may the pro poor impacts of trade liberalisation vanish because of imperfect information abstract in this paper we try to evaluate changes in welfare gains and their distribution due to trade liberalisation when imperfect information is considered the results of two versions of a computable general equilibrium cge model using the gtap database and representing goods as well as capital flows are compared in the first version a standard world cge approach is followed in the second version we included risk aversion imperfect information and production lag in the agricultural sector after a brief description of the two versions changes in welfare represented by the income of two types of household middle low and middle high in three regions europe united states rest of the world after agricultural trade liberalisation are presented theoretical and political consequences of the results are discussed

joint pricing and ordering policy for two echelon imperfect production inventory model with two cycles abstract this study deals with an imperfect epq economic production quantity price dependent inventory model over two types of cycles in the first cycle the retailer sells only good product with actual price and in the second he sells the products with a discount price in the production run time the non conforming items are produced at a random rate and they are reworked after the regular production run time and the reworked items are almost perfect as good as original quality items the retailer starts the second cycle when a certain percent of good items are left to him after the completion of regular production the retailer continues simultaneously two cycles up to which both types of the products are available to him now our objective is to find out optimal ordering lot size and optimal price for which the profit of the integrated model is maximum also we check the best strategy of retailer for the time of starting second cycle a numerical example is provided to illustrate the behavior and application of the model

customs unions and domestic taxes it is well known that nondiscriminatory domestic taxes and subsidies are perfect substitutes for nondiscriminatory trade policies and would render useless international agreements restricting trade policy alone the author shows that these instruments generally are imperfect substitutes for trade policy in a customs union however in one popular specification of trading patterns access to such tax powers nevertheless renders a customs union useless furthermore numerical simulations demonstrate that a union may be ineffective in many other cases severely curtailing the potential unions that are attractive to both members the author illustrates the restrictive conditions under which a union will then form

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

optimal tariff equilibria with customs unions the authors construct a model of customs unions in which countries charge optimal tariffs customs unions internalize the externality that exists whenever two countries import the same good also customs unions make several countries into one large unit with more market power big customs unions can improve their members welfare relative to the free trade the authors model of customs unions separates the effects of tariff reduction from the effects of policy coordination the movement from nash equilibrium to a free trade association improves global resource allocations moving from a free trade association to a full customs union has ambiguous resource allocation effects

the appraisal of industrial investments a new method and a case study abstract a general method of investment projects evaluation proposed by the second author is outlined it consists in decomposing in period quotas myers adjusted present value the analysis of these quotas provides satisfactory insight into the profitability of the project per se and its profitability through an adequate funding policy a case from real life concerning a large scale industrial investment is briefly discussed and some advantages of the method are highlighted

an eoq model with partial backordering and advance payments for an evaporating item abstract in the classic economic order quantity model the purchasing cost of an order is paid at the time of its receipt in some cases retailers ask purchasers to pay all or a fraction of the purchasing cost in advance and may allow them to divide the prepayment into several equal sized parts in this paper an economic order quantity model for an evaporating item with partial backordering and partial consecutive prepayments is developed with a real case study of a gasoline station real numerical examples illustrate the proposed model and the solution method

a discounted cash flow approach to the base stock inventory model abstract a widespread approach to inventory modelling is to associate costs with measures of system performance and determine the control policy which minimises the long run average cost per unit time this type of approach ignores the impact of a control policy on the timing of the cash flows associated with payments to suppliers and revenue streams from customers the approach in this paper is to concentrate on cash flows and determine the control policy which maximises the expected net present value of the cash flows associated with a demand valued at the time when that demand occurs there is a poisson demand process a fixed lead time unsatisfied demand is backordered and the system is controlled using a base stock policy a solution procedure is given and a comparison is made with an equivalent simple interest model and with the standard cost model with linear holding and shortage costs

the problem of global environmental protection what distinguishes global common property problems and global unidirectional externalities from the ones that arise under a single jurisdiction is that there is no global authority empowered to intervene and regulate use of global environmental resources cooperation is needed the paper discusses when cooperation is most needed and how it might be obtained cooperation might emerge from a noncooperative setting if supergames are played if the actions of any one country are explicitly contingent on the actions undertaken by other countries or if moral concerns lead countries to consider the consequences of their actions for others cooperation emerges in an explicit though limited form when countries commit to regulate themselves in signing international agreements in these cases the signatories cooperate but the agreements are self enforcing an attempt is made to relate these theoretical concepts to the practice of global environmental protection copyright 1990 by oxford university press

