Selection procedures help identify the best of a finite set of simulated alternatives. The indifference-zone approach focuses on the probability of correct selection, but the expected opportunity cost of a potentially incorrect decision may make more sense in business contexts. This paper provides the first selection procedure that guarantees an upper bound for the expected opportunity cost, in...

  We discuss the effects of inflation and time discounting on an EOQ model for deteriorating items under stock-dependent demand and time-dependent partial backlogging. The inventory model is studied under the replenishment policy starting with no shortages. We then use MATLAB to find the optimal replenishment policies. The objective of this model is to maximize the total profit (TP) which inclu...

Opportunity cost is a core, defining concept of economic science. The early Austrian economists are generally credited with the discovery of the concept and its early application. Here, it is shown that Richard Cantillon, the father of economic theory and method, developed and applied the concept of opportunity cost. His “intrinsic value” was not an objective cost approach, but merely an attemp...

Opportunity Cost and the Incidence of a Draft Lottery Military conscription implicitly taxes draftees. Those who would have volunteered at the market wage may be forced to serve for lower wages, and those with higher opportunity costs may be forced to serve regardless, yet little is known about the distribution of this burden. We exploit the Danish draft lottery to estimate the causal effect of...

People often neglect opportunity costs: They do not fully take into account forgone alternatives outside of a particular choice set. Several scholars have suggested that poor people should be more likely to spontaneously consider opportunity costs, because budget constraints should lead to an increased focus on trade-offs. We did not find support for this hypothesis in five high-powered experim...

This paper develops a model wherein labor income is affected by work experience; further, it analyzes how the fertility rate is determined. In the case where the wage rate is affected through on-the-job training (OJT) or work experience, the fertility rate converges to a low level or continues to increase. Moreover, this paper demonstrates the effects of two childcare support policies. A childc...

In this paper, we discuss the concept of the expected opportunity cost of a potentially incorrect selection as a measure of selection quality on a new selection procedure that is used to selecting the top m systems for large scale problems. This procedure is used the ordinal optimization method to reduce the size of the search space, and then it is used the idea of computing budget allocation O...

The preservation of species diversity generally suggests protection of either the greatest number of species possible or all species. Requiring representation of each species in at least one parcel in the system and seeking the minimum number of parcels in the reserve system to achieve this requirement is termed the Species Set Covering Problem (SSCP). Nonetheless, it is important, as well, to ...

Why does performing certain tasks cause the aversive experience of mental effort and concomitant deterioration in task performance? One explanation posits a physical resource that is depleted over time. We propose an alternative explanation that centers on mental representations of the costs and benefits associated with task performance. Specifically, certain computational mechanisms, especiall...