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To formulate stochastic capacity allocation problems in a manufacturing system, the concept and techniques of revenue management is applied in this research. It is assumed the production capacity is stochastic and hence its exact size cannot be forecasted in advance, at the time of planning. There are two classes of "frequent" and "occasional" customers demanding this capacity. The price rate as well as the penalty for order cancellation caused by overbooking is different for each class. The model is developed mathematically and we propose an analytical solution method. The properties of the optimal solution as well as the behavior of objective function are also analyzed. The objective... 

This paper provides a framework to study the integration of network marketing in a dual-channel distribution system. We develop an approach to optimize the main decision variables of this system simultaneously. These decision variables include the price paid by the customers of both channels, confidence level, the effort level of active distributors of network marketing, and wholesale price. Although both channels compete with each other, it is vital to have a balanced pricing system to keep them motivated. However, the prices in network marketing and traditional retailer system are not necessarily equal due to the differences in their nature. Furthermore, it is also required to develop an... 

In this paper, a new approach to formulate a class of scheduling problems is introduced, which can be applied to many other discrete problems with complicated structures. The concept of graph circular coloring is applied to develop a model for the special case of an open shop scheduling problem. In this problem, there are some independent jobs to be processed in a shop with dedicated renewable resources. Each job consists of several tasks with no precedence restriction. Each task is processed without preemption. The processing time of the tasks is given. Processing each task requires using some multiple specified types of resource, while no more than one task can use each resource,... 

The aim of this paper is to develop a practical R&D portfolio selection model that addresses effective R&D project valuation issue, while it tackles R&D uncertainty in portfolio optimization. Fuzzy sets theory is employed to capture and model the inaccuracy in project information. To avoid the well-known complications of fuzzy real option valuation, the fuzzy pay-off method is used to more effectively value R&D projects. The resulting problem is formulated as a fuzzy zero-one integer programming model which is later transformed into a crisp mathematical formulation to solve the problem for various degrees of risk. A numerical example is used to illustrate the proposed approach  

In this paper, three critical issues with the paper "A fuzzy set approach for R&D portfolio selection using a real options valuation model", coauthored by Wang and Hwang and published in Omega 2007 are addressed. Shortcomings of the original work are highlighted and corrective measures to improve the approach are proposed  

The objective of this research is to develop a practical research and development (R&D) portfolio selection model that addresses the effective R&D project valuation issue, while tackling R&D uncertainty in portfolio optimization. Fuzzy set theory is employed to capture and model the uncertain project information. To evade the well-known complexities of fuzzy real option valuation, the recently developed fuzzy pay-off method is used to more effectively valuate R&D projects. The resulting problem is formulated as a fuzzy zero-one integer programming model that handles uncertainty of input data in order to determine the optimal portfolio. Two satisfaction measures, which are based on... 

One concern of many investors is to own the assets which can be liquidated easily. Thus, in this paper, we incorporate portfolio liquidity in our proposed model. Liquidity is measured by an index called turnover rate. Since the return of an asset is uncertain, we present it as a trapezoidal fuzzy number and its turnover rate is measured by fuzzy credibility theory. The desired portfolio turnover rate is controlled through a fuzzy chance constraint. Furthermore, to manage the portfolios with asymmetric investment return, other than mean and variance, we also utilize the third central moment, the skewness of portfolio return. In fact, we propose a fuzzy portfolio mean-variance-skewness model... 

The random PRF method has been suggested for the design of LPD (low probability of detection) radar signals. The LPD improvement in using this kind of signal is discussed quantitatively. First, a detection theoretic approach is used to find the optimum detectors of the unauthorised receiver (ESM receiver) and their performance for both constant PRF and random PRF signals. Then, the effect of the random PRF method on the authorised receiver (radar receiver) is investigated. Based on these analyses and definition of a proper measure, the constant PRF signals are compared with random PRF signals from the LPD point of view. By finding a simple formula for the improvement caused by the random PRF... 

We propose a robust optimization framework to deal with uncertain component reliabilities in redundancy allocation problems in series-parallel systems. The proposed models are based on linearized versions of standard mixed integer nonlinear programming (MINLP) formulations of these problems. We extend the linearized models to address uncertainty by assuming that the component reliabilities belong to a budgeted uncertainty set, and develop robust counterpart models. A key challenge is that, because the models involve nonlinear functions of the uncertain data, classical robust optimization approaches cannot apply directly to construct their robust optimization counterparts. We exploit problem... 

Make-to-order firms use different strategies, such as dynamic pricing and due date management, to influence their performance. In these strategies, orders are segmented into classes based on their sensitivity to lead time and price. Quoting different prices and lead times to different classes of customer can increase a firm's profit and its capacity utilization. Most research in this area does not consider the effects of production constraints on price and lead time decisions. In this paper, we consider the role of flexibility in dynamically choosing the price, lead time and segmentation of customers in make-to-order environments with limited production capacity and multi-period horizon... 

