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Bidding for offshore U.S. oil and gas leases is a major corporate resource allocation problem involving enormous uncertainties and very high stakes. This paper presents two new, operationally useful decision analysis models to aid in bidding for oil and gas leases. They are unique in that they consider risk aversion and probabilistic dependence among the values of the leases, with both bid levels and partnership shares as (continuous) decision variables. They are suitable for use in evaluating proposed bidding policies or as objective functions in optimization formulations. Practicality of their data requirements is evidenced by use of one of the models for several years in a major oil company. Comparison of optimal solutions to these models on a small example, using actual oil-company data, demonstrates the importance of taking risk aversion and probabilistic dependence into account, and provides insight into the adequacy of independence and conditional dependence as approximations for dependence. These results are pertinent to other real-world allocation problems that share many of the characteristics of bidding problems, such as R&D funds allocation. [ABSTRACT FROM AUTHOR]

This paper analyzes the relationship between technology licensing and the effectiveness of patent protection. Using the 1994 Carnegie Mellon survey on industrial research and development (R&D) in the United States, we develop and test a simple structural model in which the patenting and licensing decisions are jointly determined. We find that increases in the effectiveness of patent protection increases licensing propensity, but only when the firm lacks specialized complementary assets required to commercialize new technologies. In contrast, for firms with specialized complementary assets, increases in patent effectiveness increase patenting propensity but reduce the propensity to license. We present systematic cross-industry empirical support for the proposition that intellectual property protection is a key determinant of the vertical boundaries of the firm and the market for technology but that its impact is mediated by a firm's ownership of specialized complementary assets. [ABSTRACT FROM AUTHOR]

This paper illustrates a methodology to evaluate how dissimilar military systems support the accomplishment of the United States' counterproliferation objectives. The key questions in evaluating counterproliferation systems are identified. By using decision analysis, an influence diagram model is developed that represents military activities in the counterproliferation process. A value model is developed that enables systems to be evaluated against common criteria. An analysis of intelligence, defensive, and offensive counterproliferation systems suggests that intelligence system improvements may provide the greatest potential to meet the United States' counterproliferation objectives. Sensitivity analysis is conducted to determine which factors in the model are most important. To demonstrate the model, nine systems from the Air Force Vulcan's Forge 1995 wargame are evaluated. This paper illustrates the value of decision analysis, and influence diagrams in particular, by involving decision makers and subject matter experts in structuring complex problems for analysis. [ABSTRACT FROM AUTHOR]

The regulatory decision on how safe a safeguarded nuclear facility should be depends on a trade-off between diversion risk and the cost of reducing that risk. Given that one plans to build the plant, the optimum level of safeguards is achieved when the cost of further risk reduction exceeds the benefit from lower risk. This paper develops quantitative models of factors that influence this risk/cost trade-off. A basic conceptual structure is presented, and a detailed example is used to illustrate the methodology for optimal regulation setting. [ABSTRACT FROM AUTHOR]

The fundamentals of the METRI approach to model-building are discussed. This approach may have applicability where the system to be modelled involves very large numbers of variables, ignorance, uncertainty, and hierarchical relationships, and where the decisions to be made involve enormous amounts of detail. Since the approach was developed in the context of the "allowance list" problem, the application of the approach to that problem is discussed in detail. The problem of "validation" is also discussed, since, as in some other cases, the payoff measure defined by the model has no close parallel in terms of independently available data. The paper is basically an account of certain aspects of a U.S. Navy project. [ABSTRACT FROM AUTHOR]

Air Force 2025 was a study directed by the Chief of Staff of the United States Air Force to identify key system concepts and technologies for achieving air and space dominance in the year 2025. The study was a large effort in which over 200 military experts participated for more than one year. We developed a Value-Focused Thinking model, which we used to evaluate which futuristic system concepts have the greatest potential to ensure future U.S. air and space dominance. We named the value model Foundations 2025 because it represented a return to the basics of air and space dominance. We used the "silver standard" approach for value hierarchy development. The participants identified key verbs to describe tasks that must be performed in 2025 to ensure air and space dominance. The value hierarchy was developed bottom-up by aggregating these verbs into higher order tasks using affinity diagrams. Using the value hierarchy, we used multiattribute decision analysis techniques to develop an additive value model with 134 attributes. The Foundations 2025 value model was successfully used to score 43 futuristic system concepts and provide insights about the most promising system concepts and technologies. The analysis results directly supported the study director and the senior leadership of the United States Air Force. [ABSTRACT FROM AUTHOR]

