Knowledge that Transforms

High-low bidding refers to auctions of a series of objects where for a subset of the auctioned objects one of two buyers bids high on some objects and low on others while the other buyer does the reverse. This paper shows that high-low bidding does not imply collusive behavior among buyers. In particular, through a formal modeling of a noncooperative game of information acquisition and bidding decisions, it shows that high-low bidding can be obtained. The paper also demonstrates that if the cost of information to a seller is less than the equilibrium joint expected information cost of the buyers, then it pays the seller to provide public information. Finally, if the provision of public information is not feasible but a seller can know whether buyers have acquired information, then it pays the seller to make known to the buyers and to pursue a policy that just prior to the start of an auction the seller will announce which buyer has acquired information.

Information for management decisions is typically presented in both numeric and nonnumeric forms. This paper tests whether the choice of presentation form affects the use of such information by decision makers. Selected information from corporate annual reports was provided to a group of practicing financial analysts in a quasi-experimental setting. The analysts were asked to evaluate two companies (one R&D company and one manufacturing company) using selected financial data and excerpts from the president’s letter. Some versions of the letter contained numeric information while other versions contained nonnumeric information. The study tested several hypotheses which specified the conditions under which information in one presentation form would receive higher weight in a decision than the other form. Relative weights placed on different information forms were determined by an averaging model from information integration theory. The appendix contains a presentation of that model. The study’s results suggest that when the link between organizational actions and future performance is not well established and understood, financial analysts may give more weight to nonnumeric information in evaluating a company. This study has important implications because it shows that in certain situations managers can influence financial analysts’ use of information by varying presentation form.

User involvement in the design of computer-based information systems is enthusiastically endorsed in the prescriptive literature. However determining when and how much, or even if, user involvement is appropriate are questions that have received inadequate research attention. In this paper research that examines the link between user involvement and indicators of system success is reviewed. The authors find that much of the existing research is poorly grounded in theory and methodologically flawed; as a result, the benefits of user involvement have not been convincingly demonstrated. Until higher quality studies are completed intuition, experience, and unsubstantiated prescriptions will remain the practitioner's best guide to the determination of appropriate levels and types of user involvement; these will generally suggest that user involvement is appropriate for unstructured problems or when user acceptance is important. In order to foster higher quality integrated research and to increase understanding of the user involvement-system success relationship, the authors present the following: a conceptual framework into which previous research has been mapped that can provide direction to future efforts; a review of existing measures of user involvement and system success; a set of variables that have been proposed as potentially impacting the relationship between user involvement and system success.

Under an alternate assumption of the payoff function, we analyze Lee's dynamic game model of R&D rivalry. Both similarities and differences in the equilibrium results of the model are obtained. It is shown that both the reswitching property and the convergence property of R&D rivalry are robust under the alternate assumption. The reswitching property of R&D rivalry states that after gaining a technological edge against a rival, a decision maker stops doing R&D and he will resume doing R&D when his rival succeeds in narrowing the technological gap between the two rivals. The convergence property of R&D rivalry states that when the technology levels of two rivals differ by a wide margin, the one with a lower technology level will be the only one doing R&D to narrow the technological gap between the two rivals. This formalizes the perception of R&D managers that the R&D decision of one firm should depend on the R&D decision of its rivals for competitive reasons. Moreover, when multiple Nash equilibria exist, a different pair of equilibria is obtained under the alternate assumption. Insights to an antitrust puzzle relevant to managers are provided. Finally, this paper provides an explanation of why the market shares of firms in an industry may differ. At stationary states of technologies, asymmetric technologies (market shares) are expected.

In many practical applications or multi-item inventory systems significant economies of scale can be exploited when coordinating replenishment orders for groups of items. This paper considers a continuous review multi-item inventory system with compound Poisson demand processes; excess demands are backlogged and each replenishment requires a lead time. There is a major setup cost associated with any replenishment of the family of items, and a minor (item dependent) setup cost when including a particular item in this replenishment. Moreover there are holding and penalty costs. We present an algorithm which searches for a simple coordinated control rule minimizing the long-run average cost per unit time subject to a service level constraint per item on the fraction of demand satisfied directly from on-hand inventory. This algorithm is based on a heuristic decomposition procedure and a specialized policy-iteration method to solve the single-item subproblems generated by the decomposition procedure. The model applies to multi-location inventory systems with similar cost structures for coordinated deliveries.

Models of decision-making in multi-level, hierarchical systems in the literature have been restricted to structures where the system is strictly pyramidal in nature. We will show that this restriction has been self-imposed and that existing models can be modified to represent a wide range of nonpyramidal structures.

We examine a queueing system with multiple primary servers and a fewer number of auxiliary servers. There are two classes of customers—those who require service from a primary server working alone and those who require service from a primary server who is assisted by an auxiliary server. Though the apparent Markovian state space is five-dimensional, we show that an aggregation results in an exact two-dimensional representation which is Markovian. Matrix geometric theory is used to obtain approximations for the mean delay and blocking probability of each customer type.

The two types of mathematical manpower planning models that appear in the literature involve either longitudinal or cross-sectional formulations. Despite the high degree of realism achieved, the use of longitudinal models is limited because the implementation requires the knowledge of a large amount of historical personnel data that is often unavailable. The value of cross-sectional models requiring a minimal amount of data is diminished due to (1) the difficulty in transferring cross-sectional results into cohort information, and (2) an assumption implicit in the structure of these models stating that the movement of an individual from one grade in the organization to another is independent of that person's organizational age. In this paper, we present a cohort (longitudinal) personnel planning model solved using distributed parameter optimal control theory that requires only cross-sectional data. We derive the optimal hiring, promotion, separation and retirement policies of an organization as functions of time and a person's organizational age and grade. In response to changing goal levels of manpower, we observe changes in the optimal policies and their subsequent effect on the career paths of cohort groups over time.

Since the introduction of the concept of the product life cycle (PLC) some decades ago a great deal has been written on the subject and several empirical studies have been conducted. However, empirical research to date is often limited in scope. It is oriented towards the analysis of the growth and saturation stages and focused primarily on the study of consumer goods. Furthermore, the application of the PLC concept in strategic planning is largely disappointing, the normative orientation of most of this literature being somewhat naive and misleading. The aim of the present research is to study the efficiency of different strategies for achieving market share and cash flow objectives. This study is performed on different types of businesses producing both consumer and industrial products situated at various stages on the product life cycle: growth, maturity and decline. A sample of approximately 1,100 businesses (217 in the growth stage, 315 in the maturity stage, 569 in the decline stage) is drawn from the PIMS data base. A cluster analysis is run to identify natural groups of homogeneous businesses. For each of the nine identified groups, linear regression models are estimated to study the influence of strategic actions—finance, marketings, production, R&D, personnel—on two criteria of performance: market share and cash flow. The research indicates that strategies not only depend on the life cycle stage but also are influenced by the goal orientation of the firm—short-term (cash-flow) or long-term (market share)—and that success strategies appear to be contingent upon the business and the environmental characteristics.

Improved scheduling rules and spares stocking policies are examined for a repair shop supporting a multi-item repairable inventory system with a hierarchical product structure. The results from an earlier paper are extended to the case where more than one unit fails in each item to be repaired. A variety of scheduling rules and methods for initializing the vector of spare parts are evaluated using a simulation of a representative shop. The results indicate that procedures which perform well when only a single unit fails also perform well when multiple failures occur. More complex rules, which recognize assembly mating requirements, do not appear to provide any significant improvement.