a comparative analysis of approaches for determining optimal price and order quantity when a sale increases demand abstract both average cost or profit and present value of cost or profit methods have been used in developing inventory policies although the present value method represents the costs and revenues better both methods generate identical solutions for the classical eoq case this paper discusses the differences between the two methods and illustrates situations where these two methods generate drastically different policies specifically when a supplier reduces the price of a product temporarily a retailer might place a special order and offer a discount on these units to its customers to increase demand this paper uses an average profit method to develop profit functions for different combinations of supplier s sale period and retailer s replenishment time and presents methods for determining the optimal price and order quantity experiments are then conducted to compare the results of average profit and present value of profit approaches for solving the problem the results indicate that these models may generate drastically different policies for the problem and neither model will consistently generate a larger order quantity this paper suggests that the present value approach be used to determine optimal policies when there is a temporary change in price and demand

the capital cost of holding inventory with stochastically mean reverting purchase price most models of inventory control assume that the per unit purchase price is constant the capital cost of holding inventory can then be taken into account by adding a fixed interest rate r times the purchase price c to the out of pocket holding cost however it is not uncommon that the purchase price varies over time how the capital cost then should be calculated is the focus of the present paper the paper studies the common single item inventory model with a fixed set up cost and assumes that the stochastic purchase price follows the mean reverting ornstein uhlenbeck process methods for computing an adjusted interest rate r are suggested along with modifications of well known heuristics and formulas for lot sizing simulation tests where the optimal policy has been compared to policies obtained using modified versions of the silver meal method the part period algorithm and the eoq formula suggest that r should be estimated as the sum of the unadjusted interest rate and the average expected purchase price decrease measured over a period between 1 3 and 2 3 of the length of the order cycle

current energy scenario and future prospect of renewable energy in bangladesh abstract energy is the building block of modern civilization and a prerequisite for sustainable development global energy consumption will increase by 36 with an annual growth of 1 6 from year 2011 to 2030 comprising 88 fossil fuel share bangladesh is a developing country in the southeast asia which is one of the lowest per capital energy consuming nation the power crisis has become a major constraint to continued economic growth and energy sector of the country is currently facing serious challenge due to depleting nature and mono fuel dependent energy policy finding alternative energy source has become imperative for the country this study examined the current energy mix present energy crisis and its way to overcome such scenario by utilizing alternative energy sources such as biomass solar wind and small scale hydropower energy in the context of bangladesh among the renewable energy sources biomass is found to be the most effective and utilizable potential electricity generation from biomass is 312 608 terawatt hour twh where only 44 52 twh is utilized on the other hand solar home system shs has shown positive impact on socio economic development in the rural areas by alleviating poverty and creating jobs to assure national energy security and aiming to provide constant and quality power supply to all citizens of bangladesh government of people s republic of bangladesh gob must strive to double its effort towards attaining greater renewable energy share by conversion utilization and dissemination

optimal ordering for a probabilistic one time discount abstract we develop a model for a one time special purchasing opportunity where there is uncertainty with respect to the materialization of the discounted purchasing offer our model captures the phenomenon of an anticipated future event that may or may not lead to a discounted offer we analyze the model and show that the optimal solution results from a tradeoff between preparing for the special offer and staying with the regular ordering policy we quantify the tradeoff and find that the optimal solution is one of four intuitive policies we present numerical illustrations that provide additional insights on the relationship between the different ordering policies

comments on a comparative analysis for determining optimal price and order quantity when a sale increases demand although the net present value npv criterion is theoretically the correct approach to developing optimal inventory policies in the classical eoq case the average profit criterion generates solutions that are practically identical to those resulting from the npv criterion nevertheless a recent paper suggests that when the demand for a product is price elastic and a wholesaler offers a one time only price discount use of the average profit criterion may obtain policies that are drastically suboptimal compared to the policies obtained by using the npv criterion we show that this suggestion is based on inaccurate models and inconsistent comparisons although in cases of large one time only discounts there may be significant differences in the policies and consequences resulting from the two criteria such large discounts are unrealistic furthermore the larger the discount the less practicable are the optimal order quantities based on either one of these criteria thus in most real life situations the use of the average profit criterion does not result in serious suboptimization in these situations what may be important is not whether a retailer uses the npv criterion or the average profit criterion but whether the retailer can and does implement the optimal decisions resulting from the use of either criterion

