exploiting ergodicity in forecasts of corporate profitability abstract theory suggests that competition tends to equalize profit rates through the process of capital reallocation and numerous studies have confirmed that profit rates are indeed persistent and mean reverting recent empirical evidence further shows that fluctuations in the profitability of surviving corporations are well approximated by a stationary laplace distribution here we show that a parsimonious diffusion process of corporate profitability that accounts for all three features of the data achieves better out of sample forecasting performance across different time horizons than previously suggested time series and cross sectional models as a consequence of replicating the empirical distribution of profit rates the model prescribes a particular strength or speed for the mean reversion of all returns which leads to superior forecasts of individual time series when we exploit information from the cross sectional collection of firms the new model should appeal to managers analysts investors and other groups of corporate stakeholders who are interested in accurate forecasts of profitability to the extent that mean reversion in profitability is the source of predictable variation in earnings our approach can also be used in forecasts of earnings and is thus useful for firm valuation

a statistical equilibrium model of competitive firms abstract we find that the empirical density of firm profit rates measured as returns on assets is markedly non gaussian and reasonably well described by an exponential power or subbotin distribution we start from a statistical equilibrium model that leads to a stationary subbotin density in the presence of complex interactions among competitive heterogeneous firms to investigate the dynamics of firm profitability we construct a diffusion process that has the subbotin distribution as its stationary probability density this leads to a phenomenologically inspired interpretation of variations in the shape parameter of the subbotin distribution which essentially measures the competitive pressure in and across industries our findings have profound implications both for the previous literature on the persistence of profits as well as for understanding competition as a dynamic process our main formal finding is that firms idiosyncratic efforts and the tendency for competition to equalize profit rates are two sides of the same coin and that a ratio of these two effects ultimately determines the dispersion of the equilibrium distribution

continuous review inventory models where random lead time depends on lot size and reserved capacity the processing time of large orders is in many industries longer than that of small orders this renders supply lead times in such settings to be increasing in the order size yet that pattern is not re ected in existing inventory control models especially those allowing for random lead times this work aims at rectifying the situation our setting is an order quantity reorder point model with backordering where the shortage penalty is incurred per unit per unit time the processing time of each unit is random the processing time of a lot is correlated with its size for the case where lead time is proportional to the lot size we obtain a closed form solution that is unlike the classical q r model where lead time is independent of lot size no iterations are required here we also analyze a case where the processing time exhibits economies of scale in the lot size finally we consider a situation where a customer can secure shorter processing times by reserving capacity at the supplier s manufacturing facility 2000 elsevier science b v all rights reserved

an optimal r q policy in a stochastic inventory system with all units quantity discount and limited sharable resource abstract this paper is concerned with the single item inventory system with resource constraint and all units quantity discount under continuous review where demand is stochastic and discrete in most actual inventory systems the resource available for inventory management is limited and the system is able to confront the resource shortage by charging more costs considering the resource constraint as a soft constraint beside a quantity discount opportunity makes the model more practical an optimization problem is formulated for finding an optimal r q policy for the problem in which the per unit resource usage depends on unit purchasing price the properties of the cost function are investigated and then an algorithm based on a one dimensional search procedure is proposed for finding an optimal r q policy which minimizes the expected system costs and converges to a global optimum based on the properties of the partially conditioned cost functions the presented algorithm is modified such that its search path to optimal policy is changed experimental results show that the performance of the modified version of the presented algorithm is much better than the original algorithm in various environments of test problems

leadtime reduction in a q r inventory system an agency perspective abstract we examine the problem of designing and implementing a continuous review q r inventory system from an agency perspective in which the agent s effort influences the item s replenishment leadtime our results are as follows if the agent is risk neutral a linear or quadratic contract achieves first best for a risk averse agent with an exponential utility function assuming a normal leadtime distribution we determine the optimal linear contract extensive numerical experiments suggest that ignoring the possible influence of the agent on the replenishment leadtime can be costly but that the cost penalty of ignoring agency can be significantly reduced by a simple contract

a single item continuous review inventory problem with space restriction abstract with today s high cost of land acquisition observed in most countries management can no longer afford large storage facilities to house their products for this reason one of the main concerns of inventory managers is to ensure that enough storage space is available upon the delivery of a product they therefore have to determine the least cost ordering policy so as to meet demand and taking into account the space limitation in this paper we investigate the problem of a single item continuous review inventory problem in the presence of a space restriction when the demand is stochastic through a sensitivity analysis study it is found that ordering cost storage capacity average demand per unit time and holding cost rate are the most influential problem parameters on the expected inventory costs it is also shown numerically that a simple solution based on economic order quantity is performing very well with an average and maximum cost penalty of 0 19 and 2 03 respectively