a classification of literature on determining the lot size under quantity discounts abstract determining a lot size in the presence of either all units or incremental discounts has represented one of major interests of materials managers it is a common practice that the suppliers offer quantity discount to entice the buyers to purchase more and to achieve economies of scale for transportation and processing costs this paper will classify the literature on lot sizing determination under several types of discount schemes and discuss some of the significant literature in this area over two decades also some future research areas have been identified

financial management in inventory problems risk averse vs risk neutral policies abstract in this work we discuss the effect of risk measure selection in the determination of inventory policies we consider an inventory system characterized by the loss function of luciano et al 2003 var as a risk measure for multi period static inventory models international journal of production economics 81 82 375 384 we derive the optimization problems faced by risk neutral quadratic utility mean absolute and cvar decision makers results show that while the global nature of the optimal policy is assured for risk coherent and risk neutral decision makers the convexity of the quadratic utility problem depends on the stochastic properties of demand we investigate the economic and stochastic determinants of the different policies this allows us to establish the conditions under which each type of decision maker is indifferent to imprecision in the distribution families finally we discuss the numerical impact of the choice of the risk measure by means of a multi item inventory the introduction of an approach based on savage scores allows us to offer a quantitative measurement of the similarity discrepancy of policies reflecting different risk attitudes

economic purchasing strategies for temporary price discounts abstract the familiar model for determining the optimal stock replenishment strategy for a temporary price reduction is based on the simple eoq this paper extends the logic to a composite eoq model which can be decomposed into a family of hybrid models with broader operational flexibility the composite eoq provides malleability and flexibility to changing operational requirements by disaggregating complexity it approaches the resourcefulness of an expert system with its attendant economies

forecasting vector autoregressions with bayesian priors the paper explores the justification for and application of bayesian priors in forecasting a vector autoregression a nonsymmetric random walk prior outperforms three alternative time series representations in forecasting five series of the u s hog market

an inventory model with both stock dependent demand rate and stock dependent holding cost rate abstract in this paper we develop an inventory model under a stock dependent demand rate and stock dependent holding cost rate with relaxed terminal conditions shortages are allowed and partially backlogged in the model the purpose of this study is to determine the optimal order quantity and the ending inventory level such that the total profit per unit time is maximized for the retailer we first establish a proper model for a mathematical formulation then we develop several theoretical results and provide the decision maker with an algorithm to determine the optimal solution finally numerical examples are provided to illustrate the solution procedure and a sensitivity analysis of the optimal solution with respect to major parameters is carried out

nonlinear dynamics and stock returns simple deterministic systems are capable of generating chaotic output that mimics the output of stochastic systems for this reason algorithms have been developed to distinguish between these two alternatives these algorithms and related statistical tests are also useful in detecting the presence of nonlinear dependence in time series in this article the authors apply these procedures to stock returns and find evidence that indicates the presence of nonlinear dependence on weekly returns from the center for research in security prices value weighted index copyright 1989 by the university of chicago

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

the emergence of chaos from classical economic growth this paper shows how fluctuations of an erratic and unstable nature can emerge from the classical deterministic economic growth process implications of the analysis would appear to be at least two first pronounced changes in the way an economy behaves need not cause us to reject our understanding of how it works second we need not seek in exogenous forces an explanation as to why behavioral patterns change and why it may be so difficult to anticipate future events from the profile of past experience

is the business cycle characterized by deterministic chaos abstract tests are conducted on u s macroeconomic data for the presence of low dimensional deterministic chaos where deterministic chaos is defined as in grandmont s 1985 walras bowley lecture or in brock 1986 the idea is to test for evidence of endogenous instability causing the business cycle low order autoregressions are hard to reject with our methods evidence of chaos is weak but our tests may be too weak to detect it evidence of nonlinearity is present in employment 1950 i to 1983 iv unemployment 1949 i to 1982 iv monthly post war industrial production and pig iron production 1877 1937