the optimality of myopic stocking policies for systems with decreasing purchasing prices abstract this paper studies the stocking replenishment decisions for inventory systems where the purchasing price of an item decreases overtime in a periodic review setting with stochastic demands we model the purchasing prices of successive periods as a stochastic and decreasing sequence to minimize the expected total discounted costs purchasing inventory holding and shortage penalty for systems with backlogging and lost sales we derive conditions regarding the cost parameters under which myopic stocking policies are optimal

foreign owned banks in the united states earning market share or buying it foreign owned u s banks have been chronically unprofitable for more than a decade the authors employ a profit efficiency model introduced by allen n berger diana hancock and david b humphrey 1993 modified to be less sensitive to variations in asset size to estimate the relative profit efficiency of 62 foreign owned and 240 u s owned banks between 1985 and 1990 their results indicate that foreign owned banks were significantly less profit efficient than were u s owned banks primarily due to foreign banks reliance on expensive purchased funds for foreign owned banks the results are consistent with a strategy of sacrificing profits in exchange for fast growth and increased market share during the 1980s copyright 1996 by ohio state university press

risk based capital requirements and bank portfolio risk abstract we construct a linear programming model and analyze the effectiveness of r b capital adequacy standards when bank deposits are fully insured we derive a set of optimal asset risk weights given a constraint in raising equity and using these weights the r b capital plan is an effective regulation mechanism without a constraint on equity maximum leverage restrictions and r b capital plans are mutually exclusive alternatives as we deviate from the optimal risk weights a combination of a leverage restriction and a r b equity ratio seems to be the more appropriate approach to controlling bank portfolio risk

replenishment and stocking policies for inventory systems with random deal offerings this paper considers the replenishment and stocking decision for inventory systems in which price discounts referred to as deals are offered by the supplier or the market place at random points in time assuming that the demand is constant over time the times between deal offerings are exponentially distributed and that the order leadtimes are negligible we derive expressions for evaluating the operating characteristics of the model moreover we derive expressions for determining the optimal policy parameters for such systems and present results on the behavior of the optimal policy parameters our results are easy to implement intuitive and provide managerial insights and a better understanding on the effect of random deal offerings on replenishment and stocking decisions in addition we suggest a back of envelope heuristic solution for deriving the policy parameters

nontraditional activities and the efficiency of us commercial banks abstract in recent years an increasing portion of bank income has been generated through nontraditional activities most studies of bank efficiency do not include any measure of nontraditional activities when measuring outputs in this paper cost revenue and profit efficiency are estimated by using models with and without nontraditional output the results suggest that the standard model which omits nontraditional output understates bank efficiency evidence also surfaces that based on efficiency the relative ranking of individual banks changes when nontraditional activities are included as a type of output

the international transmission of financial shocks the case of japan one of the more dramatic financial events of the late 1980s and early 1990s was the surge in japanese stock prices that was immediately followed by a very sharp decline of more than 50 percent while the unprecedented fluctuations in japanese stock prices were domestic financial shocks the unique institutional characteristics of the japanese economy produce a framework that is particularly suited to the transmission of such shocks to other countries through the behavior of the japanese banking system the large size of japanese bank lending operations in the united states enables us to use u s banking data to investigate the extent to which this domestic japanese financial shock was transmitted to the united states as well as to identify a supply shock to u s bank lending that is independent of u s loan demand we find that binding risk based capital requirements associated with the decline in the japanese stock market resulted in a decline in commercial lending by japanese banks in the united states that was both economically and statistically significant this finding has added importance given the severe real estate loan problems currently faced by japanese banks how japanese bank regulators decide to resolve these problems will have significant implications for credit availability in the united states as well as in other countries with a significant japanese bank presence

