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This paper looks at the inventory-related models published during the last ten years from the systems point of view. A chart is given to show the broad categories of inventory models. The paper first lists eleven quantifiable and four nonquantifiable variables (and their types) that go into inventory formulas, affect inventory decisions, and have already been identified by the researchers. Next, various research papers are grouped in six categories based on similarities of approaches used by these papers. These categories are : (1) models for determining optimum inventory policies, (2) lot size optimization, (3) optimization of various specific management objectives, (4) models for optimizing highly specialized inventory situations, (5) application of advanced mathematical theories to inventory problems, and (6) models bridging the gap between theory and practice. Next a synthesized review of recently published models belonging to each individual category is presented, and salient features of individual studies are highlighted. Further, this paper discusses the difficulties that most commonly arise in applying these models to routine practical inventory situations ; and it also lists the weaknesses (or limitations) of certain assumptions commonly made by the researchers for developing inventory models. In the end, the paper makes several suggestions about how the available results of inventory models can beat be used in practice. [ABSTRACT FROM AUTHOR]

Presents an optimization approach for machining for a fixed demand. Determination of the cutting conditions for minimum overall machining cost; Emphasis on the technological constraints related to each operation in machining; Economic effects of batch- and machine-idle time and of other disturbing events.

Empirical studies of multifactor choice making can easily generate thousands of combinations if full factorial designs are used. A set of procedures--orthogonal arrays and incomplete block designs--are proposed and illustrated as ways to reduce significantly the number of combinations while retaining other desirable feature of balanced experimental designs. [ABSTRACT FROM AUTHOR]

The objective of this paper is to determine upper bounds of the potential savings that can be realized by the application of cash management optimization models. These upper bounds are found by simulation as the difference between the performance of a deterministic optimization model--which finds the optimal policy in hindsight--and the simulated performance of a hypothetical treasurer who uses simple heuristic cash management rules as informally practiced by many treasurers, based on prediction of random cash flows. The results of this analysis leave serious doubts as to profitability of cash management optimization models. [ABSTRACT FROM AUTHOR]

The article reports on two important assets to any retail chain: merchandise inventory and display space. The authors focus on developing a mathematical optimization model that can be used to forecast consumer reaction to inventory stockouts as well as the costs associated with inventory replenishment policies. The results of a questionnaire designed to monitor consumers' decision making habits regarding stockouts at liquor stores are discussed. The results are interpreted on a basis of lost sales instead of lost profits. Managerial applications are also examined.

The semantic differential technique [12] has enjoyed widespread use in many areas of the behavioral sciences in measuring attitudes. It has been used by opinion researchers to measure corporate images [3], by pollsters to measure political images [12], and by academicians to measure student attitudes toward teachers [15]. McGinness [16] shows how a semantic differential was used in the successful presidential campaign of Richard M. Nixon in 1968. As marketing researchers have applied the semantic differential technique to marketing problems, they have suggested modifications to allow more flexibility [9]. Two important assumptions tacitly made by those employing the semantic differential will be examined in this article, specifically: (1) what Osgood calls "contextual contamination" and (2) the stability and meaning of an ideal rating. [ABSTRACT FROM AUTHOR]

Economic analysis of advertising and promotion can account for effects of previous promotional effort and its decay, evaluate the level of past and present efforts, and determine effects of advertising of competing products. A unique opportunity exists in introducing new products to test the relative efficiencies of some common forms of promotion. Analysis is not distorted by previous effort, and competitive programs that might reduce the market share of a new product can be controlled in the test stores. [ABSTRACT FROM AUTHOR]

Models for determining optimal levels of advertising expenditures require an equation that relates such expenditures to sales in the context of other marketing efforts and the environment of the firm. Using three savings banks as an example, this study demonstrated that the construction of this equation requires knowledge of a bank's goals, planning horizon, and marketing strategy. [ABSTRACT FROM AUTHOR]

There is a clear dichotomy between the optimizing and the nonoptimizing approaches. The four main methods using the optimizing approach are: (1) linear programming, (2) nonlinear programming, (3) iteration or marginal analysis, and (4) dynamic programming. The two major nonoptimizing approaches are (1) heuristic programming and (2) simulation. One of the known models using each approach is examined in detail. The relative merits of the various approaches are then discussed. [ABSTRACT FROM AUTHOR]

