Editor's Choice
Volume 19, Number 2, April 2008
An inventory control project in a major Danish company using compound renewal demand
In this paper a framework is developed to compute the optimal inventory policy for a large spare parts distribution centre operation in the Refrigeration & Air Conditioning (RA) division of the Danfoss Group in Denmark. The RA division distributes spare parts worldwide for cooling and air-conditioning systems. First, demand distributions are chosen from a class of compound renewal distributions. Subsequently, models and algorithmic procedures are designed for determining suitable inventory control variables based on the fitted demand distributions and a service level requirement stated in terms of an order fill rate. Finally, the empirical performance of the proposed solution is assessed against the procedures that had been in use in the company. It is concluded that the new procedures provide a better fit with the actual demand processes and they are more consistent with the stated objectives for the distribution centre.
Volume 19, Number 1, January 2008
Estimation and decomposition of cost efficiency in the health care food service sector: an extended stochastic frontier approach
by A. Assaf and K.M Matawie
In this paper, a model is proposed to estimate three measures of efficiency: technical efficiency which measures the ability of a firm to obtain maximum outputs from a given set of inputs, allocative efficiency which measures the ability to use the inputs in optimal proportions given the input prices, and total cost efficiency which is based on the other two measures. The approach offers an alternative to the well known Data Envelopment Analysis (DEA) methodology. An extended stochastic frontier approach is used in which maximum likelihood techniques are used to estimate a Cobb-Douglas production frontier along with first-order conditions for cost minimisation. The method is applied to an interesting application in health care food service operations and its effectiveness is demonstrated.
Click on the article title above for free online access until June 30 2008.
Volume 18, Number 4, October 2007
Gaussian Factor Models - Futures and Forward Prices
by Cody Hyndman
This paper uses stochastic flow techniques to characterise futures and forward prices of a risky asset that pays a stochastic dividend yield. The use of stochastic flows offers an alternative derivation of future and forward prices that is simpler and clearer than other known approaches in the literature.
The proposed approach provides a unified framework for characterising futures and forward prices for a wide class of Gaussian models and offers fresh insights into existing pricing formulae derived using alternative approaches (e.g. using PDEs or using conditional expectations). The technique is applied in the hedging of long term forward contracts using bonds and futures contracts with shorter term.
Click on the article title above for free online access until March 31st 2008.
Volume 18, Number 3, July 2007
Central Consolidation with a threshold: an algorithm
by Ariane Chapelle and Ariane Szafarz
This paper addresses the fascinating topic of integrated corporate control within companies. Alternative forms of control such as multiple voting rights, board representation and active monitoring are discussed.
The paper generalises previous work by allowing any consistent threshold level and by being capable of handling special features.
A new algorithm, based on Graph Theory, that evaluates the control tunneling exerted by shareholders is proposed.
This is a very interesting paper on an unusual application.