cost function for a periodic reorder point system with time dependent replenishment costs abstract a single item inventory model with probabilistic demand is considered in this paper the replenishment of items is cyclical and occurs every n periods the order for replenishment can be placed at the end of any period during the cycle replenishment costs setup and unit costs are stated as a function of time the units ordered are set equal to an order quantity q the general expression of this inventory system is formulated by developing the stationary distribution of the inventory position units ordered and the probability of placing an order during any period the expression is stated in terms of the reorder point s and the order quantity q and can be used to locate the optimal solution

optimal ordering policies in response to a discount offer abstract sometimes supplier offers a temporary price discount to increase cash flow or decrease the inventory level of certain items thus the manufacturer may be able to improve the effectiveness of his inventory system by ordering a special quantity at this sale period in this paper economic order quantity eoq models with a discounted price are developed to obtain the optimal ordering policy during the sale period for five different cases a coincidence of sale period with replenishment time b non coincidence of sale period with replenishment time c sale period is longer than a cycle d discounted price as a function of the special ordering quantity and e incremental discount each case has its own characteristics of the sale period and the discounted price the objective is to take the maximum possible advantage from the discounted price by ordering a special quantity during the sale period the optimal ordering policy is obtained by maximizing the difference between the two costs regular eoq cost and special quantity cost during the sale period moreover a comparison of different discount scenarios is developed to sense the effect of different parameters on the ordering policies the annual gain obtained is linearly related to the discount and the on hand remnant inventory numerical analyses are provided to illustrate and testify the values of the optimal special quantity the analysis showed an impressive improvement in the effectiveness of the inventory system when a special order is placed during the sale period the optimal special quantity is driven for each case to visualize real life problems sensitivity analysis is also initiated to study the change in the total savings with respect to the variation of the special optimal quantity

an economic order quantity model with a known price increase and partial backordering abstract a constant unit purchase cost is one of the main assumptions in the classic economic order quantity model in practice suppliers sometimes face a known price increase in this paper we develop eoq models with a known price increase and partial backordering under two different assumptions about when the increase will occur we prove the concavity of the extra profit functions for both scenarios if a special order is placed just before the price increases a solution method is proposed and numerical examples are presented

a note on inventory models with cost increases in this note a simple procedure is given for determining the optimal ordering policy for an item for which an increase in the price has been announced the procedure eliminates the need for evaluation and comparison of the total costs of alternate ordering policies for determining the optimal ordering policy

optimal ordering strategies for announced price increases the familiar model for determining the optimal ordering strategy given an announced price increase assumes that the buyer has an opportunity to place an order at the end of the next economic order quantity cycle before the price increase takes effect this paper extends the price increase model by relaxing the requirement on the timing of the price increase specifically we develop optimal ordering strategies for situations where the price increase becomes effective at any future specified time we also calculate savings for alternate ordering strategies

evaluating lot sizing strategies under limited time price incentives an efficient lower bound abstract determination of the optimal lot sizing strategy when the vendor offers limited time price incentives such as pre announcement of a price increase that will take effect after a finite time or a price discount that is valid for a limited time is a common problem that has been extensively researched a review of the literature indicates that the mathematical analysis and solution of this problem are quite complex this complexity may deter managers from using the optimal strategy although an optimal lot sizing strategy results in the lowest cost managers generally prefer simple heuristic or rule of thumb strategies that are easy to understand and to implement provided the total relevant cost associated with such strategies compares well with that of the optimal strategy therefore it would be of significant value to managers if the cost associated with the optimal strategy can be deduced easily without recourse to complex mathematical analysis so that the simpler strategies can be quickly and easily evaluated in this paper we present an intuitively appealing and easy to compute method to determine a tight lower bound whose value is very close to the total cost of the optimal strategy we demonstrate through extensive computational analysis the adequacy of our lower bound by comparing it with the total cost associated with an optimal strategy over a wide range of operating parameters thus managers can use it as a surrogate for the cost of the optimal strategy while evaluating heuristic strategies we illustrate the application of our lower bound with numerical examples