In recent years, the U.S. corporate world has been dominated by a spectacular spate of mergers and acquisitions. Firms are seeking out partners that will provide them the necessary leverage to achieve their various growth and diversification goals. Based on the balance model developed by Farquhar and Rao, this paper suggests a multi-attribute approach for evaluating acquisition partners. The appropriateness of this approach in the decision of one firm to acquire another firm is investigated using experimental methods. The context of the cosmetic industry is used in this empirical application. Results indicate that the balance model is quite suitable in describing the acquisition decision. [ABSTRACT FROM AUTHOR]

The article presents the author's views on means of measuring and controlling development progress in the United States. First, the author discusses the terms PERT (Program Evaluation and Research Task) CPM (Critical Path Analysis). The author references a related document written by Andrew Vassonyi as well as the document "The Image: A Guide to Pseudo-Events in America," by Daniel J. Boorstin. Boorstin's book focuses on the practice of self-deception. The author also references one of the first articles explaining the PERT network analysis technique. The article, written by Messrs, Fazar, Roseboom, Malcolm, and Clark, was published in the October 1959 issue of the periodical "Operations Research." The aforementioned article focuses on methods of evaluating research and development projects.

We investigate whether cultural differences between professional decision makers affect financial contracts in a large data set of international syndicated bank loans. We find that more culturally distant lead banks offer borrowers smaller loans at a higher interest rate and are more likely to require third-party guarantees.These effects do not disappear following repeated interaction between borrower and lender and are economically sizable: A one-standard-deviation increase in cultural distance, approximately the distance between Canada and the United States or between Japan and South Korea, is associated with a 6.5 basis point higher loan spread; the loan spread increases by about 23 basis points if the bank-firm match involves culturally more distant parties,for example, from Japan and the United States. We also find that cultural differences not only affect the relation between borrower and lender, but also hamper risk sharing between participant banks and culturally distant lead banks. [ABSTRACT FROM AUTHOR]

The agglomeration of the automobile industry around Detroit, Michigan is explained using a theory in which disagreements lead employees of incumbent firms to found spinoffs in the same industry. Predictions of the theory concerning entry and firm survival are tested using data on the origin, location, and years of production of every entrant into the industry from 1895 to 1966. The geographic concentration of the industry is attributed to four early successful entrants and the many successful spinoffs they spawned in the Detroit area and not to conventional agglomeration economies benefiting co-located firms, as featured in modern theories of agglomeration. Implications of the findings regarding firm strategy are discussed. [ABSTRACT FROM AUTHOR]

A model developed to aid a state-level resource allocation process in the United States Department of Agriculture Special Supplement Food Program for Women, Infants, and Children (WIC) is presented. The model is formulated as a linear integer goal program, utilizing service levels for six categories of W1C participants as goals. The model employs a methodical, consistent approach to the allocation process, yet allows ample flexibility for consideration of state-specific issues. By allowing the user to adjust the relative importance of each goal, the model can incorporate subjective attitudes of state-level WIC administrators. This is extremely important as these attitudes are the result of the administrators' familiarity with the WIC program in their states, and the significance of input of this nature should not be neglected. An application of the model to the Indiana WIC program is presented. Sensitivity of the model to changes in the objective function weights and in the target values for the goals is explored. Although orginally developed to allocate budget increases, the model may be used in allocating budget cuts as well; this form of the model is also presented. The model can be extended hierarchically to incorporate resource allocation at the federal level. This modeling approach should be useful in all public sector programs characterized by multiple objective and hierarchical decisionmaking. [ABSTRACT FROM AUTHOR]

