Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return

In practices, not only production but inspection processes are often not perfect, thereby generating defects and inspection errors. Previous imperfect-quality inventory studies, however, have mostly focused on developing cost-minimizing models that do not consider imperfect inspection processes and related defect sales return issues despite their practical significance. Thus, this study proposes a profit-maximizing economic production quantity model that incorporates both imperfect production quality and two-way imperfect inspection, i.e., Type I inspection error of falsely screening out a proportion of non-defects and disposing of them like defects and Type II inspection error of falsely not screening out a proportion of defects, thereby passing them on to customers, resulting in defect sales returns. We also consider rework and salvage in disposing of screened and returned items. Then we solve the model optimally and present numerical sensitivity analyses to provide important managerial insights into practices.     

Disaggregation and consolidation of imperfect quality shipments in an extended EPQ model

We consider a standard economic production quantity (EPQ) model. Due to manufacturing variability, a fraction P of the produced inventory will have imperfect quality, where P is a random variable with a known distribution. We consider a 100% inspection policy and further assume that the inspection rate is larger than that of production. Thus, all imperfect quality items will be detected by the end of the production cycle. For such an augmented EPQ model, we first derive the new optimal production quantity assuming that the imperfect quality items are salvaged once at the end of every production cycle. Then, we extend this base model to allow for disaggregating the shipments of imperfect quality items during a single production run. Finally, we consider aggregating (or consolidating) the shipments of imperfect items over multiple production runs. Under both scenarios we derive closed-form expressions for both the economic production quantity and the batching policy, and show that our desegregation/consolidation schemes can lead to significant cost savings over the base model.     

Imperfect competition law enforcement

Competition policy is a subject of often heated debate. Competition authorities, seeking to prevent or battle anticompetitive acts in complex cases to the best of their abilities, regularly find themselves advised by rival economic theories and disputed empirical analyses. As a consequence, there is a real possibility that they may occasionally err, missing true violations of competition law or finding firms liable that actually had no other intentions than good competition. In this paper, possible consequences of such imperfect competition law enforcement on firm strategies are considered. In a simple model of collusion, it is found that the incidence of anti-competitive behavior increases in both types of enforcement errors: Type II errors decrease expected fines, while Type I errors encourage industries to collude precautionary when they face the risk of a false conviction. Hence, fallible antitrust enforcement may stifle genuine competition, thus stimulating the very behavior competition policy is meant to deter. When enforcement errors are non-negligible, competition authorities run the risk of being over-zealous, in the sense that welfare is best served by an authority that is selective and conscientious in its targeting of alleged anticompetitive acts.     

Securities auctions with pre-project information management

This paper analyzes securities auctions in which bidders have an option to acquire information after winning the right to develop a project. The payment consists of an up-front cash bid and a contingent security bid, which distorts investment and information acquisition relative to the first-best. We order securities in terms of their steepness: the payment of a steeper security is more sensitive to high project values. The agent’s incentives to acquire information that prevents either cost overruns (Type I errors) or false cancellations (Type II errors) decrease with the steepness of securities. The optimal limited-liability securities auction involves bidding debt that minimizes the distortions in the agent’s incentives to acquire performance-enhancing information. The model delivers implications on the practices commonly observed in oil lease auctions.     

Modelling quality in replacement and inspection maintenance

Heterogeneity in component and maintenance quality is considered in the context of age-based inspection and replacement for a single component system. A three-state component failure model is assumed, with a defective state preceding the failed state. Heterogeneity in maintenance intervention is modelled by supposing that inspections may induce the defective state. Component heterogeneity is modelled by supposing that the population of components comprises a mixture of the weak and strong, and that the mixing proportion and cost of components vary between suppliers. Within this framework, the impact, on system reliability and cost, of switching component or maintenance supplier is determined. Broadly, our finding is that one is much more inclined to switch supplier in order to obtain higher quality maintenance than to obtain higher quality components. A gas pressure control valve is used to illustrate our ideas.     