one time only incentives and inventory policies abstract this paper presents a review of the literature available on inventory policies under incentives on a one time only basis it is quite a common industrial practice to offer special incentives to motivate the buyer to order in larger than regular order quantities such special deals are available for a limited time only the literature on inventory policies under conditions of incentives has been classified by the nature of incentives such as price discount and credit period a situation of announced price increase which is very similar to price discount is also reviewed the policy implications of various scenarios are highlighted and areas of future research are identified

ordering and inventory policies for step changes in the unit item cost a discounted cash flow approach this paper considers the problem of determining the optimal ordering quantities of a purchased item where there are step changes in price either up or down other costs incurred include ordering costs associated with each replenishment and holding costs related to capital tied up in inventory and physical stock holding the net present value npv principle is applied explicit expressions for the development of the optimal order quantities over time are presented it is shown that three cases may be distinguished i when the price change is very small ii when an essential price increase occurs and iii when there is an essential price decrease although the optimal last order quantity before a price increase is similar in magnitude to what has been presented in other articles applying average cost approaches in certain respects this paper offers novel results contradictory to those suggested by other authors analysis shows that the average cost model solutions are first order approximations in the discount rate numerical evaluations of a range of price increases and times to the price increase suggest that with certain important caveats the average cost formulae are likely to be acceptable for most practical situations for the infinite horizon situation

optimal eoq for announced price increases in infinite horizon in this paper we consider an infinite horizon economic order quantity eoq model with single announced price increase with an option of placing a special order just before the price increase takes effect we extend earlier work where it is assumed that the special order is an integral multiple of the new eoq quantity in the process we show that when the assumption of integrality is not valid the earlier approach of minimizing the cost difference over a finite horizon is no longer valid and establish the periodicity of cost difference function next we show that the cesaro limit of the function exists and utilize that to derive the optimal special order quantity we find that the optimal special ordering policy is of s s type

the effect of risk based capital requirements on profit efficiency in banking the purpose of this paper is twofold to show how to measure profit efficiency in banking using a newly developed technique and to use that technique to determine the effect of risk based capital requirements on the profit performance of us banks the measure of profit efficiency used captures deviations from profit maximization arising from technical inefficiency caused by a lack of managerial oversight and allocative inefficiency which is caused by managers choosing a nonoptimal mix of inputs and outputs a leverage ratio constraint and a risk weighted capital ratio constraint are explicitly included in the model which allows identification of the effect on profits of those constraints the techniques are applied to random samples of us banks for 1990 1992 and 1994 the results indicate that allocative inefficiency is a larger source of profit loss than technical inefficiency and that the risk based capital standards have a significant effect on bank allocative efficiency

did risk based capital allocate bank credit and cause a credit crunch in the united states this paper examines the reallocation of bank credit from loans to securities in the early 1990s using data on virtually all u s banks from 1979 to 1992 the authors investigate implementation of risk based capital and other regulatory and nonregulatory changes as possible causes of a supply driven credit crunch the main empirical implication of these credit crunch hypotheses that the reallocation of credit would be most associated with low capital high risk banks generally is not consistent with the data much of the reallocation is associated with demand side factors but it is difficult to differentiate cleanly among these factors copyright 1994 by ohio state university press

