F. J. Arcelus

University of New Brunswick · Faculty of Business Administration

This article considers the optimal inventory ordering, purchasing and holding policies of the profit-maximization problem, as against the well-known cost-minimization case, over a finite horizon of length H, under two special conditions. First, there is change in at least one of the inventory costs, that is, in the cost of ordering and/or purchasin...

This paper considers the impact of an option contract for a retailer/buyer and a manufacturer/supplier, within a single-period newsvendor framework, with a random supply and a random demand that incorporates hedging possibilities through call and put options. We consider two cases. In Case 1, the retailer hedges against the uncertain supply and the...

This paper shows the potential differences between the profit-maximizing and the cost-minimizing solutions to the deterministic finite-horizon inventory problem. First, it presents a counterexample to the proposition that both types of solutions are alike. Then, it provides a formal proof of the proposition that the cost minimization solution to th...

This paper extends the EOQ formulation in an effort to integrate marketing and inventory objectives. The model considers demand a function of price, within a given demand curve, with price set at a markup of unit cost. The objective is to find the markup rate and the order quantity that maximizes the return on the investment in inventory. Optimal s...

Arcelus F. J., Arocena P., Cabasés F. and Pascual P. On the cost-efficiency of service delivery in small municipalities, Regional Studies. This paper analyses the determinants of the efficiency of local government spending. To that effect, a stochastic cost frontier is estimated on a sample of 260 small municipalities from Navarre, a region located...

This paper tests for differences in the managerial performance of micro and small firms, classified by capital-ownership configuration, be they labor-owned or participatory capitalist firms. Measures of managerial performance comprise indices of economic performance, profitability, financial structure, worker remuneration, and solvency. Explanators...

Transaction exposure normally arises when there exists a time lag between the time the financial obligation has been incurred and the time it is due to be settled, because the purchase price to the buyer/retailer may, on settlement day, differs from that when it was incurred, if the debt is denominated in the supplier/manufacturer’s currency. This...

This paper analyzes the extent to which differences in operating performance, economic growth, efficiency and productivity between labour-owned (LOFs) and participatory capitalist (PCFs) firms can be attributed to their distinct capital-ownership structures, which in turn reflects their different ways of managing capital and labour as well as inter...

This paper analyses a single-period decision of a retailer facing uncertain and price dependent demand. The typical modeling of the problem in a newsvendor framework assumes the unfulfilled demand to be lost once and for all. However, in reality, there may be an opportunity to backlog the lost sales, by offering some incentive for waiting. Neverthe...

A comparison of results of assessment of technical efficiency of innovativeness for 2005 and 2010 is presented in this paper. The intent is to show how capable is the Innovation Union Scoreboard (IUS) in the explanation of innovation process in transforming innovation inputs into results or innovation outputs. Critical comments regarding IUS approa...

This paper analytically addresses the Bicriteria decision newsvendor problem of a retailer with the conflicting goals of maximizing the expected profit and the probability of exceeding it and obtains a closed form solution for a uniformly distributed demand. This is done by using the existence of a closed form solution for the second criterion to a...

This paper studies the impact of direct rebates to the end customer from the manufacturer and/or from the retailer upon the profitability and effectiveness of the policies of both channels. Effectiveness is measured by the ratio of the retailer’s to the manufacturer’s profits and by the sum of the profits for the two parties across scenarios wherei...

For decades what has been heated are debates on topics such as: which country is the most competitive? What is the best country to live in?. However, it may be disputable whether results of these debates have practical outcomes. It is arguable whether is it clear what constructs are in fact discussed, how to measure their level, and how to draw con...

The saliency of returns in today’s business world is unquestionable, in such items as toys, Christmas decorations, books, seasonal/fashion items and the like. This is largely due to the high economic benefits prevalent in some industries today and to the increasing opportunities for resale in secondary and global markets. This paper attempts to mod...

