M. Hossein Safizadeh

Optimization in simulation: Current issues and the future outlook

Simulation is commonly used to find the best values of decision variables for problems which defy analytical solutions. This objective is similar to that of optimization problems and thus, mathematical programming techniques may be applied to simulation. However, the application of mathematical programming techniques, e.g., the gradient methods, to simulation is compounded by the random nature of simulation responses and by the complexity of the statistical issues involved. The literature relevant to optimization in simulation is scattered, and no comprehensive and up-to-date treatment of the subject is presently available. To that end, this article brings together numerous concepts related to t he problem of optimization in simulation. Specifically, it discusses the application of mathematical programming techniques to optimization in simulation, response surface methodology and designs, perturbation analysis, and frequency domain simulation experiments. The article provides a user with an overview of the available optimization techniues and identifies future research possibilities.

Uncertainty Reduction Approaches, Uncertainty Coping Approaches, and Process Performance in Financial Services

Developing a better understanding of the impact of uncertainty on process performance has been recognized as an important research opportunity in service design (Hill, et al., 2002). Within this general research stream, our study focuses on the question of what managers can do to most effectively address operational uncertainty and mitigate its negative effects. To begin to address this question, we report on an exploratory study using a sample of professionals in the financial-services industry who acted as informants on 108 financial-services processes. These professionals were sampled from a population of graduates of a university in the northeastern region of the United States who were employed in the financial-services industry. Based on these processes, we empirically examine the relationship between responses to operational uncertainty and process performance after controlling for customer mix, other uncertainty sources, and process type characteristics. Our findings suggest that process improvement—an uncertainty reduction approach related to the internal functioning of the process—as well as several uncertainty coping approaches are associated with better performing processes. However, uncertainty reduction approaches related to customer involvement with, and demands on, the process are not associated with better performing processes. We discuss the implications of our findings for determining what actions managers can take to reduce the negative performance effects of operational uncertainty and how managers can decide which of these actions to take. We conclude with a discussion of the limitations of our study.

The effect of sociopolitical instability on the flow of different types of foreign direct investment

Abstract We examine the effect of sociopolitical instability on the flow of U.S. manufacturing, mining, and petroleum foreign direct investment in 14 developing countries for the years 1950–1982. The analysis shows that sociopolitical instability does not have the same effect on the flow of these three forms of foreign direct investment. The findings support the belief that multinational corporations in different industries do not perceive the same degree of risk when political turmoil surfaces in a host country.

Minimizing the bias and variance of the gradient estimate in RSM simulation studies

Abstract To minimize the variance of the response estimator in response surface methodology (RSM)-based simulations, most users extend the design points to the limits of the subregion under investigation. Our analysis, however, shows that when common pseudorandom numbers are used, this practice likely increases the variance of the estimated gradient. Under the criterion of the variance of the gradient and the Mahalanobis distance function, we show that smaller subregions reduce both the bias and the variance of the estimated gradient. Furthermore, we discuss how users may take advantage of the magnitude of the induced correlations to draw inferences about the search process and to manipulate the subregion size. Our analysis offers a new direction for future research.

Application of multidimensional scaling techniques to facilities layout

Abstract Guidelines in the form of scatter diagrams can be valuable and helpful in facilities layout decisions. This paper demonstrates that a direct application of non-metric multidimensional scaling (MDS) techniques to layout problems can conveniently provide such guidelines. Although two layout-specific algorithms develop scatter diagrams as well, our proposal is significant for two reasons. First, MDS packages for microcomputers and mainframes that generate low cost solutions are readily available. Second, because non-metric MDS programs accept various forms of input data without restrictions, allow different distance measures, and can offer solutions in three dimensions, they provide users with flexibility in the type of layout problems that can be solved.

Strategy Japanese style: mobilizing the manufacturing workforce

Abstract In recent years, manufacturing firms have recognized the crucial importance of incorporating the strengths and weaknesses of the manufacturing function in formulating business strategy. They have also recognized the importance of involving other functional areas in the strategy formulation process. In order to make strategy formulation a company-wide activity, we propose the establishment of a network of strategy-related information throughout the organization. We see the network as an extension of manufacturing resource planning. It requires a strategy-related data base which receives input from, and provides information to, the employees and top management. Top management should take advantage of the data base to make appropriate adjustments to business strategy.

Effect of R&D product and process expenditures on new product introductions

This study examines the relationship between the introduction of new products and R&D process and product expenditures of 15 industries. The objective is to determine the degree to which product and process R&D expenditures, uniquely or jointly, contribute to the development of new products. The findings suggest that concurrent R&D expenditures on products and processes lead to higher R&D output, as measured by new product announcements, than R&D expenditures on products or processes alone. As a by-product, the analysis clearly shows that the relationship between the number of new products introduced and product and process R&D expenditures can be represented by a function resembling the Cobb-Douglas production function

Economic and sociopolitical determinants of exchange controls

Abstract The objective of this study is to explore the feasibility of identifying factors that could presage the imposition of exchange controls. Two sets of variables are argued to contain pertinent information regarding the imposition of controls. One set is composed of 14 economic ratios related to the balance of payments and exchange rate; the other set is made up of 17 proxy measures of sociopolitical instability. The empirical analysis of exchange controls imposed by 13 governments during 1973–1983 shows that these variables have potential for predicting the imposition of exchange controls.

Bringing Decision Support to the Customer Level

Customer-targeted systems represent a logical next step in the evolution of decision support systems (DSSs), but they have not proliferated because of organizational concerns regarding usage and satisfaction. A six-month study of an interactive telephone system in the financial services sector suggests that these concerns are unwarranted and that the initial cost of designing such systems is offset by increased customer satisfaction and more efficient use of organizational resources.

Determinants of exchange controls: an integrated approach

Abstract This study ascertains the degree to which economic and sociopolitical variables are associated with the imposition (relaxation) of exchange controls. The results can serve as a steppingstone toward the development of models aimed at estimating the probability that a particular form of exchange control may be imposed by a host government. The paper is divided into four parts. The alternative forms of exchange controls are discussed in Section I. Section II identifies the determinants of exchange controls. The empirical results are reported in Section III. The paper is summarized and concluded in Section IV.