Acquisition of Telecommunications Bandwidth Under Economies of Scale in Size and Duration of Contracts*

Significant advances in information technology have brought about increased demand for bandwidth. Buyers of bandwidth often encounter bandwidth prices that are decreasing over time. Additionally, bandwidth prices at any point in time are decreasing in total bandwidth purchased and length of contracts. Therefore, buyers face complex decisions in terms of the number of contracts to buy, their bandwidth, and their lengths. In this article, we formulate models for the acquisition of bandwidth from a buyer's perspective. We begin with a model that allows varying contract durations under deterministic demand and without allowing shortages or overlapping contracts. We then formulate a simpler model, which restricts contract lengths over the planning horizon to be equal. We also solve the problem under probabilistic demand and allowing for shortages, which are satisfied by buying additional bandwidth at a premium. We perform numerical sensitivity analysis to compare the results of the models and illustrate the results with numerical examples. The numerical analyses illustrate that using relatively simple equal‐length contracts produces approximately the same results as the more complicated unequal‐length contract strategy.     

Production knowledge and its impact on the mechanisms of governance

A framework is developed outlining how production knowledge and capabilities influence firm boundaries by impacting the transaction costs of markets and hierarchies. A central implication of the framework is that at lower levels of these capabilities the transaction costs of markets decline at a faster rate than the costs of hierarchy, while at higher levels of these capabilities the transaction costs of hierarchy decline at a faster rate than the costs of markets. The discriminating role of production capabilities arises because markets and hierarchies utilize different types of control (prices and output control versus authority and behavior control), and hence require different levels of knowledge to be efficient. The analysis suggests firms often maintain some production knowledge when contracting for various inputs since it not only reduces transactional hazards in markets, but also because in comparative institutional terms, initial gains in knowledge make markets more efficient than internal organization. In addition, the analysis suggests that there would be a U shaped relationship between the propensity to integrate vertically and the extent of production capabilities as opposed to a monotonically increasing relationship. I find support for the U shaped relationship in a cross sectional sample of 1553 manufacturing firms.     

Connected Substitutes and Invertibility of Demand

We consider the invertibility (injectivity) of a nonparametric nonseparable demand system. Invertibility of demand is important in several contexts, including identification of demand, estimation of demand, testing of revealed preference, and economic theory exploiting existence of an inverse demand function or (in an exchange economy) uniqueness of Walrasian equilibrium prices. We introduce the notion of “connected substitutes” and show that this structure is sufficient for invertibility. The connected substitutes conditions require weak substitution between all goods and sufficient strict substitution to necessitate treating them in a single demand system. The connected substitutes conditions have transparent economic interpretation, are easily checked, and are satisfied in many standard models. They need only hold under some transformation of demand and can accommodate many models in which goods are complements. They allow one to show invertibility without strict gross substitutes, functional form restrictions, smoothness assumptions, or strong domain restrictions. When the restriction to weak substitutes is maintained, our sufficient conditions are also “nearly necessary” for even local invertibility.     

Design and implementation of an integrated production planning system for a pharmaceutical manufacturing concern in India

SmithKline Beecham (SBPI) is a major player in the Indian pharmaceutical industry. Though relatively small in terms of turnover, it has performed Pharmaceuticals (India) exceptionally well in terms ofprofitability and growth rate. The firm has substantial cash reserves. However, the firm operates in 'mass production' mode at present, with the established finished goods inventory norms being in the range of 1 to 1.5 months. Competitive pressure on the firm is now forcing it to move towards world class manufacturing and the application of concepts from MRP II, JIT and OPT is under consideration. This paper describes the considerations that went into the justification, design and implementation of an integrated production planning and control system in this situaion.     

Concurrent consideration of product design,process planning and production planning activities

In manufacturing engineering, product design, process planning and production planning activities are often considered independently. However, in order to effectively respond to changes in business situations, such as changes in demand forecast, product mix and technology, it is desirable to consider them concurrently. For this purpose, a large-scale linear programming model has been developed. The model considers minimization of the sum of processing cost, late shipment cost and inventory holding cost as the objective, and concurrently selects product designs, and generates process plans and production plans. The number of columns in the formulation can be large and, hence, an efficient column generation scheme is developed to solve the model. The model and solution procedure are illustrated with examples.     

