does a procurement service provider generate value for the buyer through information about supply risks we consider a supply chain with one buyer and two suppliers who are subject to disruptions and whose likelihoods of disruption are their private information in such a setting does the buyer benefit from engaging the services of a better informed procurement service provider psp compared to procuring directly from the suppliers intuition might suggest that hiring a psp is always the right choice because the psp s knowledge of the supply base improves supplier selection and management on the other hand earlier studies prove that using a psp purely for its superior knowledge about supply costs is always worse for a buyer than contracting with the suppliers directly our answer to this research question is more nuanced contrary to the findings of earlier studies we find that the buyer may benefit from using a psp we identify quantify and explain all of the benefits and the costs of using a psp and describe conditions under which the benefits exceed the costs the benefits of using a psp are deriv

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

a cost adjustment heuristic for dynamic lot sizing with uncertain demand timing we define a new heuristic based on the adjustment of set up costs for the dynamic lot sizing problem when demand timing is uncertain using a range of simulated problems we compare the performance of this cost adjustment heuristic with that of a safety lead time heuristic zangwill s deterministic algorithm which ignores uncertainty and the optimal solution results show that the safety lead time heuristic works well for problems with high shortage costs and high probability of early demands but poorly in other circumstances the cost adjustment heuristic is quite robust generally exceeds the performance of the safety lead time approach and is relatively insensitive to variations in uncertainty

micro estimates of public spending demand functions and tests of the tiebout and median voter hypotheses responses to questions given to a random sample of michigan households are used to estimate public spending demand functions while income and price elasticities are similar to those obtained from aggregate data positive income elasticities appear to arise because public services are distributed in a prorich manner a relatively small variance in spending demands among urban and suburban communities in metropolitan areas with substantial public service variety suggests that the tiebout mechanism works this interpretation is supported by the fact that actual spending conforms substantially to desired levels in urban areas but less so in rural areas with little public sector choice

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

a periodic review production planning model with uncertain capacity and uncertain demand optimality of extended myopic policies increasing product complexity manufacturing environment complexity and an increased emphasis on product quality are all factors leading to uncertainties in production processes these uncertainties are in the form of unplanned machine maintenance varying production yields and rework among others in planning for production an adequate model must incorporate these uncertainties into the representation of the production process this paper treats the aggregate planning problem for a single product with random demand and random capacity in the single period problem random capacity does not affect the optimal policy but results in a unimodal nonconvex cost function in the multiple period and infinite horizon settings order up to policies that are dependent on the distribution of capacity are shown to be optimal in spite of a nonconvex cost in the infinite horizon setting an intuitive description of the situation leads to the notion of a class of extended myopic policies requiring the consideration o

the structure of periodic review policies in the presence of random yield this work provides a comprehensive analysis of a general periodic review production inventory model with random variable yield existence of an order point whose value does not depend on yield being random is proved in the single period case without specifying the yield model and using a very general cost structure when yield is a random multiple of lot size the nonorder up to optimal policy is characterized for a finite horizon model the finite horizon value functions are shown to converge to the solution of an infinite horizon functional equation and the infinite horizon order point is shown to be no smaller than when yield is certain

which median voter under the median voter model the demand for local government spending is a function of the median voter income and median tax price of spending in the jurisdiction the theory provides a convenient framework for analytically aggregating the individuals public spending demands into a community public demand function it does not however provide guidance when selecting the proper definition of median income and tax share variables in empirical models data availability often dictates the selection of empirical proxies in applications but the question nonetheless remains is the appropriate empirical proxy median family income median household income or some other median income measure this paper addresses this and related questions concerning the specification of empirical expenditure functions for local governments the median voter model has proved to be an enduring device in public economics but even while it continues to be widely used in both theoretical and empirical studies of local government spending behavior the median voter model itself has become the focus of study although various specifications and modifications have been examined and compared in the literture the question of the appropriate median definition in empirical models has been overlooked thus far the usual methods of testing competing specifications in the local public spending literature is to evaluate prediction errors or the sign of key parameters in an estimated expenditure function 4 6 9 11 14 19 the nature of our question however requires a different type of test one capable of evaluating competing hypotheses that entail mutually exclusive functional forms or sets of regressors the cox test represents an appropriate procedure for evaluating the competing median definitions and related functional form questions in this paper this test based on theoretical results by cox 2 3 has several advantages in our application first the test is tractable and the statistics have well defined properties the asymptotic distribution of the calculated statistics are known thereby avoiding the use of bootstrap or other simulation methods in our evaluation second the test allows for bilateral rejection so that we