Grade inflation in restaurant hygiene inspections: Repeated interactions between inspectors and restaurateurs

Restaurant hygiene grading schemes are considered exemplars of targeted transparency policies. We investigate the impact of an administrative design feature found in many schemes: repeated interactions between health inspectors and restaurateurs. Data was analyzed from 336,208 inspections of 27,119 restaurants conducted by 493 inspectors from 2000 to 2010 by the Los Angeles Department of Public Health (LADPH). The findings associate repeated interactions with higher public letter grades, and these grades drop with the assignment of a new inspector. Specifically, a one-unit increase in the logged number of visits by a prior inspector is associated with a 71% increased chance the restaurant will be downgraded to a lower letter grade upon the arrival of a new inspector. Exploiting an inspection protocol change in 2007, we also find that inspectors with more repeated visits to a restaurant are more likely to code a higher number of compliant rules as “Not Observed,” thereby possibly avoiding potential violations and corresponding penalties. Analysis of subsequent consumer complaints filed with the local health department shows that a one-unit increase in repeated inspector-restaurateur interactions is associated with an 10% increase in the likelihood of a consumer complaint, suggesting a public health impact. Coupled with prior evidence, the study demonstrates that administrative and design features of targeted transparency policies can impact the information provided to the public and potentially affect health outcomes.     

质量检验数据人为影响误差的纠正与预防

针对产品质量检验、测试过程中，影响检验、测试结果的人为因素造成的检验数据误差的特点进行了分析、探讨，提出了切实有效的纠正与预防措施。     

The incentives for cost reduction in a differentiated industry

This paper investigates how the incentives for cost reduction in a differentiated industry depend upon the degree of product substitutability. When goods are imperfect substitutes, both Cournot and Bertrand competition result in underinvestment in the sense that a social planner would be willing to pay more for a given cost reduction than a profit-maximizing firm. Overinvestment may occur when the goods are sufficiently close substitutes. Similarly, Cournot competition provides a stronger incentive to innovate than Bertrand competition if the degree of substitutability is low, and a weaker incentive if this degree is high.     

An optimal production run length in deteriorating production processes

This paper presents an EMQ model which determines an optimal production run length in a deteriorating production process. It is assumed that the process is subject to a random deterioration from an in-control state to an out-of-control state with an arbitrary distribution and, thus, produces some proportion of defective items. An optimal production run length and a minimum average cost are derived in three deteriorating processes: constant, linearly increasing, and exponentially increasing. Several different results from those of previous research are obtained and discussed. A numerical experiment is carried out to see the behavior of the proposed model depending on the cost and process parameters. Some interesting behaviors are observed.     

Designing a reverse logistics network for optimal collection, recovery and quality-based product-mix planning

This study proposes an integrated, reverse logistics supply chain planning process with modular product design that produces and markets products at different quality levels. A mixed integer programming (MIP) model formulates the overall planning process required to maximize profit by considering the collection of returned products, the recovery of modules and the proportion of the product mix at different quality levels. This paper proposes the collection of returnables (end-of life, defective, product under warranty) through retail outlets combined with the recovery of modules from the collected products using a network of recovery service providers. The proposed modular product design approach would create a design criterion that provides an improved recovery process at a lower cost. This study uses a total supply chain view that considers the production, transportation and distribution of products to customers, while a numerical problem illustrates the applicability of the models.     

Measuring the efficiency of assembled printed circuit boards with undesirable outputs using data envelopment analysis

The printed circuit board (PCB) assembling production process is generally optimized to ensure very low levels of errors (defects) so as to produce the higher quality product. The evaluation of efficiency of different types of PCB (cards) could help the management in identifying the quality of assembly process to work out appropriate interventions to prevent failures. This study uses the technique of data envelopment analysis to assess the efficiency of cards across all assembly units as well as within its respective assembly unit in the presence of undesirable outputs under the assumption of weak disposability. In our case, the three types of errors, viz., machine error, manual errors and other errors that occur in the defective assembled PCBs are considered as the undesirable outputs. In-depth analysis has been carried out through jackknifing analysis to check the robustness of DEA efficiency scores. The best practice group of cards for each inefficient card has been identified which eventually facilitate the management to derive the level of undesirable outputs to be reduced and desirable output to be improved so as to achieve the level of efficiency at par with its practice group.     

Looking at the Cost Side of “Monopoly”

Welfare loss under oligopoly is defined as that part of consumer surplus which is lost and not regained by higher profits. In a model with asymmetric firms, this implies that the total welfare loss consists of the deadweight loss triangle plus a cost side inefficiency effect, due to the fact that in imperfect markets not all firms utilize the lowest cost technique. Using a flexible CV-model we calculate these effects empirically for two relatively homogeneous industries (pulp/paper and cement). The deadweight loss triangles are shown to be smaller than the cost difference effect (“the staircase”) for these industries.     

