables, our results question the unidimensionality of two original variables. Further testimony is provided in favor of our results by citing previous research studies.     

A Model for Resource Constrained Production and Inventory Management

We present a general model for multi-item production and inventory management problems that include a resource restriction. The decision variables in the model can take on a variety of interpretations, but will typically represent cycle times, production batch sizes, number of production runs, or order quantities for each item. We consider environments where item demand rates are approximately constant and performing an activity such as producing a batch of a product or placing an order results in the consumption of a scarceresource that is shared among the items. Some examples of shared resources include limited machine capacity, a restriction on the amount of money that can be tied up in stock, orlimited storage capacity. We focus on the case where the decision variables must be integer valued or selected from a discrete set of choices, such as when an integer number of production runs is desired for each item, or in order quantity problems where the items come in pack sizes containing more than one unit and, therefore, the order quantities must be an integer multiple of the pack sizes. We develop a heuristic and a branch and bound algorithm for solving the problem. The branch and bound algorithm includes reoptimization procedures and the heuristic to improve its performance. Computational testing indicates that the algorithms are effective for solving the general model.     

DESIGNING HIGH-CONTACT SERVICE SYSTEMS: APPLICATION TO BRANCHES OF A SAVINGS AND LOAN*

The customer-contact model represents one of the few conceptually based approaches for designing service systems. This paper develops that concept further for high-contact systems, relative to efficiency and effectiveness notions. Four design features (contact technologies, contact training, data bases, and contact roles) are developed and a simple design methodology (built around the four design features) is presented. A demonstration of the design methodology is provided through its applications to branches of a savings and loan. Areas for additional theoretical and practical refinement of the model and the desirability of multidisciplinary research are discussed.     

A COMPARISON OF INVESTMENT ALLOCATION STRATEGIES FOR DISTRIBUTION INVENTORIES

Management goals in distribution inventories are often expressed in terms of the maximum percentage of aggregate sales that should be back ordered. This paper compares several strategies for allocating total inventory investment to each item stocked in order to meet such goals. Computational results are given from a wholesale distribution inventory. The results show that multi-item strategies (which consider the interactions between items) require substantially less investment to meet management goals than strategies that treat each line item independently. All models in this research are approximations based on the assumptions commonly used in practice.     

A Clustering Algorithm for Computer-Assisted Process Organization

Amathematical programming clustering model that forms groups based on total group membership interactions is extended to include precedence relationships, group size limits, and group time limits. The extended clustering model is most appropriate for structured design of information systems as described by the computer-assisted process organization (CAPO), which requires certain ordering and may have limits on development and production capacity. An efficient algorithm for optimizing the CAPO criteria along with computational results is presented. The results show that the method is viable for the CAPO problems reported in the literature.     

Concepts,Theory, and Techniques DISTRIBUTED COMPUTER SYSTEM DESIGN: A MULTICRITERIA DECISION-MAKING METHODOLOGY*

The design of distributed computer systems (DCSs) requires compromise among several conflicting objectives. For instance, high system availability conflicts with low cost which in turn conflicts with quick response time. This paper presents an approach, based on multi-criteria decision-making techniques, to arrive at a good design in this multiobjective environment. An interactive procedure is developed to support the decision making of system designers. Starting from an initial solution, the procedure presents a sequence of non-dominated vectors to designers, allowing them to explore systematically alternative possibilities on the path to a final design. The model user has control over trade-offs among different design objectives. This paper focuses on the details of the mathematical model used to provide decision support. Accordingly, a formulation of DCS design as a multicriteria decision problem is developed. The exchange search heuristic used to generate nondominated solutions also is presented. We argue that multicriteria models provide a more realistic formulation of the DCS design problem than the single-criterion models used widely in the literature. While obtaining a clear definition of design objectives (single or multiple) is an important activity, by explicitly acknowledging the trade-offs among multiple objectives in the design process, our methodology is more likely to produce a better overall design than methods addressing a single criterion in isolation.     

INCORPORATING SALES FORCE PREFERENCES IN A GOAL PROGRAMMING MODEL FOR THE SALES RESOURCE ALLOCATION PROBLEM

This note presents a model for the sales territory assignment and resource allocation problem. The integer-goal-programming model includes input from the sales representatives in the form of preference values along with organizational goal values from management. The approach integrates the multiple objectiive inputs both for individual sales reprresentatives and for the organization into a single model by employing the approaches of multiattribute utility theory and multicriteria decision making. The purpose of the model is to provide a vehicle for testing various strategies and assessing the impact of those strategies on the sales representatives’utilities and the organization's goals.     

A Comparative Analysis of Quality Practice in Manufacturing Firms in the U.S. and Taiwan*

The aim of this paper is to determine if there is a causal relationship between multivariate constructs for quality (i.e., customer satisfaction, employee satisfaction, and employee service quality) and organizational performance. The presence of such relationships, as well as the identification of key indicators within each quality construct for different types of firms, are explored in this empirical study on the perceptions of middle managers in Taiwan and the United States. The study found a significant causal relationship between the quality constructs and organizational performance. These relationships are different, however, for the four types of firms based on age and size. Also, within the same firm types, there are differences among countries. For example, for older firms, Taiwanese managers tend to perceive customer satisfaction as the most important quality construct in improving organizational performance, while U.S. managers tend to perceive employee satisfaction as the most important. For younger firms, U.S. managers perceive customer satisfaction as influencing organizational performance, while Taiwanese managers perceive both customer satisfaction and employee satisfaction as doing so. A further breakdown of the quality constructs identified the key indicators within each construct that separates “better performers'’from “lesser performers'’in both countries for the four types of firms. These indicators are dissimilar, thus suggesting that focus on quality constructs may lead to improvements in organizational performance by focusing on different indicators in different environments. These results have implications for the adoption and implementation of quality practices in different countries.     

A NOTE ON LEARNING CURVE PARAMETERS

This note describes differences in the feasible range of values that the learning curve parameter may take when a unit learning approach is used as opposed to a cumulative-average learning curve. Clarification of this point is important because learning curve theory now is used in a variety of areas.     

Redesigning a Cellular Manufacturing System to Handle Long-Term Demand Changes: A Methodology and Investigation*

Cellular manufacturing systems have been proposed as an alternative to the job shop since they provide some of the operational benefits of a flow line production process, while retaining to some extent the flexibility of job shops. However, this must be balanced against the possibility of additional initial investments in equipment to form the cells and a certain loss in manufacturing flexibility, particularly in terms of the ability to deal with long-term demand changes. This paper presents a model-based heuristic cell system redesign methodology to deal with such demand changes. The methodology is validated and applied to system designs generated from several data sets published in the literature. Results show that different kinds of demand changes incur distinct kinds of costs. Further, characteristics of cell designs that can handle long-term demand changes at least cost are identified.