In a rapidly changing economy, warehouse location is a dynamic decision problem. Yet most existing location models used to solve the problem are static. In this article, solutions from these static location models are used with the techniques of dynamic programming to find a dynamic optimum warehouse location-relocation plan. [ABSTRACT FROM AUTHOR]

Constrained and unconstrained models of a variable-sum market game characterizing the problem of television programming are developed. Solutions are obtained through the introduction of a nonresponding pseudo-firm which turns the game into a constant-sum one. The relative values of competitive and noncompetitive models are then discussed. [ABSTRACT FROM AUTHOR]

This article is concerned with the effect of a problem's environmental context on the learning of on ‘optimal’ allocation role. A series of soles allocation problems were presented to groups of executive and student subjects. While the allocation principle remained invariant over conditions, the context of the problem was experimentally modified. Results of the experiments indicated that: (1) both groups of subjects performed about the some; (2) the modifications made in the ‘surface’ complexity of the problem did not markedly affect the probability of learning the allocation principle; and (3) a constant-probability-over-trials model appeared to describe learning behavior. [ABSTRACT FROM AUTHOR]

The article focuses on optimal financing of cyclical cash needs. The aim of the article is to figure out the optimal mix of short- and long-term borrowing to finance cyclical cash needs, and to do a comparative static analysis of how the optimal mix varies with the shape of the cycle and the interest rate structure, with rates assumed certain but possibly varying over time. The article is critical of macroeconomics and monetary policy literature for ignoring the possibility of borrowing long-term funds to meet a portion of variable short-run cash needs.

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This paper deals with a theoretical programming method for determining conditions of unit cost reductions of dynamic technological processes. The mathematical model has been adopted for use as a dynamic programming procedure. The necessary assumptions needed to use the procedure have been formulated.
The more important part of the work is the optimum principle, enabling the solution of a wider class of problems than is possible with the commonly applied R. Bellman's Principle. In place of the assumptions on critical functional additivity (i.e. the additive nature of costs) due to several trajectory elements (e.g. technological operations), more general moments were introduced. These can be stated as 'the costs of the functional value of the first part of the trajectory causes an increase of the functional value for the entire trajectory, regardless of its second part' and 'each intermediate state required in reaching the optimum of the whole process, is to be reached in an optimal manner'. [ABSTRACT FROM AUTHOR]

Optimization is rightly claimed to be the most significant factor distinguishing the modern approach to machining processes from the orthodox one. Practical results can be obtained from the application of mathematical modelling and optimization techniques.
The paper presents a procedure for solution of machining process optimization problems, with the use of theory of graphs and Bellman's optimum principle.
The finite graph G=(N, A) (where N denoted a set of nodes and A the set of arcs) here presents the set of feasible solutions. Each arc represents a corresponding machining operation and each path the feasible machining process.
A number can be associated with each are the increment of criterion for optimality. Using the optimum principle we can find the shortest possible path in the graph, thus solving given problems of choice for the optimal machining process.
There is a variety of ways in which the performance criterion can be formulated. In this paper only those performance measures having sufficient economical justification are considered. We may minimize the costs of machining processes, or optimize economical effectiveness of capital engaged.
The method presented can be applied with every additive criterion, as well as with some non-additive ones. A practical example illustrates the field of possible application of this method. [ABSTRACT FROM AUTHOR]

Optimization techniques are widely used in many areas and frequently developments of a technique in one area open up opportunity for its use in other areas. This paper presents examples of how the newer techniques have contributed to the improvement in technological processes.
After a brief discussion of optimization, available optimization techniques are classified and the principles of constraint and uncertainty programming outlined.
The application of current techniques to design problems in various production disciplines are then discussed and the Appendix presents some problem solutions. [ABSTRACT FROM AUTHOR]

This paper discusses the use of the geometric programming technique to determine the cutting speed and feed which yield minimum production cost. The method provides for simultaneous determination of the cost optimum values of speed and feed and allows for the incorporation of restrictions on the allowable levels of the machining variables. [ABSTRACT FROM AUTHOR]

Two models of steady-state production line systems are analysed using simulations to estimate the coefficients for an optimal solution to the problem of determining the buffer storage capacity for lines of varying length. The non-steady-state case is then considered and the possibility of using a time-dependent control on buffer capacity during the transient period is investigated. [ABSTRACT FROM AUTHOR]

This study deals with the problem of optimum production scheduling. The problem is solved in detail by a discrete form of Pontryagin's maximum principle to illustrate the use of the principle. [ABSTRACT FROM AUTHOR]