An np control chart for monitoring the mean of a variable based on an attribute inspection

This article proposes a new np control chart, called the np_x chart, that employs an attribute inspection (inspecting whether a unit is conforming or nonconforming) to monitor the mean value of a variable x. The distinctive feature of the np_x chart is using the statistical warning limits to replace the specification limits for the classification of conforming or nonconforming units. By optimizing the warning limits, the np_x chart usually outperforms the X¯ chart on the basis of same inspection cost. In addition, the np_x chart often works as a leading indicator of trouble and allows operators to take corrective action before any defective is actually produced.     

Weighing what’s practical: proxy means tests for targeting food subsidies in Egypt

Despite achieving a significant cost reduction over the past two decades, the absolute cost of food subsidies in Egypt is still high relative to the benefits received by the poor. There is scope for better targeting these food subsidies, in particular for targeting cooking oil and sugar ration cards, both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policy for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits. Targeting the high-subsidy green ration cards to the poor and the low-subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households. An International Food Policy Research Institute research team in Egypt, in collaboration with the Egyptian Ministry of Trade and Supply, developed a proxy means test for targeting ration cards. The paper describes the process of moving from the optimal income-predicting model to the final model that was both administratively and politically feasible. An ex-ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households. An effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system, and, at the same time, the total budgetary costs of rationed food subsidies would decline. Moreover, the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in Egypt.     

Per unit vs. ad valorem royalties under asymmetric information

We study an inside patent holder's optimal licensing policy when it has imperfect information about the value of the patent to its rival. The patent holder can choose any two-part licensing fee with either per unit or ad valorem royalties. We demonstrate that the equilibrium will be either a fully separating contract with different per unit royalty rates, or a contract with a single ad valorem royalty that excludes a high cost rival. Fixed fees will not be used. The presence of asymmetric information uniquely drives the per unit royalties that otherwise would not be adopted. Per unit royalties always generate higher social welfare than ad valorem royalties.     

高镍合金油管的质量控制

介绍了高镍合金油管的主要生产和检验过程,分析了生产和检验过程中容易出现的问题,提出了该类油管质量控制的要点。     

Inventory management with random supply and imperfect information: A hidden Markov model

In most of the papers on inventory models operating in a random environment, the state of the environment in each period is assumed to be fully observed with perfect information. However, this assumption is not realistic in most real-life situations and we provide a remedy in this paper by assuming that the environment is only partially observed with imperfect information. We accomplish this by analyzing two formulations of single-item models with periodic-review and random supply in a random environment. In the first one, supply is random due to random capacity of production and random availability of transportation. We show that state-dependent base-stock policy is optimal if the capacity and all costs are observed, while demand and availability are unobserved. In the second model, we consider a model with random availability only with fixed-ordering cost. We show that state-dependent (s,S) policy is optimal if the availability process is observable.     

石油工业也应建立专用计量器具检定系统

针对石油天然气行业专用计量器具的检定系统表这一现状进行了分析，提出检定系统表是量值溯源的唯一依据，没有它工作计量器具的允许误差就缺少科学依据．并对如何建立这一系统提出了建设性意见。     

Maintenance, Housing Quality, and Vacancies under Imperfect Information

A model of a rental housing market is presented in which landlords economize on the maintenance of housing quality to profit from tenants imperfect information. In a partial equilibrium model that describes tenants by their distribution of minimum acceptable (reservation) quality for units priced at an identical rent, these profits induce entry of new units, resulting in rental vacancies. The equilibrium number of landlords and the market vacancy rate are derived in a free entry, imperfect information equilibrium in which the distribution of rental unit qualities range from the competitive quality to that which would be offered by a monopoly landlord.     

Using Analytic Hierarchy/Network Process (AHP/ANP) in Developing Countries: Shortcomings and Suggestions

This article intends to shed light on the problems arising in the benefit–cost (BC) analyses through the analytic hierarchy/network process (AHP/ANP) in developing countries when analysts may encounter lack of data, deficient databases, defective information, and, more important, the lack of groups of specialists with considerable expertise. In this article, through a comparison between the AHP/ANP and conventional engineering economy techniques, the major concerns that may be encountered are theoretically addressed. Then, through a real case project appraisal, the specific developing country-related issues that can distort the AHP/ANP results from the BC analysis are demonstrated.