We consider a finite-state, finite-action, infinite-horizon, discounted reward Markov decision process and study the bias and variance in the value function estimates that result from empirical estimates of the model parameters. We provide closed-form approximations for the bias and variance,...

It is puzzling that firms often continue to invest in product development projects when they should know that demand will be low. We argue that bad products are hard to kill because firms face an inherent conflict when designing managers' incentives. Rewarding success encourages managers to...

Many markets have historically been dominated by a small number of best-selling products. The Pareto principle, also known as the 80/20 rule, describes this common pattern of sales concentration. However, information technology in general and Internet markets in particular have the potential to...

We generalize Narasimhan's (Narasimhan, Chakravarthi. 1988. Competitive promotional strategies. J. Bus. 61(4) 427--449.) model of retail promotion to include multiple products and general demand functions. Doing so allows us to further characterize optimal promotion strategies. We find that...

There is now an extensive theoretical literature investigating optimal inventory policies for retailers. Yet several recent reviews have recognized that these models are rarely applied in practice. One explanation for the paucity of practical applications is the difficulty of measuring how...

We take advantage of recent advances in optimization methods and computer hardware to identify globally optimal solutions of product line design problems that are too large for complete enumeration. We then use this guarantee of global optimality to benchmark the performance of more practical...

We investigate the performance of empirical criteria for comparing and selecting quantitative models from among a candidate set. A simulation based on empirically observed parameter values is used to determine which criterion is the most accurate at identifying the correct model specification....