Environmentally responsible inventory models: Non-classical models for a non-classical era

Mathematical models of inventory typically include the three inventory associated costs of surplus, shortage and ordering. These classic inventory models are then analysed so as to choose inventory parameters that usually minimise the total cost of operating the inventory system being investigated.Unfortunately, classic inventory models do not provide a meaningful basis for analysing many real and increasingly important practical inventory problems and situations. It is therefore not surprising that over recent years, several authors have discussed these issues in broad terms and suggested that a new paradigm needs to be developed.This paper develops some specific aspects of this discussion. In particular, the paper identifies a range of inventory problems that are not covered appropriately by traditional inventory analysis. One of these is to design responsible inventory systems, i.e. systems that reflect the needs of the environment. The paper then examines the importance of inventory planning to the environment in greater detail. For example, packaging is important, not only because of its costs and the protection that it provides to the inventory items, but also because of its eventual effects on the environment in terms of the use of resources and potential landfill. For similar reasons, waste, which can result from poor inventory management, is highly important. The location of stores is important because location affects transport costs. Thus the influence of the secondary aspects of most inventory models; packaging, waste and location are important but, even more important are the inter-relations with the total system. In particular, the location of the manufacturing plants and the effect that inventory planning has on the logistics chain, potentially have considerable environmental implications. Inventory is part of a wider system.However, until the cost charged for an activity reflects the true environmental cost of that activity, it is likely that decisions will be made on the basis of erroneous data. In that situation, we are faced with either determining the environmental cost of specific actions or to use environmental costs that are somewhat contrived; in which case it may be more sensible to use very different performance measures and models. The paper discusses these ideas and ways in which inventory policies may reassure us with our environmental concerns.     

Bulldog printing: cost estimation and information elicitation mini-case and teaching notes

This case describes a printing company that is concerned about predicting paper waste on their web offset presses as a component of both job estimating (pricing) and overall control standards in order to respond to competitive pressures. We use this case in the undergraduate cost/managerial course. Students first seek information from the instructor (representing company management). Then, using regression and correlation analysis, students identify the activities that best predict waste. Given the information about press speeds and paper waste generated, an obvious conclusion is that speed is the independent variable and waste the dependent. However, students find that there is a real question about which is x and which y. In fact, neither variable is the independent variable; both are dependent on other factors. In their first regression and correlation analysis using just speed and waste, they find that waste and speed are inversely related. They must then move on to isolate the intervening activities that can explain what is happening. Students should first determine that waste differs for the two paper types: newsprint and machine-coated. They then should determine that it is the level of complexity of the job that increases waste and decreases processing speed. These measures of complexity can then be used for pricing and control. While the case lends itself to many formats, it has been used as an information elicitation case using e-mail. Information elicitation (or incident process) cases help develop critical thinking as students identify key issues and ask questions to determine the best solutions.^fn1 They are enjoyable for both the students and the professors, and place students in a more real-world situation where all the necessary information is seldom readily available. The use of e-mail correspondence is also more reflective of a real-world situation and has the advantage of providing the instructor with a record of the interactions. In this elicitation case, students are given limited information about paper waste at Bulldog. The instructor role-plays the controller of the company, Chris Walters, and students ask Walters appropriate questions to determine activities that relate to paper waste. The following presents the information provided to students. The Teaching Note explains the process and provides the controllers information.     

Trends in Judicial Review and the Human Rights Act

It was widely predicted that the Human Rights Act 1998 would have a significant effect on the incidence of litigation against public bodies. This article considers the early impact of the Act on the use of judicial review to challenge public decision-making. It compares the use of judicial review prior to the coming into effect of the Act, focusing on the subject areas litigated and the types of respondent challenged, with the trends during the first five months of Act's operation. Contrary to predictions, an increase in the use of judicial review has not materialized. Nor, as yet, has there been a significant change in the nature of judicial review litigation.     

Acceptance of Functional Foods: A Comparison of French, American, and French Canadian Consumers

