Real option games with R&D and learning spillovers

We demonstrate to decision makers how to optimally make costly strategic pre-investment R&D decisions in the presence of spillover effects in an option pricing framework with analytic tractability. Decisions are modeled as impulse-type controls with random outcome. Two firms face two decisions that are solved interdependently in a two-stage game. The first-stage decision is: What is the optimal level of coordination (optimal policy/technology choice)? The second-stage decision is: What is the optimal effort for a given level of the spillover effects and the cost of information acquisition? The framework is extended to a two-period closed-loop stochastic game with (path-dependency inducing) switching costs that make strategy revisions harder. When conditions of learning-by-doing exist, we find that strategy shifts are easier to observe in market environments of high growth and high volatility.     

Setups and effective capacity: the impact of lot sizing techniques in an MRP environment

This study investigates how lot sizing techniques influence the profit performance, inventory level, and order lardiness of an assembly job shop controlled by MRP. Four single-level lot sizing techniques are compared by simulation analysis under two levels of master schedule instability and two levels of end item demand. A second analysis investigates the influence of a multilevel lot sizing technique, the generalized constrained-K (GCK) cost modification, on the four single-level techniques at low demand and low nervousness. The analyses reveal a previously unreported phenomenon. Given the same inventory costs, the single-level lot sizing techniques generate substantially different average batch sizes. The lot sizing techniques maintain the following order of increasing average batch size (and decreasing total setup time):

economic order quantity (EOQ)

period order quantity (POQ)

least total cost (LTC)

Silver-Meal heuristic (SML)

The causes for different average batch sizes among the lot sizing techniques are analysed and explained. Demand lumpiness, inherent in multilevel manufacturing systems controlled by MRP, is found to be a major factor. The number of setups each lot sizing technique generates is the primary determinant of profit performance, inventory level, and order tardiness. EOQ, a fixed order quantity technique, is less sensitive to nervousness than the discrete lot sizing techniques. EOQ_, however, generates the smallest average batch size, and, therefore, the most setups. Since setups consume capacity, EOQ, is more sensitive to higher demand. SML generates the largest average batch sizes, and is, therefore, less sensitive to increased demand. At low demand, the other lot sizing techniques perform better on all criteria. They generate smaller batches and, therefore, shorter actual lead times. The GCK cost modification increases the average batch size generated by each lot sizing technique. GCK improves the profit and customer service level of EOQ the lot sizing technique with the smallest batches. GCK causes the other lot sizing techniques to generate excessively large batches and, therefore, excessively long actual lead times.     

The value of rescheduling functionality within standard MRP packages

One of the basic functions of an MRP system is to issue rescheduling messages that urge the planner tospeed up or slow down open orders. It seems in practice that these messages are not used at all by planners. This is mostly due to the inaccuracy of MRP, that more or less ignores safety time, safety stocks and lotsize flexibility in the calculation of reschedule-in messages. Reschedule-out messages are usually ignored because planners do not see the value of the message. Other reasons for not adhering to rescheduling messages are a lack of maintenance of MRP parameters or simply the wrong use of the MRP function. In the future, MRP rescheduling functionality will be used even less than today, due to the changing role of MRP within the planning framework. With the uprise of finite capacity scheduling packages, MRP is being pushed one level upward in the planning hierarchy. This means that rescheduling functionalities for the short term will become completely obsolete in MRP systems.     

The extended enterprise-a context for manufacturing

Today's manufacturing enterprises face tremendous competitive pressures. Global competition, together with market demands for customized products delivered just in time, place tremendous pressures on manufacturers. The emerging global economy is rapidly replacing local markets. The emergence of open markets, reductions in trade barriers, and improvements in transportation and communications links have led to a situation where local competition and markets operate in the context of global standards. This open infrastructure allows manufacturers to respond to these challenges by working more closely with their suppliers and customers, and by building extended enterprises across the whole value chain. Such extended enterprises present great challenges in terms of redesigning business processes to create a competitive advantage from the linkages they include. This paper describes the manufacturing philosophies currently in vogue. Any manufacturing or related business will need to use them, albeit tailored to its own circumstances, in one form or the other, to ensure its prosperity.     

