Donald B. Rosenfield

Markovian Deterioration with Uncertain Information

This paper presents a model of a deteriorating process with imperfect information. This model, unlike many previous efforts, stipulates that the operator most pay an inspection cost to determine the state of the system. This situation presents him with three choices at every time period: repair, inspection, or inaction. Under the assumptions that the transition matrix representing the process is upper-triangular and totally positive of order two, it is shown that the state-space can be broken up into at most four regions of action and that the optimal region of repair is of a special intuitive type.

Optimal adaptive price search

Consider the problem of a consumer desiring to buy a good which is sold at a variety of prices. Such a buyer will be able to obtain a sequence of price quotations from various sellers. When should the buyer stop searching for a lower price? If he continues, he may obtain a lower price, but he incurs additional time, effort and expense in searching. The optimal price search decision is one of balancing the expectation of a possibly lower price obtained by continued search against cumulative costs from search. When the prices arise from a known probability distribution, the optimal search strategy has certain well-defined and desirable properties. In the more realistic case that the buyer has only partial information about the price distribution and must update his beliefs after observing prices in the marketplace, the problem becomes more complex, and search strategies become less well behaved. The major purpose of this article is to determine new conditions under which optimal policies have these desirable characteristics in the case where the consumer possesses only incomplete information about the distribution of prices. Price quotations he receives, in addition to providing him with price possibilities, provide him with information about that distribution. Rothschild [ 151, in citing an unpublished paper of Gastwirth, has noted that small specification errors for an assumed distribution can lead to substantial changes in expected number of searches and expected cost. Consequently, the assumption of a known distribution of prices can have a profound effect on total cost. 1 0022-053 l/8 l/040001-20

Disposal of Excess Inventory

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Global and variable cost manufacturing systems

This paper deals with the problem of disposal of slow-moving or obsolete inventory. For many reasons, companies will find themselves in an overstock situation where the potential sales value of excess stock, less the expected storage costs, does not match the salvage value. We present relationships for the optimum number of items to keep under conditions of stochastic demand and perishing.

Optimality of Myopic Policies in Disposing Excess Inventory

Abstract The advent of global manufacturing companies has led to a series of new challenges and problems. One of the more important of these is planning capacity and facilities in the environment of exchange rate uncertainties. While exchange rate uncertainty is a feature of a global environment, the problem formulations actually apply to a wide range of facility and network design problems. This article presents a series of models and results to address these problems.

An application of sizing service territories

In a recent article, the author presented results for the optimum levels of inventory to dispose and keep in an excess inventory situation. This note shows that these levels do not change when additional disposal opportunities are presented in the future. In this sense, the optimal policy is myopic in that the decision can be made without any examination of future decisions.

When to refinance a mortgage: A dynamic programming approach

Abstract The major tradeoff in designing a service network, where facility-based delivery people travel to customer sites, is the variable cost of delivery versus the fixed cost of facilities. In many applications, reduced travel time, due to a larger number of facilities, increases the efficiency of the delivery people, thereby requiring fewer of them. Using techniques developed for related problems, the authors developed a model for evaluating and applying this concept, and used it as the basis for decision support systems for several applications. This article describes the model and its application developed for the United States Postal Service.

Scheduling and estimation techniques for transportation planning

Abstract When should one refinance a mortgage loan? It is one of the most common finance questions in todays world. There have been surprisingly few attempts to answer this question in a structured manner, however. Moreover, the existing guidelines for refinancing consist of a short list of very simple rules that have a limited application. This article addresses the question through a dynamic programming model coupled with an analysis of historical interest rates. The analysis reveals a more complex set of rules for an optional refinance decision––oftentimes conflicting with the conventionally accepted idea that rate differences must be greater than two percent.

The MIT Leaders for Global Operations Program

Abstract The Urban Transportation Planning System (UTPS) is a computer system developed by the Urban Mass Transportation Administration for the purpose of assisting planners in the analysis of proposed mass transit systems. While UTPS provides many indicators of system performance, the estimates of operating cost have not been satisfactory. The authors have developed an alternative model for estimating the operating cost of mass transit systems. This model is designed primarily for road-based systems although both rail and road systems can be analyzed. Recognizing the relationship of operating costs with scheduling complexities, the authors also developed procedures to determine line schedules and vehicle schedules and to estimate manpower requirements for the proposed transit system. These procedures, which will be integrated in future versions of UTPS, are the subject of this paper.

The Leaders for Manufacturing Program: a new type of industry/university consortium

In 2014, the MIT Leaders for Global Operations Program LGO was awarded the third annual UPS George D. Smith Prize for effective and innovative preparation of students to be good practitioners of operations research. In this paper, we describe the innovative, interdisciplinary education of the two-year dual-degree LGO program, which trains students for careers in operations and manufacturing through a three-way partnership between the MIT School of Engineering, the MIT School of Management, and industry. The first-of-its-kind program includes a six-month research internship that results in a masters thesis. This paper will discuss the LGO approach to preparing students for practicing operations research and the impact that the program has made on operations in manufacturing and services companies.