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Stochastic dynamic optimization models for societal resource allocation

Armagan Bayram, University of Massachusetts Amherst

Abstract

We study a class of stochastic resource allocation problems that specifically deals with effective utilization of resources in the interest of social value creation. These problems are treated as a separate class of problems mainly due to the nonprofit nature of the application areas, as well as the abstract structure of social value definition. As part of our analysis of these unique characteristics in societal resource allocation, we consider two major application areas involving such decisions. The first application area deals with resource allocations for foreclosed housing acquisitions as part of the response to the foreclosure crisis in the U.S. Two stochastic dynamic models are developed and analyzed for these types of problems. In the first model, we consider strategic resource allocation decisions by community development corporations (CDCs), which aim to minimize the negative effects of foreclosures by acquiring, redeveloping and selling foreclosed properties in their service areas. We model this strategic decision process through different types of stochastic mixed-integer programming formulations, and present alternative solution approaches. We also apply the models to real-world data obtained through interactions with a CDC, and perform both policy related and computational analyses. Based on these analyses, we present some general policy insights involving tradeoffs between different societal objectives, and also discuss the efficiency of exact and heuristic solution approaches for the models. In the second model, we consider a tactical resource allocation problem, and identify socially optimal policies for CDCs in dynamically selecting foreclosed properties for acquisition as they become available over time. The analytical results based on a dynamic programming model are then implemented in a case study involving a CDC, and social return based measures defining selectivity rates at different budget levels are specified. The second application area involves dynamic portfolio management approaches for optimization of surgical team compositions in robotic surgeries. For this problem, we develop a stochastic dynamic model to identify policies for optimal team configurations, where optimality is defined based on the minimum experience level required to achieve the maximum attainable performance over all ranges of feasible experience measures. We derive individual and dependent performance values of each surgical team member by using data on operating room time and team member experience, and then use them as inputs to a stochastic programming based framework that we develop. Several insights and guidelines for dynamic staff allocation to surgical teams are then proposed based on the analytical and numerical results derived from the model.^

Subject Area

Management|Operations research

Recommended Citation

Bayram, Armagan, "Stochastic dynamic optimization models for societal resource allocation" (2014). Doctoral Dissertations Available from Proquest. AAI3615396.
http://scholarworks.umass.edu/dissertations/AAI3615396

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