Using the discrete optimizing technique, a procedure is developed to obtain an optimal or near-optimal plant layout for minimum material handling. The material handled is understood to be loads times distance travelled. The discrete optimizing technique is summarized. [ABSTRACT FROM AUTHOR]

The paper discusses planning problems which arise when different products are manufactured on several assembly lines and production has to be co-ordinated with other manufacturing centres. In a limited labour market flexible production capacity requires the transfer and retraining of existing workers.
The first section of the paper explores the simplest possible planning element which still contains enough of the essence of the problems to shed some light on the nature of a solution. This model consists of the planning of production of a single product in one location, under the supposition that teams of girls may be relinquished to (or obtained from) a labour reservoir at a penalty which corresponds to retraining costs. A production planning game based on this model is constructed, and played with teams of human planners. The game is also played by means of two types of systematic decision rules:(1) a linear production smoothing rule; (2) the optimum rule for the game, developed by dynamic programming. This permits a comparison of the efficacy of human planners in comparison to automatic decision rules.
The dynamic programming model is extended in the next part of the paper to cover a more realistic model of the situation. The results of the dynamic programming analysis are shown to be a very valuable tool for the production planning of several product types in one plant, as well as for the co-ordination of different plants. [ABSTRACT FROM AUTHOR]

An investigation was carried out to determine the effect of the independent variables of sex, weight carried and distance moved on the following dependent variables for three-dimensional hand movements: (1) maximum acceleration, (2) maximum velocity, (3) ratio between maximum velocity and average velocity, (4) per cent time until maximum acceleration is reached, (5) per cent time until maximum velocity is reached.
Additional objectives were to determine the pattern and shape of acceleration and velocity curves, and to develop mathematical relationships to evaluate the velocity and acceleration at any time during a three-dimensional hand movement. [ABSTRACT FROM AUTHOR]

This paper gives the results of computations, for a chosen production control model, yielding the extra costs incurred when information about a change in mean demand level becomes available at some rime relative to the time of the change. These extra costs are zero if the information is available from prehistoric times and increase monotonically as the detection moment shifts to later points of time. Only "jumplike" changes of mean demand level are considered. It is found that the extra costs as a function of the detection moment N approach a linear asymptote for high N. The points of contact of these results with control chart theory, especially the optimization of control charts as a link between predictors and production control, are mentioned. [ABSTRACT FROM AUTHOR]

The article presents a test to determine the optimal time temperature at which pork and gravy should be processed during canning for the maximum palatibility to the consumer. The test uses a mathematical optimization technique when the variables involved represent consumer preferences. 135 respondents rated preference samples from six different meat packing plants, rating each sample on a nine-point scale from "extremely disliked" to "extremely liked." An equation is derived from the data collected and the confidence limits are described. Some other applications for the test are also discussed.

The article presents a response to an earlier article in the April 1956 issue of "The Journal of Marketing" from Professor Hans Brems, titled "Long-Run Automobile Demand." In that article, Professor Brems claimed that automobile output for the year 1955 exceeded demand and that it would be unwise to base long-run investment in plant on the current ratio of new car purchases. The author of this article takes issue with Professor Brems' claim, suggesting that his approach may be too simple and inadequate for long-run planning. The article summarizes Brems' formulation, presents an alternative formulation, and addresses long-run equilibrium adjustments and statistical derivation of the coefficients. The author claims that this model can also apply to other durable goods.

The article discusses the marginal preference model and its applicability in operations research. The article discusses how mathematical models used in operations research are developed and how these models provide measurements that are needed and used to help satisfy human needs. The article discusses measurements, qualitative measurements, and replication. In describing the use of the marginal preference model, the article highlights the preference defined, optimization within constraints, and a test of the model. Discussion of the applicability of the model is also presented.

The article discusses optimal financing policy for a firm with uncertain fund requirements. The author explains that several financial models make the distinction between short-term and long-term sources of finance and focus on two or at most three asset dimensions of the problem including cash, marketable securities and bank loans. He states that keeping up such narrow correspondence between maturities of fund requirements and sources of finance has been found in the context of bank asset management to be suboptimal.

