Managing international supply: The balance between total costs and customer service

Many trading companies have taken a global approach to their supply markets, sourcing from low-cost foreign countries in order to achieve cost reductions. There remains, however, a lack of evidence that sourcing internationally actually leads to improved economic performance. This can be explained by two key challenges in terms of how to achieve a balance between: (1) purchasing and logistics costs, and (2) customer service. The purpose of this paper is to examine the organisation and management of international supply from a total cost perspective, taking into account both purchasing and logistics costs, as well as customer service and agility. Previous research into a number of Norwegian companies that have sourced from China has identified four configurations for managing international supply. This paper utilises the supply management literature and an example of a Norwegian retail and wholesale company to analyse and discuss these configurations and their effects on total costs and customer service. The paper's theoretical contribution is the conceptualisation of a total cost perspective on international supply management and the discussion of such costs in relation to customer service. This contribution may, in turn, aid companies that source from foreign, low-cost countries.     

Prevention versus Treatment under Precautionary Regulation: A Case Study of Groundwater Contamination under Uncertainty

Policy discussions on agricultural pollution problems characterize prevention as more cost effective and precautionary than ex post treatment. We derive conditions under which treatment alone is more cost effective in situations involving multiple sources of emissions, multiple sites affected, and a commonly used precautionary approach to uncertainty. We also show that a greater degree of precaution can result in less reliance on prevention. An empirical case study indicates that treatment alone is the most cost-effective means of dealing with nitrate in most Maryland community water system wells. The use of leaching prevention measures is restricted to the most intensive poultry producing areas. The incremental cost of precaution is substantial.     

Did the Federal Crop Insurance Reform Act Alter Farm Enterprise Diversification?

We estimate how much United States farms changed enterprise diversification in response to a marked increase in crop insurance coverage brought about by the 1994 Federal Crop Insurance Reform Act, which substantially increased insurance subsidies. The analysis exploits farm‐level panel census data to compare farm‐specific changes in enterprise diversification over time. By examining diversification decisions of the same farms over time, we control for time‐invariant unobserved individual heterogeneity. We then use pooled cross‐sectional data from the United States Department of Agriculture (USDA) Agricultural Resource Management Survey to estimate the relationship between farm diversification and average returns. We find that the insurance subsidies caused a modest increase in enterprise specialisation and production efficiency. Estimated efficiency gains are far less than the subsidies.     

Spatial statistical modelling of insurance risk: a spatial epidemiological approach to car insurance

Spatial models, such as the Besag, York and Mollie (BYM) model, have long been used in epidemiology and disease mapping. A common research question in these subjects is modelling the number of disease events per region; here the BYM models provides a holistic framework for both covariates and dependencies between regions. We use these tools to assess the relative insurance risk associated with the policyholders geographical location. A Bayesian modelling approach is presented and an elastic net is used to reduce the large number of possible geographic covariates. The final inference is performed using Integrated Nested Laplace Approximation. The model is applied to car insurance data from If P&C Insurance together with spatially referenced covariate data of high resolution, provided by Insightone. The entire analysis is performed using freely available R-packages. Including spatial dependence when modelling the number of claims significantly improves on the result obtained using ordinary generalised linear models. However, the support for adding a spatial component to the model for claims cost is weaker.     

Public management reform in Denmark

Abstract

This article discusses public management reform in Denmark. First, the institutional features of the Danish public sector are introduced. Danish ministries enjoy a considerable amount of autonomy that makes central co-ordinated public management reform challenging. The second part of the article outlines the contents of public management reform and provides an overview of the major reform initiatives of the last three governments. Denmark's reforms are characterized as a mixture of strategies for modernization and marketization, but with most emphasis on the former rather than the latter. Together with successive governments, the Danish Ministry of Finance has argued strongly for efficiency, economy and effectiveness as key values and they have been institutionalized in modernization efforts. Denmark should now be considered a country where NPM reforms have taken a firm hold.     

THE BIAS OF THE MULTIPLIER MATRIX WHEN SUPPLY AND USE TABLES ARE STOCHASTIC

The literature on stochastic input–output (I–O) analysis has paid considerable attention to the bias in the Leontief inverse. This paper extends previous studies by assuming supply and use tables (SUTs rather than I–O tables or input coefficients matrices) to be stochastic. This is a natural starting point because SUTs have become the basic data sources for I–O applications. In a Monte Carlo simulation experiment, a given SUT is randomized in two different ways and the effects are determined for eight different multiplier matrices. The analysis is carried out for Spain, Italy, the Netherlands, Germany and Finland, using their SUTs for 2006. The findings indicate that, in general, biases are statistically significant but negligibly small. This corroborates earlier findings obtained for stochastic I–O tables.     

The Neuer Markt as an institution of creation and destruction

The market for publicly traded equity is the heart of a modern capitalist system. In particular, the market for newly listed firms is in turn a bellwether for the public equity market because the entry gives firms expanded access to capital, allowing them to emerge and grow. On the other hand, stock markets also serve as an institution to reallocate productive resources from non-surviving to surviving firms. We describe the Neuer Markt—a special segment of the Frankfurt Stock Exchange in Germany—as an institution to foster the creation of new firms and their destruction.

On Conformity Testing and the Use of two Stage Procedures

Conformity testing is a systematic examination of the extent to which an entity conforms to specified requirements. Such testing is performed in industry as well as in regulatory agencies in a variety of fields. In this paper we discuss conformity testing under measurement or sampling uncertainty. Although the situation has many analogies to statistical testing of a hypothesis concerning the unknown value of the measurand there are no generally accepted rules for handling measurement uncertainty when testing for conformity. Usually the objective of a test for conformity is to provide assurance of conformity. We therefore suggest that an appropriate statistical test for conformity should be devised such that there is only a small probability of declaring conformity when in fact the entity does not conform. An operational way of formulating this principle is to require that whenever an entity has been declared to be conforming, it should not be possible to alter that declaration, even if the entity was investigated with better (more precise) measuring instruments, or measurement procedures. Some industries and agencies designate specification limits under consideration of the measurement uncertainty. This practice is not invariant under changes of measurement procedure. We therefore suggest that conformity testing should be based upon a comparison of a confidence interval for the value of the measurand with some limiting values that have been designated without regard to the measurement uncertainty. Such a procedure is in line with the recently established practice of reporting measurement uncertainty as “an interval of values that could reasonably be attributed to the measurand”. The price to be paid for a reliable assurance of conformity is a relatively large risk that the procedure will fail to establish conformity for entities that only marginally conform. We suggest a two‐stage procedure that may improve this situation and provide a better discriminatory ability. In an example we illustrate the determination of the power function of such a two‐stage procedure.