Food products have diversified with industry globalization. To market functional foods efficiently, food managers must gauge cross‐cultural variance of functional food acceptance. Expanding on previous research, we investigate young consumers' acceptance of functional foods. Data collected in French Canada, United States, and France in 2004 reveal that business students are slightly in favor of functional foods, and associate health benefits with these foods but very few product‐related benefits. Students do not have strong opinions on the trustworthiness of information and expressed a slight interest in purchasing this type of product. Analyses of cultural differences revealed significant, albeit small, divergence in these variables. Statistical analysis performed on the full sample assessed the impact of food attitudes and other cognitive and attitudinal factors on the general attitude toward functional foods. Health and product‐related benefits and belief about the credibility of information are the main positive determinants of the acceptance of functional foods, followed by high knowledge. Apart from the negative impact of Neophobia, none of the other food attitudes influences attitudes toward functional foods. Linear regressions performed on each subgroup indicated similar positive cross‐cultural results for health and product‐related benefits. However, cross‐cultural differences are detected for knowledge, credibility of information, and food attitudes that influence acceptance of functional foods. Les produits alimentaires se sont diversifiés avec l'avènement de la mondialisation. Pour commercialiser efficacement les aliments fonctionnels, les gestionnaires du secteur alimentaire doivent évaluer l'acceptation des aliments fonctionnels par les diverses cultures. À partir de travaux de recherche antérieurs, nous avons examiné l'acceptation des aliments fonctionnels par les jeunes consommateurs. Des données recueillies en 2004 au Canada français, aux États‐Unis et en France ont révélé que les étudiants en commerce étaient légèrement en faveur des aliments fonctionnels, leur associaient des avantages pour la santé, mais très peu d'avantages liés aux produits. Les étudiants n'avaient pas une très bonne opinion concernant la crédibilité de l'information et ont manifesté un faible intérêt pour l'achat de ces produits. Des analyses des différences culturelles ont révélé des divergences, petites mais significatives. Les analyses statistiques effectuées sur l'échantillon total ont évalué l'impact des attitudes envers les aliments ainsi que d'autres facteurs cognitifs et attitudinaux sur l'attitude générale envers les aliments fonctionnels. Les avantages pour la santé, les avantages liés aux produits et les croyances concernant la crédibilité de l'information sont les principaux facteurs favorables à l'acceptation des aliments fonctionnels, suivis d'un degré de connaissances élevé. Outre l'impact négatif de la néophobie, aucune autre des attitudes envers les aliments n'influe sur les attitudes envers les aliments fonctionnels. Les régressions linéaires effectuées pour chaque sous‐groupe ont indiqué des résultats positifs similaires. Toutefois, nous avons noté des différences interculturelles quant à la connaissance, à la crédibilité de l'information et aux attitudes envers les aliments qui influencent l'acceptation des aliments fonctionnels.     

Entrepreneurship, Asymmetric Information, and Unemployment

We examine how three sources of asymmetric information affect the supply of entrepreneurs and unemployment. In the first case, banks cannot observe entrepreneurs' risk of failure so ration credit. This increases the number of entrepreneurs and the level of unemployment. In the second case, firms cannot observe workers' effort so offer a wage above the market clearing one. This results in unemployment and too few entrepreneurs. The final case arises when firms cannot observe workers' abilities. A pooling wage is offered and results in too many entrepreneurs. The role of government in restoring efficiency is explored.     

Social Insurance and Redistribution with Moral Hazard and Adverse Selection*

Rochet (1991) showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re‐examined when ex post moral hazard and adverse selection are included, and under different informational assumptions. Individuals can take actions influencing the size of the loss in the event of accident (or ill health). Social insurance can be supplemented by private insurance, but private insurance markets are affected by both adverse selection and moral hazard. We study how equity and efficiency considerations should be traded off in choosing the optimal coverage of social insurance when those features are introduced. The case for social insurance is strongest when the government is well informed about household productivity.     

The effects of dynamic feedbacks on LS and MM estimator accuracy in panel data models

The finite sample behavior is analyzed of particular least squares (LS) and a range of (generalized) method of moments (MM) estimators in panel data models with individual effects and both a lagged dependent variable regressor and another explanatory variable. The latter may be affected by lagged feedbacks from the dependent variable too. Asymptotic expansions indicate how the order of magnitude of bias of MM estimators tends to increase with the number of moment conditions exploited. They also provide analytic evidence on how the bias of the various estimators depends on the feedbacks and on other model characteristics such as prominence of individual effects and correlation between observed and unobserved heterogeneity. Simulation results corroborate the theoretical findings and reveal that in small samples of models with dynamic feedbacks none of the techniques examined dominates regarding bias and mean squared error over all parametrizations examined.     

The Euro Effect on Trade is not as Large as Commonly Thought*

Existing studies on the impact of the euro on goods trade report increments between 5% and 40%. These estimates are based on standard panel gravity models for the level of trade. We show that the residuals from these models exhibit upward trends over time for the euro countries, and that this leads to an upward bias in the estimated euro effect. To correct for that, we extend the standard model by including a time trend that may have different effects across country‐pairs. This results in an estimated euro impact of only 3%.     

Open innovation in SMEs: Trends,motives and management challenges

Open innovation has so far been studied mainly in high-tech, multinational enterprises. This exploratory paper investigates if open innovation practices are also applied by small- and medium-sized enterprises (SMEs). Drawing on a database collected from 605 innovative SMEs in the Netherlands, we explore the incidence of and apparent trend towards open innovation. The survey furthermore focuses on the motives and perceived challenges when SMEs adopt open innovation practices. Within the survey, open innovation is measured with eight innovation practices reflecting technology exploration and exploitation in SMEs. We find that the responding SMEs engage in many open innovation practices and have increasingly adopted such practices during the past 7 years. In addition, we find no major differences between manufacturing and services industries, but medium-sized firms are on average more heavily involved in open innovation than their smaller counterparts. We furthermore find that SMEs pursue open innovation primarily for market-related motives such as meeting customer demands, or keeping up with competitors. Their most important challenges relate to organizational and cultural issues as a consequence of dealing with increased external contacts.