Restaurant Revenue Management at Chevys: Determining the Best Table Mix

Revenue management has been used in a variety of industries and generally takes the form of managing demand by manipulating length of customer usage and price. Supply mix is rarely considered, although it can have considerable impact on revenue. In this research, we focused on developing an optimal supply mix, specifically on determining the supply mix that would maximize revenue. We used data from a Chevys restaurant, part of a large chain of Mexican restaurants, in conjunction with a simulation model to evaluate and enumerate all possible supply (table) mixes. Compared to the restaurant's existing table mix, the optimal mix is capable of handling a 30% increase in customer volume without increasing waiting times beyond their original levels. While our study was in a restaurant context, the results of this research are applicable to other service businesses.     

On the correlation between fraud and default risk

Identity fraud is one of the fastest growing white-collar crimes today and a serious concern in our information-based economy. This paper studies one type of identity fraud: new account fraud, where an impostor opens lines of credit using a false identity, made-up or stolen. Relying on a unique data set of consumer bank accounts, that contains information on both, fraud and default losses, I analyze the correlation between fraud and default risk. I find that common socio-economic/demographic account holder characteristics have opposite effects on estimated default and fraud probabilities. For example, women possess a lower fraud probability, but a higher default probability, compared to men, and foreigners are more likely to engage in account fraud but less likely to default than Germans. Also, the portfolio level analysis indicates that portfolio loss distributions are quite sensitive to ex ante portfolio characteristics like the share of foreigners or blue-collar workers. These findings have important implications for banks managing their consumer credit portfolios using limiting rules based on borrower characteristics, and for the adequacy of banks’ capital levels.     

Using Frontier Analysis to Evaluate Company Performance

The measurement of performance is critical to nearly all managerial disciplines. Yet little is known about the aggregation characteristics of the components of performance and how our notion of a ‘good performing firm’ relates to what we use as a dependent variable. In this paper we propose an approach to the measurement of performance that uses the logic of frontier analysis and the technique of data envelopment analysis. The approach is shown to be a reasonable representation of the multidimensional nature of performance and is shown to replicate, effectively, the components that strategic management scholars typically consider when discussing performance. It is also shown to be superior to the simpler alternatives based on traditional approaches to performance measurement.     

Now What Do People Know About Global Climate Change? Survey Studies of Educated Laypeople

In 1992, a mental‐models‐based survey in Pittsburgh, Pennsylvania, revealed that educated laypeople often conflated global climate change and stratospheric ozone depletion, and appeared relatively unaware of the role of anthropogenic carbon dioxide emissions in global warming. This study compares those survey results with 2009 data from a sample of similarly well‐educated laypeople responding to the same survey instrument. Not surprisingly, following a decade of explosive attention to climate change in politics and in the mainstream media, survey respondents in 2009 showed higher awareness and comprehension of some climate change causes. Most notably, unlike those in 1992, 2009 respondents rarely mentioned ozone depletion as a cause of global warming. They were also far more likely to correctly volunteer energy use as a major cause of climate change; many in 2009 also cited natural processes and historical climatic cycles as key causes. When asked how to address the problem of climate change, while respondents in 1992 were unable to differentiate between general “good environmental practices” and actions specific to addressing climate change, respondents in 2009 have begun to appreciate the differences. Despite this, many individuals in 2009 still had incorrect beliefs about climate change, and still did not appear to fully appreciate key facts such as that global warming is primarily due to increased concentrations of carbon dioxide in the atmosphere, and the single most important source of this carbon dioxide is the combustion of fossil fuels.     

An Empirical Model of Perceived Mortality Risks for Selected U.S. Arsenic Hot Spots

Researchers have long recognized that subjective perceptions of risk are better predictors of choices over risky outcomes than science‐based or experts’ assessments of risk. More recent work suggests that uncertainty about risks also plays a role in predicting choices and behavior. In this article, we develop and estimate a formal model for an individual's perceived health risks associated with arsenic contamination of his or her drinking water. The modeling approach treats risk as a random variable, with an estimable probability distribution whose variance reflects uncertainty. The model we estimate uses data collected from a survey given to a sample of people living in arsenic‐prone areas in the United States. The findings from this article support the fact that scientific information is essential to explaining the mortality rate perceived by the individuals, but uncertainty about the probability remains significant.