chaos significance mechanism and economic applications imagine a bargaining model say involving diplomats negotiating tariff levels or a disarmament treaty in which each party has been instructed by higher headquarters to respond to each new offer by her opposite number with a counteroffer that is to be calculated from a simple reaction function provided in advance both negotiating parties are prohibited from revealing their own reaction functions to the other if the perfectly deterministic sequence of offers and counteroffers that must emerge from these simple rules were to begin to oscillate wildly and apparently at random the negotiations could easily break down as each party not understanding the source of the problem came to suspect the other side of duplicity and sabotage yet all that may be involved as we will see is the phenomenon referred to as chaos a case that is emphatically not pathological but in which a dynamic mechanism that is very simple and deterministic yields a time path so complicated that it will pass most standard tests of randomness chaos has become a subject of great interest to specialists and nonspecialists alike besides economics it has entered the literature of geometry physics ecology and meteorology it has been written about at length in the new york times magazine and scientific american as well as technical publications this article seeks to describe what it is how it works and what it means for economics

the deterministic eoq with partial backordering a new approach previous authors have shown that if demand that cannot be filled from stock is partially backordered then using the full backordering model or assuming that all stockouts will result in lost sales can lead to substantial increases in cost relative to using a model that specifically recognizes the percentage of the stockouts that will be backordered the models that these authors developed resulted in procedures or equations that are relatively difficult to use in this paper we take a different approach to modeling the deterministic eoq with partial backordering that results in equations that are more like the comparable equations for the basic eoq and its full backordering extension

a note on optimal ordering policies in response to a discount offer abstract in this short note we are suggesting a marginal analysis approach over the approach used by sarker and al kindi 2006 optimal ordering policies in response to a discount offer international journal of production economics 100 2 195 211 for developing models for determining the optimal ordering policy for an item for which the supplies offer a price discount during a sale period

on nonlinear dynamics the case of the pork cycle new methods for analyzing nonlinear dynamic processes are used to evaluate the hogcorn price ratio the results present evidence of nonlinear dynamics in the pork cycle moreover while garch processes account for some of the nonlinearities the pork cycle is apparently characterized by more complex dynamic forms the empirical analysis provides some evidence of the presence of chaos in the pork cycle the results also indicate that the dynamic process generating the pork cycle is nonlinear and cannot be adequately characterized by a small number of state variables

global sensitivity analysis in inventory management abstract this paper deals with the sensitivity analysis sa of inventory management models when uncertainty in the input parameters is given full consideration we make use of sobol function and variance decomposition method for determining the most influential parameters on the model output we first illustrate the method by means of an analytical example we provide the expression of the global importance of demand holding costs order costs of the harris economic order quantity eoq formula we then present the global sa of the inventory management model developed by luciano and peccati 1999 capital structure and inventory management the temporary sale problem international journal of production economics 59 169 178 for the economic order quantity estimation in the context of the temporary sale problem we show that by performing global sa in parallel to the modeling process an analyst derives insights not only on the eoq structure when its expression is not analytically known but also on the relevance of modeling choices as the inclusion of financing policies and special orders

buyer s response to a temporary price reduction incorporating freight costs abstract in this paper we characterize the buyer s response to a temporary price reduction although there have been many studies that have considered the above problem most of those studies assume that the buyer orders fob free on board destination and that the freight charges are included in the supplier s unit price our model thus becomes applicable for a buyer whose strategy is to include transportation costs in their purchase decisions the buyer may want direct control on his inbound logistics costs the company may have outsourced its logistics function and as a result is charged for freight as invoiced by the public motor carrier in some cases the supplier may only allow for orders that are fob origin our model allows for less than truckload as well as truckload rates freight cost for a ltl shipment is modeled using tariffs set by public carriers in practice these tariffs generally involve 6 7 breakpoints in terms of the weight of the shipment another complication in practice is that the shipper buyer has an option to over declare the weight of the shipment

an inventory control model with stochastic review interval and special sale offer abstract periodic review inventory models are widely used in practice especially for inventory systems in which many different items are purchased from the same supplier however most of periodic review models have assumed a fixed length of the review periods in practice it is possible that the review periods are of a random stochastic length this paper presents an inventory control model in the case of random review intervals and special sale offer from the supplier the replenishment interval is assumed to obey from two different distributions namely exponential and uniform distributions also shortages are allowed in the term of partial backordering for this model its convexity condition is discussed and closed form solutions are proposed

note on an eoq model with a temporary sale price a flaw is revealed in the formulation of a fundamental temporary sale price model however its impact is only relatively significant when the amount of the discount is small

