Knowledge that Transforms

The time-sharing computer system now being operated in Phoenix by the Computer Department offers any Company executive willing to spend a few days learning to use the system an entirely new capability to explore and prepare business forecasts. The system does the arithmetic and prints the results in the privacy of the user's office in a few minutes. The planner can explore a range of assumptions and estimates impossible to handle by manual methods and difficult and time-consuming by more traditional computer methods. With the system, the planner can state his basic data and assumptions, observe the results, and then modify any of the assumptions he chooses and get new results within a few minutes. By following this procedure several times it is possible to explore the effects of a variety of environmental assumptions, such as market and price structure for a new product, and to find out what budget of costs for the new product must be realized to yield acceptable business results. This procedure, which requires many days of the time of several individuals by manual methods, can be completed in most cases by one man in less than one day, including the initial programming. An example from a recent new business study is given.

There is a persistent belief that regional R and D activity will have stimulating effects on the region's economic activity. In order to explore this view further, a multi-equation econometric model is derived to determine the extent to which the spatial distribution of scientific talent is in turn reflected in regional economic activity. The parameters of the model are estimated by the two-stage least-squares method. It is concluded that such economic variables as investment in plant and equipment, employment, and earnings are positively related to the distribution of scientific talent, although these relationships are relatively inelastic. It is also seen that the regional distribution of Department of Defense R and D expenditures tends to be extremely elastic with respect to the regional distribution of scientific talent. It is therefore concluded that concern for the scientific sophistication of a region's population, and the economic implications of this sophistication, is by no means misplaced.

Conditions are derived under which optimal replacement rules for systems subject to Markovian deterioration and failure are given by control limit replacement rules. An efficient method of deriving such rules is given which is based on the simplex algorithm.

Exponential Smoothing, Moving Average, and Least Squares forecasting models were tested by simulating their operation on seven years of actual data for various sewing machine product groups. The relative accuracy of the forecasts varied according to the length of the period being forecasted and the characteristics of the data. Tests were also conducted on synthetic series designed to isolate the cyclical, trend and noise components. For the series tested, the Exponential Smoothing and Moving Average methods were about equal in overall performance for intermediate range forecasts (next six months' demand). For the short range (next month's demand), the Exponential Smoothing gave slightly better over-all results. The difference in relative performance between the Exponential Smoothing and Moving Average methods for intermediate versus short range forecasts appears to be due to a subcomponent identified as “caused noise.”

Correction to the article Beightler, C. S., D. J. Wilde. 1966. Diagonalization of quadratic forms by Gauss elimination. Management Sci. 12(5, January) 371–379.

A method is given for maximizing a linear function subject to a quadratic and a number of linear constraints. The method differs from general convex programming methods by terminating in a finite number of iterations and is actually an application of the Simplex and dual methods for quadratic programming to parametric quadratic programming problems. The method is shown to be useful for the solution of some chance-constrained programming problems. Detailed rules and a simple example of an application are given.

This paper presents results which apply to convex programming problem in parametric form. The results secured are also related to the problem of fractional programming in a way which indicates computational possibilities for the latter class of problems. The results are extended to general non-linear programming problems with special reference to continuous criterion functions. As a particular case, the linear fractional programming problem is considered and, in conclusion, the results secured here are pointed up by reference to existing algorithms for the latter class of problems.

A dynamic interaction exists between a firm and its business environment, due to both physical and psychological changes. This necessitates a system to generate a sequence of decisions which will create a sequence of acts modifying the forces within the firm-environment interaction so as to maximize the probability that the firm's basic objectives will be met.

Correction to the article Feeney, G. J., C. C. Sherbrooke. 1966. (s − 1, s) Inventory policy under compound poisson demand. Management Sci. 12(5, January) 391–411.

This paper considers a class of algorithms for solving quadratic programming problems. An attempt is made to rank the various procedures. Computational results are given and a discussion of the results is presented.