corporate growth and industrial structures some evidence from the italian manufacturing industry this work analyses the properties of corporate growth in a large longitudinal sample of italian manufacturing firms in particular it focuses on the statistical properties of growth rates and on the influence of proxies for relative efficiency upon relative growth in line with previous work the emergence of fat tails in growth rate distributions and the idiosyncratic nature of autocorrelation coefficients confirm the existence of a structure in the growth process richer than the one normally assumed by the gibrat law hypothesis and suggest the presence of firm specific drivers of growth at the same time there is a remarkable puzzle concerning the absence of any negative relationship between size and growth variance and only weak influences of relative efficiencies upon growth dynamics

an inventory model with poisson demands and emergency orders abstract in this paper we explicitly consider the opportunity to use an emergency supply mode to hedge against demand uncertainty when replenishing a single item inventory normal orders with a relatively long and constant lead time are controlled by a standard r q policy these orders can only be issued when no other orders are outstanding when a normal order is outstanding emergency orders are controlled by a reorder point r j and an order up to level u j where j is a measure of the time remaining until the normal order is delivered the emergency orders have a short lead time and they may also have different ordering costs compared to normal orders demands not satisfied immediately from inventory are backordered we formulate a long run average cost model that includes ordering costs for the two types of orders backordering costs and holding costs backordering costs are considered both as a unit based cost and as a cost rate a tailor made policy iteration algorithm is designed and utilized to minimize the inventory cost rate with state dependent emergency orders for comparisons an algorithm for finding a best simple emergency order policy is also implemented simulation is used to check the validity of our model numerical results are presented for a set of parameter variations and compared to results without emergency orders as well as to results from an earlier model in the literature our results show that substantial cost savings might be obtained by using emergency orders especially when backordering costs are high however the marginal gains are fairly small if state dependent emergency orders are used instead of a simple emergency order policy

does classical competition explain the statistical features of firm growth abstract we propose a statistical equilibrium model where the tendency for competition to equalize profit rates results in an exponential power or subbotin distribution the model supports and extends recent evidence on the laplace distribution of firm growth rates

corporate growth and industrial dynamics evidence from french manufacturing this work explores basic properties of the size and growth rates distributions of firms at the aggregate and disaggregate levels using an extensive dataset on french manufacturing firms we investigate which properties of firm size distributions and growth dynamics characterize the aggregate dynamics and are at the same time robust under disaggregation our analysis is based on non linear robust regression methods which have never been applied before to this kind of data the growth rates distributions we observe are well described by a subbotin distribution with a shape parameter significantly lower than 1 suggesting a noticeable departure from the laplace behavior reported in previous works on italian and us data at the same time the variance of growth rates depends negatively on size and the relationship does not seem to be linear with larger firms possibly displaying lower variability in their growth dynamics at the disaggregate level we observe significant heterogeneity in the firm size distributions across sectors while the shape of the sectoral growth rates density displays a surprising degree of homogeneity

nutritional functional classification study of panama abstract despite significant progress wide spread malnutrition persists in panama this article describes a study which found that over half the malnutrition in the country is clustered in functional groups economically connected to the agricultural sector and which indicates that food availability is a serious problem for 25 of the population food intake deficits were equally prevalent among the urban and rural populations dietary composition was not seen as the principal problem rather malnutrition problems are linked to low wages and poor access to public services a nutrition policy for panama must be centred first on employment and income generation and then on extending and maintaining public health and nutrition services particularly for the extremely poor in the central provinces food policy per se would not seem a priority area for public intervention

impact of inventory inaccuracy on service level quality in q r continuous review lost sales inventory models this article focus on the behavior of a q r continuous review lost sales inventory model exposed to an inventory record inaccuracy iri an unusual phenomenon has been observed which runs counter to certain empirical practices in the smes based on the principle that safety stock is only necessary for certain intervals in the data inaccuracy rate both analytical results and simulation modeling are proposed to investigate the relationship between the quality of service safety stock and inventory inaccuracy under demand variations it is shown that the service level quality is a non monotone function of the inaccuracy rate i e the service level quality increases up to an iri level and subsequently decreases other inaccuracy distribution functions have produced the same phenomena with constant demand as well as with demand fluctuations finally another noteworthy result also shows the same phenomenon between the function involving a level of safety stock defined by simulation and the function between the service level quality and iri these different observed results are discussed in terms of both their contribution to the q r inventory management policies in smes and of the limitations to this study