state government expenditure determinants and tax revenue determinants revisited the primary aim of the research was to test the general hypothesis that many institutional and political variables affect fiscal outcomes that the preferences of public officials and the decision processes used to act on those preferences matter state government data state only not state and local from 1980 1985 and 1990 were used to specify state tax revenue and expenditure models a previous merrifield 1991 state tax revenue model identified many significant institutional and political variables but it was based only on 1985 data 49 observations the larger data set 147 observations including better data for some of the variables indicated that most of merrifield s 1991 findings are robust the state expenditure models facilitated a second test of the general institutional and political variable hypothesis as well as the hypotheses about specific variables the expenditure model also facilitated comparisons of expenditure and tax determinants and comparisons with results published in the literature though there are some noteworthy differences between the expenditure and tax models the expenditure models also supported many of the institutional and political variable hypotheses

a single period stocking and pricing problem involving stochastic emergency supply abstract we develop a model for determining jointly optimal price and production policy of products with short life cycles subject to partially uncertain supply capacity within the price setting newsvendor framework we consider that demand in excess of the stocking quantity can be met by an emergency order due to the randomness of emergency supply capacity it may not always be possible to satisfy the demand completely assuming that all customers are charged the same price we explore the optimal sourcing and pricing decisions in the commonly used additive and multiplicative demand scenarios the first order conditions imply that the optimal price in the problem with random emergency supply is less than the optimal price associated with the deterministic demand problem when demand uncertainty is additive and it is greater than the optimal price associated with the deterministic demand problem when demand uncertainty is multiplicative we also find that the same type of comparative static applies in the multiplicative uncertainty case when there exists a dual source emergency system consisting of a perfectly reliable supplier and a second supplier with a stochastic capacity

price and income distortions under separate spending and taxing decisions abstract this paper analyzes the extent to which intergovernmental grants create a discrepancy between the local voter s actual and perceived budget constraints the model is innovative in that it introduces grant illusion due to income misperceptions theoretically distinguishes illusion caused by income distortions from illusion caused by price distortions and separately tests for the magnitude of each empirical analysis identifies both price and income misperceptions as significant determinants of voter behavior these unbiased estimates reveal that previous research has misspecified the budget constraint resulting in overestimation of the stimulative effects of intergovernmental grants on local expenditure

fiscal illusion uncertainty and the flypaper effect abstract the flypaper effect is the empirical observation that increases in intergovernmental aid stimulate greater local government expenditure than do increases in voter income fiscal illusion provides a widely accepted explanation for this asymmetry models of voter behavior under fiscal illusion typically assume that taxpayers consistently misperceive nonstochastic average for marginal tax prices this paper develops an alternative framework in which rational voters recognize marginal tax prices but must make tax and expenditure plans under imperfect information or uncertainty various sources of uncertainty are analyzed and related to the flypaper effect and implications for public expenditure demand theory are discussed

optimal production and inventory policy for multiple products under resource constraints we show that a modified base stock policy is optimal for multiproduct infinite horizon production inventory systems where demand for the products is random and the products share a finite resource every period we characterize the optimal policy for the case of homogeneous products because of the difficulty in computing the optimal base stock levels for the heterogeneous case we propose a heuristic that is simple enough for practical applications we present numerical results that suggest that the heuristic yields near optimal solutions

