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This article focuses on the "newsboy" model, expressed as a payoff matrix, which enables inventory control managers to incorporate demand uncertainty, salvage value and shortage cost in determining run size or purchase quantity. Discard is a term for merchandise remaining in inventory that will no longer be offered through normal dealer channels. The discard problem consists of three distinct aspects. In some cases, clearly too much merchandise was produced or purchased. In other cases, analysis may reveal excess merchandise and yet no regret; for example, where additional items were purchased to obtain a price break. Prior to 1982, as new products were considered, no contingency analyses were conducted. Instead, product management made an estimate of sales, often based on items of similar price or type, and the product was run to fit that estimate. A simple case like Linmar Co. was used to introduce payoff matrices. This case has an easily determined set of five acts and five states, clear costs and revenues, and a historically-based probability distribution of forecast error.

The article discusses the concepts in behavioral decision theory and suggests selective bibliography on certain topics. Normative decision theory prescribes choices that a rational man should make in a given situation, while descriptive decision theory is concerned with the choices actually made in a given situation. Because actual choice can differ from prescribed choice, a distinction is sometimes made between normative and descriptive decision theory. Behavioral decision theory is concerned with both descriptive and normative aspects. The hypothesis, that man is rational, is treated as a general hypothesis to be formulated and tested. Explanatory models which view man as an information processor have recently been developed. In this approach the focus is on two research questions, first, the identification of sources of information actually used by the decision maker and second, identification of the processes used to combine information. Much research of the past twenty years has investigated aspects of decision making complementary to those reported in the operations research literature.

Three published approximation formulae for selecting the best multiattribute alternative based on rank-ordered weights are evaluated. All formulae are surprisingly efficacious in determining the best alternative. Rank order centroid (ROC) weights are more accurate than the other rank-based formulae; furthermore, the ROC formula generalizes to incorporate both other forms of partial information about attribute weights and partial rank order information as well. Because a ROC-based analysis is so straightforward and efficacious, it provides an appropriate implementation tool. [ABSTRACT FROM AUTHOR]

Those management and social scientists dealing with organizational behavior are severely limited by the need for more operational theory and by the paucity of experimental data on important events and phenomena. The many practical and conceptual reasons why experiments in the classical sense cannot be conducted lead us to consider a less rigorous form of inquiry called an investigation. A possible heuristic procedure for analyzing data from investigations is proposed. The heuristic has the property that rather than selecting favorable events to support a theory, it codes and incorporates observed events systematically into a testing of theory. This procedure is applied to data from the Churchman-Ratoosh laboratory investigations of implementation processes. Our results are consistent with the assumption of a constant source diffusion of innovation process. Data for the diffusion process and attendant structural change are presented in terms of models. The application of the heuristic also suggests questions for further diffusion and implementation experiments. [ABSTRACT FROM AUTHOR]