Template-Type: ReDIF-Article 1.0 Author-Name: Joseph C. Hartman Author-X-Name-First: Joseph C. Author-X-Name-Last: Hartman Author-Name: Chin Hon Tan Author-X-Name-First: Chin Hon Author-X-Name-Last: Tan Title: Equipment Replacement Analysis: A Literature Review and Directions for Future Research Abstract: Replacing equipment is an important decision that nearly all entities must face, generally motivated by rising operating and maintenance costs of current assets or the technological advances of available assets in the market. The problem has been studied for nearly a century. In this article, we survey single and multiple asset solution approaches under a variety of settings, including technological change, variable utilization, tax, and various uncertainties. Furthermore, we illustrate a number of open problems that are worthy of future study. Journal: The Engineering Economist Pages: 136-153 Issue: 2 Volume: 59 Year: 2014 Month: 4 X-DOI: 10.1080/0013791X.2013.862891 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.862891 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:2:p:136-153 Template-Type: ReDIF-Article 1.0 Author-Name: Xiang Wu Author-X-Name-First: Xiang Author-X-Name-Last: Wu Author-Name: Sarah M. Ryan Author-X-Name-First: Sarah M. Author-X-Name-Last: Ryan Title: Joint Optimization of Asset and Inventory Management in a Product–Service System Abstract: We propose an integrated model of the asset management decisions for a fleet of identical product units and the inventory management decisions for a closed-loop supply chain in the context of a product–service system, in which the two types of decisions are closely coupled. A joint optimization technique is developed to obtain the parameters of the operational policy for the integrated model that minimize the long run average cost rate. A numerical example is provided to illustrate the computational procedures. In addition, the effect of a simplifying assumption that the replaced products have no quality difference is evaluated and the results suggest that as long as the quality difference between the preventively replaced products and failure replaced products is not too big, the simplification to treat them as one category is reasonable. Journal: The Engineering Economist Pages: 91-115 Issue: 2 Volume: 59 Year: 2014 Month: 4 X-DOI: 10.1080/0013791X.2013.873844 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.873844 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:2:p:91-115 Template-Type: ReDIF-Article 1.0 Author-Name: Stephan A. Trusevych Author-X-Name-First: Stephan A. Author-X-Name-Last: Trusevych Author-Name: Roy H. Kwon Author-X-Name-First: Roy H. Author-X-Name-Last: Kwon Author-Name: Andrew K. S. Jardine Author-X-Name-First: Andrew K. S. Author-X-Name-Last: Jardine Title: Optimizing Critical Spare Parts and Location Based on the Conditional Value-At-Risk Criterion Abstract: This article considers the problem of managing the risks associated with random equipment failures by optimizing decisions regarding the quantity and placement of critical spares over a network of related industrial sites. To develop the model and provide a practical example, we focus on the allocation of electrical transformer spares for a large-scale industrial producer, such as a mining company or chemical manufacturer, operating several different sites across a geographic region. In particular, we consider the risk of financial loss due to interrupted business and lost production following an unexpected transformer failure. A two-stage stochastic integer programming model with a conditional value-at-risk (CVaR) criterion to incorporate risk aversion is developed. Computational results are presented to illustrate the advantages of the CVaR approach compared to a corresponding expected cost minimization approach. The CVaR model results in policies that have lower loss than the corresponding risk neutral model since, at sufficiently high risk aversion levels, the CVaR model introduces the acquisition of more spares as a hedge against catastrophic scenarios. Journal: The Engineering Economist Pages: 116-135 Issue: 2 Volume: 59 Year: 2014 Month: 4 X-DOI: 10.1080/0013791X.2013.876795 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.876795 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:2:p:116-135 Template-Type: ReDIF-Article 1.0 Author-Name: Wenbo Shi Author-X-Name-First: Wenbo Author-X-Name-Last: Shi Author-Name: K. Jo Min Author-X-Name-First: K. Jo Author-X-Name-Last: Min Title: Product Remanufacturing and Replacement Decisions Under Operations and Maintenance Cost Uncertainties Abstract: In recent years, there has been substantial interest in remanufacturing because it conserves new natural resources and reduces wastes. In this article, we aim to contribute to a deeper understanding of this remanufacturing in the context of maintenance and replacement policies. Specifically, we assume that a product consists of durable and nondurable parts with uncertain, yet different, operations and maintenance (O&M) costs, and we aim to determine the optimal remanufacturing and replacement policies for the nondurable parts and the product. The evolution of the O&M costs is assumed to follow a geometric Brownian motion process, and the corresponding modeling and analysis use a real options approach. Managerial insights and economic implications are obtained via mathematical and numerical analyses. Journal: The Engineering Economist Pages: 154-174 Issue: 2 Volume: 59 Year: 2014 Month: 4 X-DOI: 10.1080/0013791X.2014.884662 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.884662 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:2:p:154-174 Template-Type: ReDIF-Article 1.0 Author-Name: Andrew K. S. Jardine Author-X-Name-First: Andrew K. S. Author-X-Name-Last: Jardine Title: Introduction: Special Issue on Engineering Economics in Reliability, Replacement and Maintenance, Part 1 Journal: The Engineering Economist Pages: 89-90 Issue: 2 Volume: 59 Year: 2014 Month: 4 X-DOI: 10.1080/0013791X.2014.912459 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.912459 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:2:p:89-90 Template-Type: ReDIF-Article 1.0 Author-Name: L. Jennergren Author-X-Name-First: L. Author-X-Name-Last: Jennergren Title: Technical Note: Value Driver Formulas for Continuing Value in Firm Valuation by the Discounted Cash Flow Model Abstract: A team from McKinsey (Koller et al. 2010) recommended the value driver formula for continuing value. The idea is as follows: The company is almost in a steady state. However, the existing operations and the subsequent ones, referred to as growth projects, can be somewhat different. That is, the return on new invested capital (RONIC; refers to growth projects) can be lower than the return on invested capital (ROIC; refers to existing operations). Two weaknesses are associated with the McKinsey formula. Firstly, the only permissible case of RONIC < ROIC is where the working capital requirement is different between the growth projects and the existing operations. The usual Gordon formula then gives the same result, so the McKinsey formula is not necessary. Secondly, the implied split into existing operations and growth projects means that the former are valued under the unreasonable assumption of zero inflation. A more significant extended value driver formula is derived that rectifies these weaknesses. Journal: The Engineering Economist Pages: 59-70 Issue: 1 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.729876 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729876 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:1:p:59-70 Template-Type: ReDIF-Article 1.0 Author-Name: György Andor Author-X-Name-First: György Author-X-Name-Last: Andor Author-Name: Marcell Dülk Author-X-Name-First: Marcell Author-X-Name-Last: Dülk Title: Harmonic Mean as an Approximation for Discounting Intraperiod Cash Flows Abstract: We examine the possible errors of various present value approximations that center on the widely used end-of-period convention in cases of intraperiod cash flows. We suggest a new formula for adjusting the end-of-period present value based on the harmonic mean of the end-of-period and beginning-of-period present values. This approximation minimizes the maximum possible error in general. We give useful nomograms for several cash flow patterns to assess and correct for the errors of the different approximation methods. We find that the harmonic approximation has acceptable errors for most of these patterns. The findings are illustrated in a realistic example. Journal: The Engineering Economist Pages: 3-18 Issue: 1 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.742607 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.742607 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:1:p:3-18 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel Donkor Author-X-Name-First: Emmanuel Author-X-Name-Last: Donkor Author-Name: Michael Duffey Author-X-Name-First: Michael Author-X-Name-Last: Duffey Title: Optimal Capital Structure and Financial Risk of Project Finance Investments: A Simulation Optimization Model With Chance Constraints Abstract: We investigate the use of chance constraints in modeling the debt financing decision under conditions of debt heterogeneity and uncertainty. We develop a stochastic financial model that uses simulation optimization to select an optimal mix of fixed-rate debt instruments from different sources, with the objective of maximizing net present value (NPV) while limiting default risk. We then use simulation to evaluate the performance of the resulting debt policy. Numerical results from our model indicate that in a world of uncertainty, project promoters who wish to create bankable proposals for project financing, by limiting the probability of default, should spread debt across different maturities. Journal: The Engineering Economist Pages: 19-34 Issue: 1 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.742948 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.742948 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:1:p:19-34 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Kaiser Author-X-Name-First: Mark Author-X-Name-Last: Kaiser Author-Name: Brian Snyder Author-X-Name-First: Brian Author-X-Name-Last: Snyder Title: Capital Investment and Operational Decision Making in the Offshore Drilling Industry Abstract: Drilling contractors new build or idle rigs based on market conditions and business strategies. In theory, contractors invest in new building when the expected net present value of adding a rig to the fleet is positive, and idle capacity when the costs of operation are expected to exceed the costs of idling. We developed models of capacity decision making in the offshore contract drilling industry and found that high combinations of day rates and utilization are required to justify new build investment and that idling capacity may be preferred even if daily operating costs exceed daily revenue. Journal: The Engineering Economist Pages: 35-58 Issue: 1 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.758331 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.758331 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:1:p:35-58 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Special Issue Call for Papers: “Engineering Economics in Reliability, Replacement, and Maintenance†Journal: The Engineering Economist Pages: 71-72 Issue: 1 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.773246 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.773246 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:1:p:71-72 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas Boucher Author-X-Name-First: Thomas Author-X-Name-Last: Boucher Title: Letter from the Editor Journal: The Engineering Economist Pages: 1-2 Issue: 1 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.773247 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.773247 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:1:p:1-2 Template-Type: ReDIF-Article 1.0 Author-Name: Sergio Franklin Author-X-Name-First: Sergio Author-X-Name-Last: Franklin Author-Name: Madiagne Diallo Author-X-Name-First: Madiagne Author-X-Name-Last: Diallo Title: Valuing Real Options for Network Investment Decisions and Cost-Based Access Pricing Abstract: In this article, we propose a model and methodology for valuing the option to delay network investment decisions and calculating cost-based access prices. We model the value of the option to invest in each network element as a function of two stochastic variables: the flow of total variable profit from the service provided by the network element and the cost of new investment in that network element. We calculate the option value multiple to be applied to the investment cost component of three main network elements, conduct sensitivity analyses, and highlight key findings. Journal: The Engineering Economist Pages: 223-246 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729874 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729874 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:223-246 Template-Type: ReDIF-Article 1.0 Author-Name: Hsin-Ting Su Author-X-Name-First: Hsin-Ting Author-X-Name-Last: Su Author-Name: Yeou-Koung Tung Author-X-Name-First: Yeou-Koung Author-X-Name-Last: Tung Title: Minimax Expected Opportunity Loss: A New Criterion for Risk-Based Decision Making Abstract: A risk measure, expected opportunity loss (EOL), is introduced to quantify the potential loss of making an incorrect choice in risk-based decision making. Different from Savage's (1951) minimax regret principle, EOL can account for the unbounded continuous random outcomes of alternatives and decision makers’ acceptable risk. This article studies the effects of the forms of loss function, correlation among outcomes, and the acceptable risk on the ranking results by considering the loss function in the power form. The results show that the loss functions and the outcomes correlations can significantly influence the rankings of alternatives in risk-based decision making. Journal: The Engineering Economist Pages: 247-273 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729875 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729875 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:247-273 Template-Type: ReDIF-Article 1.0 Author-Name: Qing Cao Author-X-Name-First: Qing Author-X-Name-Last: Cao Author-Name: Vicky Gu Author-X-Name-First: Vicky Author-X-Name-Last: Gu Author-Name: Mark Thompson Author-X-Name-First: Mark Author-X-Name-Last: Thompson Title: Using Complexity Measures to Evaluate Software Development Projects: A Nonparametric Approach Abstract: In this article, we use newly developed complexity metrics for software development projects that are more useful than traditional measures such as lines of code and functional points. Next, we present an approach to assessing the relative efficiency of software projects using these complexity measures as outputs. Due to the nature of the complexity measures, the constant returns to scale assumption often used in data envelopment analysis (DEA) is not appropriate. We relax this assumption and estimate the DEA model assuming variable returns to scale. This two-step approach provides project managers with a decision support tool to assess project productivity, categorize projects, and evaluate critical success/failure factors in software development projects. Journal: The Engineering Economist Pages: 274-283 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729878 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729878 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:274-283 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph Hartman Author-X-Name-First: Joseph Author-X-Name-Last: Hartman Title: Letter from The Editor Journal: The Engineering Economist Pages: 221-222 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729943 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729943 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:221-222 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: ASEE Engineering Economy Division Annual Business Meeting Minutes Journal: The Engineering Economist Pages: 302-305 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729944 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729944 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:302-305 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: IIE Engineering Economy Division 2012 Town Hall Minutes Journal: The Engineering Economist Pages: 306-307 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729945 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729945 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:306-307 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call For Wellington Award Nominations Journal: The Engineering Economist Pages: 308-309 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729947 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729947 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:308-309 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board EOV Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.729949 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.729949 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Nicholas Leifker Author-X-Name-First: Nicholas Author-X-Name-Last: Leifker Author-Name: Philip Jones Author-X-Name-First: Philip Author-X-Name-Last: Jones Author-Name: Timothy Lowe Author-X-Name-First: Timothy Author-X-Name-Last: Lowe Title: A Continuous-Time Examination of End-of-Life Parts Acquisition With Limited Customer Information Abstract: Manufacturers often encounter difficulties in supplying an adequate number of spare parts for a product that is in its post-production phase. Current solution methods for optimal spare part order amounts use assumptions that require knowledge of the number of products in operation at any time t. In the business situation presented here, the manufacturer only has knowledge of the part and product failure rates and a probability distribution on the number of products still in operation; unless the manufacturer and customer have a close working relationship, it is likely that this information is all that the manufacturer will have available in a typical business environment. We model time-discounted revenues and costs as a function of the spare parts order amount. We consider two different versions of the problem—incremental replenishment and no replenishment—that operate by determining the rate of change of the total profit with respect to the order amount q. Journal: The Engineering Economist Pages: 284-301 Issue: 4 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.733488 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.733488 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:4:p:284-301 Template-Type: ReDIF-Article 1.0 Author-Name: Pedro Godinho Author-X-Name-First: Pedro Author-X-Name-Last: Godinho Title: Simulation-based estimation of state-dependent project volatility Abstract: Project volatility is an essential parameter for real options analysis, and it may also be useful for risk analysis. Many volatility estimation procedures only consider the volatility in the first year of the project. Others consider that different years may have different values of the project volatility. This article takes into account that volatility may change not only with time but also with the state of the project. Two possible definitions for the project volatility are considered, the log-variance and the variance of the project value, and two simulation-based procedures are proposed for estimating state-dependent volatility: two-level simulation and one-and-a-half-level simulation. Computational experiments show that both procedures perform better than the method proposed by Copeland and Antikarov and that the one-and-a-half-level simulation procedure leads to the most accurate estimations of project volatility. Journal: The Engineering Economist Pages: 188-216 Issue: 3 Volume: 63 Year: 2018 Month: 7 X-DOI: 10.1080/0013791X.2017.1384523 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1384523 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:3:p:188-216 Template-Type: ReDIF-Article 1.0 Author-Name: Morris G. Danielson Author-X-Name-First: Morris G. Author-X-Name-Last: Danielson Title: Double vision: Insights about the origin and interpretation of multiple IRRs Abstract: The ability of a project's internal rate of return (IRR) to quantify its economic return has been questioned by many scholars over the past 60 years, most recently by Magni (2010, 2013). Although IRR is a plausible—albeit imperfect—measure of a project's economic return when the cash flow stream is conventional, IRR can be an untenable measure of an unconventional project's economic return. The goal of this article is to identify a simple, intuitive explanation of IRR, one that can be applied to any cash flow pattern. To do this, the article shows how a project's IRR systematically changes when it first crosses from the conventional into the unconventional realm (i.e., a small cash outflow is appended to a conventional cash flow stream) and then as it becomes progressively more unconventional. This process reveals that the most robust economic interpretation of IRR—for both conventional and unconventional projects—is that a project's IRRs are external benchmarks that divide the set of all plausible discount rates into positive and negative net present value (NPV) ranges, rather than internally generated returns. Because it can be difficult to estimate a project's cost of capital with precision, this information can help guide the sensitivity analysis of a project. Journal: The Engineering Economist Pages: 217-235 Issue: 3 Volume: 63 Year: 2018 Month: 7 X-DOI: 10.1080/0013791X.2017.1391361 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1391361 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:3:p:217-235 Template-Type: ReDIF-Article 1.0 Author-Name: SingRu Hoe Author-X-Name-First: SingRu Author-X-Name-Last: Hoe Author-Name: Zhongfeng Yan Author-X-Name-First: Zhongfeng Author-X-Name-Last: Yan Author-Name: Alain Bensoussan Author-X-Name-First: Alain Author-X-Name-Last: Bensoussan Title: The impact of competitive advantage on the investment timing in Stackelberg leader–follower game Abstract: This short note clarifies how the Stackelberg leader’s competitive advantage after the follower’s entry affects the leader’s optimal market entry decision and Stackelberg strategic interactions under uncertainty. Although the Stackelberg leader’s first investment threshold remains constant and coincides with the monopolist’s investment trigger, his second (third) investment threshold, which defines the exit (entry) of the first (second) investment interval, increases with an increased competitive advantage. With an increased competitive advantage, the probability of sequential investment equilibrium (simultaneous investment equilibrium) increases (decreases) irrespective of the level of volatility. Moreover, for a given level of competitive advantage, an increase in the volatility tends to decrease (increase) the probability of simultaneous investment equilibrium (sequential investment equilibrium). For a richer set of results, endogenous firm roles are examined and analyzed as well. The leader’s preemptive threshold is negatively affected by his competitive advantage. Journal: The Engineering Economist Pages: 236-249 Issue: 3 Volume: 63 Year: 2018 Month: 7 X-DOI: 10.1080/0013791X.2017.1399186 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1399186 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:3:p:236-249 Template-Type: ReDIF-Article 1.0 Author-Name: Mathieu Sauvageau Author-X-Name-First: Mathieu Author-X-Name-Last: Sauvageau Author-Name: Mustafa Kumral Author-X-Name-First: Mustafa Author-X-Name-Last: Kumral Title: Cash flow at risk valuation of mining project using Monte Carlo simulations with stochastic processes calibrated on historical data Abstract: Mining projects are subject to multiple sources of market uncertainties such as metal price, exchange rates, and their volatilities. Assessing a mining project's exposure to market risk usually requires Monte Carlo simulations to capture a range of probable outcomes. The probability of a major loss is extracted from the probability density function of simulated prices at a given time into the future. This article proposes an approach to calibrate the stochastic process to be used in Monte Carlo simulations. The simulations are then used for measuring the cash flow at risk of a mining project. To assess the performance of the proposed approach, a case study is conducted on a mining project. The results show that the calibration approach is robust and apt at fitting various stochastic processes to historical observations. Journal: The Engineering Economist Pages: 171-187 Issue: 3 Volume: 63 Year: 2018 Month: 7 X-DOI: 10.1080/0013791X.2017.1413150 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1413150 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:3:p:171-187 Template-Type: ReDIF-Article 1.0 Author-Name: Miguel RodrÃguez GarcÃa Author-X-Name-First: Miguel Author-X-Name-Last: RodrÃguez GarcÃa Author-Name: Pablo DomÃnguez Caamaño Author-X-Name-First: Pablo Author-X-Name-Last: DomÃnguez Caamaño Author-Name: José Antonio Comesaña Benavides Author-X-Name-First: José Antonio Author-X-Name-Last: Comesaña Benavides Author-Name: Jose Carlos Prado-Prado Author-X-Name-First: Jose Carlos Author-X-Name-Last: Prado-Prado Title: Designing a fair, financially sustainable pay rate for owner-operator truck drivers. Modeling and case study Abstract: Owner operator truck drivers have been dealing with a long-standing problem: compensation per distance. Owner operators who get paid according to these criteria get a fixed payment per distance traveled regardless of how long it takes to actually cover the distance. This means that there are numerous situations that truck drivers are working; yet they might be unpaid because the truck is not moving. To compensate for the unfairness of the pay rate models, owner operators have continuously increased their working hours. In addition, many studies have confirmed that a fair payment is among the most important factors that truck drivers take into consideration when deciding to leave a company. Consequently, an unfair pay rate, along with the hard labor conditions truck drivers suffer from, inevitably leads to high turnover rates. For all these reasons, our study aims at developing a fair, financially sustainable pay rate for owner operators that will help companies ensure a stable and highly experienced workforce by making sure that owner operators can cover the real expenses of their working activity. Finally, in order to prove that our pay rate was of practical use, we test the model on one of the largest Spanish agro-food companies. Journal: The Engineering Economist Pages: 250-272 Issue: 3 Volume: 63 Year: 2018 Month: 7 X-DOI: 10.1080/0013791X.2017.1414342 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1414342 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:3:p:250-272 Template-Type: ReDIF-Article 1.0 Author-Name: Cristina Matos Silva Author-X-Name-First: Cristina Author-X-Name-Last: Matos Silva Author-Name: Joana Serro Author-X-Name-First: Joana Author-X-Name-Last: Serro Author-Name: PatrÃcia Dinis Ferreira Author-X-Name-First: PatrÃcia Author-X-Name-Last: Dinis Ferreira Author-Name: Inês Teotónio Author-X-Name-First: Inês Author-X-Name-Last: Teotónio Title: The socioeconomic feasibility of greening rail stations: a case study in lisbon Abstract: Green roofs and living walls are considered effective solutions for improving the environmental integrity of urbanized areas and the overall performance of buildings. Proposals are emerging not just for buildings but also for existing transport infrastructures that have needs/problems that can be met or addressed by such solutions. However, the economic feasibility of such sustainable solutions has not yet been clarified. This study presents a methodological approach to performing cost–benefit analyses of greening