Francisco J. Arcelus

Retailer's pricing, credit and inventory policies for deteriorating items in response to temporary price/credit incentives

Abstract It is the purpose of this paper to model the retailers profit-maximizing retail promotion strategy, when confronted with a vendors 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 retailers promotion strategy, namely (i) the size of the special order to be placed from the vendor, under the different types of possible trade incentives offered; (ii) the price and/or credit-terms incentives to be passed on to its own customers to stimulate demand on a temporary basis; and (iii) the quantity to be sold under these one-time-only conditions.

On the efficiency of national innovation systems

Abstract This paper presents a non-parametric approach to the disentanglement of the related effects of efficiency and productivity of a countrys technological effort. The ultimate purpose is to identify the extent to which the alleged decrease in the productivity growth of many countries can be explained by differences in efficiency and by differences in its components, namely scale and congestion. The role of moderators in explaining productivity fluctuations if also assessed. The database consists of the countries included in the World Competitiveness Report.

Convergence and productive efficiency in fourteen OECD countries: A non-parametric frontier approach

Abstract 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 techniques to examine the productivity catching-up in 14 OECD countries over the 1970–1990 period, under the assumption of variable returns to scale. We find evidence of convergence, even if at quite different speeds, for total industry, for manufacturing and for services.

Retailer's Response to Alternate Manufacturer's Incentives Under a Single-Period, Price-Dependent, Stochastic-Demand Framework*

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 trade incentive, that is contrasted with a riskless demand, which is the expected value of the stochastic demand; and (iii) a single-period newsvendor-type framework. Additional analysis includes the development of equal profit policies in either form of trade incentive, an assessment of the conditions under which a one-dollar discount is more profitable than a one-dollar rebate, and an evaluation of the impact upon the retailer-expected profits of changes in either incentive or in the degree of demand uncertainty. A numerical example highlights the main features of the model. The analytical and numerical results clearly show that, as compared to the results for the riskless demand, dealing with uncertainty through a stochastic demand leads to (i) (lower) higher retail prices if additive (multiplicative) error, (ii) lower (higher) pass throughs if additive (multiplicative) error, (iii) higher claw backs in both error structures wherever applicable, and (iv) higher rebates to achieve equivalent profits in both error structures.

An Assessment of the Measurement Properties of the Human Development Index

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 purchasing power. This paper evaluates HDIs contribution towards measuring the quality of the human capital component of a nations competitiveness. Two primary issues under study are the HDIs information properties vis-a-vis its components and its measurement properties as an index. The primary conclusion of the study is that the HDI carries useful information about a countrys current development, but not about the future level of development. Hence, further refinements in its construction as well as additional theoretical support as a quantitative measure are needed.

One time only incentives and inventory policies

Abstract 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 policies under conditions of incentives has been classified by the nature of incentives such as price discount and credit period. A situation of announced price increase which is very similar to price discount is also reviewed. The policy implications of various scenarios are highlighted and areas of future research are identified.

Interrelationships among the elements of national innovation systems: A statistical evaluation

Abstract 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 countrys involvement in innovative activity. It is the purpose of this paper to develop a comprehensive NIS model through the identification of elements which characterize a countrys NIS and of the interrelationships embedded in each individual system. The point of departure is to treat the NIS as any other sector of the economy. As a result, its various elements are delineated according to their role within the NIS, as inputs, outputs, moderators or as a measure of productivity. The nature of the interrelationships is assessed through a structural equations model linking the various elements. It is shown that substantial commonalities exist among the basic elements of the various NISs, notwithstanding large differences in technology development strategies that exist across countries and the wide disparity between levels of development of each country in the sample.

Optimal process levels for the joint control of variables and attributes

Abstract 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 number of rejected items does not exceed a given limit. The objective is to simultaneously select the appropriate target values for the characteristics, so as to maximize the expected income per lot. Optimality conditions are derived for various probability distributions of the number of defects in a lot and computational experience is reported.

Pricing, rebate, advertising and ordering policies of a retailer facing price-dependent stochastic demand in newsvendor framework under different risk preferences

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 and multiplicative demand-error structures. Performance is measured by the risk-adjusted expected profit and evaluated across risk preferences. Pricing, rebate and advertising, in that order, are the most profitable sales-promotion policies. The more risk averse the retailer, the lower its profit and the more it favors multiple promotion policies.

Measuring sectoral productivity across time and across countries

Abstract This paper examines the problem of measuring the evolution of productivity changes over time and across the 14 countries included in the OECDs 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 productivity indices. These in turn can be decomposed into several components, associated to the various sources of productivity change. Included here are productivity fluctuations due to economies of scale, being constant or variable, to technical change and technical efficiency change. The computational procedure is based upon the concept of distance function, computed through the use of variations of data envelopment analysis.