This paper undertakes a three-stage DEA-SFA (Data Envelopment Analysis / Stochastic Frontier Analysis) efficiency analysis of labour-owned (LOF) and mercantile (PCF) firms to assess whether variations in the productive efficiency and in the total factor productivity of LOFs and PCFs are explainable by differences in their capital-ownership con figu...

In today’s highly competitive environment, green logistics issues are gaining interest. This paper analyses how logistics managers could lead the initiative in this area by incorporating environmental management principles into their daily decision-making process. A case study is given to show how they can turn practices into green while simultaneo...

This paper examines the supply and demand behavior of taxpayers as "suppliers" and students as "beneficiaries" of the higher-education process. The authors treat higher education as a merit good, and present an argument in favor of an assumption of nonreciprocal interdependence between the taxpayers and the beneficiaries. They conclude that there i...

This study seeks to assess the construct validity of the Globe and Mail Corporate Governance Index. A number of recent studies that have examined corporate governance practices in Canada have relied on annual data from this index. We find an important degree of redundancy on the construction of the index. Our results indicate that fewer index compo...

En este trabajo y tomando como punto de partida distintas medidas de desempeño económico, se analizan algunas particularidades de la IAA como la estructura de propiedad del capital y el tamaño, al objeto de establecer la existencia de diferencias en las mismas. La función objetivo de las organizaciones suele estar determinada por el comportamiento...

The purpose of this paper is to assess whether financial performance differences between labour-managed (LOFs) and mercantile (PCFs) firms are due to differences in their capital-ownership configuration or to the particular measurement indexes commonly used to quantify performance. The empirical evidence rests upon a 1994-2003 data set of LOFs and...

This paper considers a profit-maximizing retailer’s decision process when anticipating a vendor’s offer of a temporary sale at a reduced price. The retailer is confronted with anticipation and discount periods of unknown length, within which to develop simultaneously the expected profit-maximizing ordering policy needed to purchase the items at the...

This paper models a retailer’s response to temporary manufacturer’s trade deals characterized by a time interval of random length, but with the ending date known before its occurrence. Uncertainty is handled through a reordering point, which serves as a trigger mechanism for a new special order and is activated at the discount termination date. The...

This paper attempts to model the profitability of a secondary market, in a newsvendor setting, to a profit-maximizing manufacturer, who is offering to the retailer a buyback policy for the unsold merchandise left at the end of the selling season. With a buyback agreement, the manufacturer shares the risks of demand uncertainty, thus inducing the bu...

This paper analyzes the manufacturers’ strategy of optimizing the direct rebate to the final customer and the wholesale price to a profit-maximizing retailer with a price-dependent stochastic demand. The manufacturer possesses full information about the cost and the functional relationship among demand, price and rebate, but may or may not know abo...

The purpose of this paper is to study whether there are differences in the financial survival, as measured by the degree of solvency and profitability, of very small firms, classified by type of ownership, whether Participatory Capitalist Firms (PCFs) or employee/Labour-Owned Firms (LOFs). The indexes measuring these two factors include return on a...

El objetivo de este trabajo es el estudio del desempeño de la Sociedad Laboral Navarra, a través del análisis de sus resultados económicos y financieros. El período de análisis se refiere a 1994-2003. Compararemos estos resultados con los obtenidos, para el mismo periodo, por la Sociedad Mercantil Navarra, e inferiremos, a partir del estudio compar...

Purpose The purpose of this paper is to test whether performance differences between labour‐managed (LOFs) and mercantile (PCFs) firms are due to the measures used in the comparison, rather than to their distinct capital‐ownership configurations. Design/methodology/approach Tests for the equality of two means and two variances of a variety of perf...

This paper generalizes the announced price increase problem to consider a variety of practical concerns arising out of applications ranging from foreign exchange fluctuations to upper limits on the purchase of discounted supermarket items. These include limitations on the amount that can be purchased at the old price and/or on the length of the gra...

This paper presents a common modelling structure for (i) the implementation of operational policies by individual purchasing managers of risk-sharing agreements among supply-chain partners, and (ii) the integration of brick and click purchasing policies in a B2B. The problem of price uncertainty created within these two environments is modelled as...