urban transport infrastructures at the separate financial, economic, and socioenvironmental levels. Infrastructure, user, and environmental dimensions are also assessed. Whole life cycle costs and socioenvironmental benefits are considered together. The methodology is applied to one of the main stations in Lisbon, Portugal: Entrecampos Railway Station. Five different case study alternatives for the station’s retrofit with green infrastructures are compared to its current situation. The cost–benefit analysis demonstrated that all five greening alternatives are economically feasible. For a 50-year life cycle and a 3.36% discount rate, the net present value ranged between EUR 734,700 and EUR 7,733,279. A sensitivity analysis was also performed, revealing a high degree of influence of discount and inflation rates, recreation, aesthetics improvement, well-being, and the station noise reduction on the net present value, ranging from 1.5 to 9%. Journal: The Engineering Economist Pages: 167-190 Issue: 2 Volume: 64 Year: 2019 Month: 4 X-DOI: 10.1080/0013791X.2018.1470272 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1470272 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:2:p:167-190 Template-Type: ReDIF-Article 1.0 Author-Name: Taner Cokyasar Author-X-Name-First: Taner Author-X-Name-Last: Cokyasar Author-Name: Alberto Garcia-Diaz Author-X-Name-First: Alberto Author-X-Name-Last: Garcia-Diaz Author-Name: Mingzhou Jin Author-X-Name-First: Mingzhou Author-X-Name-Last: Jin Title: Optimization of size and timing of base salary increases Abstract: Salary administration research mostly examines the compensation guides in a subjective manner and lacks quantitative approaches. Recent failure instances of salary administration demonstrate the exiguity and/or inapplicability of scientific research in this area. This research considers the core aspects of theoretical salary administration while complying with the recent competitive working environment. In this article, a mathematical optimization approach that recognizes the significance of performance and potential to future promotions of employees is proposed to find the optimal salary increase amounts and to set an advantageous schedule for salary increases. The two objectives are combined with a weight, and a sensitivity analysis shows the impact of the weight on both objectives to provide managerial guidance. The resulting raise amounts satisfy both internal alignment and external competitiveness conditions and represent employee performance and potential for promotion. The proposed mixed integer programming problem can be solved with commercial solvers quickly, even for rather large instances. The short computational time directly addresses the challenge raised by the current trend that more enterprises hire a large number of exempt employees. Additionally, two cases are presented with detailed data collection to illustrate the applications and limitations of the proposed model. Journal: The Engineering Economist Pages: 97-115 Issue: 2 Volume: 64 Year: 2019 Month: 4 X-DOI: 10.1080/0013791X.2018.1528408 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1528408 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:2:p:97-115 Template-Type: ReDIF-Article 1.0 Author-Name: Nithin Saravana Marthandam Author-X-Name-First: Nithin Saravana Author-X-Name-Last: Marthandam Author-Name: Ean H. Ng Author-X-Name-First: Ean H. Author-X-Name-Last: Ng Author-Name: Javier Calvo-Amodio Author-X-Name-First: Javier Author-X-Name-Last: Calvo-Amodio Author-Name: Chinmay Narwankar Author-X-Name-First: Chinmay Author-X-Name-Last: Narwankar Author-Name: Luis A. Barroso Author-X-Name-First: Luis A. Author-X-Name-Last: Barroso Title: Validating a model for forecasting the project termination phase using existing business cases Abstract: Studies on project failure and its subsequent termination phase are scarce; studies that use a quantitative approach are almost nonexistent. This is most likely because organizations usually do not collect data on project failures, are unable to share such data, or a combination of both. The contribution of this article is twofold: to (1) showcase a methodology to validate a model using actual business cases and (2) validate a project termination phase forecast model (PTPFM) using the methodology. The model is validated through four business cases, comparing the results from the model to the decisions made in reality. Journal: The Engineering Economist Pages: 142-166 Issue: 2 Volume: 64 Year: 2019 Month: 4 X-DOI: 10.1080/0013791X.2018.1555299 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1555299 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:2:p:142-166 Template-Type: ReDIF-Article 1.0 Author-Name: Carlos Fernandes Author-X-Name-First: Carlos Author-X-Name-Last: Fernandes Author-Name: Carlos Oliveira Cruz Author-X-Name-First: Carlos Author-X-Name-Last: Oliveira Cruz Author-Name: Filipe Moura Author-X-Name-First: Filipe Author-X-Name-Last: Moura Title: Ex post evaluation of PPP government-led renegotiations: Impacts on the financing of road infrastructure Abstract: Renegotiations are often claimed to be the major pitfall in public–private partnership projects. In fact, the literature and empirical evidence suggest a bias toward favoring concessionaires, although there are well-known examples of harmful unilateral decisions by governments. This article establishes a distinction between structural renegotiations (with changes in the risk-sharing agreement) and nonstructural renegotiations (without shifting risk) and analyzes the implications of structural renegotiations in a road concession by comparing the ex ante and ex post financial implications for government, concessionaire, and users. The selected project is one that started as a shadow toll and was later changed to real toll. The analysis shows that the renegotiation essentially transferred costs to the users. The financial burden for the government decreased and the internal rate of return (IRR) of the concessionaire increased slightly although the overall risk profile of the concession decreased. The users supported a 40% higher cost, and the system gained an additional cost component (the electronic tolling system). Overall the global financial costs increased 40% when compared with the initial regime. The article also sets out some discussions and implications for policymakers. Journal: The Engineering Economist Pages: 116-141 Issue: 2 Volume: 64 Year: 2019 Month: 4 X-DOI: 10.1080/0013791X.2018.1559384 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1559384 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:2:p:116-141 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Correction Journal: The Engineering Economist Pages: 191-192 Issue: 2 Volume: 64 Year: 2019 Month: 4 X-DOI: 10.1080/0013791X.2019.1597240 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1597240 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:2:p:191-192 Template-Type: ReDIF-Article 1.0 Author-Name: Peter J. Barry Author-X-Name-First: Peter J. Author-X-Name-Last: Barry Author-Name: Lindon J. Robison Author-X-Name-First: Lindon J. Author-X-Name-Last: Robison Title: Technical Note: Economic Rates of Return and Investment Analysis Abstract: This article shows that a given series of single-period economic rates of return can be aggregated into either an economic average internal rate of return or a modified internal rate of return, depending upon the aggregation process (weighted average or geometric mean) and on the use of traditional economic depreciation to determine capital values for each time period. The results are shown analytically and numerically and evaluated under different levels of discount rates. The modified internal rate of return is also a form of the average internal rate of return based on the geometric mean, rather than the arithmetic mean. Journal: The Engineering Economist Pages: 231-236 Issue: 3 Volume: 59 Year: 2014 Month: 7 X-DOI: 10.1080/0013791X.2013.855857 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.855857 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:3:p:231-236 Template-Type: ReDIF-Article 1.0 Author-Name: Carlo Alberto Magni Author-X-Name-First: Carlo Alberto Author-X-Name-Last: Magni Title: Mathematical Analysis of Average Rates of Return and Investment Decisions: The Missing Link Abstract: This article expands Teichroew, Robichek, and Montalbano’s (TRM; 1965a, 1965b) rate-of-return model into a complete and general model of economic profitability for investment decision making. Specifically, TRM’s assumptions are relaxed and a project rate of return is derived, expressing the project’s overall economic profitability; direct relations among rates, costs of capital, and net present value are supplied. The various value drivers are identified and isolated, and the net present value (NPW) is decomposed into financing NPV and investment NPV. The approach allows for any pattern of financing rates, investment rates, and costs of capital. Relations with old literature and new literature on rates of return are shown: the link between them is obtained by making use of the mean operator (i.e., affine combinations of rates) and via the one-to-one correspondence between rates and invested capitals. Journal: The Engineering Economist Pages: 175-206 Issue: 3 Volume: 59 Year: 2014 Month: 7 X-DOI: 10.1080/0013791X.2014.881174 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.881174 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:3:p:175-206 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Teresa Bosch-Badia Author-X-Name-First: Maria Teresa Author-X-Name-Last: Bosch-Badia Author-Name: Joan Montllor-Serrats Author-X-Name-First: Joan Author-X-Name-Last: Montllor-Serrats Author-Name: Maria Antonia Tarrazon-Rodon Author-X-Name-First: Maria Antonia Author-X-Name-Last: Tarrazon-Rodon Title: Capital Budgeting and Shareholders’ Value: Investment Projects Versus Courses of Action Abstract: The relevance of corporate investment decisions lies in their impact on shareholder wealth. It not only depends on the investment project but also on the corporate dynamics that turns it into the sequence of shareholders’ capital contributions, dividends, and gross terminal value that constitutes the shareholders’ investment project (SIP). We develop a model to calculate the SIP cash flows and the values of its interim capitals following the average internal rate of return (AIRR) paradigm. The shareholders’ final value depends on two reinvestment rates that, respectively, capture the returns obtained by the retained cash flows and the dividends reinvested by shareholders. On this basis, we approach the analysis of value creation combining both reinvestment rates in the shareholders’ net present value (SNPV). This model enables us to obtain the AIRR of the SIP and a variant of it, the equity growth rate that embeds the impact of internal and external reinvestment on the shareholders’ final value. Journal: The Engineering Economist Pages: 207-230 Issue: 3 Volume: 59 Year: 2014 Month: 7 X-DOI: 10.1080/0013791X.2014.910719 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.910719 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:3:p:207-230 Template-Type: ReDIF-Article 1.0 Author-Name: Francisco Hawas Author-X-Name-First: Francisco Author-X-Name-Last: Hawas Author-Name: Arturo Cifuentes Author-X-Name-First: Arturo Author-X-Name-Last: Cifuentes Title: Valuation of projects with minimum revenue guarantees: A Gaussian copula–based simulation approach Abstract: This technical note presents a numerical simulation technique to perform valuations of infrastructure projects with minimum revenue guarantees (MRG). It is assumed that the project cash flows—in the absence of the MRG—can be described in a probabilistic fashion by means of a very general multivariate distribution function. Then, the Gaussian copula (a numerical algorithm to generate vectors according to a prespecified probabilistic characterization) is used in combination with the MRG condition to generate a set of plausible cash flow vectors. These vectors form the basis of a Monte Carlo simulation that offers two important advantages: it is easy to implement and it makes no restrictive assumptions regarding the evolution of the cash flows over time. Thus, one can estimate the distribution of a broad set of metrics (net present value, internal rate of return, payback periods, etc.). Additionally, the method does not have any of the typical limitations of real options–based approaches, namely, cash flows that follow a Brownian motion or some specific diffusion process or whose volatility needs to be constant. The usefulness of the proposed approach is demonstrated with a simple example. Journal: The Engineering Economist Pages: 90-102 Issue: 1 Volume: 62 Year: 2017 Month: 1 X-DOI: 10.1080/0013791X.2016.1153178 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1153178 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:1:p:90-102 Template-Type: ReDIF-Article 1.0 Author-Name: Furkan Oztanriseven Author-X-Name-First: Furkan Author-X-Name-Last: Oztanriseven Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Economic impact analysis of inland waterway disruption response Abstract: Navigable inland waterways connect inland ports with the global supply chain by providing a low-cost, reliable, and environmentally friendly freight transportation mode. In this article, we present the results from a simulation-based approach that estimates the potential economic impacts of inland waterway disruption response. Predicting economic impacts of inland waterway disruption response enables system stakeholders to increase their preparedness and potentially reduce economic losses. Our approach is implemented on an illustrative case study of the McClellan–Kerr Arkansas River Navigation System. The approach is generalizable to navigable inland waterways throughout the United States to support economic resilience of these systems. Journal: The Engineering Economist Pages: 73-89 Issue: 1 Volume: 62 Year: 2017 Month: 1 X-DOI: 10.1080/0013791X.2016.1163627 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1163627 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:1:p:73-89 Template-Type: ReDIF-Article 1.0 Author-Name: Jyrki Savolainen Author-X-Name-First: Jyrki Author-X-Name-Last: Savolainen Author-Name: Mikael Collan Author-X-Name-First: Mikael Author-X-Name-Last: Collan Author-Name: Pasi Luukka Author-X-Name-First: Pasi Author-X-Name-Last: Luukka Title: Analyzing operational real options in metal mining investments with a system dynamic model Abstract: This article presents a detailed system dynamic (SD) model of a metal mining investment that is usable in ex-ante profitability and operations management analysis. We show how the SD model can be used to analyze the profitability effect of three operational real options: the option to temporarily close production, the option to abandon production, and the option to increase production through cutoff grade change. The SD model allows for intuitive modeling of the multiple interactive real options and arriving at results that are difficult, or impossible, to reach with commonly used spreadsheet software. We also analyze the effect of mining project debt ratio to the project value and show that correctly choosing the debt ratio affects project profitability. The effect on the project value of using three different future metal price scenarios with two different stochastic processes is illustrated to highlight the importance of correct process selection in modeling future metal price paths. A realistic case of a high-cost nickel (Ni) metal mine is used as a basis for the presented numerical illustration of the model. Journal: The Engineering Economist Pages: 54-72 Issue: 1 Volume: 62 Year: 2017 Month: 1 X-DOI: 10.1080/0013791X.2016.1167988 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1167988 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:1:p:54-72 Template-Type: ReDIF-Article 1.0 Author-Name: Kemal Subulan Author-X-Name-First: Kemal Author-X-Name-Last: Subulan Author-Name: Adil BaykasoÄŸlu Author-X-Name-First: Adil Author-X-Name-Last: BaykasoÄŸlu Author-Name: Derya Eren Akyol Author-X-Name-First: Derya Eren Author-X-Name-Last: Akyol Author-Name: Gokalp Yildiz Author-X-Name-First: Gokalp Author-X-Name-Last: Yildiz Title: Metaheuristic-based simulation optimization approach to network revenue management with an improved self-adjusting bid price function Abstract: Making accurate accept/reject decisions on dynamically arriving customer requests for different combinations of resources is a challenging task under uncertainty of competitors' pricing strategies. Because customer demand may be affected by a competitor's pricing action, changes in customer interarrival times should also be considered in capacity control procedures. In this article, a simulation model is developed for a bid price–based capacity control problem of an airline network revenue management system by considering the uncertain nature of booking cancellations and competitors' pricing strategy. An improved bid price function is proposed by considering competitors' different pricing scenarios that occur with different probabilities and their effects on the customers' demands. The classical deterministic linear program (DLP) is reformulated to determine the initial base bid prices that are utilized as control parameters in the proposed self-adjusting bid price function. Furthermore, a simulation optimization approach is applied in order to determine the appropriate values of the coefficients in the bid price function. Different evolutionary computation techniques such as differential evolution (DE), particle swarm optimization (PSO), and seeker optimization algorithm (SOA), are utilized to determine these coefficients along with comparisons. The computational experiments show that promising results can be obtained by making use of the proposed metaheuristic-based simulation optimization approach. Journal: The Engineering Economist Pages: 3-32 Issue: 1 Volume: 62 Year: 2017 Month: 1 X-DOI: 10.1080/0013791X.2016.1174323 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1174323 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:1:p:3-32 Template-Type: ReDIF-Article 1.0 Author-Name: Guilherme Augusto Barucke Marcondes Author-X-Name-First: Guilherme Augusto Author-X-Name-Last: Barucke Marcondes Author-Name: Rafael Coradi Leme Author-X-Name-First: Rafael Coradi Author-X-Name-Last: Leme Author-Name: Marcela da Silveira Leme Author-X-Name-First: Marcela da Silveira Author-X-Name-Last: Leme Author-Name: Carlos Eduardo Sanches da Silva Author-X-Name-First: Carlos Eduardo Author-X-Name-Last: Sanches da Silva Title: Using mean-Gini and stochastic dominance to choose project portfolios with parameter uncertainty Abstract: Although a variety of models have been studied for project portfolio selection, many organizations still struggle to choose a potentially diverse range of projects while ensuring the most beneficial results. The use of the mean-Gini framework and stochastic dominance to select portfolios of research and development (R&D) projects has been gaining attention in the literature despite the fact that such approaches do not consider uncertainty regarding the projects’ parameters. This article discusses, with relation to project portfolio selection through a mean-Gini approach and stochastic dominance, the impact of uncertainty on project parameters. In the process, Monte Carlo simulation is considered in evaluating the impact of parametric uncertainty on project selection. The results show that the influence of uncertainty is significant enough to mislead managers. A more robust selection policy using the mean-Gini approach and Monte Carlo simulation is proposed. Journal: The Engineering Economist Pages: 33-53 Issue: 1 Volume: 62 Year: 2017 Month: 1 X-DOI: 10.1080/0013791X.2016.1176283 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1176283 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:1:p:33-53 Template-Type: ReDIF-Article 1.0 Author-Name: Sarah M. Ryan Author-X-Name-First: Sarah M. Author-X-Name-Last: Ryan Title: Letter from the editor Journal: The Engineering Economist Pages: 1-2 Issue: 1 Volume: 62 Year: 2017 Month: 1 X-DOI: 10.1080/0013791X.2017.1288506 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1288506 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:1:p:1-2 Template-Type: ReDIF-Article 1.0 Author-Name: Sung Woo Kang Author-X-Name-First: Sung Woo Author-X-Name-Last: Kang Author-Name: Conrad S. Tucker Author-X-Name-First: Conrad S. Author-X-Name-Last: Tucker Title: Exploring the correlation between new function attributes mined from different product domains and market sales Abstract: In order to satisfy various market needs and remain competitive in the marketplace, high-technology industries create cross-domain products that are differentiated from current product designs by integrating new function attributes from multiple product domains. However, given the vast number of candidate function attributes to select from, there is a fundamental challenge when searching for the appropriate function attributes to include in next-generation products. This work quantifies the semantic similarities between descriptive design requirements and function attributes in order to identify new function attributes that have the highest similarity to each requirement. This work hypothesizes that there is a correlation between these new function attributes and increased product sales. The case study presented in this work tests this hypothesis in the mechanical transmission systems domain. This work analyzes the impacts of products that contain different function attributes on actual product sales in the market. Transmission system function attributes and product sales data, including new electronic gear shifting systems from Shimano's bicycle division, are introduced in the case study. This case study reveals that the function attributes predicted by the method increase the market sales of next-generation products. Journal: The Engineering Economist Pages: 113-142 Issue: 2 Volume: 63 Year: 2018 Month: 4 X-DOI: 10.1080/0013791X.2017.1314567 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1314567 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:2:p:113-142 Template-Type: ReDIF-Article 1.0 Author-Name: Yuchen Li Author-X-Name-First: Yuchen Author-X-Name-Last: Li Author-Name: Yada Zhu Author-X-Name-First: Yada Author-X-Name-Last: Zhu Author-Name: Thomas O. Boucher Author-X-Name-First: Thomas O. Author-X-Name-Last: Boucher Title: Modeling the firm's response to research & development tax credit policies Abstract: In this article, we develop a microeconomic model of normative firm behavior under the incentive of a research and development (R&D) tax credit. The model is based on the well-known concept of a two-factor learning model in which R&D expenditures and manufacturing capacity expansion are the principle determinants of cost reduction in a new technology product. We distinguish between the behavior of start-up firms and ongoing firms and study the potential impacts of progressively larger R&D tax credits. We find highly significant differences in the potential impact of the credit on start-up firms versus ongoing firms. We also find that the credit can significantly impact optimal product pricing of the technology when introduced into the marketplace. We examine the implications of this latter fact on the overall social cost of the R&D tax credit. Journal: The Engineering Economist Pages: 91-112 Issue: 2 Volume: 63 Year: 2018 Month: 4 X-DOI: 10.1080/0013791X.2017.1319001 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1319001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:2:p:91-112 Template-Type: ReDIF-Article 1.0 Author-Name: James Rutherford Cuthbert Author-X-Name-First: James Rutherford Author-X-Name-Last: Cuthbert Title: Partitioning transaction vectors into pure investments Abstract: A pure investment is defined here as any transaction where the invested capital is nonnegative at all times during the life of the transaction. This article proves that any transaction whose first non-zero term is negative can be uniquely partitioned into pure investments with strictly decreasing internal rates of return (IRRs). The IRRs of the partitioning transactions put bounds on the IRRs of the original transaction. The partitioning theorem gives a simple characterisation of Arrow/Levhari's results on the optimal truncation of a transaction. The partitioning theorem also has applications to the problem of the optimal time for an investor to sell the remaining terms in a transaction. Journal: The Engineering Economist Pages: 143-152 Issue: 2 Volume: 63 Year: 2018 Month: 4 X-DOI: 10.1080/0013791X.2017.1326545 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1326545 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:2:p:143-152 Template-Type: ReDIF-Article 1.0 Author-Name: Jessica Lima e Silva Author-X-Name-First: Jessica Lima e Author-X-Name-Last: Silva Author-Name: Vinicius Amorim Sobreiro Author-X-Name-First: Vinicius Amorim Author-X-Name-Last: Sobreiro Author-Name: Herbert Kimura Author-X-Name-First: Herbert Author-X-Name-Last: Kimura Title: Prepurchase financing pool: Revealing the IRR problem Abstract: Internal rate of return (IRR) is one of the most common and important indicators in investment analysis because it is often used by managers and practitioners as a decision-making criterion. Moreover, the IRR reflects the financial cost in financing decisions and it helps to answer the following question when comparing different financing alternatives: “Which loan is the cheapest?