Bala V. Balachandran

An Investigation of the Informational Role of Short Interest in the Nasdaq Market

This paper examines the relationship between the level of short interest and stock returns in the Nasdaq market from June 1988 through December 1994. We find that heavily shorted firms experience significant negative abnormal returns ranging from - 0.76 to - 1.13 percent per month after controlling for the market, size, book-to-market, and momentum factors. These negative returns increase with the level of short interest, indicating that a higher level of short interest is a stronger bearish signal. We find that heavily shorted firms are more likely to be delisted compared to their size, book-to-market, and momentum matched control firms. Copyright The American Finance Association 2002.

CAPACITY PLANNING WITH DEMAND UNCERTAINTY

ABSTRACT We examine how the ability to augment capacity on an as-needed basis affects capacity planning. If it is feasible and desirable to augment all resources on an as-needed basis, optimal capacity planning can be done separately for each resource. Optimality of this simple rule is lost if even one capacity resource imposes “hard” constraints. Simulations indicate that simplifying capacity planning to focus on an expected bottleneck resource dominates product- or resource-level capacity planning, when all resources impose hard constraints and the firms product mix problem is significant.

A Generalized Transshipment Model for Cash Management Decisions

Cash Management involves the optimal financing of net cash outflows and investing net inflows of a firm, while simultaneously determining payment schedules for existing liabilities. We formulate this as a generalized transshipment model to minimize the total cost of allocating sources of funds to existing uses, while retaining the flexibility of transshipping cash among existing sources. Utilizing a numerical example of Orgler, which is solved using Linear Programming, we compare our model with its ordinary transshipment reformulation by Srinivasan. We provide a richer formulation than earlier formulations in the literature for two reasons. First, due to our model flexibility, we can provide a unique shadow price for each source-use possibility which is not available in Orgler. Second, we can address and capture the time value of money in both directions which is not possible in Srinivasans model. Extensions of our methodology for post-optimal and sensitivity analysis, minimum cash balance requirements and other institutional constraints are outlined in our computationally efficient model formulation. Other applications are identified in the conclusion.

Optimal Internal Control Strategy under Dynamic Conditions

The importance of optimal allocations of resources to the internal control effort of firms is necessary in a competitive environment following some initiatives mandating such efforts. Viewing the internal control effectiveness as a stock variable affecting the net benefits of the firm, we address the issue of the optimal path internal control outlays in a multiperiod setting. Our analysis highlights some interrelationships among the parameters in the model, in addition to providing a cross-point solution for switching to lower levels of outlays.

Planning and Control Systems for R&D Organizations

The attitude towards information systems in most research and development (R&D) organizations ranges from benign neglect to open rejection. Despite the expenditure of millions of dollars, few R&D organizations possess information systems whose quality and data integrity equal those found in major corporate profit centers. This chapter provides a constructive model framework for a decision support system combining the financial, operational, and functional needs of any R&D organization. However, the objectives are not profit oriented and, thereby, are different from those of a general corporate structure.

A mathematical programming model for optimal service selection in the airline industry

Abstract Airlines, offering tour plans, have to select a few gateways (airports) to which the air tickets for tour plans are issued. A number of alternate gateways are available for different tour plans, and the selection of gateways is influenced by the perceived preferences of tourists for these and competing plans. In this paper, using the ordinal preferences of tourists, we formulate the problem of gateway selection as an integer program. The solution procedure presented for this integer program is computationally attractive as we exploit the special structure of our formulation. The model proposed is general, and can be applied to the simultaneous positioning of several new products or services.