This paper considers a single-period problem designed to analyse the pricing strategy of a manufacturer who does not possess full information about the retailer's risk-preferences. The retailer, who faces a price-dependent stochastic demand, is a maximizer of the risk-adjusted expected profit, rather than of the expected profit. The paper first eva...

This paper develops the pricing/rebate/ordering policies of a profit-maximizing vendor, faced with a stochastic rebate-redemption rate and a price/rebate-dependent random demand, all within the single-period framework of the newsvendor problem. The profitability of these policies directly relates to the redemption rate, which in turn depends upon t...

This study develops the ordering and pricing policies of a retailer, confronted with a price-dependent demand and a vendor offering a discount on the wholesale/regular price during sales sub-periods, which are repeated randomly and last for a random amount of time. The inventory level forms a regenerative stochastic process, with regeneration point...

El objetivo de este trabajo es el estudio del desempeño de la Sociedad Laboral Navarra, a través del análisis de sus resultados económicos y financieros. El período de análisis se refiere a 1994-2003. Compararemos estos resultados con los obtenidos, para el mismo periodo, por la Sociedad Mercantil convencional Navarra, e inferiremos, a partir del e...

This paper presents a critical evaluation of the economic survival of labour-managed firms (LMF) compared to that of conventional companies, paying particular attention to their different forms of capital ownership. There are many arguments both ways; some argue that LMFs enjoy a higher likelihood of survival, since they offer greater employment st...

This paper develops ordering policies for a retailer confronted with a product subject to instant obsolescence, as a result of the imminent end to its economic lifetime, usually for technological, economic or change-in-fashion reasons. The retailer's objective function exhibits a profit maximizing rather than a cost minimising optimization objectiv...

This paper presents a characterization of a profit-maximizing retailer's response to a manufacturer trade deal that encompasses both marketing and operations concerns. Price pass-through behaviour is based on demand being realized over time, at a given rate, thereby allowing for the introduction of inventory-related costs. The analysis establishes...

This paper evaluates the pricing and ordering policies of risk-neutral, risk-averse and risk-seeking newsvendor-type retailers facing price-dependent stochastic demand and several sales-promotion policies, namely pricing, rebates and advertising. Optimal pricing and ordering policies are obtained for the iso-elastic demand function and for additive...

This paper models a retailer’s response to temporary manufacturer’s trade deals characterized by a time interval of random length and of uncertain duration. Uncertainty is handled primarily through the establishment of a reordering point, which serves as a trigger mechanism for new special orders. The timing at which this point is activated becomes...

The human development index (HDI) developed by the United Nations Development Programme (UNDP 2003) is computed as the average of three equally weighted outcome measures or indices of human development: life expectancy (LI), educational attainment (EI) and income (WI). However, this computational process is independent of the resource endowment bei...

This article considers the joint development of the optimal pricing and ordering policies of a profit-maximizing retailer, faced with (i) a manufacturer trade incentive in the form of a price discount for itself or a rebate directly to the end customer; (ii) a stochastic consumer demand dependent upon the magnitude of the selling price and of the t...

Given the essential role co-ops play in the Canadian economy, the primary purpose of this paper is to develop methods to forecast their likelihood of insolvency. However, investor-owner firms form the basic unit of analysis of most popular bankruptcy predictors used in Canada. The question is whether the key underlying elements that differentiates...

The purpose of this paper is to carry out a computational analysis of the tradeoffs between a good output and the CO2 emissions or bad output that is often created as a by-product of the production process. The efficiency of this process is computed through a series of DEA formulations, related to the two outputs. One formulation considers the stra...

This paper examines the relationship between the firm's accounting return on investment (ROI) and its economic return measured by Tobin's q (Q), given the conflicting evidence regarding the efficacy of ROI as an informational measure of the firm's underlying economic fundamentals. As in Landsman and Shapiro [Landsman, W. R., & Shapiro, A. C. (1995)...