†Among the different types of loans in Brazil, there is a financial product called a prepurchase financing pool (PPFP) that is generally regarded as the best option for financing or loans. The objective of this article is to use the prepurchase financing pool to show the flaws of IRR in financial analysis. In particular, when IRR is used to evaluate the prepurchase financing pool, one finds problems of reliability regarding (i) existence, (ii) uniqueness, and (iii) economic interpretation of the rate. The results show that the prepurchase financing pool is relevant evidence that the IRR flaws are found in financial products. Journal: The Engineering Economist Pages: 158-170 Issue: 2 Volume: 63 Year: 2018 Month: 4 X-DOI: 10.1080/0013791X.2017.1333662 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1333662 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:2:p:158-170 Template-Type: ReDIF-Article 1.0 Author-Name: Bradley C. Boehmke Author-X-Name-First: Bradley C. Author-X-Name-Last: Boehmke Author-Name: Alan W. Johnson Author-X-Name-First: Alan W. Author-X-Name-Last: Johnson Author-Name: Edward D. White Author-X-Name-First: Edward D. Author-X-Name-Last: White Author-Name: Jeffery D. Weir Author-X-Name-First: Jeffery D. Author-X-Name-Last: Weir Author-Name: Mark A. Gallagher Author-X-Name-First: Mark A. Author-X-Name-Last: Gallagher Title: The influence of operational resources and activities on indirect personnel costs: A multilevel modeling approach Abstract: Indirect activities often represent an underemphasized, yet significant, contributing source of costs for organizations. In order to manage indirect costs, organizations must understand how these costs behave relative to changes in operational resources and activities. This is of particular interest to the Air Force and its sister services, because recent and projected reductions in defense spending are forcing reductions in their operational variables, and insufficient research exists to help them understand how this may influence indirect costs. Furthermore, although academic research on indirect costs has advanced the knowledge behind the modeling and behavior of indirect costs, significant gaps in the literature remain. Our research provides important and timely advances to the indirect cost literature. First, our research disaggregates the indirect cost pool and focuses on indirect personnel costs, which represent 33% of all Air Force indirect costs and are a leading source of indirect costs in many organizations. Second, we employ a multilevel modeling approach to capture the hierarchical nature of an enterprise, allowing us to assess the influence that each level of an organization has on indirect cost behavior and relationships. Third, we identify the operational variables that influence indirect personnel costs in the Air Force enterprise, providing Air Force decision-makers with evidence-based knowledge to inform decisions regarding budget reduction strategies. Journal: The Engineering Economist Pages: 289-312 Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1155247 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1155247 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:289-312 Template-Type: ReDIF-Article 1.0 Author-Name: David G. Carmichael Author-X-Name-First: David G. Author-X-Name-Last: Carmichael Title: A cash flow view of real options Abstract: This article gives a cash flow view of real options in distinction from the majority of the literature on real options. Via a cash flow view, the article shows that real options can fit within conventional engineering investment analysis, in particular the usual discounted cash flow analysis familiar to most engineers, and there is no need to go looking for answers to real options problems in other disciplines. No mathematical sophistication is needed in order to understand the approach. All real options problems can be reduced to one plain option approach or, in the case of compound options, to a collection of plain options. There is no need to distinguish option type; for example, between expand or contract. Journal: The Engineering Economist Pages: 265-288 Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1157661 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1157661 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:265-288 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award nominations Journal: The Engineering Economist Pages: 322-322 Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1243384 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1243384 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:322-322 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: IISE Engineering Economy Division 2016 town hall meeting minutes Journal: The Engineering Economist Pages: 319-321 Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1243870 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1243870 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:319-321 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: ASEE Engineering Economy Division 2016 business meeting minutes Journal: The Engineering Economist Pages: 313-318 Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1245054 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1245054 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:313-318 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board EOV Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1253358 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1253358 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Thomas O. Boucher Author-X-Name-First: Thomas O. Author-X-Name-Last: Boucher Title: Letter from the editor Journal: The Engineering Economist Pages: 263-264 Issue: 4 Volume: 61 Year: 2016 Month: 10 X-DOI: 10.1080/0013791X.2016.1253975 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1253975 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:4:p:263-264 Template-Type: ReDIF-Article 1.0 Author-Name: Saurabh Bansal Author-X-Name-First: Saurabh Author-X-Name-Last: Bansal Author-Name: Dessislava Pachamanova Author-X-Name-First: Dessislava Author-X-Name-Last: Pachamanova Title: Special Issue on Nonconvex Portfolio Optimization Journal: The Engineering Economist Pages: 193-195 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1636177 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1636177 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:193-195 Template-Type: ReDIF-Article 1.0 Author-Name: Yerin Kim Author-X-Name-First: Yerin Author-X-Name-Last: Kim Author-Name: Daemook Kang Author-X-Name-First: Daemook Author-X-Name-Last: Kang Author-Name: Mingoo Jeon Author-X-Name-First: Mingoo Author-X-Name-Last: Jeon Author-Name: Chungmok Lee Author-X-Name-First: Chungmok Author-X-Name-Last: Lee Title: GAN-MP hybrid heuristic algorithm for non-convex portfolio optimization problem Abstract: During recent decades, the traditional Markowitz model has been extended for asset cardinality, active share, and tracking-error constraints, which were introduced to overcome the drawbacks of the original Markowitz model. The resulting optimization problems, however, are often very difficult to solve, whereas those of the original Markowitz model are easily solvable. In order to resolve the portfolio optimization problem for the new extensions, we developed a novel heuristic algorithm that combines GAN (Generative Adversarial Networks) with mathematical programming: the GAN-MP hybrid heuristic algorithm. To the best of our knowledge, this is the first attempt to bridge neural networks (NN) and mathematical programming to tackle a real-world portfolio optimization problem. Computational experiments with real-life stock data show that our algorithm significantly outperforms the existing non-linear optimization solvers. Journal: The Engineering Economist Pages: 196-226 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1620391 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1620391 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:196-226 Template-Type: ReDIF-Article 1.0 Author-Name: O. Strub Author-X-Name-First: O. Author-X-Name-Last: Strub Author-Name: S. Brandinu Author-X-Name-First: S. Author-X-Name-Last: Brandinu Author-Name: D. Lerch Author-X-Name-First: D. Author-X-Name-Last: Lerch Author-Name: J. Schaller Author-X-Name-First: J. Author-X-Name-Last: Schaller Author-Name: N. Trautmann Author-X-Name-First: N. Author-X-Name-Last: Trautmann Title: A Three-phase Approach to an Enhanced Index-tracking Problem with Real-life Constraints Abstract: Enhanced index tracking is an emerging strategy for investing money in the stock market and is aimed at achieving outperformance over a given benchmark index while achieving a low tracking error. We consider the problem of rebalancing a portfolio for an enhanced index tracking strategy subject to various real-life constraints, including a lower bound and an upper bound on the expected tracking error. To solve this problem, we propose a three-phase approach consisting of preprocessing, optimization, and learning. In a computational experiment, we applied this approach to rebalance a given portfolio on a monthly basis over a time horizon of 10 years; the data for the S&P 500 benchmark index were provided by the investment company Principal Global Investors. Our approach generated portfolios that were provably close to optimality for all monthly rebalancing decisions. Over the entire horizon of 10 years, the portfolios devised by our approach yielded cumulative returns higher than the S&P 500 index after transaction costs with a moderate tracking error. Journal: The Engineering Economist Pages: 227-253 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1619887 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1619887 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:227-253 Template-Type: ReDIF-Article 1.0 Author-Name: Andrijana BaÄević Author-X-Name-First: Andrijana Author-X-Name-Last: BaÄević Author-Name: Nemanja Vilimonović Author-X-Name-First: Nemanja Author-X-Name-Last: Vilimonović Author-Name: Igor Dabić Author-X-Name-First: Igor Author-X-Name-Last: Dabić Author-Name: Jakov Petrović Author-X-Name-First: Jakov Author-X-Name-Last: Petrović Author-Name: Darko Damnjanović Author-X-Name-First: Darko Author-X-Name-Last: Damnjanović Author-Name: DuÅ¡an Džamić Author-X-Name-First: DuÅ¡an Author-X-Name-Last: Džamić Title: Variable neighborhood search heuristic for nonconvex portfolio optimization Abstract: In this article we consider a portfolio optimization problem under multiple real-world constraints, such as: cardinality constraints, tracking error, active share, and turnover. We propose a heuristic based on variable neighborhood search (VNS) that effectively addresses additional constraints that introduce non-convexities. In the VNS-based heuristic, several neighborhood structures are introduced and fast local search is implemented. We develop a VNS portfolio rebalancing framework (VNS-PRF) with two rebalance strategies. Data sets provided by a financial investment firm are used to evaluate the validity and reliability of the proposed VNS-PRF. Computational experiments and different portfolio performance measures indicate that our approach is able to obtain solutions with competitive quality and can be applied on large-scale data sets. Journal: The Engineering Economist Pages: 254-274 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1619888 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1619888 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:254-274 Template-Type: ReDIF-Article 1.0 Author-Name: Lorenz M. Roebers Author-X-Name-First: Lorenz M. Author-X-Name-Last: Roebers Author-Name: Aras Selvi Author-X-Name-First: Aras Author-X-Name-Last: Selvi Author-Name: Juan C. Vera Author-X-Name-First: Juan C. Author-X-Name-Last: Vera Title: Using column generation to solve extensions to the Markowitz model Abstract: We introduce a solution scheme for portfolio optimization problems with cardinality constraints. Typical portfolio optimization problems are extensions of the classical Markowitz mean–variance portfolio optimization model. We solve such types of problems using a method similar to column generation. In this scheme, the original problem is restricted to a subset of the assets resulting in a master convex quadratic problem. Then the dual information of the master problem is used in a subproblem to propose more assets to consider. We also consider other extensions to the Markowitz model to diversify the portfolio selection within given intervals for active weights. Journal: The Engineering Economist Pages: 275-288 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1636439 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1636439 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:275-288 Template-Type: ReDIF-Article 1.0 Author-Name: Tao Jiang Author-X-Name-First: Tao Author-X-Name-Last: Jiang Author-Name: Shuo Wang Author-X-Name-First: Shuo Author-X-Name-Last: Wang Author-Name: Ruochen Zhang Author-X-Name-First: Ruochen Author-X-Name-Last: Zhang Author-Name: Lang Qin Author-X-Name-First: Lang Author-X-Name-Last: Qin Author-Name: Jinglian Wu Author-X-Name-First: Jinglian Author-X-Name-Last: Wu Author-Name: Delin Wang Author-X-Name-First: Delin Author-X-Name-Last: Wang Author-Name: Selin D. Ahipasaoglu Author-X-Name-First: Selin D. Author-X-Name-Last: Ahipasaoglu Title: An inexact l2-norm penalty method for cardinality constrained portfolio optimization Abstract: We analyze and solve a single-period portfolio optimization problem with non-convex constraints, which address practical concerns of investment such as the active share weights of sectors and the number of stocks held in a portfolio. We reformulate the problem to simplify the computation and propose an inexact l2-norm penalty method to solve the problem. Journal: The Engineering Economist Pages: 289-297 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1636169 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1636169 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:289-297 Template-Type: ReDIF-Article 1.0 Author-Name: Juan DÃaz Author-X-Name-First: Juan Author-X-Name-Last: DÃaz Author-Name: MarÃa Cortés Author-X-Name-First: MarÃa Author-X-Name-Last: Cortés Author-Name: Juan Hernández Author-X-Name-First: Juan Author-X-Name-Last: Hernández Author-Name: Óscar Clavijo Author-X-Name-First: Óscar Author-X-Name-Last: Clavijo Author-Name: Carlos Ardila Author-X-Name-First: Carlos Author-X-Name-Last: Ardila Author-Name: Sergio Cabrales Author-X-Name-First: Sergio Author-X-Name-Last: Cabrales Title: Index fund optimization using a hybrid model: genetic algorithm and mixed-integer nonlinear programming Abstract: Index funds consist of a subset of stocks, an index tracking portfolio, included in the market index. The index tracking portfolio aims to match the performance of the benchmark index. In this paper, we propose a hybrid model for solving the multiperiod index tracking problem, which includes rebalancing concerns, transaction costs, limits on the number of stocks, and diversification by sector, market capitalization, and stock weight. Our hybrid model combines the genetic algorithm (GA) to select stocks of the index tracking portfolio and mixed-integer nonlinear programming (MINLP) to estimate its weights. Finally, we apply our proposed hybrid model to the S&P500 to find an index tracking portfolio that includes those constraints. The results show that our hybrid model is able to create an index fund whose return rate is similar to the market index with significantly lower risk. Journal: The Engineering Economist Pages: 298-309 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1633450 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1633450 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:298-309 Template-Type: ReDIF-Article 1.0 Author-Name: Çelen N. Ötken Author-X-Name-First: Çelen N. Author-X-Name-Last: Ötken Author-Name: Z. Batuhan Organ Author-X-Name-First: Z. Batuhan Author-X-Name-Last: Organ Author-Name: E. Ceren Yıldırım Author-X-Name-First: E. Ceren Author-X-Name-Last: Yıldırım Author-Name: Mustafa Çamlıca Author-X-Name-First: Mustafa Author-X-Name-Last: Çamlıca Author-Name: Volkan S. Cantürk Author-X-Name-First: Volkan S. Author-X-Name-Last: Cantürk Author-Name: Ekrem Duman Author-X-Name-First: Ekrem Author-X-Name-Last: Duman Author-Name: Z. Melis Teksan Author-X-Name-First: Z. Melis Author-X-Name-Last: Teksan Author-Name: Enis Kayış Author-X-Name-First: Enis Author-X-Name-Last: Kayış Title: An extension to the classical mean–variance portfolio optimization model Abstract: The purpose of this study is to find a portfolio that maximizes the risk-adjusted returns subject to constraints frequently faced during portfolio management by extending the classical Markowitz mean–variance portfolio optimization model. We propose a new two-step heuristic approach, GRASP & SOLVER, that evaluates the desirability of an asset by combining several properties about it into a single parameter. Using a real-life data set, we conduct a simulation study to compare our solution to a benchmark (S&P 500 index). We find that our method generates solutions satisfying nearly all of the constraints within reasonable computational time (under an hour), at the expense of a 13% reduction in the annual return of the portfolio, highlighting the effect of introducing these practice-based constraints. Journal: The Engineering Economist Pages: 310-321 Issue: 3 Volume: 64 Year: 2019 Month: 7 X-DOI: 10.1080/0013791X.2019.1636440 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1636440 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:3:p:310-321 Template-Type: ReDIF-Article 1.0 Author-Name: Jun Ye Author-X-Name-First: Jun Author-X-Name-Last: Ye Title: A Linear Programming Method Based on an Improved Score Function for Interval-Valued Intuitionistic Fuzzy Multicriteria Decision Making Abstract: This article proposes a linear programming model based on an improved score function to solve interval-valued intuitionistic fuzzy multicriteria decision-making problems. In this decision-making process, the score matrix of the interval-valued intuitionistic fuzzy decision matrix can be constructed by the score function. We solve the linear programming model to determine the optimal criteria weights and then utilize the obtained criteria weights and the weighted score function as the suitability function of each alternative to rank the alternatives and select the most desirable one(s). Finally, an illustrative example for engineering investment alternatives demonstrates the effectiveness of the decision-making method. Journal: The Engineering Economist Pages: 179-188 Issue: 3 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.760695 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.760695 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:3:p:179-188 Template-Type: ReDIF-Article 1.0 Author-Name: Chung-Hsiao Wang Author-X-Name-First: Chung-Hsiao Author-X-Name-Last: Wang Author-Name: K. Min Author-X-Name-First: K. Author-X-Name-Last: Min Title: Electric Power Plant Valuation Based on Day-Ahead Spark Spreads Abstract: With recent regulatory changes in the electric power industry toward a competitive market, there have been significant increases in sales and purchases of merchant power plants. To support utilities’ decisions on such transactions, we develop an option-based valuation model that better reflects the current practices of plant operations in utilities. What distinguishes our approach from the extant literature is that, rather than conventionally assuming that theoretically optimal decisions can or will be followed through by practitioners, our model explicitly incorporates the actual practices in the utility operations areas such as unit commitments and startups. Journal: The Engineering Economist Pages: 157-178 Issue: 3 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.788686 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.788686 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:3:p:157-178 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Hammond Author-X-Name-First: Robert Author-X-Name-Last: Hammond Author-Name: J. Bickel Author-X-Name-First: J. Author-X-Name-Last: Bickel Title: Approximating Continuous Probability Distributions Using the 10th, 50th, and 90th Percentiles Abstract: In economic decision analyses, continuous uncertainties are often represented by discrete probability distributions. In this article, we analyze the ability of discretizations based on the 10th, 50th, and 90th percentiles to match the mean, variance, skewness, and kurtosis of a wide range of distributions in the Johnson distribution system. In addition, we develop new discretization methods that improve upon current practice. Finally, we demonstrate that all of these methods are special cases from a continuum of weightings and show under which conditions each is most appropriate. Our results provide guidelines for the methods’ applications and limits to their usefulness. Journal: The Engineering Economist Pages: 189-208 Issue: 3 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.793761 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.793761 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:3:p:189-208 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Hammond Author-X-Name-First: Robert Author-X-Name-Last: Hammond Author-Name: J. Bickel Author-X-Name-First: J. Author-X-Name-Last: Bickel Title: On the Decision Relevance of Stochastic Oil Price Models: A Case Study Abstract: Stochastic price models may aid decision making when accurate project valuations are important. However, little consideration has been given to their usefulness in decision contexts that are concerned primarily with project rankings. In this article, we distinguish between valuation decisions and ranking decisions and quantify the degree to which differing stochastic oil price models result in different portfolio choices. We show that, within the confines of our example, differing models can result in very different valuations while at the same time having little impact on decision making. Journal: The Engineering Economist Pages: 209-230 Issue: 3 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.806975 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.806975 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:3:p:209-230 Template-Type: ReDIF-Article 1.0 Author-Name: Babak Jafarizadeh Author-X-Name-First: Babak Author-X-Name-Last: Jafarizadeh Author-Name: Reidar Brumer Bratvold Author-X-Name-First: Reidar Brumer Author-X-Name-Last: Bratvold Title: Oil and Gas Exploration Valuation and the Value of Waiting Abstract: The timing flexibility of investments in oil and gas assets can potentially add value. In this article, we examine the value of waiting in exploration projects and propose a real option–based valuation method using least-squares Monte Carlo simulation. We show that the dynamics of the oil and gas prices have a large impact on the value of the option to wait, especially for projects with long lead times and durations. The uncertainty in the forward price curve is modeled using a two-factor stochastic price process. The article also presents the valuation method in the form of MATLAB functions and routines that can be used as an efficient test and analysis platform using the industry-standard input formats. Journal: The Engineering Economist Pages: 245-262 Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1045647 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1045647 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:245-262 Template-Type: ReDIF-Article 1.0 Author-Name: Ali Z. Rezvani Author-X-Name-First: Ali Z. Author-X-Name-Last: Rezvani Author-Name: Walter Kemmsies Author-X-Name-First: Walter Author-X-Name-Last: Kemmsies Author-Name: Ajith Kumar Parlikad Author-X-Name-First: Ajith Kumar Author-X-Name-Last: Parlikad Author-Name: Mohsen A. Jafari Author-X-Name-First: Mohsen A. Author-X-Name-Last: Jafari Title: Toward Closing the Loop between Infrastructure Investments and Societal and Economic Impacts Abstract: The long-term value proposition of transportation infrastructure investments can be significantly distorted if the short-term effects of spatial externalities on land use patterns, economic expansions, and migration patterns are not properly included in the analysis. Some of these effects occur over a short period of time and soon after the investment materializes, whereas others take longer and follow more steady patterns. In this article, we develop a novel dynamical model of a primal society with constructs that are specifically geared toward transportation infrastructure expansions and investments. The model quantifies the impact of these expansions on some key performance indicators and on the overall utility and production capacity of the society. We argue that traditional analytical models that work on the premises of stationary behavior and a static response of society to changes in infrastructure do not correctly capture these effects. The land use patterns and spatial expansion computed from the model are validated against existing theory on land use. Preliminary results on how to use the model for value proposition analysis are also presented using simple case studies. Journal: The Engineering Economist Pages: 263-290 Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1065358 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1065358 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:263-290 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: ASEE Engineering Economy Division Business Meeting Minutes Journal: The Engineering Economist Pages: 307-313 Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1093346 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1093346 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:307-313 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: IIE Engineering Economy Division 2015 Town Hall Meeting Minutes Journal: The Engineering Economist Pages: 314-318 Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1093348 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1093348 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:314-318 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award Nominations Journal: The Engineering Economist Pages: 319-319 Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1093350 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1093350 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:319-319 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Nominations: National Engineering Economy Teaching Excellence Award Journal: The Engineering Economist Pages: 320-320 Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1099932 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1099932 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:320-320 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board EOV Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 60 Year: 2015 Month: 10 X-DOI: 10.1080/0013791X.2015.1104207 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1104207 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Fikri Kucuksayacigil Author-X-Name-First: Fikri Author-X-Name-Last: Kucuksayacigil Author-Name: K. Jo Min Author-X-Name-First: K. Jo Author-X-Name-Last: Min Title: Expansion planning for transmission network under demand uncertainty: A real options framework Abstract: In recent years, there has been much expectation that transmission expansion planning should address ever increasing demands for transmission services under significant and complex economic and regulatory uncertainties. In this article, toward meeting the aforementioned expectation, we develop and analyze a real options framework that provides the valuation of a transmission owner's option to expand in his or her network. What distinguishes our framework from the extant literature is that the evolution of the demand follows a geometric Brownian motion process, it explicitly accounts for the physical flow of the electric power economically manifested as the locational marginal prices, and it shows how the values of the expansion options can be determined in the transmission network. Furthermore, our framework shows how to value an option to expedite or delay can be determined given that a specific expansion is planned. An extensive numerical example is presented to illustrate the key features of our framework. Journal: The Engineering Economist Pages: 20-53 Issue: 1 Volume: 63 Year: 2018 Month: 1 X-DOI: 10.1080/0013791X.2016.1256459 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1256459 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:1:p:20-53 Template-Type: ReDIF-Article 1.0 Author-Name: Yongxiu He Author-X-Name-First: Yongxiu Author-X-Name-Last: He Author-Name: Wenya Liu Author-X-Name-First: Wenya Author-X-Name-Last: Liu Author-Name: Jie Jiao Author-X-Name-First: Jie Author-X-Name-Last: Jiao Author-Name: Jie Guan Author-X-Name-First: Jie Author-X-Name-Last: Guan Title: Evaluation method of benefits and efficiency of grid investment in China: A case study Abstract: The existing evaluation system for power grid investment in China has not combined measures of the investment benefits and investment efficiency very well and it lacks practical reference value. This article proposes an improved evaluation index system of the benefits and efficiency of power grid investment projects. The system divides the evaluation method into indexes. This includes the basic indexes, modification indexes, and appraisal indexes that evaluate the economic and environmental benefits of the investment projects comprehensively. It considers the overall efficiency in terms of the economy, technology, and society. It combines an absolute efficiency evaluation model with a data envelope analysis relative efficiency evaluation model. Finally, the benefits and efficiency of investment of an actual power grid project are evaluated through a case study. The results show the practical value of the proposed efficiency evaluation method for evaluating investment projects in a power grid. Journal: The Engineering Economist Pages: 66-86 Issue: 1 Volume: 63 Year: 2018 Month: 1 X-DOI: 10.1080/0013791X.2016.1258100 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1258100 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:1:p:66-86 Template-Type: ReDIF-Article 1.0 Author-Name: Bo Yan Author-X-Name-First: Bo Author-X-Name-Last: Yan Author-Name: Lifeng Liu Author-X-Name-First: Lifeng Author-X-Name-Last: Liu Author-Name: Si Liu Author-X-Name-First: Si Author-X-Name-Last: Liu Author-Name: Jianbo Yang Author-X-Name-First: Jianbo Author-X-Name-Last: