Decisions concerning the mix of automation and labor employed by an organization are embedded in the long-term strategic plan since the composition of productive capacity impacts on an organization's ability to survive and compete. In this paper, the optimal mix of automation and labor is identified for automation which acts to enhance the productivity of an organization's workforce. The incentives considered for acquiring automation are increasing the level of output, reducing the high cost of labor, and compensating for a limited supply of labor. Factors explicitly examined by the model include the future long-term goal level of output, costs associated with maintaining the workforce (wages) and automation, and costs associated with changing the levels of workforce and automation. Since the formulation is dynamic so that all exogenous and decision variables may be expressed as functions of time, the effects of technological improvement, increasing wage rates, changing labor supply, and diminishing returns as additional automation is acquired are considered.
The passage of the Depository Institutions Deregulation and Monetary Control Act of 1980 has created a major change in the banking system of the United States, in that the Federal Reserve began charging for its check clearing and collection services September 1, 1981. The result from the passage of this legislation has been major changes in bank check clearing arrangements, in that greater check clearing efficiency is now required to offset the increased clearing costs. This paper describes the development of an integer programming model which has been used to determine the set of clearing arrangements and associated transportation connections that optimizes a bank’s transit check clearing system in this new environment.
The proximity among people in an organization is known to exert considerable influence on a variety of organizational outcomes such as performance, stress, and job satisfaction. Early research on proximity in organizations studied pairs of people in job locations that were at fixed distances (e.g., keypunch operators at their work stations). This research procedure ignores three critical features of organizational life. First, people are simultaneously proximate to everyone else in their organization. Second, this proximity changes throughout the day as people move about the organization. Finally, the opportunity and obligation for communication that people perceive by being physically close to others is often more important than the actual physical distance. The present paper develops a definition of organizational proximity that accounts for these previous limitations. Specifically, organizational proximity is defined as two or more people being in the same location where there is both the opportunity and psychological obligation for face-to-face communication. This measure, when aggregated across all people in an organization, provides a single value of how concentrated people are in the various locations of the firm. Further, given the proper data collection techniques, it reveals the degree to which organizational proximity changes throughout the workday and workweek. On the basis of this definition, research was conducted which examined the organizational proximity among employees in a research and development firm for each 15-minute interval of a typical workweek. Two major findings were obtained. First, the level of organizational proximity changed considerably during the course of a typical day, with peaks during the late morning and early afternoon and valleys during the early morning, lunch, and late afternoon hours. Second, the pattern was highly consistent from day-to-day. This consistency permitted the development of a model which enables accurate prediction of the level of organizational density for any time period during any day of the workweek. There are several rather interesting managerial implications in these results. First, they support Peters and Waterman's (Peters, T. J., R. H. Waterman. 1982. Search of Excellence: Lessons from America's Best-Run Companies. Harper & Row, New York, 3–26, 119–155, 200–234.) recent recommendation of “management by wandering around,” since that technique maximizes a manager's proximity to employees. Second, the results suggest managerial and electronic alternatives to traditional forms of communication such as face-to-face meetings and phonecalls. Third, they imply alternative strategies for managing the daily fluctuations in availability of people and communication that result from differences and changes in organizational proximity.
A family of algorithms is described for finding optimum schedules for job-shops. The algorithms are of a branch and bound type but have a complete schedule associated with each node of the search tree. Branching from nodes is based on important conflicts in the schedule. Some results are provided.
This paper reconciles three stylized facts about capital budgeting in firms and shows that they are tied to the presence of asymmetric information among the several members of the firm, each with his or her own objectives and decisions. The facts of interest are: 1. The existence of organizational slack. 2. The “rationing” of resources within organizations. 3. The stated “cut off rate” for accepting capital projects in firms is often greater than the market rate of interest. Organizational slack is defined as the excess of resources allocated over the minimum necessary to accomplish the tasks assigned. Resource rationing is defined as the under-allocation of resources; i.e., an increase in the amount allocated would generate revenues in excess of its costs. Rationing and slack are both manifestations of ex post inefficiencies. An LP model is used to show that these inefficiencies can occur in ex ante efficient organizational designs when asymmetric information is present. The optimal allocation policy involves a hurdle rate criterion in which the hurdle rate is strictly in excess of the cost of capital, thus inducing rationing in some states of the world. Typically, resources are optimally allocated such that slack exists in other states. The optimal allocation policy trades off these two inefficiencies.