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

hog cycles and countercyclical production response the cycle in prices and output is not a permanent fixture of the pork industry exogenous shocks occasionally give rise to predictable cycles in pork prices but these are eventually eliminated in a manner that is consistent with the existence of countercyclical producers it normally takes several revolutions of the cycle before a sufficient number of countercyclical producers notice that a cycle has begun and are able to alter their production patterns sufficiently to eliminate it consequently the more compelling the evidence is in favor of a cycle the less likely it is to continue

evaluation of capital costs in a multi level inventory system by means of the annuity stream principle abstract in this paper some results obtained from applying the annuity stream principle for evaluating capital tied up in inventory and work in progress and presented this principle departs from the cashflows associated with the production inventory processes considered in contrast to traditional procedures by which the inventory value is determined from physical stock evaluated at costs incurred to date in many situations it appears that the traditional procedure will underestimate the amount of capital tied up in production in this paper the two principles are applied to a multi level inventory system and the capital cost expressions and optimal order quantities are compared

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

managing price risks using and local polynomial kernel forecasts this study contributes to understanding price risk management through hedging strategies in a forecasting context a relatively new forecasting method nonparametric local polynomial kernel lpk is used to forecast prices and to generate ex ante hedge ratios the selective multiproduct hedge based on the lpk price and hedge ratio forecasts is in general found to be better than continuous hedging no hedging and alternative forecasting procedures selective multivariate hedging using the lpk is found to improve hog producer s expected returns the findings indicate that combining hedging with forecasts especially when using the lpk procedure can improve price risk management

closed form solutions for wee s and martin s eoq models with a temporary price discount abstract in this article we use closed form solutions to solve wee and yu 1997 deteriorating inventory model with a temporary price discount and martin s 1994 eoq model with a temporary sale price in wee and yu 1997 and martin s 1994 the benefits during the temporary price discount purchase cycle are represented by their objective functions wee and yu 1997 and martin 1994 only used search methods to find approximate solutions following the theorems we suggested you can find closed form solution directly when there are integer operators involve in an objective function using the data of wee and yu 1997 and martin 1994 we can find the results are more quick and more accurate

optimal ordering and pricing policy for demand functions that are separable into price and inventory age abstract we formulate and analyze two models for determining the optimal pricing order quantity and replenishment period for items whose demand function is separable into components of price and inventory age the first model assumes a multiplicative demand function we provide conditions which are satisfied by most common price dependent demand functions to reduce the three variable profit maximization problem into a single variable problem which can be solved using an efficient line search method next we show that a genuine additive model cannot exist and instead suggest and analyze a pseudo additive model however this model is more limited than the multiplicative model in its ability to incorporate various combinations of price and inventory age effects and reduction of the maximization problem into a single variable problem is more complicated except in the case of a linear price effect which is further analyzed for both models we show that the optimal solution satisfies the first order condition for equilibrium under a monopoly with a modification that includes inventory holding costs we solve numerical examples to illustrate the solution procedures

average rates of return working capital and npv consistency in project appraisal a sensitivity analysis approach abstract in project appraisal under uncertainty the economic reliability of a measure of financial efficiency such as a rate of return depends on its strong npv consistency meaning that the performance metric i supplies the same recommendation in accept reject decisions as the npv ii ranks competing projects in the same way as the npv iii has the same sensitivity to perturbations in the input data as the npv in real life projects financial efficiency is greatly affected by the management of the working capital using a sensitivity analysis approach and taking into explicit account the role of working capital we show that the average return on investment roi is not strongly npv consistent in accept reject decisions if the working capital is uncertain and changes under changes in revenues and costs also it is not strongly npv consistent in project ranking we also show that the internal rate of return irr is not strongly npv consistent and economic analysis may even turn out to be impossible owing to possible nonexistence and multiplicity caused by perturbations in the input data as well as to possible shifts in the financial meaning of irr under changes in the project s value drivers we introduce the straight line rate of return slrr based on the notion of average rate of change which overcomes all the problems encountered by average roi and irr it always exists is unique strongly npv consistent for both accept reject decisions and project ranking and has an unambiguous financial nature