Occupational stress in universities: Staff perceptions of the causes,consequences and moderators of stress

In recent years, the Australian university sector has undergone large-scale organizational change, including restructuring, downsizing and government funding cuts. At the same time, research from across the globe reports an alarming increase in the occupational stress experienced by university staff. We report on the first phase of a longitudinal investigation of occupational stress. A total of 22 focus groups were conducted with a representative sample of 178 academic and general staff from 15 Australian universities. The groups focused on understanding staff 's experience of occupational stress, and perceptions of the sources, consequences and moderators of stress. Both general and academic staff reported a dramatic increase in stress during the previous 5 years. As a group, academic staff reported higher levels of stress than general staff. Five major sources of stress were identified including: insufficient funding and resources; work overload; poor management practice; job insecurity; and insufficient recognition and reward. The majority of groups reported that job-related stress was having a deleterious impact on their professional work and personal welfare. Aspects of the work environment (support from co-workers and management, recognition and achievement, high morale, flexible working conditions), and personal coping strategies (stress management techniques, work/ non-work balance, tight role boundaries and lowering standards), were reported to help staff cope with stress. The findings provide a timely insight into the experience of stress within universities.     

The application of a performance management system in hospitals: A hypothetical example

Abstract

The central theme of this article is performance management, defined as activities of organizations aimed at an effective and efficient use of their human resources. The organization focused on in particular is the hospital. Three principles taken from motivation theory are dealt with which are basic to performance management: goal setting, feedback and reinforcement. Next, a recently developed procedure (Pritchard 1990, Pritchard et al. 1988, 1989) for the design of performance management systems is described. This procedure, ProMES: Productivity Measurement and Enhancement Systems, is explained using a team of ward nurses as a hypothetical example. In addition to the nursing wards example, other potential applications of the ProMES technique to several hospitals areas are mentioned. Finally, some conditions that should be fulfilled in order to successfully start a ProMES project are discussed.     

Catastrophe Risk Models for Evaluating Disaster Risk Reduction Investments in Developing Countries

Major natural disasters in recent years have had high human and economic costs, and triggered record high postdisaster relief from governments and international donors. Given the current economic situation worldwide, selecting the most effective disaster risk reduction (DRR) measures is critical. This is especially the case for low‐ and middle‐income countries, which have suffered disproportionally more economic and human losses from disasters. This article discusses a methodology that makes use of advanced probabilistic catastrophe models to estimate benefits of DRR measures. We apply such newly developed models to generate estimates for hurricane risk on residential structures on the island of St. Lucia, and earthquake risk on residential structures in Istanbul, Turkey, as two illustrative case studies. The costs and economic benefits for selected risk reduction measures are estimated taking account of hazard, exposure, and vulnerability. We conclude by emphasizing the advantages and challenges of catastrophe model‐based cost‐benefit analyses for DRR in developing countries.     

Effectiveness of FISK,an Invasiveness Screening Tool for Non‐Native Freshwater Fishes,to Perform Risk Identification Assessments in the Iberian Peninsula

Risk assessments are crucial for identifying and mitigating impacts from biological invasions. The Fish Invasiveness Scoring Kit (FISK) is a risk identification (screening) tool for freshwater fishes consisting of two subject areas: biogeography/history and biology/ecology. According to the outcomes, species can be classified under particular risk categories. The aim of this study was to apply FISK to the Iberian Peninsula, a Mediterranean climate region highly important for freshwater fish conservation due to a high level of endemism. In total, 89 fish species were assessed by three independent assessors. Results from receiver operating characteristic analysis showed that FISK can discriminate reliably between noninvasive and invasive fishes for Iberia, with a threshold of 20.25, similar to those obtained in several regions around the world. Based on mean scores, no species was categorized as “low risk,” 50 species as “medium risk,” 17 as “moderately high risk,” 11 as “high risk,” and 11 as “very high risk.” The highest scoring species was goldfish Carassius auratus. Mean certainty in response was above the category “mostly certain,” ranging from tinfoil barb Barbonymus schwanenfeldii with the lowest certainty to eastern mosquitofish Gambusia holbrooki with the highest level. Pair‐wise comparison showed significant differences between one assessor and the other two on mean certainty, with these two assessors showing a high coincidence rate for the species categorization. Overall, the results suggest that FISK is a useful and viable tool for assessing risks posed by non‐native fish in the Iberian Peninsula and contributes to a “watch list” in this region.