Attachment and leader's development via experiences

Apart from biographies and memoirs of outstanding leaders, studies on the development of leaders in everyday life from childhood to maturity are rare. We propose a developmental model of leaders in which certain variables formed in early childhood are the basic components for leadership development in later life. These are a low level of trait anxiety [Spielberger, C.D. (1972). Conceptual and methodological issues in anxiety research. In C.D. Spielberger (Ed.), Anxiety: Current trends in theory and research. New York: Academic Press, vol. 1] and openness to experiences [Costa, P.T. Jr., & McCrae, R.R. (1992a). Revised NEO Personality Inventory (NEO-PI-R) and NEO Five-Factor Inventory (NEO-FFI) professional manual. Odessa, FL: Psychological Assessment Resources]. We argue that secure attachment style [Bowlby, J. (1969). Attachment and loss: Vol. 1. Attachment. New York: Basic Books] explains the formation and influence of these basic components, which in turn affect the leader's development through experience in leadership roles. Questionnaires were administered to 286 subjects. The data obtained were analyzed by structural equation modeling (SEM).The findings show that trait anxiety and openness to experience affect leaders' development via experiences. Alternative models in which formative variables may affect the magnitude and intensity of leadership experiences are discussed.     

Uncertainty Analysis Based on Probability Bounds (P-Box) Approach in Probabilistic Safety Assessment

A wide range of uncertainties will be introduced inevitably during the process of performing a safety assessment of engineering systems. The impact of all these uncertainties must be addressed if the analysis is to serve as a tool in the decision-making process. Uncertainties present in the components (input parameters of model or basic events) of model output are propagated to quantify its impact in the final results. There are several methods available in the literature, namely, method of moments, discrete probability analysis, Monte Carlo simulation, fuzzy arithmetic, and Dempster-Shafer theory. All the methods are different in terms of characterizing at the component level and also in propagating to the system level. All these methods have different desirable and undesirable features, making them more or less useful in different situations. In the probabilistic framework, which is most widely used, probability distribution is used to characterize uncertainty. However, in situations in which one cannot specify (1) parameter values for input distributions, (2) precise probability distributions (shape), and (3) dependencies between input parameters, these methods have limitations and are found to be not effective. In order to address some of these limitations, the article presents uncertainty analysis in the context of level-1 probabilistic safety assessment (PSA) based on a probability bounds (PB) approach. PB analysis combines probability theory and interval arithmetic to produce probability boxes (p-boxes), structures that allow the comprehensive propagation through calculation in a rigorous way. A practical case study is also carried out with the developed code based on the PB approach and compared with the two-phase Monte Carlo simulation results.     

Managing Logistics in Regional Banknote Supply Chain Under Security Concerns

We study the logistics problem faced by Regional Branches (RBs) of a central bank in managing the currency supply under security concerns. While making banknote supply decisions to Sub‐Branches (SBs), the management of RB must achieve two goals simultaneously: (i) guarantee that each SB has sufficient inventories of all denominations of banknotes to satisfy the demands from all commercial banks within its service area, and (ii) control the annual spending on this banknote supply operation. Due to security concerns, the following methods are implemented in the process of transporting banknotes: (i) the capacity of a cash truck is limited by the total face value (instead of the physical space) of banknotes, and (ii) empty decoy trucks are deployed along with the trucks filled with banknotes. After deriving a polynomial‐time strategy to guarantee an optimal solution for the special Bin‐Packing Problem faced in this study, we provide an exact formulation for the RB's supply planning problem. We also propose several polynomial‐time algorithms for deriving either optimal or near‐optimal solutions for the problem under different settings. Using the weekly demand data obtained from the central bank, we verify the performance of our algorithms, and analyze the impacts of changes in these features and in the fleet capacity on the total cost incurred by an RB under various scenarios.