Abraham Mehrez

Quality-adjusted Life Years, Utility Theory, and Healthy-years Equivalents

Decisions about medical treatments and the settings of health programs are not purely technical, but also involve issues of value such as the evaluation of trade-offs between quality of life (morbidity) and quantity of life (mortality). The most commonly used measure of outcome in such cases is the quality-adjusted life year (QALY). The authors show that QALYs, being a health status index, do not stem directly from the individuals utility function and thus only partly reflect the individuals true preferences. This might lead to the choice of the nonpreferred alternative due to the misrepresentation of the individuals preferences. Two examples illustrate this claim. An alternative measure of outcome, the healthy-years equiv alent (HYE), is described. This measure stems directly from the individuals utility function and thus fully reflects his/her preferences. It combines outcomes of both morbidity and mortality and thus can serve as common unit of measure for all programs, allowing com parisons across programs. Different ways of measuring the HYE are discussed. Key words: utility theory; economic evaluation; cost-effectiveness analysis. (Med Decis Making 1989;9:142-149)

Academic departments efficiency via DEA

Abstract This paper presents a case study where academic departments at Ben-Gurion University were evaluated via the Data Envelopment Analysis using the CCR model. Extensive post analyses were performed in several directions. First various sets of data were used to identify efficient and inefficient departments. New efficiency measures are suggested in relation to the reference set included in the analyses of academic departments. We measured the efficiency of departments to other departments within the same school. We applied cluster analyses to divide the departments into several sets; and the discriminant analysis to test the match of the efficiency/inefficiency division of the CCR ratio. We further tested organizational changes where an inefficient department was closed and joins other departments. Finally we compared the CCR model to the pure economic approach—the cost per student ratio.

Cellular manufacturing: A taxonomic review framework

Abstract The purpose of this paper is to employ a taxonomic framework for a comprehensive review of cellular manufacturing systems. Three classes of machine-part grouping techniques have been identified in cellular manufacturing: visual inspection, part coding and classification, and analysis of the production process. For this review, we concentrate on the latter approach and classify it by assumptions, characteristics, and main properties and results. A comprehensive review and discussions of various models are provided. Model assumptions and characteristics are summarized using a tabular framework. Finally, the paper provides directions for future research.

Optimal inventory policy under different supplier credit policies

The purpose of this paper is to investigate the effect of supplier credit policies on the optimal order quantity within the economic order quantity framework. The supplier credit policies addressed in this paper have been neglected in previous work and fall into two categories: (1) supplier credit policies where credit terms are independent of the order quantity and (2) supplier credit policies where credit terms are linked to the order quantity. In the latter case, suppliers use favorable credit terms to encourage customers to order large quantities. In other words, the favorable credit terms apply only at large order quantities and are used in place of quantity discounts. As shown, supplier credit policies in some cases can lead to substantially different order quantities from classical economic order quantities. Numerical examples are used to illustrate the effects of different credit policies.

Economics, health and health economics: HYEs versus QALYs

This paper responds to Culyer and Wagstaffs (CW) and Buckinghams (B) arguments. We refute their claim about the equivalence of HYEs and QALYs; they fail to distinguish between choice under uncertainty and under certainty. CW assume that all individuals have a specific form of utility function, which yields their conclusion of equivalence. Bs arguments confuse the measurement technique and the utility theory from which it stems; his argument about the normative superiority of the QALY construct is inconsistent with economic thinking. The HYE, by being compatible with the principles of economics, is superior to the QALY for economic evaluations of health care interventions.

A two-item newsboy problem with substitutability

Previous research on the newsboy problem is based on the assumption that in case of a shortage, unsatisfied demand is lost. Such an assumption is inappropriate for items that have a close substitute. In this paper, we formulate a two-item newsboy problem with substitutability (TINPS). Upper and lower bounds on the optimal order quantities of the two items are derived. Since analytical solutions to the problem are difficult to obtain, a Monte Carlo simulation is used to identify the optimal solution to the TINPS. Order quantities identified by the simulation provide higher expected profit than would have been obtainable without considering substitutability.

Evaluating health related quality of life: An indifference curve interpretation for the time trade-off technique

A commonly used method of measuring cardinal preferences for the purpose of evaluating health related quality of life is the time trade-off (TTO) technique. The TTO technique, although offered as a substitute to the standard gamble (SG) technique, is not related in a general way to any existing behavioral theory. We suggest that in the context of value function theory the TTO technique is a method which enables us to identify different points on an individuals indifference curve in his evaluation space. Creating a formal theoretical foundation for the TTO technique enables us to better understand and interpret the outcome of our measurements. We show, for example, that the current way of calculating the value preference of a given health state assumes a very specific set of specific set of value functions. This assumption has not been validated in empirical studies and thus casts doubt upon the interpretation of these values as being the value preferences of individuals for these health states.

A partial backorder control for continuous review ( r,Q ) inventory system with Poisson demand and constant lead time

In this paper, we consider the partial backorder policy used in conjunction with the traditional stochastic (r, Q) inventory system. The partial backorder control is modeled using a control variable, b, which limits the maximum number of backorders allowed to be accumulated in any given cycle. In traditional inventory control policies, the unsatisfied demands are either completely backordered or completely lost. The new control variable b provides an alternative to dealing with shortages, which is different from the two extremes policies: the pure backorder policy (which corresponds to b=∞) and the lost sales policy (b=0). We obtain the expected annual cost of the model and give a procedure to compute the optimal parameters, r∗, b∗ and Q∗. Numerical examples which demonstrate the advantage of implementing the partial backorder policy are presented and the percentage of cost savings depends on the fill rate.

A discounted machine-replacement model with an expected future technological breakthrough

A machine-replacement problem is analyzed in a technological-development environment, in which a new-type machine (built by a new technology) may appear in the future. The solution of the replacement problem depends on purchasing, operating, and resale costs, and on the probability distribution of the market debut of the new technology, and it indicates whether to replace the existing machine now with an available similar type of machine, or to continue to operate the existing machine for at least one more period. A dynamic discounted cost model is presented, and a method is suggested for finding the optimal age for replacement of an existing machine (under rather general conditions of a technological environment). A solution procedure and a numerical example are given.

An Overview of Representative Research of the Relationships Between Quality and Inventory

We present a taxonomy of the research that includes the relationship between quality and inventory. A literature review of over forty-five books and journal articles provides a basis for understanding the research in this area. Our goal is not to review all variants of this relationship or to describe all of the results, but rather to provide a broad overview of the major problems in the literature. We review optimization, statistical analysis and simulation, viewpoint and policy literature, although the majority of the works deal with optimization research and viewpoint or case studies. This is the first attempt to review this subjective matter.