The combination of traditional retail channel with direct channel adds a new dimension of competition to manufacturers' distribution system. In this paper, we consider a make-to-order manufacturer with two channels of sale, sale through retailers and online direct sale. The customers are classified into different classes, based on their sensitivity to price and due date. The orders of traditional retail channel customers are fulfilled in the same period of ordering. However, price and due date are quoted to the online customers based on the available capacity as well as the other orders in the pipeline. We develop two different structures of the supply chain: centralized and decentralized... 

To estimate the parameters of fuzzy linear regression models with fuzzy output and crisp inputs, we develop a mathematical programming model in this paper. The method is constructed on the basis of minimizing the square of the total difference between observed and estimated spread values or in other words minimizing the least square errors. The advantage of the proposed approach is its simplicity in programming and computation as well as its performance. To compare the performance of the proposed approach with the other methods, two examples are presented. © 2004 Elsevier Inc. All rights reserved  

In this paper, fuzzy linear regression models with fuzzy/crisp output, fuzzy/crisp input are considered. In this regard, we define risk-neutral, risk-averse and risk-seeking fuzzy linear regression models. In order to do that, two equality indices are applied to express the degree of equality between a pair of fuzzy numbers. We also develop three mathematical models to obtain the parameters of fuzzy linear regression models. Minimizing the difference between the total spread of the observed and estimated values is the objective of these models. The advantage of our proposed models is the simplicity in programming and computation  

This paper develops an approach to determine the optimal production and shipment policy for an integrated vendor-buyer problem. The vendor manufactures the product in batches at a finite rate and ships the output to the buyer. All shipments to the buyer are equal-sized batches. Despite previous papers in the literature, we assume that the supply lead-time between vendor and buyer is stochastic and shortage is also allowed. The objective is to minimize the expected total cost of both buyer and vendor. We derive the expected annual integrated total cost function and propose an analytic solution procedure to determine the optimal policy. To illustrate the significance of cost-reduction of the... 

By applying shortest path analysis in stochastic networks, we introduce a new approach to obtain the reliability function of time-dependent systems with standby redundancy. We assume that not all elements of the system are set to function from the beginning. Upon the failure of each element of the active path in the reliability graph, the system switches to the next path. Then, the corresponding elements are activated and consequently the connection between the input and the output is established. It is also assumed each element exhibits a constant hazard rate and its lifetime is a random variable with exponential distribution. To evaluate the system reliability, we construct a directed... 

This paper is concerned with the study of the constant due-date assignment policy in repetitive projects, where the activity durations are exponentially distributed random variables. It is then extended to the case where activity durations follow generalized Erlang distributions. The main feature of this research over the classical PERT networks is that the projects are generated according to a renewal process and share the same facilities. Our approach is first to obtain the project completion time distribution, for each generated project, by constructing a proper continuous-time Markov chain, and then to compute the optimal constant lead time for each particular project. The repetitive... 

In the literature, although a few studies can be found regarding the application of revenue management to special cases of Make-to-Order manufacturing systems with stochastic capacity, there is not any study when capacity or demand (or both) are random variables with general distribution function. Therefore, in this paper, an approach is developed to study a more general case of Make-to-Order manufacturing systems based on the concept of revenue management. Due to the random nature of capacity and demand, the exact size of capacity to satisfy the orders is not known at the time of arriving orders. Consequently, the vital decision is either to accept or reject an order at the time of arrival.... 

This paper deals with decision making in a remanufacturing facility where returned products arrive according to a Poisson process. Arrivals have different routings among the facility stations since they have different defects and need different operations. A returned product is either accepted for remanufacturing or sold at a salvage value without working on it in order to reduce congestion. The authors provide an analytical model using a queuing network theory to obtain the best policy for accepting returned products. Furthermore, a continuous genetic algorithm is implemented to solve the model, which happens to be a mixed integer nonlinear programming problem. Several examples are solved... 

Existing revenue management methods and heuristics rely on specific demand-side assumptions such as customers' independent decisions over time. We relax the assumption that purchasing decisions depend only on the current price and are independent of previous prices of the same or similar products. On the contrary, we assume that customers' decisions depend on the product's past prices through a reference price. With this new dimension, a firm needs not only to manage its remaining capacity but also to control the reference price to maximize its expected future profit. In this situation, we show that some of the main analytical properties such as monotonicity or modularity of the firm's value... 

A new model for long-term operation of hydrothermal power systems is introduced, and a method for obtaining an optimal solution is developed. We assume both reservoir inflows and energy demand are stochastic and all units are exposed to random outages. The objective is to minimize the total cost of the system as well as the expected interruption cost of energy (EIC) during a given planning horizon. This goal is reached through simultaneous determination of hydro plant discharges, thermal units energy output, and the system reliability level. Long-term hydrothermal system operation planning and system reliability determination are integrated in a unified model. Since the resulting model is a...