Operations Management and Econometrics

Resource Allocation in a Tactical Arms Race with Temporary Advantages

Professor Boaz Golany, Technion in Haifa, Israel

30th Apr 2010  11:00 am - Room 498 Merewether Building

We consider an arms race between two opponents (e.g., government forces vs. insurgents) where each advantage that is achieved by one of the opponents is limited in time and expires when the other opponent develops a new weapon or counter-measure (in contrast with the "winner-takes-all" situation that characterizes much of the literature on investments in competitive business environments). We first consider a variety of models that apply to a one-sided situation, where the defender has to determine how much to invest in developing counter-measures to a weapon employed by the attacker. The decision problems are expressed as (convex) nonlinear optimization problems. We present an example that provides some operational insights regarding optimal resource allocation. We also consider a two-sided situation and develop a Nash equilibrium solution that sets investment values so that both parties have no incentive to change.

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