This paper supports the proposition that the indexes of technological achievement and of human development exhibit similar information validity and similar country rankings, thus questioning the need for the existence of two indexes rather than one.

The human development index (HDI) developed by the United Nations Development Programme is computed as the average of three equally weighted outcome measures: life expectancy (LI), educational attainment (EI) and income (WI). However, this computational process is independent of the resources being devoted by each country to the achievement of the...

This paper examines the impact of the various types of foreign capital flows (or FCF) on the efficiency with which countries transform their respective resources into the achievements associated with the three dimensions (Life expectancy or LI, Educational attainment or EI and wealth or WI) of the Human Development Index. An important result is the...

This paper evaluates the role of trade incentives specifically designed to fight forward-buying practices on the part of the retailers, by examining the use of scanbacks and direct rebates as manufacturers' tools for the prevention of these practices. Scanner data allows the manufacturer to keep track of the retailer's pricing policies at the point...

This paper examines a retailer’s response to a vendor’s trade promotion, which is guaranteed to last some fixed length of time, followed by an additional (uncertain) period of time, “while supplies last”. At issue is the development of a general-special-sales model under uncertainty, which produces profit-maximizing policies for a retailer during b...

This paper constructs a model of saving for retired single people that includes heterogeneity in medical expenses and life expectancies, and bequest motives. We estimate the model using Assets and Health Dynamics of the Oldest Old data and the method of simulated moments. Out-of-pocket medical expenses rise quickly with age and permanent income. Th...

It is the purpose of this paper to model the retailer's profit-maximizing retail promotion strategy, when confronted with a vendor's trade promotion offer of credit and/or price discount on the purchase of regular or perishable merchandise. At issue is the determination of the three main elements of the retailer's promotion strategy, namely (i) the...

This paper examines the profitability of forward buying practices for a retailer confronted with a temporary decrease in the purchasing price of perishable items. The model includes a price-dependent demand structure which allows for the selection of policy alternatives on the basis of the retailer's decisions as to how much of the discount it shou...

Temporary trade promotions can take in practice many forms, specially when competitive pressures lead vendors to generate new and creative alternatives to the standard price discount or delay of payment. It is the purpose of this paper to develop the retailer's profit-maximizing decision-making strategy when confronted with any one of three such of...

The purpose of this paper is to develop a retailer's profit-maximizing myopic inventory policy for an item recognized as subject to gradual obsolescence. Demand is assumed to be a decreasing function of both the retailer's sale price and of time. up to a certain stochastic time point when obsolescence occurs and. as a result, the demand suddenly dr...

Given the increasing saliency of special offers as a sales promotion tool, this paper analyses the advantages and disadvantages of the two most common payment reduction schemes, namely a decrease in the purchase price and a delay in the payment of the merchandise. Following some of the latest empirical evidence in the sales promotion field, the mod...

Temporary sales are quite prevalent in practice, due to the changing power patterns between retailers and manufacturers, which has tended to shift sales promotion policies away from advertising and more towards price promotions. This paper models a common practical situation not covered in the literature, namely the familiar "while supply lasts" ca...

This paper uses attribution theory and the concepts of portfolio efficiency and portfolio effectiveness to evaluate the performance of a fixed income portfolio throughout a 36-month period and to ascertain the extent to which the portfolio performance can be attributed to the various elements which characterize the portfolio. Efficiency is defined...

This paper explores the use of a non-parametric frontier approach to analyse multi-factor productivity across time and countries. We argue that conventional measures of total factor productivity involve some restrictive assumptions that might bias the results. A non-parametric approach avoids these assumptions. The model uses linear programming tec...

This paper considers the hypothesis that globalisation of business practices has led to the harmonisation of policies dealing with the acquisition and development of technology throughout the years and across countries. The data set includes the countries listed in the World Competitiveness Report(WCR) and covers the 19931997 period. The paper (i)...

An obstacle often faced by countries in attempting to improve the standard of living of their people and the productivity of their economic base is a low level of technological development. At the national level, such a problem may be conceptualized in the form of a National Innovative System (NIS), which represents a country's involvement in innov...

