James R. Kroes

Operational Compliance Levers, Environmental Performance, and Firm Performance Under Cap and Trade Regulation

Cap and trade programs impose limits on industry emissions but offer individual firms the flexibility to choose among different operational levers toward compliance, including inputs, process changes, and the use of allowances to account for emissions. In this paper, we examine the relationships among (1) levers for compliance (at-source pollution prevention, end-of-pipe pollution control, and the use of allowances); (2) environmental performance; and (3) firm market performance for the context of stringent cap and trade regulation with allowance grandfathering (i.e., the allocation of allowances for free). To investigate these relationships, we use data on publicly traded utility firms operating coal-fired generating units regulated by the U.S. Acid Rain Program from three principal sources: the U.S. Energy Information Administration, the U.S. Environmental Protection Agency, and the Compustat database. Our results indicate a significant relationship between better environmental performance and lower firm market performance over at least a three-year period. From a regulatory perspective, our results show a negative association between allowance grandfathering and firm environmental performance. Overall, by explicitly considering the context of stringent regulation, we find a counter-example to the view that better environmental performance generally associates with better economic performance.

Estimating Demand for Container Freight Service at the Port of Davisville

The Port of Davisville, located at Quonset Point, Rhode Island, is a former US Navy facility that was turned over to Rhode Island for commercial development when the naval base closed in 1974. Since then, a number of proposals have been put forth to expand the port’s operations to include the handling of containerized cargo. The Port of Davisville’s managing organization, the Quonset Development Corporation QDC, partnered with this academic research team to objectively analyze the viability of three proposals: 1 a major expansion of the port to make it an international container megaport, 2 a lesser investment to make it a regional international port of entry for containers, and 3 a minor expansion to make it a short-sea shipping container port. We estimated the potential demand for each expansion option using transportation cost optimization models. QDC used our study’s demand estimation in its request for grant funds from the US Department of Transportation’s Transportation Investment Generating Economic Recovery program. As a result, QDC received

An exploration of ‘sticky’ inventory management in the manufacturing industry

22.3 million to support the development of short-sea container freight shipping services at the Port of Davisville.

Leveraging Academic Partnerships to Improve Logistics at Nonprofit Organizations

Abstract Traditional models examining relationships between firm resources and revenues assume that the many expenses and asset holdings change in proportion to changes in demand. However, research has found that for many costs and assets assumed to be variable, the magnitude of a change in a cost or asset in proportion to a change in revenue is smaller during periods when revenue decreases compared to the change in the cost or asset when revenue increases. Costs and assets which behave in this manner have been denoted as ‘sticky’ costs or assets. This study examines if inventory in the manufacturing industry is managed in a ‘sticky’ manner and what implications inventory stickiness has on firm performance. Utilising firm panel data over a 25-year time window we find that inventory stickiness does exist amongst manufacturers and that it has negative implications for firm performance.

Improved forward buying of commodity materials

This article presents the results of a partnership between a nonprofit organization and a team of academic researchers that developed a low-cost spreadsheet-based tool that allows organizations to effectively schedule vehicle operations. Specifically, the tool (1) handles the real-world constraints present in moderately complex logistics environments; and (2) uses general computing hardware and software that is already deployed in most organizations, thereby rendering the solution radically low cost (effectively free). We deployed this tool to a humanitarian organization, the Idaho Foodbank, which realized a substantial improvement in its fleet efficiency and a corresponding reduction in route-planning time. The methodology used to manage this collaboration with academia can be leveraged by other nonprofit organizations attempting to overcome the financial barriers that commonly prevent budget-constrained organizations from accessing advanced technologies.

Metro Meals on Wheels Treasure Valley Employs a Low-Cost Routing Tool to Improve Deliveries

This research presents the Enhanced Commodity Forward Buy (ECFB) heuristic, a new method for commodity purchasing, which allows strategic forward buying of commodities for products that include commodity components or materials. The ECFB addresses limitations of existing methods by considering stochastic demand and stochastic commodity prices for products that contain both commodity and non-commodity materials. We conduct a simulation test of the new heuristic on 10 commodity indices using actual historical market prices, over a range of holding costs, markup margins, commodity percentages of the product’s cost of goods sold and demand distributions. The results of the simulation show that compared with five other buying methods, the ECFB heuristic’s ability to adapt to variations in both demand and commodity prices allows it to generate higher profits when demand is uncertain and commodity prices are volatile.

Cash flow management and manufacturing firm financial performance: A longitudinal perspective

In this paper, we discuss a project in which we develop a spreadsheet-based system that interfaces with a no-fee driving-directions application programming interface to quickly and accurately build a travel-time and distance matrix, and then rapidly determine near-optimal delivery-route schedules using a modified genetic algorithm. To the best of our knowledge, the method we used to create the travel matrix had not been studied previously. The tool was tested and refined in a humanitarian setting—a local branch of the Meals on Wheels Association of America (now Meals on Wheels America), an organization that combats hunger and poverty by providing food to individuals who are in need. The tool, which is currently being utilized by Metro Meals on Wheels Treasure Valley, has substantially reduced the time required to plan deliveries and has also reduced the delivery driving times by approximately 15 percent.