the problem of the persistent hog price cycle a chaotic solution a persistent hog corn price ratio has been known to exist since the early 1930s and many attempts have been made since then to model its dynamics that these models have been ineffectual as forecasting tools is apparent by the fact that the hog cycle has persisted to this day in this paper i propose that increased forecasting accuracy can be obtained by adjusting traditional forecasting models so that they account for deterministic nonlinear processes with improved forecasts the costs of countercyclical production will decrease dampening and perhaps even eliminating the cycle the chaotic dynamics of the hog corn price cycle is confirmed and chaotic models of this system are developed the analysis provides the framework for developing a function to forecast the dynamics of the hog corn price ratio

capital structure and inventory management the temporary sale price problem the paper discusses the use of adjusted present value techniques in a problem of inventory management the temporary sale price problem in the presence of equity or debt financing while traditional net present value approaches produce results very similar to those of the average cost approach our consideration of the capital structure of the firm opens the way to theoretically and numerically different inventory policies

public sector capital and the productivity puzzle a number of studies have suggested a quantitatively important relationship between public sector capital accumulation and private sector productivity with the most compelling evidence derived from analyses of state level data estimates herein of production functions that use standard techniques to control for unobserved state specific characteristics however reveal essentially no role for public sector capital in affecting private sector productivity only estimates of state production functions that do not include such controls find substantial productivity impacts this result reconciles existing econometric estimates with the findings of hulten and schwab based on growth accounting techniques as such techniques effectively control for state specific effects region level estimates are essentially identical to those from state data suggesting no quantitatively important spillover effects across states copyright 1994 by mit press

differential importance and comparative statics an application to inventory management abstract in this work we deal with the problem of establishing which parameters impact an inventory policy the most a new sensitivity measure is introduced by relating the differential importance d and the comparative statics cs techniques we discuss the properties of the new indicator and show that it shares the additivity property we provide the expression of for optimization models numerical results are offered for the sensitivity analysis of a recently introduced inventory management model

vector autoregression forecasting models recent developments applied to the u s hog market bayesian estimation and the exclusion of variables are two basic approaches to the improvement of vector autoregression forecasting models this study presents a method which combines and extends several techniques within the exclusion of variables approach several quarterly hog market models are estimated and out of sample forecasts from 1977 through 1984 are evaluated the results suggest the proposed method compares favorably to other exclusion of variables techniques as well as to the more sophisticated bayesian approaches the univariate autoregressive moving average arma model has been quite successful in time series forecasting the main problem with this type of model is its failure to consider information about other potentially important variables vector autoregression var models represent one approach toward incorporating this information however researchers have typically found that unrestricted var models do not forecast well e g nerlove grether and carvalho kling and bessler perhaps because they are overparameterized the resulting variability associated with the parameter estimates contributes to the lack of precision in the forecasts attempts to overcome this degrees offreedom problem fall into two broad categories the exclusion of explanatory variables tiao and box hsiao 1979 caines keng and sethi and bayesian estimation of the parameters doan and litterman litterman the latter approach is difficult to implement newbold asks how the priors are generated bessler and hopkins suggest a random walk prior may be consistent with an efficient market hypothesis while this may be useful for price series considerable expertise in the modeling procedure is generally required as is detailed knowledge of the series of interest this article suggests a new technique for building var forecasting models using the exclusion of variables approach for comparative purposes other recently proposed var modeling strategies are discussed applications are then made to the live u s hog market

an eoq model for perishable product with special sale and shortage abstract in this paper for the first time an inventory control model to determine the optimal order and shortage quantities of a perishable item when the supplier offers a special sale is developed four possible cases based on decision that the purchaser might make about the first replenishment policy using regular economic order quantity model at reduced price or regular price if he did not take the special order and coincidence of special period length with positive or negative inventory level of the last regular period length during the special period are investigated moreover several useful theorems are suggested through which one can find closed form solution directly when there are integer operators involved in an objective function at the end in order to illustrate the proposed theorems and the solution method some numerical examples are solved and a sensitivity analysis is reported too

