productivity in swedish electricity retail distribution this paper examines productivity growth in electricity retail distribution in sweden in a multiple output multiple input framework the approach used is nonparametric data envelopment analysis dea productivity is measured by means of the malmquist index productivity comparisons are made between different types of ownership and between different service areas the study indicates a high rate of productivity growth due to economies of density when measured over a period of 17 years the results show no significant differences in productivity growth between different types of ownership or economic organization

evaluating the economic impact of planning controls in the united kingdom some implications for housing this paper explores some implica tions for the housing market of the operation of the land use planning system in the united king dom drawing out the relevance of the methodol ogyfor other forms of land use regulation in con trast to the american zoning system the u k system ensures enough land is released to meet foreseeable housing needs by national allocation however the u k system is implemented and mediated locally in response to political and other pressures neo classical comparative stat ics combined with a more behavioral approach enables us to examine the interface between three related sub markets in a rapidly growing region jel r20

the labor illusion how operational transparency increases perceived value aubiquitous feature of even the fastest self service technology transactions is the wait conventional wisdom and operations theory suggest that the longer people wait the less satisfied they become we demonstrate that because of what we term the labor illusion when websites engage in operational transparency by signaling that they are exerting effort people can actually prefer websites with longer waits to those that return instantaneous results even when those results are identical in five experiments that simulate service experiences in the domains of online travel and online dating we demonstrate the impact of the labor illusion on service value perceptions demonstrate that perceptions of service provider effort induce feelings of reciprocity that together mediate the link between operational transparency and increased valuation and explore boundary conditions and alternative explanations this paper was accepted by pradeep chintagunta and preyas desai special issue editors this paper was accepted by pradeep chintagunta and preyas desai special issue editors

we will be right with you managing customer expectations with vague promises and cheap talk delay announcements informing customers about anticipated service delays are prevalent in service oriented systems how delay announcements can influence customers in service systems is a complex problem that depends on both the dynamics of the underlying queueing system and on the customers strategic behavior we examine this problem of information communication by considering a model in which both the firm and the customers act strategically the firm in choosing its delay announcement while anticipating customer response and the customers in interpreting these announcements and in making the decision about when to join the system and when to balk we characterize the equilibrium language that emerges between the service provider and her customers the analysis of the emerging equilibria provides new and interesting insights into customer firm information sharing we show that even though the information provided to customers is nonverifiable it improves the profits of the firm and the expected utility of the customers the robustness of the results is illustrated via various extensions of the model in particular studying models with incomplete information on the system parameters allows us also to highlight the role of information provision in managing customer expectations regarding the congestion in the system further the information could be as simple as high congestion low congestion announcements or it could be as detailed as the true state of the system we also show that firms may choose to shade some of the truth by using intentional vagueness to lure customers

setting customer expectation in service delivery an integrated marketing operations perspective service firms have increasingly been competing for market share on the basis of delivery time many firms now choose to set customer expectation by announcing their maximal delivery time customers will be satisfied if their perceived delivery times are shorter than their expectations this gap model of service quality is used in this paper to study how a firm might choose a delivery time commitment to influence its customer expectation and delivery quality in order to maximize its market share a market share model is developed to capture 1 the impact of delivery time commitment and delivery quality on the firm s market share and 2 the impact of the firm s market share and process variability on delivery quality when there is a congestion effect we show that the choice of the delivery time commitment requires a proper balance between the level of service capacity and customer sensitivities to delivery time expectation and delivery quality we prove the existence of nash equilibria in a duopolistic competition and show that this delivery time commitment game is analogous to a prisoners dilemma

