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Recent literature use logit analysis for point estimators of the probability of insolvency for each insurer based on financial statements data. These studies focus on selecting predictors, comparing classification techniques, and measuring classification accuracy. Our analysis differs from the previous literature by explicating and developing confidence intervals which provide measures of statistical reliability for the estimators and thus enhance the results of prior research. The main purpose of this article is to provide and illustrate a method of constructing confidence intervals for insolvency probabilities. We examine various measures of the confidence intervals, such as their minimum lengths and minimum upper bounds. Two examples show a substantial improvement (reduction) in the length and the minimum upper bound of the confidence intervals at the optimal level of the financial accounting variables. A third example depicts a confidence interval for the probability of failure for an insolvent insurer. Implications for researchers and users of financial accounting information are briefly discussed.

Recently a public committee has been appointed by the Israeli government. The committee was assigned to prepare regional plans for the northeastern Negev, in the southern part of Israel, in order to absorb some of the large waves of immigrants (about 400,000) expected by the year 2000. Among the strategic issues treated by the committee were the questions when, where and whether to build a new hospital in the area. The locational decision was studied by first identifying a finite candidate set of possible sites. At the final stage various quantitative locational models were employed. In the next stage a subjective multicriteria model was further used to derive locationally preferred solutions. This paper focuses on the first stage. Furthermore, the suggested solution approach is discussed in light of strategic issues.

The classical economic production lot size (EPL) model assumes a constant production rate that is predetermined and inflexible, and perfect quality. Recent models have removed the assumption of perfect quality while maintaining the inflexible production rate assumption. Production rates in many cases, such as orders filled by a machine, can be changed. Moreover, unit production cost and process quality depend on the production rate. In this paper, we extend the EPL model to cases where the production rate is a decision variable. Unit production cost becomes a function of the production rate. Also, the quality of the production process deteriorates with increased production rate. We solve the proposed model for special cost and quality functions and illustrate the results with a numerical example. The results show that, for cases where increases in the production rate lead to a significant deterioration in quality, the optimal production rate may be smaller than the rate that minimizes unit production cost. For cases where quality is largely independent of the production rate, the optimal production rate may be larger than the rate that minimizes unit production cost.

This paper presents a stochastic allocation model for a sequential financial problem involving the allocation of funds to uncertain future payments. It is shown that under certain conditions the optimal allocation policies are piece-wise linear with the budget available, and that there exists an intimate relationship between these policies and the myopic policies obtained from the solution of a sequence of single-payment problems. A numerical example is provided and, finally, certain technical and methodological issues associated with a chance constraint version of the problem are discussed.

The purpose of this paper is to review various structures of the project-selection problem with discrete multiattribute utility. The approach of maximizing the utility for project selection is discussed where the utility function cannot be measured on a continuous scale. The review includes reference to models of uncertainty versus certainty, and to models assuming the existence of dependence and complementary relations among projects versus independent projects. Project selection in hierarchical organizations with a large number of projects and group decisions is also referred to. The various types of models are formulated and analysed, including applications in the areas of water resources, R&D and nuclear plant location. Finally, directions for future research are suggested.

In an earlier paper, the authors presented an interactive method for project selection. The method used additive utilities. This note briefly reports the appropriate modifications for using multiplicative utilities.

An analysis of the willingness of a risk-neutral decision-taker to pay for a parallel research strategy is undertaken. The results, which are based on the management science/operational research literature about the value of information, examine the relationship between this willingness to pay and the statistical moments of the distribution of research outcomes. Only the benefits are considered in studying the above-mentioned problem in a non-traditional economic approach. More precisely, the case of the winner-takes-all is studied to evaluate the willingness to pay for a parallel strategy rather than for a non-parallel one. Upper bounds on the willingness to pay are computed and analysed with respect to the distribution of research outcomes.