DETERMINATION OF ECONOMIC VALUE ADDED FOR A PROPOSED INVESTMENT IN NEW MANUFACTURING

This paper discusses a measure for estimating the wealth creation potential of capital investments in manufacturing. The measure, called “Economic Value Added,” has recently become popular in the United States and can be derived from an after-tax analysis of cash flows generated by a capital investment. A proposed investment in manufacturing capacity is analyzed to illustrate the after-tax cash flow calculations required to determine its EVA potential.     

CASE STUDY: ECONOMIC VIABILITY OF COMPONENT MANAGEMENT FOR A NEW DESIGN

This paper explores the viability of standardization of design and manufacturing techniques to expedite product development and control design proliferation using an example of a leading transport refrigeration unit manufacturer. As an incremental approach to implementing standardization in a product development environment, a conceptual framework for component management decision support system is presented to build a case for its technical feasibility. The primary objective of this research case study is to provide an economic justification for implementing the proposed system. A three level decision making hierarchy is proposed with economic optimization for levels 1 and 2 representing standardization of system modules and capacity decisions for a product line respectively and thermodynamic optimization for level 3 representing control systems to keep the system dynamically balanced in changing environments. Other potential applications amenable to classification are identified.     

CASE STUDY: US ARMY UTILITY HELICOPTER FLEET MODERNIZATION ANALYSIS

The US Army has relied heavily on helicopter support for more than 30 years. These aircraft have been used for a variety of purposes, with the most widely identified category being the utility, or general-purpose transport, mission area. Currently, the US Army is confronting the problem of managing an aging equipment fleet (its helicopters) in the face of significant budgetary constraints, a very large-scale fleet replacement problem. By the nature of its business, the US Army is not working toward a desired profit margin, but it must maintain a level of military capability to meet its national defense obligations. The US Army recently commissioned the Utility Helicopter Fleet Modernization Analysis to determine the most cost and operationally effective strategy for fleet replacement or modernization. This case study presents a synopsis of how multi-criteria decision analysis techniques were integrated with total cost of ownership considerations to develop a multi-billion dollar equipment modernization strategy, a strategy that is being implemented by the US Army today.     

CASE STUDY: BUS FLEET REPLACEMENT

Parallel replacement analysis is concerned with determining minimum cost replacement schedules for a group of assets that are economically interdependent and operate in parallel. That is, keep and replace decisions are required for each asset among a group of assets over a specified horizon. The assets are economically linked through economies of scale or budgeting constraints. One application of parallel replacement analysis is fleet replacement. We recently studied the operations, including fleet replacement policies, for a city transit bus operator in Europe. Key factors in their replacement decisions included the ability to choose from multiple manufacturers, purchase price, and government regulations. We explore these and other factors, by solving a heterogeneous replacement problem with fixed costs, budgeting constraints, and demand constraints. Through extensive sensitivity analysis we analyze the impact of various parameters on decisions, in terms of the choice of replacement assets, as well as the optimal time to retain assets. Additionally, we provide motivation for future research in this application area, which is important for many cities.     

THE IMPACT OF POLITICAL RISK ON THE FOREIGN DIRECT INVESTMENT DECISION: A CAPITAL BUDGETING ANALYSIS

Using a capital budgeting framework, we examine the impact of political risk on the foreign direct investment decision. Political risk may alter operating cash flows via discriminatory regulations as well as the investment via expropriation. We model the impact of political operating costs and expropriation costs on the NPV of a project under the assumption that the parameters that affect the NPV are constant over the life of the project. Next, we provide an illustration for the case in which the relevant parameters are variable over the life of the project. The paper concludes with an example of political risk in the 1990s, the case of Black Sea Energy Ltd.'s investment in Russia.     

A COMPARISON BETWEEN TWO MULTIATTRIBUTE DECISION METHODOLOGIES USED IN CAPITAL INVESTMENT DECISION ANALYSIS

Two multicriteria decision methodologies applied to evaluating capital investments are the Analytic Hierarchy Process (AHP) and the Non-Traditional Capital Investment Criteria (NCIC) model. In this paper we demonstrate that a mathematical relationship exists between these two models. In-particular, a data set obtained by one method can be mapped into an equivalent data set obtained using the other method. It is suggested that this offers an opportunity of empirically assessing decision makers judgmental capabilities under varying data collection methods. An example problem illustrates the manner in which such comparisons can be made.     

企业间互供石脑油价格研究

企业间互供石脑油受计划经济、相关产品价格、石脑油质量标准及供货时间的影响,供需双方存在许多矛盾,关键在于石脑油价格。根据定价原则确定企业间互供石脑油的价格。尽快制定石脑油质量标准,调节７０＾＃汽油消费税,使石脑油与７０＾＃汽油价格差别趋于合理化,才能真正发挥集团优势。     

EVALUATING INVESTMENT IN INVENTORY POLICY: A NET PRESENT VALUE FRAMEWORK -AN ADDENDUM-

This paper attempts to fill gaps found in the article by Kim, Philippatos and Cbung which recently appeared in this journal. Simple proofs of the concavity of the three objective functions they postulated are presented.     

INFLATION AND DEBT INDEXATION: THE EQUIVALENCE OF TWO ALTERNATIVE SCHEMES FOR THE CASE OF PERIODIC PAYMENTS

The presence of inflation has induced the financial institutions to implement procedures devised to protect the real values of their loans. Two of such procedures, the floating rate scheme and the monetary correction mechanism, tend to lead to very different streams of payments. However, whenever the floating rate scheme follows the rule of strict adherence to the Fisher equation, the two procedures are financially equivalent.     

A Review of: BUSINESS COST-BENEFIT ANALYSIS

This paper reports the findings of a survey of 427 large hospitals nationwide. The survey provided information regarding the techniques employed as primary and secondary tools of capital budgeting, the percentage of capital projects formally evaluated, the methods used in capital budgeting, the qualitative factors which influence the capital budgeting decisions and the extent of their impact in determining the acceptance decision, and the nature and frequency of involvement of the medical staff in major capital investment decisions.     

CLOSED-FORM EXPRESSIONS FOR THE APPROXIMATE EVALUATION OF INTEREST RATES: EXTENSIONS TO THE GEOMETRIC SEQUENCE OF PAYMENTS CASE

For the case of a given sequence of constant payments, theoretical and numerical comparisons between two particularly simple closed-form expressions for the approximate evaluation of the interest rate are presented. It is also shown how these expressions can be generalized to cover the case where the sequence of payments follows a geometric progression.