Knowledge that Transforms

This paper proposes an indirect approach to estimate average production intervals the length of time between starting and finishing work on each product using work-in-process inventory measurements...

When an individual is given a lottery, he usually must wait some time interval before that lottery is resolved. Previous work from the literature has shown that if the individual has to make consumption decisions during that time interval, the lottery's utility will not equal the expected utility of its consequences. In this paper, we derive a formula for the utility of the lottery for situations with relatively small gambles. Our formula is consistent with many of D. Kahneman and A. Tversky's observations. It also is similar, in some ways, to Bell's notion of elation and disappointment.

When the U.S. Congress began considering acid rain legislation in the early 1980s, the federal Environmental Protection Administration (EPA) relied on two major models for analyzing the impact of emission reduction policies on the coal and electric utility industries. Debate over the merit of these two models was hampered because they were proprietary, and both had achieved computational tractability through a priori exclusion of the nation's largest and most detailed data bases describing either: (1) the characteristics of individual electric generating units, or (2) coal reserves and washability. Because of general dissatisfaction with the limitations of both models, the EPA contracted with three universities to develop an Advanced Utility Simulation Model (AUSM) that would combine the best features of each of the existing models. This paper describes the approach taken to develop the AUSM, currently used by the EPA, in a manner that achieved computational tractability while making maximum use of the information contained in the available data.