Yang Title: Influencing factors in the application of RFID technology in the supply chain Abstract: This article analyzes the obstacles in the application of the Internet of Things in the supply chain by means of evolutionary game theory. Through modeling, the game payoff matrix of core enterprises and suppliers as well as their replicator dynamic equations are obtained. Subsequently, an analysis of two populations that adopt the key technology of the Internet of Things, radio frequency identification (RFID), is conducted through replicator dynamics. The two populations achieve an evolutionarily stable strategy through continuous imitation and adjustment to the strategy. Furthermore, through the analysis of relevant parameters, the influence on the RFID application strategy selected by core enterprises and suppliers of factors such as implementation risk, tag cost, system cost, maintenance cost, compelling force of core enterprises, and expected return, among others, is verified. Journal: The Engineering Economist Pages: 1-19 Issue: 1 Volume: 63 Year: 2018 Month: 1 X-DOI: 10.1080/0013791X.2016.1269269 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1269269 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:1:p:1-19 Template-Type: ReDIF-Article 1.0 Author-Name: Diderik Lund Author-X-Name-First: Diderik Author-X-Name-Last: Lund Author-Name: Ragnar Nymoen Author-X-Name-First: Ragnar Author-X-Name-Last: Nymoen Title: Comparative statics for real options on oil: What stylized facts? Abstract: An important application in the real options literature has been in investments in the oil sector. Two commonly applied “stylized facts†in such applications are tested here. One is that the correlation of the returns on oil and the stock market is positive; the other that it is invariant to changes in oil price volatility. Both are rejected in data for 1993–2008 for crude oil and Standard & Poor's 500 stock market index. Based on real options theory, consequences are pointed out. The widespread idea that higher volatility leads to increased value and postponed investment is not necessarily valid. Journal: The Engineering Economist Pages: 54-65 Issue: 1 Volume: 63 Year: 2018 Month: 1 X-DOI: 10.1080/0013791X.2017.1283001 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1283001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:1:p:54-65 Template-Type: ReDIF-Article 1.0 Author-Name: James D. Burns Author-X-Name-First: James D. Author-X-Name-Last: Burns Title: Engineering Economics Journal: The Engineering Economist Pages: 87-89 Issue: 1 Volume: 63 Year: 2018 Month: 1 X-DOI: 10.1080/0013791X.2018.1428431 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1428431 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:1:p:87-89 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel des-Bordes Author-X-Name-First: Emmanuel Author-X-Name-Last: des-Bordes Author-Name: Ä°. Esra Büyüktahtakın Author-X-Name-First: Ä°. Esra Author-X-Name-Last: Büyüktahtakın Title: Optimizing capital investments under technological change and deterioration: A case study on MRI machine replacement Abstract: We study the multiple style and type parallel asset replacement problem (MST-PRES), which determines an optimal policy for keeping or replacing a group of assets that operate in parallel under a limited budget. Operating assets generally suffer from deterioration, which results in high operation and maintenance (O&M) cost and decreased salvage value, and technological improvements make it possible for new assets to operate more efficiently at a lower cost. In order to address these issues, we formulate a multi-objective mixed-integer programming (MIP) model that minimizes fixed and variable costs of purchasing new assets, O&M cost, inventory cost, and penalty cost for unmet demand minus salvage values, while considering technological advances and deterioration as a gain and loss in capacity, respectively. We apply our model to a case study involving two different styles of assets: a full-body magnetic resonance imaging (MRI) machine and a smaller extremity magnetic resonance imaging (eMRI) machine. Each has two types: high-field and low-field. We perform computational experiments and analyses using key model parameters and illustrate optimal replacement strategies considering the impact of technological advances and deterioration. Results show that the proposed MIP model provides valuable insights and strategies for companies, decision makers, and government entities on the capital asset management. Journal: The Engineering Economist Pages: 105-131 Issue: 2 Volume: 62 Year: 2017 Month: 4 X-DOI: 10.1080/0013791X.2015.1126775 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1126775 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:2:p:105-131 Template-Type: ReDIF-Article 1.0 Author-Name: Peter T. Vanberkel Author-X-Name-First: Peter T. Author-X-Name-Last: Vanberkel Author-Name: Saeideh Y. Moayed Author-X-Name-First: Saeideh Y. Author-X-Name-Last: Moayed Title: A general model to compute activity-based waste disposal costs for health care products Abstract: Hospitals are large producers of solid waste, of which some is benign, some is extremely hazardous, and much is in between. The cost of segregating and disposing of products in these waste streams is high, and studies have shown there is considerable potential to reduce these costs while simultaneously decreasing environmental impact. In this article we develop an activity-based costing method that assigns waste disposal costs proportionally to each product. By providing disposal cost information at this level of aggregation it is possible to directly influence purchasing decisions, identify priority products for focused interventions, and determine the ratio of a product's purchasing cost to disposal cost. The method is tested on products with different purchasing costs, disposal costs, physical characteristics, and disposal processes. Journal: The Engineering Economist Pages: 132-145 Issue: 2 Volume: 62 Year: 2017 Month: 4 X-DOI: 10.1080/0013791X.2016.1173267 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1173267 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:2:p:132-145 Template-Type: ReDIF-Article 1.0 Author-Name: Brendan Bettinger Author-X-Name-First: Brendan Author-X-Name-Last: Bettinger Author-Name: James C. Benneyan Author-X-Name-First: James C. Author-X-Name-Last: Benneyan Title: The volunteer's dilemma and alternate solutions for ensuring responsibility within accountable care organizations Abstract: The emphasis on accountable care organizations (ACOs) in recent health care reform increases the potential for social dilemmas such as the volunteer's dilemma within networks of providers who collectively share responsibility for a patient population. Providers in an ACO often receive financial incentives based on how well the group performs in defined quality measures. Care interventions may be indicated for certain patients, such as postdischarge follow-up to prevent readmission. However, the providers conducting the interventions may be unreliable if they vary in their belief in the intervention's effectiveness. We characterize such potential for care coordination failures as instability of an asymmetric equilibrium, illustrated by an example in which ACO patients would benefit from interventions to prevent readmission but individual providers or care teams do not perceive sufficient value in conducting the intervention. We then propose three economic mechanisms that can help ensure that patients receive indicated interventions, illustrate the impact of each with an example, and explore conditions that lead to significant improvements in overall utility. Journal: The Engineering Economist Pages: 146-160 Issue: 2 Volume: 62 Year: 2017 Month: 4 X-DOI: 10.1080/0013791X.2016.1199075 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1199075 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:2:p:146-160 Template-Type: ReDIF-Article 1.0 Author-Name: Martha Gonzalez Author-X-Name-First: Martha Author-X-Name-Last: Gonzalez Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Author-Name: Edward Pohl Author-X-Name-First: Edward Author-X-Name-Last: Pohl Title: Time-driven activity-based costing for health care provider supply chains Abstract: Health care providers currently operate in an environment of complex supply chains and increasing costs where approximately one third of hospital operating expenses are related to supplies. It is pertinent that health care providers have a clear understanding of their supply chain process costs. Knowing how these costs are driven and where opportunities for cost reduction exist can support health care provider supply chain (HPSC) efficiency. In this article, we present a time-driven activity-based costing (TDABC) supply chain cost methodology for health care providers. A TDABC management system can provide health care providers with valuable product and process supply chain cost information by investigating logistics activities, resource consumption, and time drivers. Our HPSC TDABC methodology is demonstrated in a case study conducted for the supply chain department of a 200-bed, not-for-profit hospital. Journal: The Engineering Economist Pages: 161-179 Issue: 2 Volume: 62 Year: 2017 Month: 4 X-DOI: 10.1080/0013791X.2016.1264035 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1264035 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:2:p:161-179 Template-Type: ReDIF-Article 1.0 Author-Name: David A. Muñoz Author-X-Name-First: David A. Author-X-Name-Last: Muñoz Author-Name: Mehmet Serdar Kilinc Author-X-Name-First: Mehmet Serdar Author-X-Name-Last: Kilinc Author-Name: Harriet B. Nembhard Author-X-Name-First: Harriet B. Author-X-Name-Last: Nembhard Author-Name: Conrad Tucker Author-X-Name-First: Conrad Author-X-Name-Last: Tucker Author-Name: Xuemei Huang Author-X-Name-First: Xuemei Author-X-Name-Last: Huang Title: Evaluating the cost-effectiveness of an early detection of Parkinson's disease through innovative technology Abstract: Early detection of Parkinson's disease (PD) is critically important because it can increase patient quality of life and save treatment costs. An innovative approach for early detection of PD is to use nonwearable sensors that are capable of capturing skeletal joint data. This article evaluates the cost-effectiveness of this sensor-based intervention considering the quality-adjusted life years (QALYs) and the associated costs. The results indicate that the intervention would be cost-effective if devices were deployed for community health screening in public places such as health fairs and pharmacies. Journal: The Engineering Economist Pages: 180-196 Issue: 2 Volume: 62 Year: 2017 Month: 4 X-DOI: 10.1080/0013791X.2017.1294718 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1294718 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:2:p:180-196 Template-Type: ReDIF-Article 1.0 Author-Name: Paul M. Griffin Author-X-Name-First: Paul M. Author-X-Name-Last: Griffin Title: Introduction: Special issue on engineering economic models in health care systems Journal: The Engineering Economist Pages: 103-104 Issue: 2 Volume: 62 Year: 2017 Month: 4 X-DOI: 10.1080/0013791X.2017.1317375 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1317375 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:2:p:103-104 Template-Type: ReDIF-Article 1.0 Author-Name: Carlo Magni Author-X-Name-First: Carlo Author-X-Name-Last: Magni Title: The Internal Rate of Return Approach and the AIRR Paradigm: A Refutation and a Corroboration Abstract: This article shows that the internal rate of return (IRR) approach is unreliable and that the recently introduced average internal rate of return (AIRR) model constitutes the basis for an alternative theoretical paradigm of rate of return. To this end, we divide the paper into two parts: a pars destruens and a pars construens. In the “destructive†part, we present a compendium of 18 flaws associated with the IRR approach. In the “constructive†part, we construct the alternative approach from four (independent) economic intuitions and put the paradigm to the test by showing that it does not suffer from any of the flaws previously investigated. We also show how the IRR, as a rate of return, is absorbed into the new approach. Journal: The Engineering Economist Pages: 73-111 Issue: 2 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.745916 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.745916 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:2:p:73-111 Template-Type: ReDIF-Article 1.0 Author-Name: Byung-cheol Kim Author-X-Name-First: Byung-cheol Author-X-Name-Last: Kim Author-Name: Euysup Shim Author-X-Name-First: Euysup Author-X-Name-Last: Shim Author-Name: Kenneth Reinschmidt Author-X-Name-First: Kenneth Author-X-Name-Last: Reinschmidt Title: Probability Distribution of the Project Payback Period Using the Equivalent Cash Flow Decomposition Abstract: For stochastic cash flows, probabilistic approaches to determine a complete distribution of payback period are very limited. The payback analysis based on the net present value (NPV) has several advantages. For annual cash flows, however, the NPV-based method does not provide a complete payback distribution. This article proposes a new technique, the equivalent cash flow decomposition (ECFD), which converts an annual cash flow into an equivalent subannual cash flow at a desired level of precision. The ECFD technique can be used in conjunction with any probabilistic cash flow technique. This article demonstrates that the ECFD technique overcomes the discontinuity limitation of the conventional NPV-based payback period method and generates a complete distribution of the payback period of annual cash flows. Examples indicate that the proposed method is robust with the accuracy comparable to Monte Carlo simulation. Journal: The Engineering Economist Pages: 112-136 Issue: 2 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.760696 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.760696 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:2:p:112-136 Template-Type: ReDIF-Article 1.0 Author-Name: Nikolay Kulakov Author-X-Name-First: Nikolay Author-X-Name-Last: Kulakov Author-Name: Anastasia Kulakova Author-X-Name-First: Anastasia Author-X-Name-Last: Kulakova Title: Evaluation of Nonconventional Projects Abstract: This article introduces the generalized net present value (GNPV) method for nonconventional project evaluation. This method generalizes the NPV method by using two discount rates: the finance rate for positive present values and the reinvestment rate for negative present values. As a result, the different rates discount cash flows invested in the project and released by the project. The GNPV method allows us to consider any nonconventional project as an investment or a loan. Therefore, each nonconventional project always has two rates of return; that is, GIRR(p) and GERR(r), depending on the reinvestment and the finance rate, respectively. The GNPV, generalized internal rate of return (GIRR), and generalized external rate of return (GERR) rules for justifying and ranking independent nonconventional projects are proposed. These rules do not contradict each other. A graphical interpretation (“GNPV diagramâ€) of the decision-making rules is suggested. The GNPV method is applied to the solution of the Lorie-Savage oil pump problem and the rate of return is determined for a project without IRR. Journal: The Engineering Economist Pages: 137-148 Issue: 2 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2012.763079 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.763079 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:2:p:137-148 Template-Type: ReDIF-Article 1.0 Author-Name: Jacques Schnabel Author-X-Name-First: Jacques Author-X-Name-Last: Schnabel Title: Technical Note: Tax Capitalization, Beta, and the Cost of Equity Abstract: In the context of a tax-adjusted reformulation of the capital asset pricing model, this article examines the extent to which capital gains taxes are impounded in the rates of return required by stockholders. Consistent with extant literature, the cost of equity capital is shown to be positively related to the capital gains tax rate. However, the induced increase in the cost of equity is lower (higher) for higher (lower) beta shares. An intuitive explanation is provided for this phenomenon in terms of greater risk-sharing, with the fiscal authority stimulating an increased stockholder propensity to bear the risk of share ownership. Journal: The Engineering Economist Pages: 149-155 Issue: 2 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.764030 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.764030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:2:p:149-155 Template-Type: ReDIF-Article 1.0 Author-Name: David Carmichael Author-X-Name-First: David Author-X-Name-Last: Carmichael Author-Name: Ariel Hersh Author-X-Name-First: Ariel Author-X-Name-Last: Hersh Author-Name: Praneeth Parasu Author-X-Name-First: Praneeth Author-X-Name-Last: Parasu Title: Real Options Estimate Using Probabilistic Present Worth Analysis Abstract: The article presents a method for estimating the value of a real option using probabilistic present worth analysis. The method is shown to capture the upside value of a real option in an equivalent way as—and provide similar results to— the Black-Scholes method. Its strength lies in its intuitive appeal, the avoidance of having to estimate volatility, relaxed assumptions, and the simplicity of the underlying calculations. A comparison with the Black-Scholes method is undertaken in structural terms, with differences noted, and numerically for a range of input parameters. The proposed method is also applicable to evaluating financial options. Journal: The Engineering Economist Pages: 295-320 Issue: 4 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.624259 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.624259 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:4:p:295-320 Template-Type: ReDIF-Article 1.0 Author-Name: Kjell Hausken Author-X-Name-First: Kjell Author-X-Name-Last: Hausken Author-Name: Jun Zhuang Author-X-Name-First: Jun Author-X-Name-Last: Zhuang Title: Defending Against a Stockpiling Terrorist Abstract: A government defends against a terrorist who attacks repeatedly and stockpiles its resources over time. The government defends an asset and attacks the terrorist's resources. The terrorist defends its resources and attacks the government. We find four possible equilibrium solutions: (1) the government attacks only, deterring the terrorist; (2) both players defend and attack; (3) the government defends but does not attack, and the terrorist attacks only; and (4) the terrorist attacks a passive government. Understanding which factors impact the four cases is important in order to combat terrorism. The terrorist allocates its resources over T periods according to a geometric series with a stockpiling parameter. This article analyzes how the government and terrorist prefer low versus high stockpiling parameters and how these preferences interact with the other parameters such as the terrorist's resources and the players’ asset valuations, unit defense and attack costs, and discount factors. If the terrorist's resources are small, it can be deterred in each period. If the terrorist's resources are extremely large, it allocates its resources equally across the T periods, whereas the government prefers a single attack. If the terrorist's resources are intermediate, the terrorist would be deterred in each period if it allocated its resources equally across the T periods. It thus strikes a balance where it allocates much resources to early or late periods, to facilitate attacks, and accept being deterred in the other periods. As the future becomes less important, the terrorist attacks more in early periods. Journal: The Engineering Economist Pages: 321-353 Issue: 4 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.624260 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.624260 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:4:p:321-353 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Letter to the Editor: Proposition on Using Tabulated Factors Journal: The Engineering Economist Pages: 281-282 Issue: 4 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.624888 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.624888 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:4:p:281-282 Template-Type: ReDIF-Article 1.0 Author-Name: Ted Eschenbach Author-X-Name-First: Ted Author-X-Name-Last: Eschenbach Author-Name: Neal Lewis Author-X-Name-First: Neal Author-X-Name-Last: Lewis Title: The Roles of Tabulated Factors, Financial Calculators, and Spreadsheets in Engineering Economy Teaching Abstract: For decades engineering economists have discussed the balance between using tabulated engineering economy factors and spreadsheets for the first course in engineering economy. However, the potential role of financially capable calculators has been ignored. Many engineering economy faculty personally use a financial calculator for time value of money (TVM) calculations, but judging from engineering economy texts and past discussions at conferences there is little or no use of such calculators by students. Such calculators allow us the opportunity to phase out the tables and reduce the fraction of our courses that is spent on financial arithmetic. Students should be able to use tables, calculators, and spreadsheets, but our courses and their preparation for professional practice can be improved by minimizing the amount of time spent using tabulated factors. Journal: The Engineering Economist Pages: 283-294 Issue: 4 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.624891 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.624891 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:4:p:283-294 Template-Type: ReDIF-Article 1.0 Author-Name: Kati Brunson Author-X-Name-First: Kati Author-X-Name-Last: Brunson Author-Name: Betsy DeLee Author-X-Name-First: Betsy Author-X-Name-Last: DeLee Author-Name: Joshua Nachtigal Author-X-Name-First: Joshua Author-X-Name-Last: Nachtigal Author-Name: Bradley Hill Author-X-Name-First: Bradley Author-X-Name-Last: Hill Author-Name: Joseph Hartman Author-X-Name-First: Joseph Author-X-Name-Last: Hartman Title: Case Study: Transport Carrier Replacement Analysis Abstract: Four replacement scenarios were analyzed for a vehicle fleet designed to haul sensitive packages at two different customer locations. In addition to completing an economic replacement analysis study, each option was analyzed according to availability requirements and other intangible attributes. Finally, a thorough sensitivity analysis was performed to examine the impact of reliability assumptions on both life cycle costs and the expected economic life of each option. Once all factors were analyzed, each critical input was graded and scored, leading to the final recommendation to replace the current equipment with a new technology. Journal: The Engineering Economist Pages: 354-384 Issue: 4 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.624921 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.624921 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:4:p:354-384 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board EOV Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.629157 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.629157 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Marcelo Gonzalez Author-X-Name-First: Marcelo Author-X-Name-Last: Gonzalez Author-Name: Arturo Rodriguez Author-X-Name-First: Arturo Author-X-Name-Last: Rodriguez Author-Name: Roberto Stein Author-X-Name-First: Roberto Author-X-Name-Last: Stein Title: Adjusted Betas Under Reference-Day Risk Abstract: Our article analyzes the performance of different methods to adjust beta. Specifically, we compare the standard ordinary least squares (OLS) regression method with the Blume and t-distribution methods from the point of view of reference-day risk. Our results indicate that the t-distribution method minimizes the variation due to changes in the reference day. Journal: The Engineering Economist Pages: 79-88 Issue: 1 Volume: 59 Year: 2014 Month: 1 X-DOI: 10.1080/0013791X.2013.855855 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.855855 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:1:p:79-88 Template-Type: ReDIF-Article 1.0 Author-Name: Navid Khademi Author-X-Name-First: Navid Author-X-Name-Last: Khademi Author-Name: Kambiz Behnia Author-X-Name-First: Kambiz Author-X-Name-Last: Behnia Author-Name: Ramin Saedi Author-X-Name-First: Ramin Author-X-Name-Last: Saedi Title: Using Analytic Hierarchy/Network Process (AHP/ANP) in Developing Countries: Shortcomings and Suggestions Abstract: 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. Journal: The Engineering Economist Pages: 2-29 Issue: 1 Volume: 59 Year: 2014 Month: 1 X-DOI: 10.1080/0013791X.2013.855856 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.855856 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:1:p:2-29 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel A. Donkor Author-X-Name-First: Emmanuel A. Author-X-Name-Last: Donkor Title: Empirical Tests of Stochastic Dominance in Capital Investment Planning: A Spreadsheet Framework Abstract: The empirical inadequacy of direct application of stochastic dominance rules and their variants has led to the development of statistical tests for making dominance inferences. Yet very little is known about their application in capital investment planning, and the algorithms for their implementation are not readily available to the analyst who uses spreadsheets for capital investment planning. Therefore, this article develops a spreadsheet framework for conducting empirical tests of stochastic dominance when comparing alternative capital investment plans under uncertainty. It uses bootstrap and simulation methodology to compute the p-values required for making first- and second-order dominance inferences. Results from numerical examples show that empirical tests yield robust inferences when the structure of risk profiles and their integrals is such that dominance inferences by visual inspection are difficult. Therefore, analysts should model and empirically test for these relationships if they want to make defensible decisions when comparing risky capital investments. Journal: The Engineering Economist Pages: 55-78 Issue: 1 Volume: 59 Year: 2014 Month: 1 X-DOI: 10.1080/0013791X.2013.859336 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.859336 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:1:p:55-78 Template-Type: ReDIF-Article 1.0 Author-Name: Ahmed A. A. al sharif Author-X-Name-First: Ahmed A. A. Author-X-Name-Last: al sharif Author-Name: Ruwen Qin Author-X-Name-First: Ruwen Author-X-Name-Last: Qin Title: Valuation of Lease Contracts with a Price Adjustment Option: An Application to the Maritime Transport Industry Abstract: In volatile lease markets, a fixed rate contract may allow one contract party to gain excessive profits while letting the other party face substantial losses. The flexibility in adjusting the contract rate can help address this issue and maintain a fair long-term relationship. This article models and prices the flexibility using real options and derives the boundary of option exercise to facilitate the optimal decision on the rate adjustment. The proposed method is applied to time charter contracts in the maritime transport industry. Moreover, the level of flexibility can be tailored to meet different budgets for the flexibility. Journal: The Engineering Economist Pages: 30-54 Issue: 1 Volume: 59 Year: 2014 Month: 1 X-DOI: 10.1080/0013791X.2013.869646 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.869646 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:1:p:30-54 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas O. Boucher Author-X-Name-First: Thomas O. Author-X-Name-Last: Boucher Title: Letter from the Editor Journal: The Engineering Economist Pages: 1-1 Issue: 1 Volume: 59 Year: 2014 Month: 1 X-DOI: 10.1080/0013791X.2014.882205 