a periodic review lot sizing problem with random yields disruptions and inventory capacity this paper examines a periodic reviewed lot sizing problem with random yields disruptions and limited inventory capacity to characterise the continuous production an additive random yield model is considered rather than a multiplicative one disruptions cause breakdowns to production inventory capacity is included since the production has to be shut down when the inventory buffer is full both disruptions and shutdowns lead to a start up cost and a stochastic lead time to recover the production these compound factors of uncertainty are encountered in practical planning decisions in process industries we review the existing random yield models which are then compared with the additive model with a linear production cost the additive model has an order up to policy to be optimal disruptions deteriorate the expected actual production quantity and the fill rate dramatically even though the optimal order up to level increases compared with the cases of no disruption considering inventory capacity makes the problem to be a non convex dynamic programming problem numerical analysis shows that the performance is dramatically deteriorated when the inventory capacity is rather tight which indicates the importance of selecting a proper inventory capacity to reduce the negative impacts and avoid redundant investment on capacity moreover the start up cost plays an important role in determining the level of inventory capacity

two sided uncertainty in the monopoly agenda setter model we extend the romer rosenthal model of representative democracy to a signaling environment in which i only the representatives knows the status quo outcome resulting if her take it or leave it policy proposal is rejected by the voters while ii only the voters know their true preferences over policies a separating sequential equilibrium is shown to exist and to uniquely satisfy a common equilibrium refinement furthermore this equilibrium has the property that relative to the environment where the status quo is known to the voter there is a downward bias in the setter s proposal and an associated upward bias in the probability of the proposal s acceptance by the voter

a model of the labour market with some marxian and keynesian features abstract this paper looks at a model of a labour market where labour contracts concerning job content cannot be written completely and employers have control over the effort level of workers it is shown that in such a model if workers face strictly positive mobility costs in moving from one firm to another then however small these costs the equilibrium level of workers utility will be that obtainable by not working in some situations this will be the subsistence level this is the marxian feature of the model this result is independent of aggregate labour market conditions consequently the model can be thought of as one where there is an endogenously fixed real wage this is the keynesian feature it is shown that there is zero effective excess demand for labour in equilibrium so there are few incentives for employers to relinquish control over effort levels

ordering and production decisions with supply quality and demand uncertainty in this paper we solve a production planning problem that has a direct bearing on the cost to a facility of vendor quality and reliability this solution is also an important first step in solving the multi plant coordination problem we consider a manufacturing facility with one critical raw material and one or more products whose demand needs to be met it is assumed that demand for finished goods and the arrival process for raw material are stochastic we calculate simultaneously the optimal production level and the raw material order quantity which minimize the total expected cost subject to capacity and release level constraints the results obtained by our model the integrated model show that the production level should be no larger than the production level obtained by solving the traditional nonintegrated models and that major savings are obtained by solving the integrated model we are also able to characterize and evaluate the cost of reliable supplies of raw material in addition we solve the above problem in the presence of capacity constraints a procedure which allocates capacity to different products is presented

some ideas regarding reserving supplier capacity and selecting replenishment quantities in a project context abstract in this paper we consider the context of a major project whose execution takes several periods specifically we are interested in the procurement policy for a resource material commodity or engineered item that is used throughout the project two types of uncertainty are considered namely i uncertainty in the requirements period by period and ii uncertainty in the capacity period by period of the supplier providing the resource there is the possibility of paying a premium to reserve dedicated capacity that can vary from period to period hence the first group of decision variables are the capacities to reserve period by period there is typically a long lead time involved so that all the capacities must be reserved prior to the first replenishment decision the second class of decision variables encompasses the procurement quantities period of period these decisions can be made as the project progresses we present some general approaches to dealing with this complex problem as well as some important insights

the flypaper effect identifying areas for further research the flypaper effect literature dates back three decades it is overwhelmingly neo classical in approach attempting to improve the median voter demand model and or temper it with public choice supply side perspectives whilst this approach provided valuable early substantial analytical insights more recent papers seem to have contributed only marginally to an understanding of the flypaper effect if indeed it exists at all hence as well as providing a long overdue comprehensive review of the literature on the flypaper effect this paper identifies more productive avenues for further research

sub supply chain coordination in a three layer chain under demand uncertainty and random yield in production abstract one of the major objectives of modern supply chain management is to deal with the growing decentralization among the involved entities and hence minimizing the double marginalization effect inside the chain especially when the end customers demand is not deterministic to address this a three layer supply chain with one raw material supplier one manufacturer and one retailer is developed and studied in this paper effects of both supply chain coordination as well as sub supply chain coordination are examined optimal order and production quantities are obtained for the centralized system which depicts the scenario under coordination optimal order quantities and expected profits of the individual channel actors are maximized locally in the decentralized system under commonly used price only contract semi integrated models are also studied under price only contract the optimal strategies under different power structures are compared and the effects of the channel parameters on the optimal strategies are also examined numerical example is given to illustrate the developed model