the dynamics and volatility of prices in a vertical sector this paper studies the evolving distribution of prices in a vertical sector in the presence of market cycles it investigates the dynamic linkages between farm and retail prices with an application to the chinese pork sector the econometric approach relies on a quantile autoregressive qar model that provides a flexible representation of the dynamics of price volatility it investigates the presence and nature of price cycles and their implications for price transmission we document that the marketing margin is more sensitive to changes in consumer income than in feed cost in addition rising feed cost increases the amplitude of the cycle while higher consumer income increases the period of the cycle

an optimal control of inventory under probablistic replenishment intervals and known price increase abstract the unit purchase price of products may increase or decrease for various reasons which influences the seller s and buyer s inventory control policies this paper develops an inventory control model when replenishment intervals are probabilistic and partial backordering in which an announced price increase happens and the buyer can make a special order before the price increase initiates inventory at the beginning of the period is not equal to zero and can be positive or negative amounts the main aim of this paper is to determine the optimum amount of replenish up to level in special sale offer this model is analyzed in two cases according to the inventory level in which the price increase happens and both cases are formulated to maximize the total saving function for placing a special order or not a closed form solution is obtained for the optimum amount of a special order two special cases with the replenishment intervals following uniform or exponential distributions are studied with sensitivity analysis the results indicate that a buyer can determine the optimal values of the maximum level of inventory and order quantity when the time between two consecutive replenishments is a probabilistic variable and the buyer experiences known price increase for which the total profit is maximized

market instability and nonlinear dynamics the potential role of nonlinear dynamics in generating market instability is investigated using a simple market equilibrium model of the u s dairy industry the supply function reflects the nonlinear dynamics of the dairy herd as estimated by chavas and klemme it is shown that in the absence of any uncertainty an inelastic demand contributes to market instability and chaos

optimal ordering policies in response to a discount offer corrections abstract recently sarker and kindi 2006a optimal ordering policies in response to a discount offer international journal of production economics 100 2 195 211 presented an inventory model from the purchaser s perspective to determine the optimal ordering policies in response to a discount offer established by the supplier for five possible cases this study presents some practical extensions to the optimal ordering policies developed by sarker and kindi 2006a optimal ordering policies in response to a discount offer international journal of production economics 100 2 195 211

costing partial order cycles in the temporary sale price problem the selection of a special order quantity in response to a temporary price reduction is usually derived by comparing the benefits of a special order in terms of a lower purchase price with the additional holding cost if the offer is rejected the analysis is usually carried out over a finite planning horizon under various cost allocation specifications thus neglecting the longer term effects of these offers in contrasting the different solutions this paper shows i that the basic differences among the various earlier formulations centres around the evaluation of the cost of a partial inventory cycle within the average cost avc approach ii that the net present value npv approach eliminates the partial order cycle problem by evaluating cash flows always at the time of occurrence thus obviating the need for considering partial order cycles and iii that the various avc specifications presented in this paper yield excellent approximations to the theoretically correct but harder to use npv formulation numerical examples highlight the main features of the paper

cycles optimization the equivalent annuity and the npv approaches abstract the paper discusses the use of a generalized version of the equivalent annuity principle which takes into account interest rate fluctuations over time when dealing with applications over a sequence of cycles e g plant replacement ones the equivalent annuity is usually defined with reference to each single cycle or to the whole sequence first we study the correspondence between net present values and equivalent annuities as defined above in optimization problems we show that only the second definition is appropriate for optimization whenever the length of the cycle is a choice variable however also the second is not necessarily correct when the horizon is finite then we discuss the corresponding problems of optimality both with an infinite and a finite sequence of cycles applications to a simple plant replacement problem are illustrated they show how different the optimal decisions can be from the equivalent annuity ones

price markdown scheme in a multi echelon supply chain in a high tech industry this paper studies the price markdown scheme in a supply chain that consists of a supplier a contract manufacturer cm and a buyer retailer the buyer subcontracts the production of the final product to the cm the cm buys the components from the supplier and charges the buyer a service fee for the final product produced the price markdown is made possible by the supplier with the development of new manufacturing technologies that reduce the production cost for the sourced component consequently the buyer adjusts the retail price in order to possibly stimulate stronger demand that may benefit both the supplier and the buyer under this scenario we identify the optimal discount pricing strategies capacity reservation and the stocking policies for the supplier and the buyer we also investigate the optimal inventory decision for the cm to cope with the price discount by considering both demand and delivery uncertainties our results suggest that higher production cost accelerates the effects of higher price sensitivity on lowering the optimal capacity and stocking policies in the supply chain the effect of mean demand error on the optimal prices is relatively marginal compared with that from price sensitivity we also found that increasing the standard deviation of the random demand does not necessarily increase the stocking level as one would predict the results show that delivery uncertainty plays an important role in the inventory carried beyond the price break we discuss potential extensions for future research