This study describes the U.S. government's role in the development of manufacturing technologies and in the transfer of manufacturing innovations to private industry. The goals, organization, technologies, methods of technology transfer, user groups, and methods of program assessment for 13 government programs in this area are described and their implications for national manufacturing innovation and productivity are discussed. [ABSTRACT FROM AUTHOR]

The literature on strategy formation is in large part theoretical but not empirical, and the usual definition of "strategy" encourages the notion that strategies, as we recognize them ex post facto, are deliberate plans conceived in advance of the making of specific decisions. By defining a strategy as "a pattern in a stream of decisions", we are able to research strategy formation in a broad descriptive context. Specifically, we can study both strategies that were intended and those that were realized despite intentions. A research program suggested by this definition is outlined, and two of the completed studies are then reviewed--the strategies of Volkswagenwerk from 1934 to 1974 and of the United States government in Vietnam from 1950 to 1973. Some general conclusions suggested by these studies are then presented in terms of three central themes: that strategy formation can fruitfully be viewed as the interplay between a dynamic environment and bureaucratic momentum, with leadership mediating between the two forces; that strategy formation over time appears to follow some important patterns in organizations, notably life cycles and distinct change-continuity cycles within these; and that the study of the interplay between intended and realized strategies may lead us to the heart of this complex organizational process. [ABSTRACT FROM AUTHOR]

PARM is an acronym for Program Analysis for Resource Management. It is a general-purpose system for preparing feasible schedules for large, complex systems of interdependent activities to support specified objectives subject to resource constraints. The procedure provides for an iterative process alternating between human decision-making and machine computation in which the goal is achievement of a feasible and acceptable program. Feasibility is objectively determined, but acceptability is subjectively determined. No overall optimizing criterion is assumed to be definable; but many optimizing procedures of limited scope are included. The PARM System has been developed by the National Planning Association under contract with the Office of Emergency Planning, Executive Office of the President. The initial implementation of the system -- the Prototype Model -- will be used for analysis and training with respect to national economic recovery following a nuclear war. Adaptations to national economic projections in peacetime and to analyses of the industrial impacts of defense expenditure or of disarmament are contemplated in future development of the system. Applications to economic development planning in other nations of the world are also under consideration. As adapted to economy-wide projections, the PARM System belongs to the same family of statistical-economic techniques as the input-output system of Leontief. However, it is more inclusive in scope and makes more exacting demands for data. Leadtimes are associated with all input requirements factors. In addition to information on requirements per unit of output for an inclusive set of current production activities defining the economy, it incorporates data on initial stocks and capacities, unit requirements for the expansion of capacity, and a variety of data used for the generation of consumer, government and foreign trade final demand from a selected list of highly-aggregated, stipulated variables. In computation the PARM System differs markedly from the pioneering approach of Leontief. An iterative, triangular process of computation is employed in which activities are taken up in turn and various transformations of the demand schedule of each activity may be performed before the impacts of the given activity on other activities are determined. The major transformations are designed to prevent the activity level from exceeding either the available physical capacity or the available trained manpower, on a plant by-plant basis. Other transformations include automatic capacity augmentation when requirements can be met only by capital expansion; limitation of expansion per period to a rate consistent with the plant-by-plant availability of trained manpower and the possibilities of training new employees; application of available stocks to meet requirements; production in advance of need when necessary to smooth the schedule of the activity and minimize investment requirements; transfer of deficits to substitute items; and acceptance of tardy output when late delivery of a requirement is permissible. The system is not restricted to linear homogeneous relationships, as is the usual input-output system, but handles all rational algebraic functions, including functions of two or more variables. The system determines the feasibility of each activity, determines capacity augmentation requirements, and measures the deficits, or indicates unutilized capacity, if any. [ABSTRACT FROM AUTHOR]

The article reports on the mechanization of management and management science in the U.S. The author focuses on the need for instrumentation of production as well as machine management in the wake of technological advances within the industry. The author encourages managers to implement technology including automatic computers, automatic turret lathes, and remote control devices. He discusses the importance of operations research, as well as timely decision making on the part of management, in order to speed up the automation process. Elements of management training are mentioned. A quotation from Phillip Murray, former president of the Congress of Industrial Organizations, is included. The implementation of the technological innovations is referred to as the Second Industrial Revolution.