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.882205 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:1:p:1-1 Template-Type: ReDIF-Article 1.0 Author-Name: Aslan Deniz Karaoglan Author-X-Name-First: Aslan Deniz Author-X-Name-Last: Karaoglan Author-Name: Omur Karademir Author-X-Name-First: Omur Author-X-Name-Last: Karademir Title: Flow time and product cost estimation by using an artificial neural network (ANN): A case study for transformer orders Abstract: In electromechanical industrial corporations, determining the production cost of the orders according to the technical specifications demanded by the customer has great importance in giving an accurate price offer. Labor cost is one of the important and most variable cost components that must be estimated in order to give an accurate price offer. In this study, a feed-forward back-propagation artificial neural network (FF-BPN) is used to predict the flow times of power transformer orders of a transformer producer according to the technical specifications given by the customer. The results of this study show that the prediction capability of an artificial neural network is very good for this type of problem and results in better cost estimation than current company practice. A case study is carried out for a manufacturer of electrical transformers in Turkey. Journal: The Engineering Economist Pages: 272-292 Issue: 3 Volume: 62 Year: 2017 Month: 7 X-DOI: 10.1080/0013791X.2016.1185808 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1185808 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:3:p:272-292 Template-Type: ReDIF-Article 1.0 Author-Name: Zafer Aslan Author-X-Name-First: Zafer Author-X-Name-Last: Aslan Author-Name: Ivan Damnjanovic Author-X-Name-First: Ivan Author-X-Name-Last: Damnjanovic Author-Name: John B. Mander Author-X-Name-First: John B. Author-X-Name-Last: Mander Title: Pricing catastrophe equity put options: Financial implications of engineering decisions Abstract: Natural disasters such as earthquakes, floods, and tsunamis cause large-scale loss of life and result in billions of dollars in damages. However, the global insurance and reinsurance sector only bears a portion of this cost; the majority of the bill is still inflicted on corporations, local communities, and the governments that struggle to recover even years following the disaster. One of the key factors why insurance and reinsurance sectors do not play a more active role is the difficulty in absorbing the losses as well as accurately pricing the underlying risks. This article presents a valuation model for catastrophe equity puts (CatEPuts), an alternative method of risk transfer. The proposed valuation model is based on a four-step engineering loss model to compute the fair value of the CatEPut for different hazard intensities and structural responses. The results from test examples show that such a model can provide a necessary link between the engineering characteristics of the underlying physical assets and the fair value of the CatEPut. Journal: The Engineering Economist Pages: 254-271 Issue: 3 Volume: 62 Year: 2017 Month: 7 X-DOI: 10.1080/0013791X.2016.1186256 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1186256 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:3:p:254-271 Template-Type: ReDIF-Article 1.0 Author-Name: Md. Aminul Haque Author-X-Name-First: Md. Aminul Author-X-Name-Last: Haque Author-Name: Erkan Topal Author-X-Name-First: Erkan Author-X-Name-Last: Topal Author-Name: Eric Lilford Author-X-Name-First: Eric Author-X-Name-Last: Lilford Title: Evaluation of a mining project under the joint effect of commodity price and exchange rate uncertainties using real options valuation Abstract: Cash flows generated by mining projects tend to be volatile and are extensively influenced by exogenous variables, notably commodity prices and exchange rates. The traditional discounted cash flow (DCF) method, which is normally used for economic feasibility studies and mining project evaluations, presents inconsistencies because the method fails to adequately address uncertainties and operational flexibilities and often ignores certain specific market conditions. Numerous studies have been carried out for mining project evaluations using the real options valuation (ROV) technique for assessing commodity price uncertainty, but there is no research on the combined effects of price and exchange rate uncertainties. Therefore, in order to assess the economic viability of a mining project more accurately, the commodity price and its inherent volatility, the exchange rate and its inherent volatility, and the correlation parameters between them have been incorporated into the model and used in the evaluation process. One of the interesting findings revealed in the study is that project values are overestimated if only commodity price uncertainty is considered in evaluating the project value instead of the joint effect of commodity price and exchange rate uncertainties. This new ROV technique will explore the opportunity to utilize an alternative methodology for approximating project values and to identify valuation opportunities to enhance economic gains or to mitigate economic losses, where the DCF valuation method does not. Journal: The Engineering Economist Pages: 231-253 Issue: 3 Volume: 62 Year: 2017 Month: 7 X-DOI: 10.1080/0013791X.2016.1217366 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1217366 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:3:p:231-253 Template-Type: ReDIF-Article 1.0 Author-Name: Dohyun Ahn Author-X-Name-First: Dohyun Author-X-Name-Last: Ahn Author-Name: Wanmo Kang Author-X-Name-First: Wanmo Author-X-Name-Last: Kang Author-Name: Kyoung-Kuk Kim Author-X-Name-First: Kyoung-Kuk Author-X-Name-Last: Kim Author-Name: Hayong Shin Author-X-Name-First: Hayong Author-X-Name-Last: Shin Title: Analysis and design of microfinance services: A case of ROSCA Abstract: Rotating savings and credit association (ROSCA) is a well-known microfinance association widely used in many countries around the world with long histories. By considering extra profits that such a system can provide when compared to banking transactions, we develop optimization problems to achieve an optimal design of a ROSCA. We find that ROSCAs might attract investors when deposit and loan rates from formal banking systems are not favorable. Furthermore, optimal rates and optimal orders to maximize system outputs are reported. Journal: The Engineering Economist Pages: 197-230 Issue: 3 Volume: 62 Year: 2017 Month: 7 X-DOI: 10.1080/0013791X.2016.1236305 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1236305 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:3:p:197-230 Template-Type: ReDIF-Article 1.0 Author-Name: Hemantha S. B. Herath Author-X-Name-First: Hemantha S. B. Author-X-Name-Last: Herath Title: Postauditing and Cost Estimation Applications: An Illustration of MCMC Simulation for Bayesian Regression Analysis Abstract: Often in Bayesian anlysis closed-form posteriors cannot be derived for complex models. However, it is important to be able to do Bayesian analysis relatively easily. This article presents an alternative, the more general Markov chain Monte Carlo (MCMC) simulation approach, which permits the efficient development of posterior distributions. MCMC simulation methods are now becoming the state of the art in numerous empirical and analytical applications in applied mathematics, biostatistics, marketing, economics, and other areas, but those methods are noticeably absent in the engineering economic analysis literature. The purpose of this article is to introduce MCMC simulation methods to the engineering economics research and practitioner community. Using postaudits and cost estimation as application areas, the article focuses on what MCMC simulation entails, its advantages, and its disadvantages and highlights the usefulness and versatility of the approach. Journal: The Engineering Economist Pages: 40-67 Issue: 1 Volume: 64 Year: 2019 Month: 1 X-DOI: 10.1080/0013791X.2018.1498961 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1498961 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:1:p:40-67 Template-Type: ReDIF-Article 1.0 Author-Name: Frank Lefley Author-X-Name-First: Frank Author-X-Name-Last: Lefley Title: Research into the postaudit of capital projects in UK SME organizations Abstract: The main research objectives are to ascertain the state of the art of the postauditing practices of UK small/medium enterprises (SMEs) to fill a gap in the literature and to offer a sound empirical base for future discussion. We show that the reality of those that undertake postaudits differs from the perceptions of those that do not and may therefore present a learning opportunity. The level of importance of the three key objectives (control, learning, and evaluation) of a postaudit appears to be influenced by organizational structure. The reasons for not undertaking a postaudit and difficulties encountered are clearly evidenced. Journal: The Engineering Economist Pages: 68-95 Issue: 1 Volume: 64 Year: 2019 Month: 1 X-DOI: 10.1080/0013791X.2018.1508618 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1508618 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:1:p:68-95 Template-Type: ReDIF-Article 1.0 Author-Name: Ted G. Eschenbach Author-X-Name-First: Ted G. Author-X-Name-Last: Eschenbach Author-Name: Neal A. Lewis Author-X-Name-First: Neal A. Author-X-Name-Last: Lewis Title: Risk, standard deviation, and expected value: when should an individual start social security? Abstract: In choosing when to start collecting Social Security, the differences in expected net present values (NPVs) are small—but the corresponding standard deviations are not. Starting earlier is less risky. The case analyzed is single individuals in the U.S. system, but the methodology can be applied to couples and to the systems of other nations. Considering risk and return together places Social Security in the same risk/return framework as other capital investments. Behavioral, situational, and qualitative factors that often dominate decisions on when to start are linked with quantitative approaches to longevity risk and mortality risk. Journal: The Engineering Economist Pages: 24-39 Issue: 1 Volume: 64 Year: 2019 Month: 1 X-DOI: 10.1080/0013791X.2018.1532543 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1532543 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:1:p:24-39 Template-Type: ReDIF-Article 1.0 Author-Name: Javad Seif Author-X-Name-First: Javad Author-X-Name-Last: Seif Author-Name: Brett A. Shields Author-X-Name-First: Brett A. Author-X-Name-Last: Shields Author-Name: Andrew Junfang Yu Author-X-Name-First: Andrew Junfang Author-X-Name-Last: Yu Title: Parallel machine replacement under horizon uncertainty Abstract: Construction projects usually get delayed for several time periods. When the planning horizon of a project is extended, projections for purchase and salvage of machinery within the planning horizon become inaccurate and less beneficial and often lead to unexpected costs. In this article, we formulate a parallel machine replacement (PMR) problem as a two-stage stochastic program with an uncertain planning horizon. We consider renting as an alternative to purchasing and maintaining the machinery. We show the application of the model through a case study in construction projects. Through numerical analysis, we derive managerial implications and show the value of the stochastic model. Journal: The Engineering Economist Pages: 1-23 Issue: 1 Volume: 64 Year: 2019 Month: 1 X-DOI: 10.1080/0013791X.2018.1535012 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1535012 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:1:p:1-23 Template-Type: ReDIF-Article 1.0 Author-Name: Leland Blank Author-X-Name-First: Leland Author-X-Name-Last: Blank Author-Name: Phillip Borrowman Author-X-Name-First: Phillip Author-X-Name-Last: Borrowman Author-Name: Hector Carrasco Author-X-Name-First: Hector Author-X-Name-Last: Carrasco Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Author-Name: John White Author-X-Name-First: John Author-X-Name-Last: White Title: Inclusion of Engineering Economy Concepts and Techniques in B.S. Engineering Curricula Abstract: This article presents a summary of an audience-panel member open discussion session conducted at the 2010 ASEE Annual Conference in Louisville, Kentucky. The discussion centered around three topics: concepts and techniques to include in all undergraduate engineering economy courses; current and future delivery systems most helpful in discipline-specific and service courses; and, some action items to move forward. After the conference, each panel member developed a brief statement on a related topic of his or her choice. Included in the article following the discussion summary, the statements focus on several current engineering economy topics: how we teach and should teach engineering economy; use of spreadsheets and web-based materials in teaching; and, ABET guidelines concerning coverage of economic principles. Journal: The Engineering Economist Pages: 193-204 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.598428 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.598428 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:193-204 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph Hartman Author-X-Name-First: Joseph Author-X-Name-Last: Hartman Title: Research Trends in Engineering Economy Abstract: An examination of publication trends in The Engineering Economist was presented at the recent Industrial Engineering Research Conference held in Reno, Nevada. Specifically, 686 articles published from 1964 to the present were assigned to 14 categories and analyzed over time. Those trends are summarized here along with a discussion about past, present, and future research trends in engineering economics. Journal: The Engineering Economist Pages: 183-192 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.598429 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.598429 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:183-192 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: ASEE-EED Business Meeting Minutes Journal: The Engineering Economist Pages: 274-278 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.598430 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.598430 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:274-278 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: IIE-EED Business Meeting Minutes Journal: The Engineering Economist Pages: 279-280 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.598431 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.598431 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:279-280 Template-Type: ReDIF-Article 1.0 Author-Name: Tom Miller Author-X-Name-First: Tom Author-X-Name-Last: Miller Title: Active Management of Real Options Abstract: Business opportunities to introduce new products at a later date are treated as real options. These real options are modeled as exchange options for which both the underlying and strike assets are risky. The distance to breakeven for an exchange option measures how far a real option is currently expected to be from having a net present value of zero on its expiration date. Because the underlying and strike assets are risky, the distance to breakeven and the value of the real option change randomly during the option's life. The distance to breakeven and the value of the business opportunity may be actively managed during the real option's life. Product design and process design may be used to change the values of the underlying and strike assets while the firm is waiting to introduce the new product. A case study shows that the distance to breakeven is an important measure for a business opportunity, active management can create substantial positive incremental value for good and marginal opportunities, and active management should not be used for bad opportunities. Journal: The Engineering Economist Pages: 205-230 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.599478 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.599478 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:205-230 Template-Type: ReDIF-Article 1.0 Author-Name: Erhan Deniz Author-X-Name-First: Erhan Author-X-Name-Last: Deniz Author-Name: James Luxhøj Author-X-Name-First: James Author-X-Name-Last: Luxhøj Title: A Scenario Generation Method with Heteroskedasticity and Moment Matching Abstract: We present a portfolio management framework composed of a new scenario generation algorithm and a stochastic programming (SP) model. The algorithm is built on heteroskedastic models and a moment matching approach to construct a scenario tree that is a calibrated representation of the randomness in risky asset returns. We also present a multistage SP model that maximizes the expected final wealth and controls the risk exposure through limiting conditional value-at-risk (CVaR) at each decision epoch over the scenario tree generated by the algorithm. Journal: The Engineering Economist Pages: 231-253 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.599918 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.599918 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:231-253 Template-Type: ReDIF-Article 1.0 Author-Name: Kelsey Barton Author-X-Name-First: Kelsey Author-X-Name-Last: Barton Author-Name: Yuri Lawryshyn Author-X-Name-First: Yuri Author-X-Name-Last: Lawryshyn Title: Integrating Real Options with Managerial Cash Flow Estimates Abstract: This article presents a real options model that fits managerial cash flow estimates (optimistic, likely, and pessimistic projections) to a continuous geometric Brownian motion (GBM) cash flow process with changing growth and volatility parameters. The cash flows and the value of a project are correlated to a traded asset, so the real option is priced under the risk-neutral measure with a closed-form solution. The analysis is extended to a sequential compound call option for investments over multiple periods. If the project is correlated to the market, then some of the risk may be mitigated by a delta-hedging strategy. A numerical example shows that the effect of the correlated asset on the real option value is significant, and the relationship between the volatility of the project and the real option value is not analogous to the typical relationship found in financial option pricing. Integrating the expertise and industry knowledge of management, this approach makes possible a more rigorous estimation of model inputs for real option pricing. Journal: The Engineering Economist Pages: 254-273 Issue: 3 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.601403 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.601403 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:3:p:254-273 Template-Type: ReDIF-Article 1.0 Author-Name: Mark J. Kaiser Author-X-Name-First: Mark J. Author-X-Name-Last: Kaiser Title: A new approach to refinery complexity factors Abstract: Wilbur Nelson introduced the concept of complexity factor in the 1960s to relate the performance level of refineries with different capabilities and processing technologies. Refinery complexity has been used for many years to describe the sophistication and capital intensity of refineries, but foundational issues and the limitations associated with the metric have not been examined. A more precise and rigorous approach to complexity factors is presented based on the application of cost functions. Two alternative formulations are introduced and compared to the traditional approach and lead to new descriptive statistics and insight. Journal: The Engineering Economist Pages: 336-368 Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2016.1202365 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1202365 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:336-368 Template-Type: ReDIF-Article 1.0 Author-Name: David G. Carmichael Author-X-Name-First: David G. Author-X-Name-Last: Carmichael Title: Adjustments within discount rates to cater for uncertainty—Guidelines Abstract: Deterministic discounted cash flow (DCF) analysis is a well-accepted technique in engineering appraisals. Common practice is to incorporate all uncertainty influences within a single variable—namely, the discount rate—which also represents the time value of money. Commentary already exists in the literature that such a practice is expedient but not rational and has shortcomings. This article examines the error involved in this practice and provides guidelines and precautions for using blanket or constant discount rates in dealing with uncertainties. It shows the adjustments necessary for any given investment scenario. This is done through establishing equivalence of the expected utility of deterministic and probabilistic present worth, allowing a rate adjustment to be calculated. Numerical studies look at the relationship or trends of this rate adjustment to the key analysis variables. Generally, it is found that the rate adjustment should be decreased as the timing of a cash flow's occurrence increases, increased as the variance of the cash flow increases, kept almost as an additive constant as the base rate increases, and increased as the investor's level of risk aversion increases. The article provides practitioner-friendly usable guidelines for adjusting rates, something that is unavailable elsewhere in the literature. Journal: The Engineering Economist Pages: 322-335 Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2016.1245376 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1245376 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:322-335 Template-Type: ReDIF-Article 1.0 Author-Name: Marco de Werk Author-X-Name-First: Marco Author-X-Name-Last: de Werk Author-Name: Burak Ozdemir Author-X-Name-First: Burak Author-X-Name-Last: Ozdemir Author-Name: Bellal Ragoub Author-X-Name-First: Bellal Author-X-Name-Last: Ragoub Author-Name: Tyrrell Dunbrack Author-X-Name-First: Tyrrell Author-X-Name-Last: Dunbrack Author-Name: Mustafa Kumral Author-X-Name-First: Mustafa Author-X-Name-Last: Kumral Title: Cost analysis of material handling systems in open pit mining: Case study on an iron ore prefeasibility study Abstract: Selection of the optimal material handling system is one of the most significant decisions to be made in mineral industries. Rapid economic changes and technological improvements make cost analysis a complicated process. On the other hand, current low commodity prices have put a greater emphasis on cost reduction and process optimization to ensure viability of mining projects. In this article, two material handling systems, a semimobile in-pit crusher and conveyor systems (IPCC) and traditional truck and shovel systems (TS), are compared through the cost analysis of an iron ore prefeasibility study. Furthermore, robustness of the design parameters is evaluated through a sensitivity analysis to determine the relative importance of project parameters. Finally, risks associated with uncertain design parameters affecting cost analysis are assessed through Monte Carlo simulation. The results indicated that IPCC is more cost effective than TS. Journal: The Engineering Economist Pages: 369-386 Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2016.1253810 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1253810 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:369-386 Template-Type: ReDIF-Article 1.0 Author-Name: M. Reaz-us Salam Elias Author-X-Name-First: M. Reaz-us Salam Author-X-Name-Last: Elias Author-Name: M. I. M. Wahab Author-X-Name-First: M. I. M. Author-X-Name-Last: Wahab Author-Name: Liping Fang Author-X-Name-First: Liping Author-X-Name-Last: Fang Title: Integrating weather and spark spread options for valuing a natural gas-fired power plant with multiple turbines Abstract: A model that integrates spark spread and weather options in valuing a power plant with multiple turbines is presented. The spark spread option entails the right to operate the plant when it is profitable to run. Weather also affects a plant’s operation. A mild winter inducing a lower heating requirement could decrease the payoff. An owner holding a long position in a temperature-based put option could exercise the option when accumulated heating degree days drop below a strike level of heating degree days. Results demonstrate that integrating spark spread with weather options adds value during a mild winter. Journal: The Engineering Economist Pages: 293-321 Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2016.1258746 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1258746 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:293-321 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: EOV Editorial Board Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2017.1401411 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1401411 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award nominations Journal: The Engineering Economist Pages: 387-387 Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2017.1401413 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1401413 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:387-387 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for nominations: National Engineering Economy Teaching Excellence Award Journal: The Engineering Economist Pages: 388-389 Issue: 4 Volume: 62 Year: 2017 Month: 10 X-DOI: 10.1080/0013791X.2017.1401874 File-URL: http://hdl.handle.net/10.1080/0013791X.2017.1401874 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:62:y:2017:i:4:p:388-389 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammadreza Sharifi Author-X-Name-First: Mohammadreza Author-X-Name-Last: Sharifi Author-Name: Roy H. Kwon Author-X-Name-First: Roy H. Author-X-Name-Last: Kwon Author-Name: Andrew K. S. Jardine Author-X-Name-First: Andrew K. S. Author-X-Name-Last: Jardine Title: Valuation of performance-based contracts for capital equipment: A stochastic programming approach Abstract: Evaluating performance-based contracts (PBCs) for capital equipment can be a challenge because it is difficult to map service-level improvements to operational availability. This article considers scenario-based stochastic programming models for the evaluation of PBC alternatives for capital equipment consisting of a single-component system. In particular, PBC alternatives are evaluated for robustness under uncertainty in mean time between failures and mean downtime. The models measure expected deviation of implied contract operational availability and realized operational availability, and robustness is measured by the extent of improvement in service quality under a budget constraint. Optimal contract service levels are also computed that can be compared to service levels offered in a contract alternative. Value at risk (VaR) and conditional value at risk (CVaR) values for contracts are generated to gain insight into the readiness risk of contracts. Journal: The Engineering Economist Pages: 1-22 Issue: 1 Volume: 61 Year: 2016 Month: 1 X-DOI: 10.1080/0013791X.2015.1081711 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1081711 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:1:p:1-22 Template-Type: ReDIF-Article 1.0 Author-Name: David J. A. Gonsalvez Author-X-Name-First: David J. A. Author-X-Name-Last: Gonsalvez Author-Name: Robert R. Inman Author-X-Name-First: Robert R. Author-X-Name-Last: Inman Title: Supply chain shared risk self-financing for incremental sales Abstract: Lack of credit during periods of financial stress can reduce sales in an entire supply chain. To reduce the reliance on external credit, we introduce a new financing framework in which key supply chain stakeholders accept delayed payment for a pre-agreed portion of their product or service. By doing so throughout the supply chain, each stakeholder must self-finance only their in-house activities—but not the cost of purchased components and services because those are in turn financed by their suppliers. Intended to account for only a small fraction of sales, this framework is limited to supplying customers who do not qualify for external financing. The payments from these customers are distributed among