corporate growth and profitability this paper argues that current period corporate growth rates reflect changes in current expectations about the long run profitability of a firm this means that growth rates are likely to vary randomly over time using data from 271 large quoted uk firms over the period 1976 1982 we report the existence of a positive statistically significant and robust correlation between current period growth rates and a natural measure of changes in current expectations about long run profitability namely changes in the stock market valuation of the firm nevertheless we find that variations in corporate growth rates are difficult to predict

a multi product continuous review inventory system with stochastic demand backorders and a budget constraint abstract common characteristics of inventory systems include uncertain demand and restrictions such as budgetary or storage space constraints several authors have examined budget constrained multi item stochastic inventory systems controlled by continuous review policies without considering marginal shortage costs existing models assume that purchasing costs are paid at the time an order is placed which is not always the case since in some systems purchasing costs are paid when orders arrive in the latter case the maximum investment in inventory is random since the inventory level when an order arrives is a random variable hence payment of purchasing costs on delivery yields a stochastic budget constraint for inventory this paper models a multi item stochastic inventory system with backordered shortages when estimation of marginal backorder cost is available and payment is due upon order arrival the budget constraint can easily be converted into a storage constraint

explaining the distribution of firm growth rates empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of corporate growth rates we present clear cut evidence on this topic using disaggregated data we explain the observed regularities proposing a model in which firms ability to take up new business opportunities increases with the number of opportunities already exploited a theoretical result is presented for the limiting case in which the number of firms and opportunities go to infinity moreover using simulations we show that even in a small industry the agreement with asymptotic results is almost complete

shared resource capacity expansion decisions for multiple products with quantity discounts abstract when multiple products compete for the same storage space their optimal individual lot sizes may need to be reduced to accommodate the storage needs of other products this challenge is exacerbated with the presence of quantity discounts which tend to entice larger lot sizes under such circumstances firms may wish to consider storage capacity expansion as an option to take full advantage of quantity discounts this paper aims to simultaneously determine the optimal storage capacity level along with individual lot sizes for multiple products being offered quantity discounts either all units discounts incremental discounts or a mixture of both by utilizing lagrangian techniques along with a piecewise linear approximation for capacity cost our algorithms can generate precise solutions regardless of the functional form of capacity cost i e concave or convex the algorithms can incorporate simultaneous lot sizing decisions for thousands of products in a reasonable solution time we utilize numerical examples and sensitivity analysis to understand the key factors that influence the capacity expansion decision and the performance of the algorithms the primary characteristic that influences the capacity expansion decision is the size of the quantity discount offered but variability in demand and capacity per unit influence the expansion decision as well furthermore we discover that all units quantity discounts are more likely to lead to capacity expansion compared to incremental quantity discounts our analysis illuminates the potential for significant savings available to companies willing to explore the option of increasing storage capacity to take advantage of quantity discount offerings for their purchased products

the food first bias and nutrition policy lessons from ethiopia abstract as in many countries from sub saharan africa nutrition policy in ethiopia is dominated by a focus on national and household food production and food security the results of the 1992 national rural nutrition survey and a substantial body of evidence and theory from other settings challenge this view in ethiopia high levels of chronic malnutrition exist in food deficit and food surplus regions alike and all regions have experienced worsening of nutritional status during the last decade moreover child nutritional status is only weakly and inconsistently associated with size of cultivated area nutrition surveillance and other empirically based efforts to improve policy should give explicit attention to policy education as an integral part of their stated objective and workplan

nutritional classification study of peru who and where are the poor abstract in peru in 1984 approximately 60 of the households with malnourished children were engaged in agricultural production or wage work these nutritional problems were associated with insufficient incomes inadequate diets low levels of schooling poor housing quality inadequate access to safe water unsanitary conditions and high levels of childhood morbidity from diarrhoeal disease for the long run the solution is to reverse the longstanding bias against agriculture and labour particularly in the highlands direct nutritional interventions must be undertaken urgently to assist the households with severe malnutrition this article identifies these households by occupational group and geographical locale