This paper examines the problem of measuring the evolution of productivity changes over time and across the 14 countries included in the OECD's International Sectoral Data Base of two sectors considered essential to the economic growth of any nation, namely manufacturing and services. The basic units of analysis are generalized Malmquist productivi...

One of the more important determinants of the competitiveness of a nation is the quality of its human capital. The Human Development Index (HDI) is the most widely used yardstick of human development. It measures human development for all the countries of the world, through the use of three factors – longevity, knowledge and GDP measured in purchas...

This paper presents a model designed to evaluate the competitiveness potential of the Latin American countries and to compare the resulting rankings with the four more widely used assessment measures of a country's competitiveness, which will in turn influence its market attractiveness for investment purposes. Included here are those produced by th...

Purchase price reductions, even on a one-time-only basis, allow retailers the opportunity to lower their own selling prices, albeit temporarily, in an effort to increase sales. This results in not only additional revenues but also in extra inventory costs. The model presented in this paper examines such a cost/revenue tradeoff, through simultaneous...

In this paper we approach an empty haul problem by Day and Ross, one of Eastern Canada's largest trucking companies. Based on past data, we optimize the company's backhaul. Sensitivity analyses then allow conclusions regarding whether or not it is worth taking on additional freight for specific origin—destination pairs.

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 specific...

The primary purpose of this paper is to examine an important public issue, namely how the use of a particular fixed budget formula impacts on the input/output structure of the decision-making units directly affected by its implementation. As an example, it assesses short- and long-term effects on the efficiency of academic units of the University o...

This paper explores the usefulness of the current Canadian Institute of Chartered Accountants standard on accounting for income taxes in bond rating decisions by credit analysts. Bond rating prediction models using accounting variables generated with alternate treatment of income taxes, have been developed. The analysis indicates that additional in...

The import of cost allocation procedures are through their ex ante important decision making. Hence, it is important that the allocation issue be placed squarely within the context of those firm's objectives which gave rise to the need for the specific allocation. To that effect, this paper focuses the debate on the identification of the indirect c...

This paper considers a video store confronted with deciding upon an ordering policy for the cassettes of a movie newly released into the video cassette rental market. A dynamic programming formulation of the problem is presented, as well as a numerical example to illustrate the main features of the model. A new solution algorithm is also proposed t...

This paper analyses an issue of great practical importance for many production processes, namely how to coordinate the apparently contradictory goals of producing not only in accordance to specifications but also with as much uniformity as possible in the characteristic of interest. The primary objective is to assess the viability of combining the...

Modern quality management practices recommend the elimination of fixed numerical goals, in favour of programs designed to continuously reduce the process variability. The ultimate purpose is a process variance which is small enough to (i) render conformance to specifications essentially a non-issue; and (ii) leave uniformity of production as the ma...

Inventory clearing sales, especially in the case of highly competitive, established products, are sometimes accompanied by temporary discounts in the purchase price, to encourage customers to place orders larger than usual. This paper presents a generalized model of this temporary price discount problem in which explicit recognition is given to wid...

The primary objective of this paper is to highlight the need for the integration of procurement, production and marketing strategies. This is accomplished through the development of a model for a small firm, where the objective is the maximization of the present value of profits within an infinite horizon framework Other features include a JIT-like...

The purpose of this paper is to develop a model for simultaneously selecting the optimal target means for both a variables and an attribute quality characteristic. The objective is to maximize the expected profit per item. The expected profit per item depends on the revenue, the production cost, and the cost of maintaining the desired quality level...

Even though small firms are the most fertile institutions in terms of job creation and also comprise the larger part of the manufacturing base of most countries, small firms have been generally quite slow in adapting computer-integrated manufacturing (CIM) technology. This is especially problematic in taday's consumer-oriented market-place, where g...