improving supplier s situation through supplier cooperation the case of xintang jeans town abstract inferior labor conditions in developing countries have raised western customers awareness of sweatshops developing countries suppliers are facing growing pressure from western clients on ethical issues associated with the production of low cost goods at the expense of worker health safety and welfare inferior working conditions not only adversely affect worker well being but also negatively impact performance and productivity which is detrimental to the entire supply chain in the long run in this paper we consider the case of xintang international jeans and textile city the largest manufacturing base of jeans in china which sought to shed its sweatshop image working closely with the administration of this manufacturing base we applied operations research techniques to analyze local suppliers possible operations strategies based on considerations of price and delivery guarantees two critical dimensions of competition in the apparel and textile industry our analysis highlighted the fact that local suppliers cooperation may be an effective way for improving labor conditions our work has implications for societal improvement in developing countries through better labor conditions and increased cooperation while maintaining a healthy level of competition

equilibrium analysis of disaggregate facility choice systems subject to congestion elastic demand this paper considers the impact of congestion on the spatial distribution of customer utilization of service facilities in a stochastic dynamic environment previous research has assumed that the rate of demand for service is independent of the attributes of the facilities we consider the more general case in which facility utilization is determined both by individual facility choice based on the stochastic disaggregate choice mechanism and by the rate of demand for service we develop generalized results for proving that equilibria exist and describe sufficient conditions for the uniqueness and global stability of these equilibria these conditions depend upon the elasticity of demand with respect to the level of congestion at the facilities and on whether customers are congestion averse or are congestion loving finally we examine special cases when these conditions are satisfied

a theory of yardstick competition in the typical regulatory scheme a franchised monopoly has little incentive to reduce costs this article proposes a mechanism in which the price the regulatedfirm receives depends on the costs of identical firms in equilibrium each firm chooses a socially efficient level of cost reduction the mechanism generalizes to cover heterogeneous firms with observable differences medicare s prospective reimbursement of hospitals by using diagnostically related groups is a scheme very similar to the one outlined here

estimating the shadow prices of so2 and nox for u s coal power plants a convex nonparametric least squares approach abstract weak disposability between outputs and pollutants defined as a simultaneous proportional reduction of both outputs and pollutants assumes that pollutants are byproducts of the output generation process and that a firm can freely dispose of both by scaling down production levels leaving some inputs idle based on the production axioms of monotonicity convexity and weak disposability we formulate a convex nonparametric least squares cnls quadratic optimization problem to estimate a frontier production function assuming either a deterministic disturbance term consisting only of inefficiency or a composite disturbance term composed of both inefficiency and noise the suggested methodology extends the stochastic semi nonparametric envelopment of data stoned described in kuosmanen and kortelainen 2011 applying the method to estimate the shadow prices of so 2 and no x generated by u s coal power plants we conclude that the weak disposability stoned method provides more consistent estimates of market prices

which utilization and service level lead to the maximum eva abstract in this paper a model for evaluating the influence of utilization wip fgi service level and production lead time on eva economic value added is developed in order to link the available logistical key figures with a market perspective and discuss their influence on company value the question answered in this paper is what is the optimal utilization and service level of a production system in order to achieve the maximum possible eva for a company a single product single machine make to order production system with investment dependent machine capacity is modeled the model combines a market share concept based on delivery production lead time and service level with concepts describing the logistical relationships between wip utilization production lead time and service level in addition to the explanatory use of the model it can provide support for strategic decisions concerning investing or divesting machinery the main application of this model is in describing the link between capacity investment and company value comprehensively based on data available from cost accounting in real companies furthermore this paper shows that high flexibility of personnel and machine capacity increases the maximum possible eva of production systems even if this flexibility is linked to additional costs

measuring the efficiency of grid companies in china a bootstrapping non parametric meta frontier approach abstract the unbundling policy reform of power industry has become a worldwide trend since 1980s there are quite many studies focusing on the efficiency changes of transmission and distribution sectors in european and latin american countries while few reports on china s issues have been found this paper employs a nonparametric frontier estimation combined with meta frontier and bootstrapping method to measure the productive efficiency and changes in the decomposition index for china s 31 grid companies from 2004 to 2013 in addition it further employs tobit regression model to analyze the influences of relevant policies and heterogeneity factors such as natural conditions and economic development the results indicate that the grouping approach extends the application of non parametric data envelopment analysis which may decrease the assumption of homogeneity for the decision making units and provide better efficiency estimates by increasing the credibility of the evaluation results overall productive efficiency increased during the whole study period with technology progress the main contributor to this improvement efficiency trends fluctuated with changes in economic development and power supply situation and the economics and customer density had positive effects on productive efficiency while the influence of clean power proportion is negative

