Economics provides a foundation for scientists and managers to understand business strategy. This paper shows how economics can aid teaching of operations strategy. A definition of operations strategy is offered along with some examples of operations papers that use economic ideas to illuminate...

This paper discusses the design of a performance evaluation system in a decentralized firm when subunits are organized as cost centers and lead time has an important effect on demand or cost. The model incorporates agency costs associated with managers' efforts and overhead absorption and...

Mail-order and internet sellers must decide how customers pay shipping charges. Typically, these sellers choose between two pricing policies: either “uniform pricing,” where the firm delivers to any customer at a fixed delivery charge (that may be volume dependent), or “mill pricing,”...

We study the effect of financial risk on the economic evaluation of a project with capacity decisions. Capacity decisions have an important effect on the project's value through the up-front investment, the associated operating cost, and constraints on output. However, increased scale also...