the value chain stakeholders according to an agreed-upon policy. These additional sales would otherwise be lost for lack of consumer credit. This approach increases sales and profitability for the entire supply chain and is especially advantageous during credit crunches. In addition to describing this new financing framework, this article places it in the context of other financing arrangements, provides an example with cash flow and net present value calculations, and identifies implementation challenges and characteristics of supply chains that are good candidates. Journal: The Engineering Economist Pages: 23-43 Issue: 1 Volume: 61 Year: 2016 Month: 1 X-DOI: 10.1080/0013791X.2015.1094562 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1094562 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:1:p:23-43 Template-Type: ReDIF-Article 1.0 Author-Name: Abdullah Eroglu Author-X-Name-First: Abdullah Author-X-Name-Last: Eroglu Author-Name: Harun Ozturk Author-X-Name-First: Harun Author-X-Name-Last: Ozturk Title: New mathematical annuity models in a skip payment loan with rhythmic skips Abstract: Formato derived a useful formula in which the amount of periodic payment was equal in a skip payment loan with arbitrary skips. Formato's model was improved by Moon in a geometric-gradient series. Eroglu and Karaoz rederived Formato's result to the case where periodic payments occur in a linear-gradient series. In this study, general formulas are derived for payment loan models in which a certain number of periodic payment amounts are determined by the customer at the beginning of the loan term and the other payments are rhythmic skips with split constant instead of random skips. Journal: The Engineering Economist Pages: 70-78 Issue: 1 Volume: 61 Year: 2016 Month: 1 X-DOI: 10.1080/0013791X.2015.1095382 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1095382 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:1:p:70-78 Template-Type: ReDIF-Article 1.0 Author-Name: Morris G. Danielson Author-X-Name-First: Morris G. Author-X-Name-Last: Danielson Title: The IRR of a project with many potential outcomes Abstract: This article shows that the internal rate of return (IRR) of a project's expected cash flow stream is a weighted average of the IRRs offered by the project's (many) possible future outcomes, where the weights are calculated using the outcome probabilities and invested capital balances. Because the invested capital associated with a particular realization is a function of the Macaulay duration of the cash flows in that outcome, the weights depend on the outcome probabilities and the effective length of each cash flow stream. Journal: The Engineering Economist Pages: 44-56 Issue: 1 Volume: 61 Year: 2016 Month: 1 X-DOI: 10.1080/0013791X.2015.1095383 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1095383 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:1:p:44-56 Template-Type: ReDIF-Article 1.0 Author-Name: Waroonporn Chienwichai Author-X-Name-First: Waroonporn Author-X-Name-Last: Chienwichai Author-Name: Jessada Wannasin Author-X-Name-First: Jessada Author-X-Name-Last: Wannasin Author-Name: Runchana Sinthavalai Author-X-Name-First: Runchana Author-X-Name-Last: Sinthavalai Author-Name: Napisphon Meemongkol Author-X-Name-First: Napisphon Author-X-Name-Last: Meemongkol Title: Model-based cost estimates for selecting a die casting process Abstract: Semisolid die casting (SSDC) is a newly developed technology to improve the quality of products and to reduce the costs of liquid die casting process. We assessed the gas-induced semisolid process (GISS), which generates a semisolid metal for die casting, in this comparison of the costs per unit between a traditional liquid die casting process and the semisolid die casting process. A process-based costing model (PBCM) was created to estimate the production costs. In principle, the PBCM consists of three submodels: process model, operation model, and financial model. This study indicates that three main factors, namely cycle time, rate of waste, and die life, affected the unit production costs. The production cost estimates decreased by approximately 13% when the process was switched from a liquid to a semisolid one. Journal: The Engineering Economist Pages: 57-69 Issue: 1 Volume: 61 Year: 2016 Month: 1 X-DOI: 10.1080/0013791X.2015.1123787 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1123787 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:1:p:57-69 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Special Issue Call For Papers: “Engineering Economic Models in Healthcare Systems†Journal: The Engineering Economist Pages: 163-164 Issue: 2 Volume: 60 Year: 2015 Month: 4 X-DOI: 10.1080/0013791X.2015.1037184 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1037184 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:2:p:163-164 Template-Type: ReDIF-Article 1.0 Author-Name: Pedro Carvalho Author-X-Name-First: Pedro Author-X-Name-Last: Carvalho Author-Name: Rui Cunha Marques Author-X-Name-First: Rui Cunha Author-X-Name-Last: Marques Title: Estimating Size and Scope Economies in the Portuguese Water Sector Using the Most Appropriate Functional Form Abstract: Contrary to the usual method of most studies that apply parametric methodologies, the current study does not assume a priori a functional form to represent the cost function. Instead, a large number of functional forms are tested in order to find the most appropriate functional form for the true cost structure of utilities. The sample focuses on water utilities operating in Portugal during the period 2002–2008. The results show that there are substantial economies of output density, economies of size, and economies of scope (in the joint supply of water supply and wastewater services) and, therefore, there are huge advantages in utilities merging. Journal: The Engineering Economist Pages: 109-137 Issue: 2 Volume: 60 Year: 2015 Month: 4 X-DOI: 10.1080/0013791X.2013.873507 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.873507 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:2:p:109-137 Template-Type: ReDIF-Article 1.0 Author-Name: Hussan Al-Chalabi Author-X-Name-First: Hussan Author-X-Name-Last: Al-Chalabi Author-Name: Jan Lundberg Author-X-Name-First: Jan Author-X-Name-Last: Lundberg Author-Name: Alireza Ahmadi Author-X-Name-First: Alireza Author-X-Name-Last: Ahmadi Author-Name: Adam Jonsson Author-X-Name-First: Adam Author-X-Name-Last: Jonsson Title: Case Study: Model for Economic Lifetime of Drilling Machines in the Swedish Mining Industry Abstract: The purpose of this article is to develop a practical economic replacement decision model to identify the economic lifetime of a mining drilling machine. A data-driven optimization model was developed for operating and maintenance costs, purchase price, and machine resale value. Equivalent present value of these costs by using discount rate was considered. The proposed model shows that the absolute optimal replacement time (ORT) of a drilling machine used in one underground mine in Sweden is 115 months. Sensitivity and regression analysis show that the maintenance cost has the largest impact on the ORT of this machine. The proposed decision-making model is applicable and useful and can be implemented within the mining industry. Journal: The Engineering Economist Pages: 138-154 Issue: 2 Volume: 60 Year: 2015 Month: 4 X-DOI: 10.1080/0013791X.2014.952466 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.952466 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:2:p:138-154 Template-Type: ReDIF-Article 1.0 Author-Name: Hemantha S. B. Herath Author-X-Name-First: Hemantha S. B. Author-X-Name-Last: Herath Author-Name: Pranesh Kumar Author-X-Name-First: Pranesh Author-X-Name-Last: Kumar Title: Using Copula Functions in Bayesian Analysis: A Comparison of the Lognormal Conjugate Abstract: Bayesian techniques have been applied to analyze sequential investment decisions in the capital budgeting literature. This article introduces copula-based Bayesian analysis as an alternative to the traditional approach where conjugate relationships do not exist. Using a numerical example, we illustrate the steps involved in the copula-based Bayesian approach. Graphical techniques for selecting an appropriate copula are also discussed. The unique ability of copulas to model nonlinear dependence rationalizes the use of copula functions as an alternative technique. Journal: The Engineering Economist Pages: 89-108 Issue: 2 Volume: 60 Year: 2015 Month: 4 X-DOI: 10.1080/0013791X.2014.962719 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.962719 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:2:p:89-108 Template-Type: ReDIF-Article 1.0 Author-Name: David G. Carmichael Author-X-Name-First: David G. Author-X-Name-Last: Carmichael Author-Name: Lachlan B. Handford Author-X-Name-First: Lachlan B. Author-X-Name-Last: Handford Title: A Note on Equivalent Fixed Rate and Variable Rate Loans; Borrower's Perspective Abstract: A common situation is where a borrower is offered the choice of two types of loans—a fixed interest rate loan for a fixed period or a variable interest (floating interest) rate loan. Usual wisdom and advice is that the borrower opts for the fixed rate loan if interest rates are anticipated to rise in the future or opts for the variable rate loan if interest rates are anticipated to fall. However, depending on the magnitude of the rates offered, and the rate uncertainty in the market, such wisdom may not always be well founded. This note demonstrates why this might be. It derives a readily usable, low-mathematical-background expression showing, for borrowers, when fixed and variable rate loans are equivalent and when one rate type is better/worse than the other. Journal: The Engineering Economist Pages: 155-162 Issue: 2 Volume: 60 Year: 2015 Month: 4 X-DOI: 10.1080/0013791X.2014.973985 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.973985 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:2:p:155-162 Template-Type: ReDIF-Article 1.0 Author-Name: Olivier Massol Author-X-Name-First: Olivier Author-X-Name-Last: Massol Title: A Cost Function for the Natural Gas Transmission Industry: Further Considerations Abstract: This article studies the cost function for the natural gas transmission industry. In addition to a tribute to H.B. Chenery, it firstly offers some further comments on a recent contribution (Yépez 2008): a statistical characterization of long-run scale economies and a simple reformulation of the long-run problem. An extension is then proposed to analyze how the presence of seasonally varying flows modifies the optimal design of a transmission infrastructure. Lastly, the case of a firm that anticipates a possible random rise in its future output is also studied to discuss the optimal degree of excess capacity to be built into a new transmission infrastructure. Journal: The Engineering Economist Pages: 95-122 Issue: 2 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.573615 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.573615 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:2:p:95-122 Template-Type: ReDIF-Article 1.0 Author-Name: David Carmichael Author-X-Name-First: David Author-X-Name-Last: Carmichael Title: An Alternative Approach to Capital Investment Appraisal Abstract: The article presents an alternative and original method for establishing the present worth and feasibility of a capital investment where the underlying parameters of interest/discount rate, cash flows. and investment lifespan are uncertain. The method, based on Markov chains, complements existing and useful practices such as sensitivity analysis, Monte Carlo simulation, Hillier-style probabilistic analysis, and fuzzy sets. For the same underlying assumptions, the results of this alternative approach are the same as for these existing approaches, but the approach provides additional insight into discounted cash flow (DCF) analysis under uncertainty. The method will be found useful to persons doing investment analysis and looking at the risks associated with investment. Journal: The Engineering Economist Pages: 123-139 Issue: 2 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.573616 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.573616 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:2:p:123-139 Template-Type: ReDIF-Article 1.0 Author-Name: Carlo Magni Author-X-Name-First: Carlo Author-X-Name-Last: Magni Title: Aggregate Return on Investment and Investment Decisions: A Cash-Flow Perspective Abstract: The recent notion of average internal rate of return (AIRR; Magni 2010a, The Engineering Economist, 55(2), 150–180) completely solves the long-standing problem of the internal rate of return (IRR). Though the AIRR is a return measure, this article presents a cash-flow measure, namely, the ratio of net cash flow (i.e., cash inflows minus cash outflows) to capital invested, which we call aggregate return on investment (AROI). It is a purely internal measure because, unlike the AIRR, it does not depend on the market rate and is a return measure, because it is a mean of one-period return rates, weighed by the outstanding capitals. The AROI is reliable in both accept/reject decisions and project ranking, in association with an appropriate, economically significant hurdle rate: the comprehensive cost of capital (CCOC), which takes into account not only the interest foregone on the capital actually employed but also the interest foregone on the capital that is given up by the investor. This perspective enables one to decompose the project net present value (NPV) into an excess-rate share and an excess-capital share. The traditional IRR is just a particular case of both AIRR and AROI, but the latter approach has the advantage that the IRR's nature (rate of return versus rate of cost) does not depend on the market rate and is unambiguously determined by the capital invested. Journal: The Engineering Economist Pages: 140-169 Issue: 2 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.573617 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.573617 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:2:p:140-169 Template-Type: ReDIF-Article 1.0 Author-Name: Stanley Block Author-X-Name-First: Stanley Author-X-Name-Last: Block Title: Does the Weighted Average Cost of Capital Describe the Real-World Approach to the Discount Rate? Abstract: Almost every capital budgeting textbook has a chapter on the weighted average cost of capital (WACC). Though this is theoretically satisfying, it does not describe how companies actually operate. The WACC calls for a balanced capital structure in which debt and equity are utilized at some predetermined percentage. The problem is that researchers have shown that firms try to avoid selling new shares whenever possible. This leads to the pecking order theory in which firms first use internal funds, then low-risk debt, then high-risk debt, and finally, as a last resort, new common stock. There is no attempt to balance the capital structure. This survey study basically confirms that approach. Journal: The Engineering Economist Pages: 170-180 Issue: 2 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.573618 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.573618 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:2:p:170-180 Template-Type: ReDIF-Article 1.0 Author-Name: Carlo Magni Author-X-Name-First: Carlo Author-X-Name-Last: Magni Title: Addendum to “Average Internal Rate of Return and Investment Decisions: A New Perspective†Journal: The Engineering Economist Pages: 181-182 Issue: 2 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2011.573658 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.573658 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:2:p:181-182 Template-Type: ReDIF-Article 1.0 Author-Name: Byung-Cheol Kim Author-X-Name-First: Byung-Cheol Author-X-Name-Last: Kim Author-Name: Kenneth Reinschmidt Author-X-Name-First: Kenneth Author-X-Name-Last: Reinschmidt Title: A Second Moment Approach to Probabilistic IRR Using Taylor Series Abstract: This article presents a practical approach for computing the internal rate of return (IRR) of stochastic cash flows. The mean and variance of the distribution of the IRR are derived by a second-moment approach using the means, variances, and correlations of the costs and returns in a cash layout. Programmed as an add-in function, the second-moment algorithm was applied to three examples in the literature and the accuracy of the second-moment method was compared with more sophisticated, computationally intensive methods. The comparison indicates that the second-moment approach can serve as a quick and viable tool for probabilistic IRR analysis. Journal: The Engineering Economist Pages: 1-19 Issue: 1 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2011.624677 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.624677 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:1:p:1-19 Template-Type: ReDIF-Article 1.0 Author-Name: Flavia Cortelezzi Author-X-Name-First: Flavia Author-X-Name-Last: Cortelezzi Author-Name: Giovanni Villani Author-X-Name-First: Giovanni Author-X-Name-Last: Villani Title: Strategic R&D Investment Under Information Revelation Abstract: R&D projects generally involve multiple phases with or without overlapping. Moreover, the investment is usually made in a phased manner, with the commencement of the subsequent phase being dependent on the successful completion of the preceding phase. The aim of this article is to analyze the equilibrium strategies of two firms competing for a two-stage sequential R&D investment, when a firm may infer a private signal from the strategy played by the other. Thus, firms must formulate their optimal strategies in a context of imperfect information. We evaluate the resulting compound option with information revelation as an American compound exchange option using Monte Carlo simulations. We then show that different equilibria may arise. Journal: The Engineering Economist Pages: 20-40 Issue: 1 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2011.649511 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.649511 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:1:p:20-40 Template-Type: ReDIF-Article 1.0 Author-Name: Mien-Ling Chen Author-X-Name-First: Mien-Ling Author-X-Name-Last: Chen Title: The Effect of Leader Reward and Punishment Behaviors on Subordinates’ Budget Reports Abstract: In this study an experiment was conducted to examine the effect of leader reward and punishment behaviors on subordinates’ budget reports, especially at different levels of reward/punishment. The results indicated that hands-off behavior is the least effective in controlling budgetary slack among four leader behaviors, even if intrinsic honesty is effective in slack reduction. Large punishments relative to slack creation (the difference between budget requests and needs) can change subordinates from the possible slack creation to reasonable cost reporting, whereas with small punishments subordinates become less cooperative. Rewards have only a small effect, whereas adding punishments to rewards has a profound effect on slack reduction. Journal: The Engineering Economist Pages: 41-54 Issue: 1 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2011.650839 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.650839 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:1:p:41-54 Template-Type: ReDIF-Article 1.0 Author-Name: K. Min Author-X-Name-First: K. Author-X-Name-Last: Min Author-Name: Chenlu Lou Author-X-Name-First: Chenlu Author-X-Name-Last: Lou Author-Name: Chung-Hsiao Wang Author-X-Name-First: Chung-Hsiao Author-X-Name-Last: Wang Title: An Exit and Entry Study of Renewable Power Producers: A Real Options Approach Abstract: In recent years, there has been a substantial increase in renewable power production sites. However, such sites operated in the 1980s were often abandoned in the 1990s and their remnants are still visible. Hence, it is highly desirable to understand the exit and entry decisions of such sites. Toward this goal, we formulate and analyze models for such decisions regarding a single site from a real options perspective when the operation and maintenance costs follow a geometric Brownian motion and derive policy implications. An extensive numerical example for a wind farm illustrates some of the key features of this study. Journal: The Engineering Economist Pages: 55-75 Issue: 1 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2011.651566 File-URL: http://hdl.handle.net/10.1080/0013791X.2011.651566 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:1:p:55-75 Template-Type: ReDIF-Article 1.0 Author-Name: Anxo Silvosa Author-X-Name-First: Anxo Author-X-Name-Last: Silvosa Author-Name: Guillermo Gómez Author-X-Name-First: Guillermo Author-X-Name-Last: Gómez Author-Name: Pablo RÃo Author-X-Name-First: Pablo Author-X-Name-Last: RÃo Title: Analyzing the Techno-Economic Determinants for the Repowering of Wind Farms Abstract: The aim of this article is to identify the relative importance of technical and economic variables in the financial feasibility of repowering wind farm projects. A financial valuation model is developed. We carry out a sensitivity analysis with several variables considered to be key in the repowering decision. The most relevant technical variable is the increase in production efficiency and the most relevant economic variable is the capital expenditures in new equipment. Furthermore, the decision to repower critically depends upon the level of support being provided. The repowering project would not be feasible in the absence of support. Journal: The Engineering Economist Pages: 282-303 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.814737 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.814737 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:282-303 Template-Type: ReDIF-Article 1.0 Author-Name: Eric Dahlgren Author-X-Name-First: Eric Author-X-Name-Last: Dahlgren Author-Name: Caner Göçmen Author-X-Name-First: Caner Author-X-Name-Last: Göçmen Author-Name: Klaus Lackner Author-X-Name-First: Klaus Author-X-Name-Last: Lackner Author-Name: Garrett van Ryzin Author-X-Name-First: Garrett Author-X-Name-Last: van Ryzin Title: Small Modular Infrastructure Abstract: In this article we argue that advances made in automation, communication, and manufacturing portend a dramatic reversal of the “bigger is better†approach to cost reductions prevalent in many basic infrastructure industries; for example, transportation, electric power generation, and raw material processing. We show that the traditional reductions in capital costs achieved by scaling up in size are generally matched by learning effects in the mass production process when scaling up in numbers instead. In addition, using the U.S. electricity generation sector as a case study, we argue that the primary operating cost advantage of large unit scale is reduced labor, which can be eliminated by employing low-cost automation technologies. Finally, we argue that locational, operational, and financial flexibilities that accompany smaller unit scale can reduce investment and operating costs even further. All of these factors combined imply that with current technology, economies of numbers may well dominate economies of unit scale. Yet realizing the full potential of small unit scale will require technologists and business leaders to develop a new ability to “think small.†Journal: The Engineering Economist Pages: 231-264 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.825038 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.825038 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:231-264 Template-Type: ReDIF-Article 1.0 Author-Name: Sunderasan Srinivasan Author-X-Name-First: Sunderasan Author-X-Name-Last: Srinivasan Title: A Two-Part Tariff Model for Energy Intermediation Abstract: The proliferation of intermittent and distributed sources of power generation leads to potential instability of the utility grid. The unforecastability of weather patterns, cloud cover, and the like and the consequent unpredictability of output from such sources as wind farms and solar power plants aggravate the situation created by unpredictable consumer demand for power. Energy storage has been increasingly seen as a crucial element in resolving the challenge and several electrical, chemical, and mechanical systems have been analyzed. On occasion, storing a unit of electric power could cost more than generating one. This article argues that investments in energy storage should be justified on a stand-alone basis. Trading margins alone are found insufficient to justify economic investments in storage facilities. To sustain investor interest in the long run, such facilities would have to bank and trade energy along the lines of mainstream commercial banks and earn economic profits comparable to alternative applications of funds. This article discusses an economic model involving a two-part tariff: an option price and a trading margin from energy time-shifting. Journal: The Engineering Economist Pages: 265-281 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.834528 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.834528 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:265-281 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: ASEE Engineering Economy Division Annual Business Meeting Minutes Journal: The Engineering Economist Pages: 306-311 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.845454 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.845454 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:306-311 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: IIE Engineering Economy Division 2013 Town Hall Meeting Minutes Journal: The Engineering Economist Pages: 312-314 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.845459 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.845459 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:312-314 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award Nominations Journal: The Engineering Economist Pages: 315-315 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.845463 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.845463 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:315-315 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board EOV Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.845465 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.845465 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Special Issue Call for Papers: “Engineering Economics and Sustainable Systems†Journal: The Engineering Economist Pages: 304-305 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.852406 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.852406 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:304-305 Template-Type: ReDIF-Article 1.0 Author-Name: Gene Dixon Author-X-Name-First: Gene Author-X-Name-Last: Dixon Title: Call for Nominations: National Engineering Economy Teaching Excellence Award Journal: The Engineering Economist Pages: 316-317 Issue: 4 Volume: 58 Year: 2013 X-DOI: 10.1080/0013791X.2013.859515 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.859515 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:58:y:2013:i:4:p:316-317 Template-Type: ReDIF-Article 1.0 Author-Name: Nikolay Yu. Kulakov Author-X-Name-First: Nikolay Yu. Author-X-Name-Last: Kulakov Author-Name: Anastasia Blaset Kastro Author-X-Name-First: Anastasia Author-X-Name-Last: Blaset Kastro Title: Evaluation of Nonconventional Projects: GIRR and GERR vs. MIRR Abstract: This article considers evaluation of nonconventional projects and projects with cash outflows occurring not only at the beginning of project. It has been proved that, being a monotonically increasing function of a discount or finance rate, the modified internal rate of return (MIRR) fails to characterize the rate of return of such projects. We showed how to eliminate the MIRR's dependence on a finance rate and proved that in this case the MIRR becomes the “equivalent rate of return†proposed by Solomon. The generalized internal rate of return (GIRR) and generalized external rate of return (GERR) indices based on the