nonlinear dynamics of daily cash prices daily cash price changes are not normally distributed their empirical distributions have fat tails and most are skewed in addition they are not independent among the diffusion jump extended generalized autoregressive conditional heteroskedasticity garch and deterministic chaos processes a garch process with residuals following a student distribution is the most likely our garch model reduces leptokurtosis removes nonlinear dependence and provides a considerable improvement over the i i d normal model the garch process is not well calibrated because it cannot explain all the observed nonnormality but it does yield asymptotically valid hypothesis tests

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 look into the nature of complex systems and beyond stonehenge economics coping with complexity or ignoring it in applied economics real world economic systems are complex in general but can be approximated by the open systems approach economic systems are very likely to possess the basic and advanced emergent properties e g self organized criticality fractals attractors of general complex systems t he theory of self organized criticality is proposed as a major source of dynamic equilibria and complexity in economic systems this is exemplified in an analysis for self organized criticality of danish agricultural subsectors indicated by power law distributions of the monetary production value for the time period from 1963 to 1999 major conclusions from the empirical part are 1 the sectors under investigation are obviously self organizing and thus very likely to show a range of complex properties 2 the characteristics of the power law distributions that were measured might contain further information about the state or graduation of self organization in the sector varying empirical results for different agricultural sectors turned out to be consistent with the theory of self organized criticality 3 fully self organizing sectors might be economically the most efficient finally empirical implications of the results are discussed complexity theory should be considered as a valuable supplement to the existing analytical toolbox jel classification b52

some basic problems in inventory theory the financial perspective the analysis of the standard eoq problem from a financial perspective is proposed the case of mixed financing equity and debt is considered and the results are compared with those stemming from the average cost approach it is shown that no prediction about the result can be made we solve completely the problem of finding the best financing policy as the financial framework suggests to consider an infinity of inventory cycles we investigate the effects on the solution of a more realistic finite truncation of the chain we show that the finite chain solution is always smaller than the infinite chain one

a deteriorating inventory model with a temporary price discount abstract inventory models considering a temporary price discount have recently become an active area of research in this study an extension is made to consider the fact that some commodities may deteriorate during storage the models also incorporate three additional assumptions that have been neglected by researchers two models for the exponentially deteriorating items with a temporary price discount are developed for a regular and non regular inventory replenishment time our goal in this research is to maximize the total cost saving during the temporary price discount order cycle a numerical example is provided to illustrate the theory

an inventory model for deteriorating items with shortages and time varying demand abstract a deterministic inventory system for items with a constant deterioration rate is studied demand varies in time and it is assumed that it follows a power pattern shortages are allowed and backlogged the ordering cost the holding cost the backlogging cost the deteriorating cost and the purchasing cost are considered in the inventory management an approach is proposed to minimize the total cost per inventory cycle this cost depends on two decision variables the time at which the inventory level falls to zero and the length of the scheduling period numerical examples illustrate the theoretical results

an economic order quantity model with partial backordering and a special sale price abstract a constant unit purchase cost is one of the main assumptions in the classic economic order quantity model in practice suppliers sometimes offer special sale prices to stimulate sales or decrease inventories of certain items in this paper we develop an eoq model with a special sale price and partial backordering we prove the convexity of the cost reduction function if a special order is placed at the special sale price a solution method is proposed and numerical examples are presented

international aspects of public infrastructure investment m odelling infrastructure as an international public good in a two country m odel of trade where each country s social planner behaves strategically we show that the equilibrium levels of infrastructure are sub optimal from a global perspective utilising an appropriate econom etric fram ework and data from 16 european countries over the period 1987 95 we find evidence that accords well with the m ain predictions of our theory thus we are able to offer a plausible theoretical explanation why public capital m ay be undersupplied as suggested by previous em pirical literature