firm growth and laplace distribution the importance of large jumps abstract recent empirical studies have shown that firm growth rate distribution is not gaussian but closely follows a laplace distribution this robust feature of the growth rate distribution challenges existing models based on gibrat s model because it predicts a gaussian distribution first we analyze more than 100 000 japanese firms and empirically show that the laplace shape can be observed for the japanese firms then by using the theory of stochastic processes we theoretically show that the absence of jumps causes the discrepancy between gibrat s model and the laplace shape in particular based on the laplace shape and the law of proportionate effect we show that the firm growth process is a jump process in other words firm growth cannot be explained by the consequence of many small shocks but is determined by a few large jumps the widely observed laplace distribution reflects this jump property of firm growth dynamics

computing the optimal replenishment policy for inventory systems with random discount opportunities the paper considers the optimal control of a single item continuous review inventory system with random demand and discount opportunities items can always be purchased with the regular order setup and variable costs however when a discount opportunity occurs they can also be purchased with a different setup cost and a lower variable cost demands for individual items and discount opportunities occur according to independent poisson processes the paper proposes an algorithm to compute the parameters of the optimal replenishment policy which has been shown to be an r r d d policy wherer

gibrat s law redux think profitability instead of growth we argue that firm profitability can be conveniently characterized by one and the same diffusion process for all firms akin to gibrat s seminal idea of a common stochastic description for the dynamics of firm growth here we show that the diffusion of profit rates applies across all surviving corporations irrespective of their size or industry which is not true for growth rates the diffusion process is empirically consistent with both the cross sectional distribution of profit rates and the individual time series of corporate profit rates leading to the notion of a statistical equilibrium this has stark and unexpected implications for our understanding of individual destinies since the model and data suggest that idiosyncratic efforts have no impact on the aggregate distributional outcome instead idiosyncratic efforts merely affect the individual persistence of abnormal profits from the system wide norm put differently corporations have to participate in the same game and can merely choose the speed at which they play it but they cannot bend the rules

innovation and corporate growth in the evolution of the drug industry abstract this work studies the processes of growth of the worlds top 150 pharmaceutical firms on the grounds of an original database which also allows disaggregate analysis at the level of single therapeutical classes and chemical entities our findings show that the industry whose long term evolution is driven by innovation imitation and permanent creation of new markets displays i fat tails in the distribution of growth shocks present at all levels of aggregation with relatively rare big spurs of growth ii a significant autocorrelation of growth rates iii a fall of variance of growth rates with size entirely dependent on corporate diversification patterns in turn plausibly shaped by the competence scope of each firm and iv different lifecycles of diverse types of products and persistent forms of heterogeneity across firms in terms of innovative output which however do not not seem to affect comparative growth performances

an inventory model for perishable items in a lot size system with quantity discounts abstract an inventory model continuous in units and time is developed for perishable items in a lot size system that allows partially backlogging and partially lost saling the model is developed under deterministic demand instantaneous delivery with quantity discounts and any well behaved probability distribution for the time to perishables an example is given to illustrate the model

size growth and survival in the upper austrian farm sector this paper investigates the evolution of the size distribution of more than 40 000 farms in the upper austrian farm sector over the period 1980 90 using gibrat s law as our point of departure we find that smaller farms grow much faster towards some minimum efficient scale of production than farms at or above this threshold size we furthermore find evidence for the existence of two separate centres of attraction of farm size supporting the notion of a disappearing middle and the emergence of a bimodal structure of farm sizes correcting for size related attrition bias had very little effect on our results

learning and the sources of corporate growth this paper explores the link between learning and corporate growth by developing different models of learning and showing that they produce observably different models of corporate growth using data on the growth of a number of firms in the us automobile industry during the 20th century we compare these different models of growth in an effort to identify the major sources of learning which these firms seem to have relied on although there are interesting differences between growth processes before and after the second world war the basic conclusion that we are drawn to is that learning in this sector is largely unsystematic and opportunistic

incorporating quantity discounts and their inventory impacts into the centralized purchasing decision multi site organizations must balance conflicting forces to determine the appropriate degree of purchasing centralization for their respective supplies the ability to garner quantity discounts represents one of the primary reasons that organizations centralize procurement this paper provides methodologies to calculate optimal order quantities and compute total purchasing and inventory costs when products have quantity discount pricing procedures for both all units and incremental quantity discount schedules are provided for four different strategic purchasing configurations scenarios complete decentralization centralized pricing with decentralized purchasing centralized purchasing with local distribution and centralized purchasing and warehousing for ordering decisions under local distribution procedures to determine optimal order quantities and costs are presented in a precise form that could be easily implemented into spreadsheets by practicing managers for the more complicated multi echelon scenarios we introduce a single cycle policy with a tailored aggregation refinement step that performs very well under experimentation when compared to a conservative bound