A central question of many previous monetary studies has been the determination of the effects of various forces upon the actual supply of money in the economy. One of a number of competing monetary supply hypotheses (Brunner and Meltzer) has focused on the relationship between bank reserves and deposit creation. This theoretical structure was first suggested in earlier works by Phillips and Crick. Recent studies of similar nature, including those of Mellon and Orr, Morrison, and Brown and Lloyd, have employed the techniques of inventory theory to examine the factors influencing bank credit expansion. Similar inventory treatments of other cash balance and portfolio adjustment models are presented in the works of Baumol, Eppen and Fama, Lloyd, and Chitre. In the present paper, the effects of various forces on the optimal expansion of credit and the holding of reserves are investigated using the techniques of dynamic programming (see, for example, Bellman and Dreyfus). Discussed in the paper are the effects on bank credit expansion of uncertainty about reserve losses, various types of penalty costs, costs of adjustment, uncertain future interest rates, and of various institutional structures under which the bank must operate. This latter topic is important because of the Federal Reserve policy change of September 1968. Prior to that time, required reserves and actual reserves were computed over the same reserve period. Since that time, however, the required reserves in any period are known with certainty at the beginning of the period and depend upon deposit levels two periods earlier. For purposes of mathematical convenience, this latter structure is treated here as a one-period lag. [ABSTRACT FROM AUTHOR]

The article presents an analytical model for the derivation and selection of an optimal profit curve for a given firm by utilizing its internal financial data. The underlying model of the Riesz-Kakutani representation theorem is reviewed and used as a basis to select optimal examples from a firm's various possible profit curves.

The article focuses on methods of frequency function estimations using limited data. It states that the use of sparse data in frequency function estimations can be used in determining the expected value that added data would provide, and if its value exceeds the cost of gathering the data. It comments on the use of constrained maximization of entropy in frequency function estimation, which can result in the same frequencies in large parent populations of random variables as the most probable combination of observations which the constraints can satisfy.

The article focuses on optimizing models for after-tax earnings, which incorporate depletion allowances. The article explains that a corporation that produces a single product, whose production cost is a linear function of the production level and where net price per unit is constant, has a Pre-Tax Earnings function which is a linear function of the production level. It is also cited that if the tax rate is constant, the After-Tax Earnings function is also linear. The optimizing model featured in the article cannot be used for the extractive industries which are allowed a depletion allowance that must be computer separately for each property according to a relatively complex formula stated in the Internal Revenue Code.

This article discusses the application of optimum-seeking methods to simulation studies for managerial problems in a preliminary fashion. There has been an increase in the applications of optimizing techniques and simulation methods after World War II due to the popularization of the operations research concept and development of a wide variety of mathematical tools such as linear programming, queuing theory, and dynamic programming. Simulation is different from other techniques in the relevant variables, cost and lot size.

This article deals with the increasing number of warnings that the field of management is declining. Starting with the premise that this decline is due to the failure of management scholars to meet the needs of the client population, practicing managers, and students, an attempt is made to correct this trend by forecasting the needs of this client group for the 197O's. The characteristics, expected to be increasingly required by this client group in the 197O's, are operationality and testability. Therefore, scholars in the field of management must move toward a research base that emphasizes these aspects, or risk the loss of these client groups to others who are willing to satisfy their needs. Attempts in the past to connect specific managerial action with firm performance have been frustrated by problems of suboptimization, the lack of experimental control, and by confounding due to the impact of environmental, or uncontrollable, factors on firm performance. A research model that has been proven to be operational in recent field tests is proposed as a way of beginning to accumulate the research base that will probably be required if we are to halt the decline in the field of management. [ABSTRACT FROM AUTHOR]

Rational decision-making is essential for the long-term success of any organization. For lower-level managers, much of their experience in decision-making is derived from recurrent decision problems. This study analyzes the decision patterns of three lower managerial levels and then contrasts these data with the optimal results generated by a dynamic programming model. [ABSTRACT FROM AUTHOR]

Systems analysis has potential for many applications. But it has pitfalls in use as well. This paper discusses the operational context for the application of systems analysis to modernizing nations of the world. It also suggests some limitations of systems analysis in its indiscriminate use for this range of problems. [ABSTRACT FROM AUTHOR]

The article discusses the evolution of management science through 1963. Classic management principles have been outlined as functions including planning which emphasizes that management is a rational process of problem solving, staffing which recognizes that management is a human process, and directing which emphasizes the importance of leadership in the management process. A major contribution to management theory has come from the human relations school. Another major component of management science is decision theory.

This article examines how dynamic programming applications can be applied to finance. The authors discuss how these applications can benefit corporations by helping solve financial problems that involve inter-temporal relationships. They note that this is an area of corporate finance that has been neglected; however, it is important to understand how current decisions may impact future decisions. They apply dynamic programming to a bond refinancing decision in order to show how a common corporate finance problem can be solved with this application and to also show the various attributes of the process.