what is the best practice for benchmark regulation of electricity distribution comparison of dea sfa and stoned methods electricity distribution is a natural local monopoly in many countries the regulators of this sector apply frontier methods such as data envelopment analysis dea or stochastic frontier analysis sfa to estimate the efficient cost of operation in finland a new stoned method was adopted in 2012 this paper compares dea sfa and stoned in the context of regulating electricity distribution using data from finland we compare the impacts of methodological choices on cost efficiency estimates and acceptable cost while the efficiency estimates are highly correlated the cost targets reveal major differences in addition we examine performance of the methods by monte carlo simulations we calibrate the data generation process dgp to closely match the empirical data and the model specification of the regulator we find that the stoned estimator yields a root mean squared error rmse of 4 with the sample size 100 precision improves as the sample size increases the dea estimator yields an rmse of approximately 10 but performance deteriorates as the sample size increases the sfa estimator has an rmse of 144 the poor performance of sfa is due to the wrong functional form and multicollinearity

estimation of cost effectiveness of the finnish electricity distribution utilities abstract this paper examines the cost effectiveness of finnish electricity distribution utilities we estimate several panel data stochastic frontier specifications using both cobb douglas and translog model specifications the conventional models are extended in order to model observed heterogeneity explicitly in the cost frontier models the true fixed effects model has been used as a representative of the models which account for unobserved heterogeneity and extended conventional random effect models have been used in analysing the impact of observed heterogeneity a comparison between the conventional random effects model and models where heterogeneity component is entered either into the mean or into the variance of the inefficiency term shows that relative efficiency scores diminish when heterogeneity is added to the analysis the true fixed effects model on the other hand gives clearly smaller inefficiency scores than random effects models in the paper we also show that the relative inefficiency scores and rankings are not sensitive to the cost function specification our analysis points out the importance of the efficient use of the existing distribution network the economies of scale results suggest that firms could reduce their operating costs by using networks more efficiently according to our results average size firms which have high load factors are the most efficient ones all firms have unused capacities so that they can improve cost effectiveness rather by increasing the average distributed volumes than by mergers

promised delivery time and capacity games in time based competition we investigate firms competitive behaviors in industries where customers are sensitive to both promised delivery time pdt and quality of service qos measured by the on time delivery rate to study the competition in pdt at the marketing level we construct an oligopoly game with an external qos requirement we show that there exists a unique nash equilibrium and the equilibrium qos exhibits a switching surface structure with respect to capacities to study the competition in capacity at the strategic level we construct a two stage game in which the firms compete in terms of their capacities in stage 1 and in terms of pdt in stage 2 we show the existence of two different types of pure strategy equilibria and characterize them this study provides the following insights an index of time based competitive advantage itca and the first mover advantage determine the positions of the firms in time based competition either the well known prisoner s dilemma or off equilibrium behaviors due to different preferences for equilibria when multiple equilibria exist may lead the firms to overinvest in capacity but no one may gain a competitive advantage a uniform improvement in internal efficiency i e a uniform capacity cost reduction may harm everyone quality differentiation i e going beyond the qos benchmark plays a dual role in time based competition either helping a firm with a larger itca to compete more effectively or helping a firm possibly with a smaller itca to preempt competitors and protect its market advantage this paper was accepted by paul h zipkin operations and supply chain management