Periods of sluggish demand and/or poor sales forecasts often leads to buildups of unwanted inventories. When this happens, funds are tied up unnecessarily in unproductive endeavours and expected sales revenues are not realized. To counter such occurrences, vendors often retort to payment reduction schemes designed to encourage sales. The most commo...

This paper considers the problem of a vendor attempting to dispose of unanticipated inventory levels through an offer to a prospective buyer of a credit-period within which no payment is required. For each party, a decision rule is developed in the form of a feasibility range beyond which the offer is not acceptable. Then, the interaction between t...

This paper considers the problem of a vendor attempting to dispose of unanticipated inventory levels through an offer to a prospective buyer of a credit-period within which no payment is required. For each party, a decision rule is developed in the form of a feasibility range beyond which the offer is not acceptable. Then, the interaction between t...

Implementation of just-in-time production planning policies has resulted in the expected lower level of inventories for many firms. Often, it has also resulted in higher per unit freight charges due to the inability to qualify any longer for the cheaper rates, which accompany higher volume shipments. This in turn has led to an update of the procure...

This paper considers the problem of integrating the main components of working capital decisions within a discounted cash flow framework in order to study the interrelationships among inventory, procurement, cash discounts, accounts payable and account receivable policies. The model yields a set of policies which are not only simple to implement bu...

This paper examines the effect of various freight rate structures and quantity discounts on the inventory policies of ROI and profit maximizing firms with downward sloping, price-elastic demand, lot-sizing policies and price set at a markup on unit cost. Units not sold at the regular price are disposed of at a reduced price. Both the markup and the...

To entice a buyer to deviate from normal ordering practices, vendors have at their disposal a spectrum of financial tools, including discounts on the purchase price, delays on the delivery of the merchandise and extended payment privileges. These payment reduction modes affect the buyer's inventory policy through changes in one or more of the compo...

This article considers the effect of freight discounts and disposals on the inventory policies of a profit-maximising firm with price-elastic demand and with price as a mark-up on the acquisition cost. In addition, the cost of placing an order is in part dependent upon a freight-cost structure, sensitive to the size of the order and upon the possib...

This article considers the problem of joint control of attribute and variable quality characteristics of a given product. Items are acceptable if they meet the specifications for both types of quality characteristics at the same time. Otherwise, the items are sold as scrap at reduced prices. The objective is to determine simultaneously the target v...

The effect of various freight-rate structures and incremental quantity (IQ) purchasing discounts on the firm's procurement and inventory decisions is examined. For ease of exposition, most of the elements of the models are introduced for the case where only one IQ break exists. Within this context, three types of freight rates are examined. The fir...

This paper presents a review of the literature available on inventory policies under incentives on a one time only basis. It is quite a common industrial practice to offer special incentives to motivate the buyer to order in larger than regular order quantities. Such special deals are available for a limited time only. The literature on inventory p...

The economic evaluation of the procurement and inventory functions of a given firm depends, in part, on the method or methods used in the valuation of the various types of inventories common to most going concerns. And yet very little is known about the reasons for the selection of the various methods, beyond tax considerations for U.S. firms. This...

This paper presents an economic model which incorporates the joint control of both variable and attribute quality characteristics of a product. Items are acceptable if they meet the specifications for both types of characteristics at the same time. Otherwise, the items are reprocessed or sold as scrap at a reduced price. A lot is acceptable if the...

This paper identifies and analyses the effect of two implicit assumptions made in the standard single-period deterministic inventory models, while valuing the level and carrying cost of average inventory. Relaxing these two assumptions we show the degree to which standard inventory models overestimate or underestimate, as the case may be, optimal i...

This paper considers a buyer's decision whether to increase the size of the usual order in exchange for either a discount on the purchase price or a credit period within which no payment is required. For each payment reduction mode, the model computes the maximum level of stock beneficiai to the buyer as well as the level of extra stock which maxim...

This paper presents a discrete-choice theoretical framework for a union participation model, whereby each individual decision-maker is faced with two or more feasible alternatives, each representing the level of participation intensity in a given union activity. The objective is to select the intensity level that results in the greatest utility to...