On the question of optimal investment in a firm there are broadly two trends of thinking in the existing literature. In one, the maximand is a static utility function; and in the other it is the growth rate of sales revenue under the conditions of long run profit maximization. Above we have proposed a model of optimizing the investment with reference to a dynamic utility function over an infinite time horizon. If, however, the time horizon is finite the same criterion can be used; but obviously the results would be somewhat different depending largely upon the postulated transversality condition. We have then examined a special case of our model where the utility and production functions are specified in a certain way. It is found that then under certain assumptions the three criteria--Lintner-type current utility maximization, Baumol-type growth rate optimization, and our dynamic utility maximization over an infinite time horizon--fully agree in terms of their respective decision rules. [ABSTRACT FROM AUTHOR]

The article presents a response to an earlier article in the September, 1966 issue of this publication titled "The Determinants of Member Bank Borrowing: An Econometric Study," by Steven M. Goldfeld and Edward J. Kane (G-K) and subsequent work by Murray Polakoff and William Silber (P-K) in their March 1967 work "Reluctance and Member Bank Borrowing: Additional Evidence." The authors take issue with the original G-K model, claiming that the empirical evidence was weak and prevented it from being considered a legitimate test of the model. The authors present some alternatives to the empirical specifications and tests.

The article presents a theoretical exploration of a theory of cash balance holdings in the corporate sector presented by the authors, Miller and Orr, in a 1966 article titled "A Model for the Demand for Money to Firms." The authors do not seek to validate the model through empirical testing, but seek to discuss the extensions of the model that have been developed that may merit empirical testing. The article presents a summary of the results to be extended and discusses Bernoullian cash flows, asymmetric movement in driftless generating processes, money demand in a three-asset model, costs of transfer and the elasticity or demand for cash, the Eppen-Fama case, lumpy-and-proportional transfer costs, and the Weitzman case.

The article describes a mechanism for implementing monetary policy. Assuming a closed economy and an activist monetary policy, the author derives two equations for the expected utility of the monetary authority. The instrument variables for these equations are money supply and nominal interest rate, respectively. Despite making admittedly simplifying assumptions, the author's analysis defines the primary monetary task as a two-step process--first decide what the optimum instrument variable is, then optimize it.

Two top authorities explain the concept of prototype mathematical models by means of detailed examples. This article is strongly recommended for those who are seriously interested in the newer quantitative aids to management decision-making. [ABSTRACT FROM AUTHOR]

The users of an accounting report may be single or multiple. Restriction to the case of a single user results in a tractable statement of the accounting problem such that, with suitable specification, the tools of optimization theory may be employed to locate the best (optimal) method of accounting. Unfortunately movement to a multiple user situation tends to complicate the analysis. Nevertheless, such an approach is clearly applicable in a class of partnerships. In particular, I have demonstrated that a partnership characterized by Pareto optimal sharing of partnership outcomes (with the independence and differentiability requirements) is necessary and sufficient to construct surrogate utility and probability functions for the partnership. This, in turn, provides a basis for a well-defined cost-benefit view of the accounting choice problem. And as observed above, the prescriptions of extant accounting theory need not be consistent with those provided by the cost-benefit analysis. Quite clearly, normative accounting analysis, moving from the beliefs and preferences of the individual, is not confined to a single person world. Indeed, this type of analysis can be extended, beyond that of a partnership setting, to any situation where risk sharing is prevalent. [ABSTRACT FROM AUTHOR]

The article discusses the nature of optimal performance measurement in a multiperson organization. The focus is on a statement of the optimization problem. Performance evaluation refers to retrospective assessment of outcomes including profit measurement or standard cost variance analysis. The optimality question may involve the actual determination of an optimal measurement system, conditions for the existence of an optimum, and even a statement of a specific class of optimization problems. Experts say that a multiperson or a multiperiod setting is a necessary condition for the usefulness of retrospective evaluations of decisions.

The article cites a study examining the effect of aggregation on the success of decision making in accounting. It is argued that the aggregation of data can destroy a portion of the information contained in a set of data messages. This study considered aggregations which theoretically result in no loss of information content. The issue focused on the ability of a decision maker to use accounting reports having equal degrees of information content but different degrees of aggregation. Based on the results it appears that little is contributed by the accountant performing the simple aggregation described in the study.