generalized net present value (GNPV) approach are considered as alternatives to the MIRR. Several nonconventional projects have been evaluated using the MIRR, GIRR, and GERR rules. In order to verify the estimates, we drew up a simple project balance sheet, which demonstrated correctness of the results based on the GIRR and GERR rules and errors inherent in the MIRR application. Journal: The Engineering Economist Pages: 183-196 Issue: 3 Volume: 60 Year: 2015 Month: 7 X-DOI: 10.1080/0013791X.2014.1002053 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.1002053 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:3:p:183-196 Template-Type: ReDIF-Article 1.0 Author-Name: Richard A. Followill Author-X-Name-First: Richard A. Author-X-Name-Last: Followill Author-Name: Brett C. Olsen Author-X-Name-First: Brett C. Author-X-Name-Last: Olsen Title: A Closed-Form, After-Tax, Net Present Value Solution to the Mortgage Refinancing Decision Abstract: Refinancing one's mortgage is often an attractive, wealth-enhancing option for homeowners in a declining mortgage rate environment. In some respects the decision is simple to analyze because future cash flows are relatively easy to define for fixed-rate mortgages. In other respects, however, the decision is nuanced by option pricing and tax considerations. The analysis must first begin with accurate after-tax, net present value solutions for varying potential holding periods. This study improves upon previous studies, which either ignore tax implications or address them iteratively in spreadsheet model solutions, by introducing a closed-form model that incorporates the ever-changing tax shield of the interest portion of each mortgage payment. Further, unlike many previous studies, our model does not assume that the current and replacement mortgages have equal remaining terms. Journal: The Engineering Economist Pages: 165-182 Issue: 3 Volume: 60 Year: 2015 Month: 7 X-DOI: 10.1080/0013791X.2015.1014531 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1014531 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:3:p:165-182 Template-Type: ReDIF-Article 1.0 Author-Name: B.C. Giri Author-X-Name-First: B.C. Author-X-Name-Last: Giri Title: Optimal Pricing and Order-Up-To S Inventory Policy with Expected Utility of the Present Value Criterion Abstract: The article determines pricing and order-up-to level S inventory decisions over an infinite planning horizon from the point of view of a risk-averse decision maker. The demand is assumed to be stochastic but influenced by the selling price which is a decision variable. Shortages are allowed and backordered partially. We calculate the present value of the cash flow over the entire planning horizon and incorporate the notion of risk aversion into the model using a concave utility function. We numerically demonstrate the model and investigate the impact of different model-parameters on the optimal decisions. It is observed that the optimal selling price for a risk-averse decision maker is not less than the optimal selling price of a risk-neutral decision maker while the optimal order level for the risk-averse decision maker is always less than that of the risk-neutral decision maker. Journal: The Engineering Economist Pages: 231-244 Issue: 3 Volume: 60 Year: 2015 Month: 7 X-DOI: 10.1080/0013791X.2014.988311 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.988311 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:3:p:231-244 Template-Type: ReDIF-Article 1.0 Author-Name: Mark J. Kaiser Author-X-Name-First: Mark J. Author-X-Name-Last: Kaiser Title: A New Approach to Decommissioning Cost Estimation Using Settled Liability Data Abstract: Cost data in the oil and gas industry are proprietary and obtaining them is challenging; in addition, unless collected across a large and diverse sample, summary statistics are unlikely to be representative of the activity or process it is trying to inform. The purpose of this article is to apply settled liability data to infer private information on the cost of decommissioning in the Gulf of Mexico. The procedure avoids most of the traditional problems associated with cost studies but requires careful normalization and a clear understanding of the limitations of analysis. Using settled liability data from 17 public companies with operations primarily in the Gulf of Mexico, decommissioning cost is evaluated on a regional basis and by operator from 2008 to 2012. The average cost to decommission a structure between 2008 and 2012 is estimated to be $6.4 million in water depth less than 200 ft and $15.6 million in water depth greater than 200 ft. Average cost statistics are suggested as a market index for Gulf of Mexico decommissioning activity. Journal: The Engineering Economist Pages: 197-230 Issue: 3 Volume: 60 Year: 2015 Month: 7 X-DOI: 10.1080/0013791X.2014.990127 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.990127 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:3:p:197-230 Template-Type: ReDIF-Article 1.0 Author-Name: Farid Mardin Author-X-Name-First: Farid Author-X-Name-Last: Mardin Author-Name: Takeshi Arai Author-X-Name-First: Takeshi Author-X-Name-Last: Arai Title: Capital Equipment Replacement Under Technological Change Abstract: In this article, one of the commonly used replacement decision methods, the challenger–defender (CD) method, is modified. The proposed method is shown to outperform the original CD method and, in some cases, it outperforms the original economic life (EL) method. When the annual multiplier for the purchase price (a) is higher than that for the new asset operating and maintenance (O&M) costs (q), the solution of the modified CD method is more advantageous compared with the EL method when the new asset O&M costs purchased at time 0 (A) are higher. Furthermore, this modified CD method is more advantageous compared to the two-replacement-cycle method when the annual effective discount rate (d) is higher. Journal: The Engineering Economist Pages: 119-129 Issue: 2 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.677112 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.677112 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:2:p:119-129 Template-Type: ReDIF-Article 1.0 Author-Name: Moshe Ben-Horin Author-X-Name-First: Moshe Author-X-Name-Last: Ben-Horin Author-Name: Yoram Kroll Author-X-Name-First: Yoram Author-X-Name-Last: Kroll Title: The Limited Relevance of the Multiple s Abstract: We find that the incidence of multiple internal rate of return (IRR) pitfalls are rare. This might partially explain the widespread use of IRRs by practitioners. When a project's cash flow has only two sign variations, the IRR rule is simple. For analyzing the case of three or more sign variations in the cash flow, we assume a non-negative sum of the future anticipated cash flows. Given this assumption, we present necessary and sufficient conditions for an investment's cash flows with three or more sign variations to have multiple IRR solutions. Based on these conditions we show that the confusing multiple IRR solutions are only possible under unrealistic large fluctuations of the cash flows. Journal: The Engineering Economist Pages: 101-118 Issue: 2 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.677113 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.677113 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:2:p:101-118 Template-Type: ReDIF-Article 1.0 Author-Name: ÇaÄŸlar Güler Author-X-Name-First: ÇaÄŸlar Author-X-Name-Last: Güler Author-Name: Alan Johnson Author-X-Name-First: Alan Author-X-Name-Last: Johnson Author-Name: Martha Cooper Author-X-Name-First: Martha Author-X-Name-Last: Cooper Title: Case Study: Energy Industry Economic Impacts from Ohio River Transportation Disruption Abstract: Recent history is full of water transport disruption events that have had significant economic effects on the waterside industries. Such disruptions may be either natural or man-made disasters or planned outages on the river's lock and dam structures. To assess coal-based economic impacts for the Ohio River Basin, we developed a network flow model to represent waterside coal-fired power plants situated along the Ohio River, their respective coal supplying mines, and the various transportation modes that connect them. We show that significant transportation-centric insights can be derived by using only commonly available spreadsheet-based analysis tools, open-source information systems, and web-based geographic tools. Journal: The Engineering Economist Pages: 77-100 Issue: 2 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.677114 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.677114 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:2:p:77-100 Template-Type: ReDIF-Article 1.0 Author-Name: Graham Davis Author-X-Name-First: Graham Author-X-Name-Last: Davis Title: Technical Note: Simulating the Two-Factor Schwartz and Smith Model of Commodity Prices Abstract: Commodity price simulation is useful in many engineering economics applications, yet discrete approximations of the continuous stochastic processes used in modeling commodity prices are not always straightforward. This article describes the exact solution for discretely simulating the Schwartz and Smith (2000) two-factor model of commodity prices. Journal: The Engineering Economist Pages: 130-140 Issue: 2 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.677302 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.677302 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:2:p:130-140 Template-Type: ReDIF-Article 1.0 Author-Name: Ä°. Esra Büyüktahtakın Author-X-Name-First: Ä°. Esra Author-X-Name-Last: Büyüktahtakın Author-Name: J. Cole Smith Author-X-Name-First: J. Cole Author-X-Name-Last: Smith Author-Name: Joseph C. Hartman Author-X-Name-First: Joseph C. Author-X-Name-Last: Hartman Author-Name: Shangyuan Luo Author-X-Name-First: Shangyuan Author-X-Name-Last: Luo Title: Parallel Asset Replacement Problem under Economies of Scale with Multiple Challengers Abstract: The parallel replacement problem under economies of scale (PRES) determines minimum cost replacement schedules for each individual asset in a group of assets that operate in parallel. A fixed cost is incurred in any period in which an asset is purchased. These fixed costs induce economies of scale, making replacement schedules for these assets economically interdependent. We prove that PRES is NP-hard and present integer programming formulations for four variants of the problem in which multiple asset types, or challengers, are available for replacement (MPRES). We then derive valid inequalities for PRES and MPRES, which are similar in structure to flow cover inequalities developed in the context of fixed charge network problems. Experiments illustrate that the inequalities are effective in improving the integrality gap of MPRES instances. Journal: The Engineering Economist Pages: 237-258 Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.898113 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.898113 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:237-258 Template-Type: ReDIF-Article 1.0 Author-Name: Nicholas W. Leifker Author-X-Name-First: Nicholas W. Author-X-Name-Last: Leifker Author-Name: Philip C. Jones Author-X-Name-First: Philip C. Author-X-Name-Last: Jones Author-Name: Timothy J. Lowe Author-X-Name-First: Timothy J. Author-X-Name-Last: Lowe Title: Determining Optimal Order Amount for End-of-Life Parts Acquisition with Possibility of Contract Extension Abstract: Manufacturers often encounter difficulties in supplying an adequate number of spare parts for a product in its postproduction phase. As a result, manufacturers will sometimes make one final order of a model of spare part that is used to satisfy any demand for the spare part going forward. The problem is compounded when a customer may request an extension to the maintenance or supply contract for which the part is supplied. We present two possible approaches for dealing with the problem: one involves the use of a continuous-time dynamic program that allows for the possibility of salvage, and the other makes use of a two-stage stochastic algorithm that does not consider salvage. Journal: The Engineering Economist Pages: 259-281 Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.903449 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.903449 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:259-281 Template-Type: ReDIF-Article 1.0 Author-Name: Faranak Fathi Aghdam Author-X-Name-First: Faranak Author-X-Name-Last: Fathi Aghdam Author-Name: Haitao Liao Author-X-Name-First: Haitao Author-X-Name-Last: Liao Title: Prognostics-Based Two-Operator Competition in Proactive Replacement and Service Parts Procurement Abstract: Effective prognostics and timely maintenance of degrading components can improve the availability and economic efficiency of an engineering system. However, possible shortage of required service parts usually makes near-zero downtime difficult to achieve. To coordinate service parts availability with scheduled maintenance, it is necessary for the operator to decide when to order the service parts and how to compete with other operators in parts procurement. In this article, we consider a situation where two operators are to make prognostics-based replacement decisions and strategically procure the needed service parts. When a competition occurs, each of the operators has a bounded continuum of strategies. A one-shot sequential game (Stackelberg game) is formulated and a sequential, constrained maximin experimental design approach is proposed to facilitate searching for the equilibrium solution. This approach is quite useful in handling cases where the follower's best response to the leader's strategy, both chosen from continuums of strategy sets, is difficult to obtain analytically. Numerical studies on wind turbine operation are provided to demonstrate the use of the sequential decision-making method in solving such complex, yet realistic maintenance and service parts logistics problems. Journal: The Engineering Economist Pages: 282-306 Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.940563 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.940563 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:282-306 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: ASEE Engineering Economy Division Business Meeting Minutes Journal: The Engineering Economist Pages: 307-312 Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.953003 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.953003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:307-312 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: IIE Engineering Economy Division 2014 Town Hall Meeting Minutes Journal: The Engineering Economist Pages: 313-316 Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.958017 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.958017 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:313-316 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award Nominations Journal: The Engineering Economist Pages: 317-317 Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.958020 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.958020 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:317-317 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board EOV Journal: The Engineering Economist Pages: ebi-ebi Issue: 4 Volume: 59 Year: 2014 Month: 10 X-DOI: 10.1080/0013791X.2014.966629 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.966629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:59:y:2014:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Cigdem Gurgur Author-X-Name-First: Cigdem Author-X-Name-Last: Gurgur Title: Dynamic Cash Management of Warranty Reserves Abstract: The objective in warranty reserve management is to cover contingent liabilities that arise from warranty obligations. Maintaining excess reserves would cause opportunity cost, whereas depleting the reserve would necessitate finding emergency funds. In this article we propose a policy rule to guide cash management of warranty reserves for an infinite horizon that involves periodic reviews. At the beginning of each period the decision maker determines how much to add to or subtract from the fund and how much to contribute after each sale. Numerical examples show how the optimal control variables change in response to change in problem parameters. Journal: The Engineering Economist Pages: 1-27 Issue: 1 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2010.548908 File-URL: http://hdl.handle.net/10.1080/0013791X.2010.548908 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:1:p:1-27 Template-Type: ReDIF-Article 1.0 Author-Name: Christopher Jablonowski Author-X-Name-First: Christopher Author-X-Name-Last: Jablonowski Author-Name: Andrew Kleit Author-X-Name-First: Andrew Author-X-Name-Last: Kleit Title: Transaction Costs and Organizational Choice: Modeling Governance in Offshore Drilling Abstract: This research examines oil company decisions to vertically integrate into the drilling function using a transaction cost economics framework. Risk preference is also investigated as an explanation of organizational choice. Econometric models are specified and estimated for organizational choice and for the cost functions of competing organizational options. Estimation of the cost functions permits isolation of the effects of transaction attributes to each form of organization, shedding light on the relative impacts of hazards of exchange and internal costs. Results provide support for both the transaction cost and risk preference hypotheses as determinants of organizational form. The cost functions also enable estimation of the transaction costs and incentive gains of outsourcing. Journal: The Engineering Economist Pages: 28-58 Issue: 1 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2010.549934 File-URL: http://hdl.handle.net/10.1080/0013791X.2010.549934 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:1:p:28-58 Template-Type: ReDIF-Article 1.0 Author-Name: Nihal Orfi Author-X-Name-First: Nihal Author-X-Name-Last: Orfi Author-Name: Janis Terpenny Author-X-Name-First: Janis Author-X-Name-Last: Terpenny Author-Name: Asli Sahin-Sariisik Author-X-Name-First: Asli Author-X-Name-Last: Sahin-Sariisik Title: Harnessing Product Complexity: Step 1—Establishing Product Complexity Dimensions and Indicators Abstract: With today's level of market competition and demand for diverse product offerings, more companies are now pressured to increase product variety as a strategy to maintain and increase market share. In addition to its associated direct costs, variety is considered the main source of product complexity, which has been proven to negatively impact product development time, productivity, costs, and customer satisfaction. Although several researchers have tackled the issue, product complexity continues to be a theoretical concept with different definitions and measurements established based on research area, scope, and objective. This lack of a unified approach has made it difficult for companies to take full advantage of existing research to manage the impact of product complexity. This article introduces five main dimensions of product complexity based on identifying different complexity sources in product design, development, manufacturing, assembly, and supply chain, and on understanding the impact of these sources on different direct and indirect costs. Establishing the dimensions of product complexity is an essential first step in developing a unified product complexity metric to be used as a support tool to improve product design and systematically manage product complexity. Journal: The Engineering Economist Pages: 59-79 Issue: 1 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2010.549935 File-URL: http://hdl.handle.net/10.1080/0013791X.2010.549935 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:1:p:59-79 Template-Type: ReDIF-Article 1.0 Author-Name: Sakesun Suthummanon Author-X-Name-First: Sakesun Author-X-Name-Last: Suthummanon Author-Name: Wanida Ratanamanee Author-X-Name-First: Wanida Author-X-Name-Last: Ratanamanee Author-Name: Nirachara Boonyanuwat Author-X-Name-First: Nirachara Author-X-Name-Last: Boonyanuwat Author-Name: Pieanpon Saritprit Author-X-Name-First: Pieanpon Author-X-Name-Last: Saritprit Title: Applying Activity-Based Costing (ABC) to a Parawood Furniture Factory Abstract: This article examines the implementation of activity-based costing (ABC) in a parawood furniture factory. It is a preliminary study describing the differences between the traditional and the ABC cost systems. Five products with the highest sale values were selected for this research. There were four main steps in accomplishing this research. First, the product, process, and current cost system were studied and analyzed. Second, an appropriate ABC model was developed and implemented at the factory. Third, a comparison between the current costing system and the ABC system was made. Finally, benefits and obstacles in the application of ABC system were discussed. The findings indicated that the costs under the traditional cost system were different from those computed using the ABC system. It allows the creation of a costing system that provides management with reliable cost information. It would be an important aid in making management decisions, particularly for improving pricing practices by making costing more accurate. Journal: The Engineering Economist Pages: 80-93 Issue: 1 Volume: 56 Year: 2011 X-DOI: 10.1080/0013791X.2010.549936 File-URL: http://hdl.handle.net/10.1080/0013791X.2010.549936 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:56:y:2011:i:1:p:80-93 Template-Type: ReDIF-Article 1.0 Author-Name: Luis V. Montiel Author-X-Name-First: Luis V. Author-X-Name-Last: Montiel Author-Name: J. Eric Bickel Author-X-Name-First: J. Eric Author-X-Name-Last: Bickel Title: Exploring the Accuracy of Joint-Distribution Approximations Given Partial Information Abstract: We test the accuracy of various methods for approximating underspecified joint probability distributions. In particular, we examine the maximum entropy and the analytic center approximations, and we introduce three methods for approximating a discrete joint probability distribution given partial probabilistic information. Our results suggest that recently proposed approximations and our new approximations more accurately represent the possible uncertainty models than do previous models such as maximum entropy. Journal: The Engineering Economist Pages: 323-345 Issue: 4 Volume: 64 Year: 2019 Month: 10 X-DOI: 10.1080/0013791X.2018.1512692 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1512692 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:4:p:323-345 Template-Type: ReDIF-Article 1.0 Author-Name: Mackenzie Whitman Author-X-Name-First: Mackenzie Author-X-Name-Last: Whitman Author-Name: Hiba Baroud Author-X-Name-First: Hiba Author-X-Name-Last: Baroud Author-Name: Kash Barker Author-X-Name-First: Kash Author-X-Name-Last: Barker Title: Multicriteria risk analysis of commodity-specific dock investments at an inland waterway port Abstract: Managing risks to critical infrastructure systems requires decision makers to account for impacts of disruptions that render these systems inoperable. This article evaluates dock-specific resource allocation strategies to improve port preparedness by integrating a dynamic risk-based interdependency model with weighted multicriteria decision analysis techniques. A weighted decision analysis technique allows for decision makers to balance widespread impacts due to cascading inoperability with certain industries that are important to the local economy. Further analysis of the relationship between inoperability and expected economic losses is explored per commodity flowing through the port, which allows an understanding of cascading impacts through interdependent industries. Uncertainty is accounted for through the use of probability distributions of total expected loss per industry that encompass the uncertainty of the length of disruption and severity of the impact that is mitigated by alternative strategies. A set of discrete allocations options of preparedness plans is analyzed in a study of the Port of Catoosa in Oklahoma along the Mississippi River Navigation System. The economic loss analysis showed that the integration of multicriteria decision analysis helps in prioritizing strategies according to several criteria such as gross domestic product (GDP) and decision maker risk aversion that are not typically addressed when strategies are prioritized according to the average interdependent economic losses alone. Journal: The Engineering Economist Pages: 346-367 Issue: 4 Volume: 64 Year: 2019 Month: 10 X-DOI: 10.1080/0013791X.2019.1580808 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1580808 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:4:p:346-367 Template-Type: ReDIF-Article 1.0 Author-Name: Shan Liu Author-X-Name-First: Shan Author-X-Name-Last: Liu Author-Name: Shouyi Wang Author-X-Name-First: Shouyi Author-X-Name-Last: Wang Author-Name: W. Art Chaovalitwongse Author-X-Name-First: W. Art Author-X-Name-Last: Chaovalitwongse Author-Name: Stephen R. Bowen Author-X-Name-First: Stephen R. Author-X-Name-Last: Bowen Title: Cost-effectiveness of patient-specific motion management strategy in lung cancer radiation therapy planning Abstract: Cost-effectiveness analysis (CEA) in medicine is a form of economic study that compares the relative value of medical technologies and health care services. It helps decision makers to formally evaluate proposed interventions and make informed choices based on the estimated health gains per dollar spent under each intervention. This study employs a CEA framework to assess an emerging imaging technology to determine whether its adoption will be appropriate in routine patient care. A significant challenge in lung cancer radiotherapy (RT) is respiration-induced tumor motion during positron emission tomography/computed tomography (PET/CT). Respiratory gating may improve the image quality and delivery of curative doses to tumor. Respiratory-gated PET/CT is especially useful for locally advanced and inoperable non–small cell lung cancer (NSCLC). Due to the heterogeneity in patients’ respiratory patterns, questions remain regarding who will benefit from respiratory gating. The effectiveness of respiratory gating can be measured by using quantitative improvements in PET/CT images. We previously developed a patient-specific motion management (PSMM) paradigm to identify patients who benefited from respiratory-gated PET/CT based on respiratory pattern analysis. This article presents a new CEA framework to evaluate the cost-effectiveness of PSMM compared to the population-based radiation oncology practice of motion management in more than 1,500 cancer patients. Journal: The Engineering Economist Pages: 368-386 Issue: 4 Volume: 64 Year: 2019 Month: 10 X-DOI: 10.1080/0013791X.2019.1597239 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1597239 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:4:p:368-386 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award Nominations Journal: The Engineering Economist Pages: 387-387 Issue: 4 Volume: 64 Year: 2019 Month: 10 X-DOI: 10.1080/0013791X.2019.1679474 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1679474 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:4:p:387-387 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Nominations: National Engineering Economy Teaching Excellence Award Journal: The Engineering Economist Pages: 388-388 Issue: 4 Volume: 64 Year: 2019 Month: 10 X-DOI: 10.1080/0013791X.2019.1679466 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1679466 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:64:y:2019:i:4:p:388-388 Template-Type: ReDIF-Article 1.0 Author-Name: Jiaying Teng Author-X-Name-First: Jiaying Author-X-Name-Last: Teng Author-Name: Xianguo Wu Author-X-Name-First: Xianguo Author-X-Name-Last: Wu Author-Name: Yawei Qin Author-X-Name-First: Yawei Author-X-Name-Last: Qin Author-Name: Tieming Hou Author-X-Name-First: Tieming Author-X-Name-Last: Hou Author-Name: Limao Zhang