the flypaper effect and other anomalies abstract i develop a model in which income both in its own right and as a proxy for other socioeconomic characteristics is an input in the production function for local public services the most obvious example is education though there are other applications as well the comparative statics results from this model yield the following results 1 the observed flypaper effect the tendency for local government to spend a higher fraction of unrestricted grants than income of residents may be due at least in part to the fact that own income but not grants is a substitute for purchased inputs in the technology hence the propensity to spend on purchased inputs out of own income is lower than out of grants 2 the income elasticity of demand for public sector output may be higher than the observed income elasticity of demand for purchased inputs 3 equalization of educational opportunity via wealth neutrality as suggested by feldstein requires major changes in education finance once we recognice the distinction between purchased inputs and output

fiscal illusion and the grantor government empirical studies indicate that unconditional intergovernmental grants have a flypaper effect several authors have modeled recipient government spending under fiscal illusion to explain this phenomenon in short grants reduce the perceived marginal cost of recipient government output this paper develops a more general model of illusion that incorporates the grantor government thereby eliminating inconsistencies encountered in previous models the more general model implies that grant finance increases the perceived marginal cost of grantor government output thus grant induced illusion should have two effects an increase in recipient output and a decrease in grantor output the empirical work supports this hypothesis

political control and public sector savings evidence from the states the right to access and ultimately spend public sector savings is determined by the party which can control the politicaloutcome this implies that anticipatedfuture changes in the state s controllingpolitical party may systematicallyadversely affect current savings extendingthe life cycle permanent income model ishow that a representative legislator willopt to forgo current saving in favor ofspending when his prospects for futurepolitical control diminish estimating apanel data model of 39 states from1973 1995 i find that an actual futurechange in the controlling party of astate s lower house significantly reducescurrent saving

coordinating inventory control and pricing strategies under batch ordering in this paper we investigate joint pricing and inventory control problems in a finite horizon single product periodic review setting with certain uncertain supply capacities the demands in different periods are random variables whose distributions depend on the posted price exhibiting the additive form the order quantity in each period is required to be of integral multiples of a given specific batch size denoted by q inventory replenishment incurs a linear ordering cost referred to as the cost rate function the sum of holding and backorder costs can either be convex or quasi convex the objective is to determine a joint ordering and pricing decision that can maximize the total expected profit over the planning horizon we first consider the case in which the cost rate function is convex and show that the modifiedr q list price policy is optimal for the system with certain and limited capacities a special case of which is the r q list price policy when capacities become unlimited as supply capacities become random the optimal policy follows a new structure wherein the optimal order up to level and posted price must be coordinated to make the optimal safety stock level follow the r q policy we further consider the case of a quasi convex cost rate function which may arise when a service level constraint is used as a surrogate for the shortage cost we demonstrate that the r q list price policy is optimal for the system without supply capacity constraints in addition extensions to several other models are discussed the enabling technique is based on the notion of q jump convexity and its variants

dynamic lot sizing when demand timing is uncertain we characterize optimal solutions for the dynamic lot sizing problem when demand quantities are known but their timing is uncertain the characterization states that for some possible history of demands following a period of production there is a period with zero inventory before another period with production using this characterization we outline a dynamic program for the solution of these problems some results from sample problems illustrate the variety of optimal solutions that can occur

note a note on the dynamic lot size model with uncertainty in demand and supply processes in this paper we give some extensions of a result of nevison and burstein nevison c h m burstein 1984 the dynamic lot size model with stochastic lead times management sci 30 100 109 who discuss a dynamic lot sizing model with stochastic lead times they consider a situation in which the lead time distribution is unaltered by the amount which is ordered but is otherwise arbitrary and characterize the optimal solution in terms of points at which there is zero inventory here we give a more precise characterization and show that these results can be extended to a situation in which the demands are also stochastic and in which there is uncertainty relating to quantity as well as to the timing of demands and order arrivals the method of proof that we use is different from that used by nevison and burstein