intertemporal efficiency analysis of sales teams of a bank stochastic semi nonparametric approach abstract the primary role of a bank branch is evolving from a service provider towards a sales channel previous branch level studies of sales efficiency consider a static setting of a single time period ignoring the stochastic nature of sales outcomes in this paper we examine efficiency and performance of sales teams in a bank branch network over time taking into account the changing demand and operational conditions as well as random disturbances the intertemporal sales frontier is estimated from the panel of monthly data over the years 2007 2010 using the stochastic semi nonparametric envelopment of data stoned method the efficiency scores of sales teams and the trajectories of performance over time allow managers and the sales force to learn from past events and to develop the managerial and work practices across the network while this study focuses on the case of a specific bank some of the innovative features of our approach are applicable to sales efficiency assessment in other banks and financial institutions as well as other network based sales organizations

stochastic semi nonparametric frontier estimation of electricity distribution networks application of the stoned method in the finnish regulatory model abstract electricity distribution network is a prime example of a natural local monopoly in many countries electricity distribution is regulated by the government many regulators apply frontier estimation techniques such as data envelopment analysis dea or stochastic frontier analysis sfa as an integral part of their regulatory framework while more advanced methods that combine nonparametric frontier with stochastic error term are known in the literature in practice regulators continue to apply simplistic methods this paper reports the main results of the project commissioned by the finnish regulator for further development of the cost frontier estimation in their regulatory framework the key objectives of the project were to integrate a stochastic sfa style noise term to the nonparametric axiomatic dea style cost frontier and to take the heterogeneity of firms and their operating environments better into account to achieve these objectives a new method called stochastic nonparametric envelopment of data stoned was examined based on the insights and experiences gained in the empirical analysis using the real data of the regulated networks the finnish regulator adopted the stoned method in use from 2012 onwards

investment incentives regulation of the finnish electricity distribution investments into the electricity distribution network are needed to support competition and to guarantee the security of supply as well as a good quality of electricity the aim of this paper is to study the ex post regulatory system in finland in context of investment incentives the second objective is to study how the investments in the sector have developed after the liberalisation and what seem to be the most important factors influencing investments in light of empirical information and how regulation affects them the investment volumes vary much between years but on average no drastic developments have taken place

setting quality expectations when entering a market what should the promise be this paper examines optimal advertised quality actual quality and price for a firm entering a market it develops a two period model where advertised quality influences expectations and hence trial and the gap between actual quality and expectations determines satisfaction which in turn impacts second period sales in such situations a company makes a choice between advertising high quality and getting trial but little repeat and advertising low quality and getting low trial but high repeat results are derived by numerical methods as well as analytically for a special case of the model the model suggests it is optimal to overstate quality when i customers rely relatively less on advertising to form quality expectations and ii customers intrinsic satisfaction with a product is high these results are consistent with deceptive advertising cases at the ftc which showed more deception for unknown firms and for firms whose customers were more satisfied they are also consistent with the decisions made by future managers mbas except that the respondents would advertise higher versus lower quality when advertising was effective

measurement of productive efficiency with frontier methods a case study for wind farms abstract in this paper we measure the productive efficiency of a group of wind farms during the period 2001 2004 using the frontier methods data envelopment analysis dea and stochastic frontier analysis sfa taking an extensive definition of the productive process of wind electricity as our starting point we obtain results which allow us to identify on the one hand an essentially ex ante efficiency measure and on the other hand aspects of relevance for wind farm development companies developers technology suppliers and operators in terms of their economic impact these results may also be of interest for regulators and other stakeholders in the sector furthermore we discuss the implications of the simultaneous use of dea and sfa methodologies

price delivery time guarantees and capacity selection this paper studies the impact of using delivery time guarantees as a competitive strategy in service industries where demands are sensitive to both price and delivery time we assume that delivery reliability is crucial and investment in capacity expansion is plausible in order to maintain a high probability of delivering the time guarantee a mathematical framework is proposed to understand the interrelations among pricing delivery time guarantee and capacity expansion decisions specifically an optimization model is developed to determine the joint optimal selection of these three important decision variables with an objective of maximizing the average net profit we characterize the optimal decisions and study their qualitative behaviors as various parameters change we further present a numerical example to illustrate how the results of our model can be used to provide useful managerial insights for selecting the best competing strategies for firms with different operating characteristics our model and results are also applicable to a make to order manufacturing environment