optimal ordering policies in inventory systems with random demand and random deal offerings abstract in this paper we determine the optimal order policies for a firm facing random demand and random deal offerings in a periodic review setting a firm may first place an order at the regular price later in the period if a price promotion is offered by the supplier with a certain probability the firm may decide to place another order we consider two models in the paper in the first model the firm does not share the cost savings due to the promotion offered by the supplier with its own customers i e its demand distribution remains fixed in the second model the cost savings are shared with the final customers as a result the demand distribution shifts to the right for both the models in a dynamic finite horizon problem the order policy structure is divided into three regions and is as follows if the initial inventory level for the firm exceeds a certain threshold level it is optimal not to order anything if it is in the medium range it is optimal to wait for the promotion and order only if it is offered the order quantity when the promotion is offered has an order up to policy structure finally if the inventory level is below another threshold it is optimal to place an order at the regular price and to place a second order if the promotion is offered the low initial inventory level makes it risky to just wait for the promotion to be offered the sum of the order quantities in this case has an order up to structure finally we model the supplier s problem as a stackelberg game and discuss the motivation for the supplier to offer a promotion for the case of uniform demand distribution for the firm in the first model when the firm does not share the cost savings with its customers we show that it is rarely optimal for the supplier to offer a promotion in the second model the supplier may offer a promotion depending on the price elasticity of the product

best practice benchmarking in uk higher education new nonparametric approaches using financial ratios and profit efficiency methodologies the neglected issue of using profit efficiency for the best practice benchmarking of uk universities is explored to see whether this supports the policy stance of encouraging more specialized university production the article also investigates whether nonparametric modelling with financial ratios in contrast to nonparametric modelling based on the prices and quantities of each university s inputs and outputs can yield ready insights into this profit efficiency issue the empirical results using two new approaches confirm that more specialized university production yields relatively higher performance on average than less specialized production the results also highlight certain advantages of financial ratios modelling

economic replenishment strategies for announced price increases abstract the usual model for determining the optimal replenishment lot size for an announced price increase is the basic eoq model this analysis extends the logic to a composite lot sizing model that can be disaggregated into a family of hybrid models with additional operational flexibility the composite model permits broader diversity and the ability to decompose complexity it provides decision support resourcefulness with its resultant economies

a technically level playing field profit efficiency analysis of enforced competition between publicly funded institutions abstract the study demonstrates how recent advances in the data envelopment analysis dea of profit efficiency and in combining dea and stochastic frontier analysis sfa to measure producer performance can be used to obtain a technically level playing field profit efficiency performance measure a three stage analysis is used to provide an empirical investigation of public sector universities facing regulatory pressures to attain both profit efficiency and output quality stage one employs directional distance function analysis to decompose dea profit efficiency measures into technical and allocative components as these performance measures incorporate the impacts of managerial inefficiency the operating environment and luck statistical noise stage two applies sfa to total radial and non radial slacks to obtain a degree of disentanglement from the latter two impacts the stage two results are used to define a common environment and common luck scenario thus permitting university producers inputs to be adjusted so as to reflect operation within this more level playing field scenario stage three recomputes the first stage dea for this scenario to yield an input focused technically level playing field measure of profit efficiency that unifies the regulatory financial audit and output quality indicators in a single best practice benchmarked performance measure

optimal ordering policies when anticipating a disruption in supply or demand abstract we develop an optimal inventory policy for eoq inventory systems which may have a disruption in either supply or demand the start of the disruption is known a priori and it lasts a random length of time we describe the structure of an optimal policy and present a procedure for its computation along with numerical results

optimal prices and order quantities when temporary price discounts result in increase in demand abstract suppliers often offer temporary price discounts to retailers the discount motivates retailers to increase their order quantity and offer a discount to their customers to increase demand and profit in this paper the change in price and the resulting change in demand and their effect on inventory policy and total profit is analyzed simultaneously to determine retailer s optimal price and optimal ordering policies the simultaneous analysis considers the joint effect of marketing and inventory policies on profits and prohibits the suboptimality that is inherent in the customarily serial treatment of these policies this paper uses a general price demand relationship and develops general models for determining optimal price and order quantity any specific price demand relationship may be substituted in these models to determine the optimal price and optimal order quantity for specific cases