production control in the face of storable raw material random supply and an outside market we study a periodic review production inventory control problem where both the supply of raw material and demand for the finished product are exogenous and random the raw material can be stored for future use can be purchased from or sold to an outside market we study both the lost sales and backlogging cases under both strict convex and linear raw material purchasing selling costs convexity of the purchasing selling cost implies that the more the firm purchases from or sells to the outside market the more expensive or less valuable the raw material becomes for all cases we find the partial characterizations for the optimal policies which all turn out to be very intuitively appealing in particular for each of the linear cost cases the optimal policy degenerates into a combination of two base stock policies one for the raw material inventory and the other for the finished product inventory

the elusive flypaper effect abstract the flypaper effect is the common empirical result that lump sum intergovernmental grants stimulate more local government spending than increases in private income which are theoretically equivalent in this paper four of the best known explanations of the flypaper effect are tested using data from michigan school districts none of these explanations are confirmed by the data the cause of the flypaper effect is likely to be much more deeply rooted in the nature of local decision making than is currently recognized

interrelating operational and financial performance measurements in inventory control financial supply chain management and working capital management are increasingly receiving attention as important avenues to increase profitability in supply chains by actively managing payment terms and working capital requirements managers can influence financial performance and achieve significant cost savings however measures to improve financial performance implicitly restrict and influence operational performance in our research we elaborate on the benefits of equally considering both operational and financial aspects in decision making for the physical and financial supply chain we develop a mathematical model that determines the optimal purchasing order quantity under working capital restrictions and payment delays we analyze the trade offs between the most commonly used financial and operational measurements such as service level return on investment profit margin and inventory level our results demonstrate the significance of payment delays increases decreases in the upstream downstream payment delays favor the system s operations by decreasing operational costs moreover increases in the working capital employed in the system decrease the total operational cost increase the total financial cost and lower the return on working capital investment c 2009 elsevier b v all rights reserved

dynamic version of the economic lot size model this article originally appeared in management science october 1958 volume 5 number 1 pp 89 96 published by the institute of management sciences a forward algorithm for a solution to the following dynamic version of the economic lot size model is given allowing the possibility of demands for a single item inventory holding charges and setup costs to vary over n periods we desire a minimum total cost inventory management scheme which satisfies known demand in every period disjoint planning horizons are shown to be possible which eliminate the necessity of having data for the full n periods

dynamic replenishment production and pricing decisions in the face of supply disruption and random price sensitive demand abstract we study a joint decision problem for replenishment production pricing strategies in the face of both supply and demand uncertainties the supply of the raw material suffers from a potential supply disruption while the demand for the finished goods is price sensitive and random we assume that the raw material is storable and unfilled demands are fully backordered we characterize the optimal policies for raw material replenishment finished goods production and pricing we find that the optimal replenishment policy is an order up to type for a given finished goods stock level while it is a threshold type for a given raw material stock level for either a given finished goods stock level or a given raw material stock level the optimal production policy is a threshold type and the optimal pricing policy is a modified list price type respectively

per capita public expenditures and population size a non parametric analysis using french data based on the median voter model we specify a flexible general framework of the effect of municipality size on per capita public expenditures previous literature has recognized that municipality size should have a non linear effect on the quality of public goods provision and to this end different papers have applied a range of alternative parametric specifications using a very large sample of french communes we are able to estimate the effect of municipality size semi parametrically in contrast with the parametric specifications we find evidence of the u shaped relationship between per capita public expenditures and population which is predicted by theory

inventory management with random supply and imperfect information a hidden markov model in most of the papers on inventory models operating in a random environment the state of the environment in each period is assumed to be fully observed with perfect information however this assumption is not realistic in most real life situations and we provide a remedy in this paper by assuming that the environment is only partially observed with imperfect information we accomplish this by analyzing two formulations of single item models with periodic review and random supply in a random environment in the first one supply is random due to random capacity of production and random availability of transportation we show that state dependent base stock policy is optimal if the capacity and all costs are observed while demand and availability are unobserved in the second model we consider a model with random availability only with fixed ordering cost we show that state dependent s s policy is optimal if the availability process is observable