A simulation model that attempts to include simplified market and production characteristics of a hypothetical firm and a specific project selection decision mechanism is constructed. Three types of projects are assumed to exist—projects whose impact is to increase market share, decrease production cost and increase production capacity. An experiment aimed at two questions is conducted. The questions are (1) Do different market conditions affect project selection decisions and (2) over time, what patterns of project selection emerge. In the model and experiment, an attempt is made to capture the essence of Abernathy and Utterback's model of the innovation process so that it may be applied to more specific settings. Observed project selection patterns over time indicate an apparent relationship between market share increasing and production cost decreasing projects and Abernathy and Utterback's concept of product innovation, and similarly between capacity increasing projects and process innovation. The model can be viewed as an attempt at developing a linkage between the environment of a firm and an “iterative decision mechanism” as proposed by Baker and Sweeney.
A laboratory experiment was conducted to assess the influence of graphical and color-enhanced information presentation on decision quality, decision-making time and user perceptions of information systems attributes. The experimental design examined the main and interaction effects of report format, color, and individual differences (field dependence/independence) among the subjects. The findings indicate that the claims made about the benefits of color-enhanced reports are subject to qualification. Even though color influenced decision-making quality in general, and to some extent color was more beneficial for graphical than tabular reports, its most significant impact was on the performance of field-dependents. The decision-making quality of field-dependents with color-enhanced reports was 73% better than field-dependents who did not have such reports. There were no performance differences between subjects who used tabular and graphical reports. This outcome is explained by taking into consideration the underlying nature of the task given to the subjects and how the reports were organized to support this task. This finding suggests that proponents of graphical presentation must qualify their claims to environments where there is a clearly defined rationale for the potential benefits of graphical report usage.
In this paper “Optimal and Near Optimal Price and Advertising Strategies,” Welam (Welam, Ulf P. 1982. Optimal and near optimal prize and advertising strategies. Management Sci. 28 1313–1327.) considers a model which is similar to a model analyzed by Gould (Gould, John P. 1970. Diffusion processes and optimal advertising policy. E. S. Phelps et al., eds. Microeconomic Foundations of Employment and Inflation Theory. W. W. Norton, 338–368.) in his work on optimal advertising policies. The main difference between the two papers is that while Welam's analysis is in discrete time, Gould's is in continuous time. The equivalence of the two analyses is easy to establish and is contained in Rao (Rao, Ram C. 1983. A note on optimal advertising strategies. Working paper, University of Texas, Dallas, January.).
In this paper, we consider multi-item inventory systems that contain repair kits of spare parts and tools and may include an inventory of spare machines as well. Demands occur in the form of field repair jobs, each requiring some collection of parts and tools for completion. If any required part or tool is not in the repair kit, the repair job is “broken.” The penalty or inconvenience cost is assumed to be proportional to the number of broken jobs, regardless of the number of items short. Previous work on job completion based systems is summarized and new results for the optimal solutions are derived. A more general job completion based system is also analyzed, which allows a pool of spare machines to be used to satisfy demands which cannot be met with the repair kits. Techniques are presented for optimizing the trade-off between the inventory cost of repair kits plus spare machines and the overall level of service.
Formal agreements can be used to achieve coordination among channel members. These agreements work by exerting explicit control over the members who make the agreements. However, implicit understandings can be used as a partial substitute for more formal agreements. In this paper, we show that implicit understandings can develop as channel members learn about each other's behavior. We show that … This learning leads to the use of the implicit influence each channel member has over the other's behavior. The learning leading to an implicit understanding requires some form of experimentation or historical observation. This learning results in an oscillating retail price. When only one channel member learns the other's behavior, both channel members obtain greater profits than when neither member learns, and both channel members obtain less profits than when both members learn. However, the member who does not learn obtains more profits than the member who learns. We also show that … Implicit understandings result in greater channel profits than in their absence. Implicit understandings cannot fully substitute for an explicit contract. Implicit understandings result in a retail price which is higher than the price resulting from an explicit contract but lower than the price resulting in the absence of an implicit understanding. Implicit understandings develop as channel members learn each other's behavior. We demonstrate that the form of learning discussed in this paper is consistent with a somewhat general demand function. Finally, the paper provides some examples of both symmetrical learning, where both channel members learn at the same speed and asymmetrical learning where channel members learn at different speeds.