OnAnalytics Spring 2012
OnAnalytics, IBA's online magazine, is designed to communicate the research by Kelley faculty to a broad audience of business leaders, students, consultants, and other academics interested in analytics. Each article illustrates the use of analytics to better understand and improve decision capabilities in a variety of contexts.
“Spackling” as an Alternative to Offshore Production
Kyle D. Cattani
For U.S. manufacturers that produce both make-to-order (MTO) and make-to-stock (MTS) items, a typical strategy might involve a (more expensive) flexible domestic factory creating the custom products and a (less expensive) overseas facility making the standard variants.
By creating an analytical model and applying it to a real-world test case at Timbuk2, the researchers show how some manufacturers can actually save money by foregoing offshore production in favor of an approach they refer to as “spackling,” wherein the flexible factory’s unused production capacity is filled in with production of standard-issue items.
A Recipe for Retail Assortment
M. A. Venkataramanan
As the variety of products on the market continues to expand, retailers are faced with difficult decisions about their stock assortments. Taking into account the heterogeneity of customer preferences, customers’ willingness to substitute a second or third choice if their first choice is unavailable, and the dissatisfaction customers experience when they cannot purchase their preferred brands, the researchers propose and test a model for retail category assortment that allows managers to balance customer satisfaction with short-term profit.
Fraud by the Numbers
Messod D. Beneish
By the time companies are caught manipulating earnings, it’s too late for investors to protect themselves. In this study, the researcher created and tested a model to detect earnings manipulation using publicly available accounting data. Now known as the Beneish Model, the formula is widely employed by investors, lenders, and auditors to profile potential manipulators, assess companies’ financial health, and determine the likelihood of fraud.
Smart Nursing Scheduling Policies: Savings and Staff Satisfaction
Kurt M. Bretthauer
Concerns over patient-care quality have prompted both state and national legislators to consider mandating nurse-to-patient ratios in hospitals. At the same time, the country continues to face shortages in qualified nursing staff.
These dual constraints place a burden on hospital administrators to develop nursing schedules that not only meet specified ratios while keeping costs in check, but are also attractive to nurses who are in high demand. The researchers address this problem by proposing a scheduling model that takes into account not only costs and nurse-to-patient ratios but also the desirability of the schedule from the nurse’s perspective.
Pension Plans and Invisible Leverage
When analysts consider the capital structure of companies, everybody looks at the balance sheet and almost nobody looks at the off-balance-sheet items, which is where you find most of the pension information. Pensions have been overlooked because the accounting is complex, so this research, which tries to reconcile some of these hidden numbers, examines the impact of defined-benefit corporate pension plans on capital structure decisions.
Triple Jeopardy for Small Brands
Lopo L. Rego
The concept of “Double Jeopardy” is a well-established empirical finding: small brands lose not just once because of their smaller volume, but twice because they don’t get the same trial—they don’t get as much shelf space and are not purchased as often.
This study tests the emerging situation of “Triple Jeopardy” for small brands in the marketplace: brands with less market share not only have fewer customers but also are purchased less often (Double Jeopardy) and, as this study demonstrates, experience lower levels of loyalty than larger brands.