informs ny

April 29, 2004 Student-Practitioner Evening Forum

Sponsored by: NY Metro INFORMS Chapter and Pace University

On April 29, 2004 the NY Metro Informs Chapter and Pace University conducted a Student/Practitioner (Evening) Event.  The themes of the event were International and Domestic perspectives on:

 

  • A Project in the Life of a Financial Engineer, a Market Scientist, Financial/manufacturing OR Consultants, a High tech/ telecommunications Consultant and Management Scientists

  • The PR of OR,  how to market analytic problem solving

  • Conversations with a practitioner

Forum participants

 

The distinguished set of panelists consisted of:

  • Andrew Kalotay (a member of the Fixed Income Hall of Fame) of Andrew Kalotay Associates,
  • Aseem Chandawarkar of I2 Technologies,
  • Howard Finkelberg of BBDO,
  • Jack Theurer of G Theurer Associates, Inc
  • Michael Alliston of Numeracy, LLC and
  • Michael Eichorst of JPMorgan Chase

 

Panelists

 

Andrew Kalotay began the round of presentations with a discussion on bond risk.  He gave used an analogy of the estimated cost to a lender of a loan getting refinanced before maturity as 40-50 points.  In other words, if a borrower committed to not refinancing the loan (no matter how low the interest rates went), the lender would be able to offer that much lower interest rate on the loan.  He also noted that many poor cannot refinance (that don't qualify for new mortgage) and can't take advantage of declining interest rates (nor will they get be considered for any of the incentive 40-50pts).  As a result the poor subsidize the rich.  Mr. Kalotay proposed a market solution to this situation - a 'ratchet' bond that would be a new type of mortgage with refinancing options built in it.  He also pointed to Asset Based Securities and credit derivatives as the new frontier in Fixed Income.

Aseem Chandawarkar works for an international company that addresses supply chain issues related to manufacturing cell phones. He addressed outsourcing and the problem of optimal outsourcing mix - which is difficult to determine with precision due to volatile data.  As a result we have to settle at a good feasible solution.  He also said that while the technical work could be done at great benefit and with good result further away, the sales representatives and people who interact with the clients need to be closer to them.

Howard Finkelberg outlined his pioneering contribution to (optimal) overbooking of the airplanes, which started as playing percentages (airline would estimate the chances and costs of overbooking) through monetary compensation for those bumped-out and finally to auctions where passengers who require least compensation are left with cash to wait for another flight.  He also discussed the issues of marketing science in the advertising business.

Michael Eichorst presented his work in retail banking with its multitude of markets and methods: market segmentation, target marketing to increase efficiency and effectiveness - marketing ROI, design of experiments, marketing mix optimization, offer sequencing, tending to their best customers, pricing models, branch location/configuration optimization, pricing models, sales (cross-sell and up-sell) orchestration, credit (granting and loan management), Underwriting Science, credit scoring, bankruptcy prediction, models for credit line increase, internet click-stream analysis, covering much of known and some of emerging OR.

Michael Alliston - the resident algebraic topologist at the meeting, elaborated on his experience in credit card security, and the pitfalls of doing it in different countries.  For example, in the USA two banks, credit bank and merchant bank are involved in a transaction and trap all kinds of data about it.  In some other countries high phone costs make less transaction data available for modeling and detecting suspicious transactions.  In the USA the merchant’s bank polices the merchants, in other countries law may require the perpetrator be actually caught in the act. In the USA insurance offers an incentive for banks to have  models used to detect fraud, in other countries the law may dictate the model used.

Jack Theurer spoke on PR of OR, and started by illustrating the roles of OR practitioner and theoretician on example of a balloonist hovering over a misty morning countryside, who spotted a passer-by down below and shouts,

“excuse me where am I?”

“You are 100ft up in the air”, responds passer-by. 

“Thank you very much”, says balloonist.  “Say, by any chance are you an OR theoretician?”

“Why yes, that I am”, responds the passer-by.  “How did you know?” 

Well, says balloonist, “the answer you gave me was totally useless”.

At that the passer-by shouts, “you must be an OR practitioner”. 

“That's true says balloonist, how did you guess?” 

“The theoretician passing by responded, “Because you don't know where you are, you don't know where you are going and you blame me”. 

 

Jack then proceeded to praise the sales training (charm school) he received early in his career as invaluable to his consulting occupation, and said that half of getting it right is not getting in the way.  When interviewing for an Application Analyst job, back when scarcely anybody knew what it was, he asked what's an Application Analyst, and then described his ideal position he was looking for, repeating back the description he just got.  He advised to think out-of-the-box, don't be complacent, be prepared for frequent changes of job, join, be seen, market yourself.


Q&A followed the presentations. Many questions dealt with careers:

 

  • Be aware of what do you bring to your prospective employer, how much will you save him.  In present environment no (hiring) decision is made by people taking risk, but by MBA types who need to be persuaded by ROI you bring.

 

  • Once hired in an OR related capacity, you need to be aware of what does it mean for decision maker to get an answer from you?

 

  • It is more important for your business success to show on your resume that you applied/improved a business process, than to show technical virtuosity (now they tell me).  Use web sites in your job search, join professional societies, be visible, show you know the stuff.

 

  • There are no more separate OR departments.  Usually there is no MS Department either.  OR/MS matured to the point of being spread all over other departments and functions (Six Sigma Quality, Project Management, …)

 

  • The meeting was well attended by 40 people: about 25 students, faculty, many practitioners and students that recently became practitioners.

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