Author-X-Name-First: Limao Author-X-Name-Last: Zhang Title: Assessing incremental cost-efficiency of eco-footprint saving measures for school buildings: The case of the Inner Mongolia region in China Abstract: Reducing energy and resource consumption as well as emissions by building projects are important goals in sustainable development of modern society. In this article, a method based on the concept of life-cycle ecological footprint is proposed to assess the efficiency of the incremental cost brought about by eco-footprint saving measures taken in building projects. This method is then utilized to provide guidelines for school building decision makers to select design plans with higher ecological and financial efficiency. In this method, a set of eco-footprint models is developed to compute the efficiency of incremental cost. Two indices are presented and adopted for assessing the life-cycle incremental cost-efficiency of eco-footprint-saving measures: the life-cycle eco-efficiency index and financial efficiency index for per unit incremental cost. The procedure for applying this method to assessing projects aimed at improving the efficiency of building energy consumption is also introduced. A case study of a school building in China is used to demonstrate the features of this method and the advantages of adopting the method. The results show that this method helps to identify inefficient design plans and provide an effective tool for decision making. Journal: The Engineering Economist Pages: 244-261 Issue: 3 Volume: 61 Year: 2016 Month: 7 X-DOI: 10.1080/0013791X.2015.1041662 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1041662 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:3:p:244-261 Template-Type: ReDIF-Article 1.0 Author-Name: John V. Farr Author-X-Name-First: John V. Author-X-Name-Last: Farr Author-Name: Isaac J. Faber Author-X-Name-First: Isaac J. Author-X-Name-Last: Faber Author-Name: Anirban Ganguly Author-X-Name-First: Anirban Author-X-Name-Last: Ganguly Author-Name: W. Andy Martin Author-X-Name-First: W. Andy Author-X-Name-Last: Martin Author-Name: Steven L. Larson Author-X-Name-First: Steven L. Author-X-Name-Last: Larson Title: Simulation-based costing for early phase life cycle cost analysis: Example application to an environmental remediation project Abstract: Simulation-based costing (SBC) has been slow to be adopted by the traditional cost estimating community. This can be attributed to many factors, including complexity, how to gather data and develop probabilistic inputs, cost of SBC software, and a lack of understanding of the benefits of developing cost versus risk profiles. This article presents an overview of how SBC can be effectively utilized for early phase life cycle cost (LCC) estimation. A formal process for conducting LCC incorporating SBC is presented not only to provide a structured approach but to also convey to stakeholders how such a study is conducted. This article also presents a case study where total ownership cost versus risk profiles were developed using this proposed process in order to support budgetary and planning considerations for a large environmental remediation project. This research argues that SBC is needed during the concept exploration phase because this is when budgets are often fixed and expectations set. Journal: The Engineering Economist Pages: 207-222 Issue: 3 Volume: 61 Year: 2016 Month: 7 X-DOI: 10.1080/0013791X.2015.1062582 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1062582 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:3:p:207-222 Template-Type: ReDIF-Article 1.0 Author-Name: Carmen Juan Author-X-Name-First: Carmen Author-X-Name-Last: Juan Author-Name: Fernando Olmos Author-X-Name-First: Fernando Author-X-Name-Last: Olmos Author-Name: Eva Pérez Author-X-Name-First: Eva Author-X-Name-Last: Pérez Title: Decision support system to design feasible high-frequency Motorways of the Sea: A new perspective for public commitment Abstract: The implementation of Motorways of the Sea (MoS) within the framework of European Union aid programs experiences a period of relative stagnation. This article analyzes the suitability of current short-term nonrepayable subsidy policy and develops a decision support system (DSS) that allows a medium- and long-term feasibility analysis of MoS proposals. One significant conclusion drawn from the application of the proposed DSS to a prototypical high-frequency MoS provides that the period of initial losses prior to achievement of both modal shift and accounting profits might last 10 years. Moreover, the entire duration of the period that includes prior objectives as well as the recovering of initial losses might reach 25 years. Therefore, existing schemes of public–private collaboration should be redefined. To this end, the proposed DSS also contributes to envisioning a spectrum of possibilities for private–public collaborations schemes, as opposed to public–private dichotomy of partnerships. Journal: The Engineering Economist Pages: 163-189 Issue: 3 Volume: 61 Year: 2016 Month: 7 X-DOI: 10.1080/0013791X.2016.1147109 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1147109 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:3:p:163-189 Template-Type: ReDIF-Article 1.0 Author-Name: Alex M. McRae Author-X-Name-First: Alex M. Author-X-Name-Last: McRae Title: Case study: A conservative approach to green roof benefit quantification and valuation for public buildings Abstract: The U.S. federal government is routinely making severe spending cuts in an attempt to correct financial instability resulting from overspending. A more recently surfaced avenue of cost savings that is becoming increasingly popular is the implementation of sustainable design. One method of sustainable design or “green infrastructure†is installing vegetated roofs on top of buildings. Such projects require intensive cost analysis that can be extremely convoluted and difficult to present in a convincing manner. Furthermore, there is minimal guidance or literature that provides a methodology for actually quantifying these financial estimates. This article systematically decomposes decision points and calculations associated with a green roof cost analysis. This hybrid analysis strives to present the inherently specific variables such as region and building size while maintaining the generic representativeness to allow readers to replicate. Specific details are derived from the Southwestern region of the United States and generic values are national averages. A 25-year green roof life cycle is evaluated against a conventional roof to illustrate the economic differences associated with both roof types. This comparison strives to provide the framework for others to follow in their efforts to quantify the economic value of their respective green roof projects. Journal: The Engineering Economist Pages: 190-206 Issue: 3 Volume: 61 Year: 2016 Month: 7 X-DOI: 10.1080/0013791X.2016.1186255 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1186255 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:3:p:190-206 Template-Type: ReDIF-Article 1.0 Author-Name: K. Jo Min Author-X-Name-First: K. Jo Author-X-Name-Last: Min Author-Name: Jean-Daniel Saphores Author-X-Name-First: Jean-Daniel Author-X-Name-Last: Saphores Author-Name: Valerie M. Thomas Author-X-Name-First: Valerie M. Author-X-Name-Last: Thomas Title: Introduction: Special Issue on Engineering Economics and Sustainable Systems Journal: The Engineering Economist Pages: 161-162 Issue: 3 Volume: 61 Year: 2016 Month: 7 X-DOI: 10.1080/0013791X.2016.1213342 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1213342 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:3:p:161-162 Template-Type: ReDIF-Article 1.0 Author-Name: Wenbo Shi Author-X-Name-First: Wenbo Author-X-Name-Last: Shi Author-Name: Tianke Feng Author-X-Name-First: Tianke Author-X-Name-Last: Feng Author-Name: K. Jo Min Author-X-Name-First: K. Author-X-Name-Last: Jo Min Title: Remanufacturing decision and sustainability under product life cycle uncertainty Abstract: For a single type of product, we study a firm's remanufacturing decisions for the product under demand uncertainty from a real options approach. Specifically, we assume that the product life cycle consists of a growth regime with the expected product demand and volatility increasing with respect to time and a decay regime with the expected product demand and volatility decreasing with respect to time while the timing of regime change itself is uncertain as well. Under this framework, this study aims to derive and analyze the demand threshold above which the firm establishes a remanufacturing process in its production system. Moreover, the number of products being remanufactured throughout the life cycle is numerically studied to assess the degree of sustainability due to remanufacturing. Journal: The Engineering Economist Pages: 223-243 Issue: 3 Volume: 61 Year: 2016 Month: 7 X-DOI: 10.1080/0013791X.2014.986352 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.986352 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:3:p:223-243 Template-Type: ReDIF-Article 1.0 Author-Name: Arthur Cox Author-X-Name-First: Arthur Author-X-Name-Last: Cox Author-Name: Richard Followill Author-X-Name-First: Richard Author-X-Name-Last: Followill Title: The Equitable Financing of Growth: A Proportionate Share Methodology for Calculating Individual Development Impact Fees Abstract: Aggregate development impact fees must be apportioned among developers in a manner commensurate with benefits provided by new infrastructure. We propose a methodology to directly, rather than iteratively, apportion aggregate development impact fees so that all users receive an internal rate of return equal to the municipality's cost of capital. The methodology explicitly recognizes that users may enjoy the benefits of infrastructure for different periods of time. The model provides for proportionate share assessment of impact fees whether infrastructure investment occurs before, during, or after development and is flexible in addressing changes in demand and in the municipality's cost of capital. Journal: The Engineering Economist Pages: 141-156 Issue: 3 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.702195 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.702195 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:3:p:141-156 Template-Type: ReDIF-Article 1.0 Author-Name: James Yunker Author-X-Name-First: James Author-X-Name-Last: Yunker Title: Technical Note: Properties of the Cubic Production Function Abstract: In the interest of improving the understanding of both students and practitioners of technical economics of some fundamental aspects of the subject, this note provides a clarification of the isoquant properties of the two-input cubic production function. Two alternatives to the “usual†cubic production function are proposed herein: the “additive†and the “multiplicative.†In contrast to the usual function, both of these alternatives possess the intuitively expected isoquant properties: the three-dimensional surface of the function is a “hill†or “protuberance†with a unique peak, and the corresponding family of isoquants is a set of closed oblongs reminiscent of a contour map. Journal: The Engineering Economist Pages: 206-220 Issue: 3 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.702196 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.702196 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:3:p:206-220 Template-Type: ReDIF-Article 1.0 Author-Name: Nihal Orfi Author-X-Name-First: Nihal Author-X-Name-Last: Orfi Author-Name: Janis Terpenny Author-X-Name-First: Janis Author-X-Name-Last: Terpenny Author-Name: Asli Sahin-Sariisik Author-X-Name-First: Asli Author-X-Name-Last: Sahin-Sariisik Title: Harnessing Product Complexity: Step 2—Measuring and Evaluating Complexity Levels Abstract: In today's market, companies are forced to balance the requirements of sales growth through increased product complexity against the requirements of cost control and operational efficiency. Therefore, how to meet the increasing needs of customers while managing the impact of product complexity becomes a great challenge for a company to gain competitive advantage. Although some have tackled the issue of product complexity, it still remains a theoretical concept. There is yet no generalized approach to identify complexity sources, measure complexity levels, and manage its impact throughout the different stages of the product's lifecycle. Our work seeks to help formulate strategies to manage the cost impacts of product complexity. This article builds on prior work that identified sources and indicators of product complexity, categorized them into five dimensions, and linked the indicators to direct and indirect costs. Now, we develop a product complexity measurement framework as a second step in establishing the overall methodology and support tool. The article also describes the application of the developed framework to existing product lines. Journal: The Engineering Economist Pages: 178-191 Issue: 3 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.702197 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.702197 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:3:p:178-191 Template-Type: ReDIF-Article 1.0 Author-Name: Samuel Chiu Author-X-Name-First: Samuel Author-X-Name-Last: Chiu Author-Name: Enrique Garza Escalante Author-X-Name-First: Enrique Author-X-Name-Last: Garza Escalante Title: A Companion For NPV: The Generalized Relative Rate of Return Abstract: We show how to determine a unique rate, for a particular cash flow stream, that is used only whenever a project demands outside resources to compound the rates of the existing term structure precisely at those times. The net present value of the cash flow stream when discounted with the thus-modified term structure becomes zero. We therefore determine a vector of rates that belongs to the induced space of internal rates of return for that cash flow stream. The rate is applicable under discrete stochastic interest rate representations and provides maximum loan rates that may be contracted only when needed thus keeping a project financially autonomous. (Any investments required may be fully repaid by the project's own cash outflows). Journal: The Engineering Economist Pages: 192-205 Issue: 3 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.702198 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.702198 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:3:p:192-205 Template-Type: ReDIF-Article 1.0 Author-Name: Ronald Spahr Author-X-Name-First: Ronald Author-X-Name-Last: Spahr Author-Name: Fariz Huseynov Author-X-Name-First: Fariz Author-X-Name-Last: Huseynov Author-Name: Pankaj Jain Author-X-Name-First: Pankaj Author-X-Name-Last: Jain Title: Government as the Firm’s Third Financial Stakeholder: Impact on Capital Investment Decisions, Capital Structure, Discount Rates, and Valuation Abstract: We extend Myers’ (1974) adjusted present value method and modify Modigliani and Miller's (1958, 1963) capital structure propositions by adding government as the firms’ third major financial stakeholder. Government is a major stakeholder because it collects income taxes, is instrumental in establishing the business environment, and provides business infrastructure to corporations. We assume that government's stake is an implicit form of capital and, consequently, any return or benefit derived by the firm from this implicit capital will affect firm value. As a result, tax structure significantly impacts relative stakeholder values, capital investment decisions, and capital formation. Only in the special case when the firm receives explicit benefits and when the return on government's implicit capital is equal to the firm's cost of equity capital will corporate taxes not impact firm value and capital investment decisions. Although tax irrelevance and the conservation of value principle may hold true within a domestic economy with a homogenous tax structure, our three-stakeholder model demonstrates that corporate income taxes become relevant for investment decisions in a globally competitive economy with heterogeneous tax structures. Thus, our model addresses the apparent inconsistencies between existing theory, which characterizes corporate taxes as nondistortionary, and empirical findings, which demonstrate that taxes reduce investments, growth, and valuation ratios. Journal: The Engineering Economist Pages: 157-177 Issue: 3 Volume: 57 Year: 2012 X-DOI: 10.1080/0013791X.2012.703762 File-URL: http://hdl.handle.net/10.1080/0013791X.2012.703762 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:57:y:2012:i:3:p:157-177 Template-Type: ReDIF-Article 1.0 Author-Name: Ean-Harn Ng Author-X-Name-First: Ean-Harn Author-X-Name-Last: Ng Author-Name: Mario G. Beruvides Author-X-Name-First: Mario G. Author-X-Name-Last: Beruvides Title: Multiple Internal Rate of Return Revisited: Frequency of Occurrences Abstract: Research in multiple internal rate of return (MROR) has mainly focused on three areas: uniqueness, conditions where MROR occur, and solutions to MROR. In an attempt to solve for MROR, researchers have assumed that the occurrence of MROR is prevalent and thus a solution is direly needed. This article examines the probability that positive MROR would occur when variation is incorporated into the cash flow and the probability of getting positive MROR when multiple sign-change cash flow is generated. Results show that the probability of positive MROR occurring in multiple sign-change cash flows is relatively low and potentially a rare event. Journal: The Engineering Economist Pages: 75-87 Issue: 1 Volume: 60 Year: 2015 Month: 1 X-DOI: 10.1080/0013791X.2013.865149 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.865149 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:1:p:75-87 Template-Type: ReDIF-Article 1.0 Author-Name: Jyh-Bin Yang Author-X-Name-First: Jyh-Bin Author-X-Name-Last: Yang Author-Name: Chien-Chung Chen Author-X-Name-First: Chien-Chung Author-X-Name-Last: Chen Title: Causes of Budget Changes in Building Construction Projects: An Empirical Study in Taiwan Abstract: Most contractors pay close attention to managing costs due to the direct impacts of cost overruns on their profits. Contractors often cannot effectively control the costs of a construction project due to inaccurate budget allocation, resulting in unsuccessfully forecasting project profits or losses until the project's completion. This study analyzed three real cases and utilized a questionnaire survey to identify the main causes of budget changes in building construction projects in Taiwan. Research results reveal that “client changes,†“inaccurately estimated quantities,†and “unclear drawings and specifications†are the main causes of budget changes. These results provide not only a means of correcting the causes of inaccurate budget allocation but also a measure for project managers to review and control their project costs, which is important to a contractor during a low-profit era. Journal: The Engineering Economist Pages: 1-21 Issue: 1 Volume: 60 Year: 2015 Month: 1 X-DOI: 10.1080/0013791X.2013.879972 File-URL: http://hdl.handle.net/10.1080/0013791X.2013.879972 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:1:p:1-21 Template-Type: ReDIF-Article 1.0 Author-Name: Mark J. Kaiser Author-X-Name-First: Mark J. Author-X-Name-Last: Kaiser Author-Name: Mingming Liu Author-X-Name-First: Mingming Author-X-Name-Last: Liu Title: Quantifying Decommissioning Risk in the Deepwater Gulf of Mexico Abstract: Deepwater oil and gas structures are expensive to install and will be expensive to dismantle when the asset no longer serves a useful purpose. Deepwater structures present special risk because decommissioning expenditures are expected to cost tens to hundreds of millions of dollars to perform, and occur when the asset no longer generates revenue. An analytic framework is presented to quantify the decommissioning risk of offshore structures by comparing the value of an asset's reserves to its undiscounted asset retirement obligations. The procedure is applied to the deepwater fixed platform and compliant tower inventory in the Gulf of Mexico circa January 2013. Journal: The Engineering Economist Pages: 40-74 Issue: 1 Volume: 60 Year: 2015 Month: 1 X-DOI: 10.1080/0013791X.2014.932036 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.932036 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:1:p:40-74 Template-Type: ReDIF-Article 1.0 Author-Name: Hadi Akbarzade Khorshidi Author-X-Name-First: Hadi Akbarzade Author-X-Name-Last: Khorshidi Author-Name: Indra Gunawan Author-X-Name-First: Indra Author-X-Name-Last: Gunawan Author-Name: M. Yousef Ibrahim Author-X-Name-First: M. Yousef Author-X-Name-Last: Ibrahim Title: On Reliability Evaluation of Multistate Weighted -out-of- System Using Present Value Abstract: A new reliability evaluation methodology for multistate weighted k-out-of-n systems is presented in this article. The present value of the cash flow generated by the system components is used as a reliability value. We take a financial view of reliability and consider functioning periods and the time value of money in system reliability analysis. Two approaches, the universal generating function (UGF) and recursive algorithm, are applied to evaluate the reliability of the multistate weighted k-out-of-n system. An illustrative example is calculated based on the proposed system reliability evaluation methodology. It is shown that this evaluation method can also be used to find the value of the maintenance policy. Finally, the UGF and recursive algorithm approaches are compared with each other for large system reliability assessment. Journal: The Engineering Economist Pages: 22-39 Issue: 1 Volume: 60 Year: 2015 Month: 1 X-DOI: 10.1080/0013791X.2014.934940 File-URL: http://hdl.handle.net/10.1080/0013791X.2014.934940 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:60:y:2015:i:1:p:22-39 Template-Type: ReDIF-Article 1.0 Author-Name: Ehsan Lotfi Author-X-Name-First: Ehsan Author-X-Name-Last: Lotfi Author-Name: M. Darini Author-X-Name-First: M. Author-X-Name-Last: Darini Author-Name: M. R. Karimi-T. Author-X-Name-First: M. R. Author-X-Name-Last: Karimi-T. Title: Cost estimation using ANFIS Abstract: Cost function estimation is vital for decision-making in project management. In this article, a novel cost estimator is investigated based on an adaptive neuro-fuzzy inference system (ANFIS). In the numerical studies, ANFIS is tested to modeling pressure vessel cost as a case study. According to the comparative results, ANFIS shows better accuracy than multiple linear regression (MLR), Taylor Kriging (TK), and artificial neural networks (ANNs). Hence, ANFIS can be applicable to various cost function estimation problems. Journal: The Engineering Economist Pages: 144-154 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2015.1104568 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1104568 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:144-154 Template-Type: ReDIF-Article 1.0 Author-Name: Óscar Gutiérrez Author-X-Name-First: Óscar Author-X-Name-Last: Gutiérrez Title: American option pricing by a method of error correction Abstract: The real options approach often assumes that investment projects last indefinitely, which is an unrealistic assumption. When projects live finitely, valuation techniques from American option pricing are required. This article presents a method for pricing American options based on the first-passage approach to the problem. The key is to correct the error associated with the price obtained from a rough first approximation. The procedure leads to a significant reduction in error corresponding to the initial approximation. As a particular case of the method proposed, we derive a closed-form approximation of the option price. The existence of a closed-form approximating formula (that does not involve iterative methods) keeps the computational cost low. In terms of accuracy, the method can be compared to much more sophisticated methods. A tight lower bound (given in closed form) is also provided. The method is fast, accurate, flexible, and easy to implement. A spreadsheet suffices for practical implementation. Journal: The Engineering Economist Pages: 95-111 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2015.1136014 File-URL: http://hdl.handle.net/10.1080/0013791X.2015.1136014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:95-111 Template-Type: ReDIF-Article 1.0 Author-Name: Marcell Dülk Author-X-Name-First: Marcell Author-X-Name-Last: Dülk Title: The sign of cash flows: A source of error in present value approximations Abstract: We show that if an asset has both positive and negative cash flows, then the error in present value attributable to the end-of-period timing convention of cash flows might be infinitely large. Under certain conditions requiring knowledge of the respective sums of positive and negative cash flows in the periods, however, the maximum possible error is finite and minimized by the formula we develop. This optimal formula is an adjusted harmonic mean of the end-of-period and beginning-of-period present values. We find that the maximum possible error is increased if the cash flow signs are not identical. Journal: The Engineering Economist Pages: 79-94 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2016.1149262 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1149262 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:79-94 Template-Type: ReDIF-Article 1.0 Author-Name: Liuqing Mai Author-X-Name-First: Liuqing Author-X-Name-Last: Mai Author-Name: Haitao Li Author-X-Name-First: Haitao Author-X-Name-Last: Li Title: Optimizing the capital rationing decision with uncertain returns Abstract: In this article, we develop a new optimization model for capital rationing with uncertain project returns. Our model maximizes the probability of meeting a predefined target return by selecting a feasible set of projects subject to budget constraints in multiple time periods. We employ a mixed-integer nonlinear algorithm recently developed in the optimization field to solve the resulting nonconvex optimization problem to optimality. Our model and solution methods are tested and validated through a comprehensive computational experiment. Several managerial insights are obtained about the impact of available budget and target return on the optimal solutions. Notably, we have found that increasing target return may not necessarily result in an increase in optimal total expected return of the selected projects. Our model and solution method offer a unified and computationally tractable approach to precisely quantify the tradeoff between project returned and risk. Journal: The Engineering Economist Pages: 128-143 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2016.1152420 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1152420 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:128-143 Template-Type: ReDIF-Article 1.0 Author-Name: Rodrigo E. Peimbert-Garcia Author-X-Name-First: Rodrigo E. Author-X-Name-Last: Peimbert-Garcia Author-Name: Jorge Limon-Robles Author-X-Name-First: Jorge Author-X-Name-Last: Limon-Robles Author-Name: Mario G. Beruvides Author-X-Name-First: Mario G. Author-X-Name-Last: Beruvides Title: Cost of quality modeling for maintenance employing opportunity and infant mortality costs: An analysis of an electric utility Abstract: Capital investment in physical assets has increased over the years. With the increasing complexity and variety of assets, companies are highly dependent on assets performing at high efficiency levels. Equipment performance has become a crucial business factor that has led to a particular focus on the maintenance function. Maintenance is frequently perceived as a function having a poor rate of return due to difficulties in presenting its benefits in terms that management can understand. The cost of quality model allows translating the tradeoffs associated with the quality function into a financial language. This model has gathered importance with its cost categories (PAF: prevention, appraisal, and failure). Based on this model, the cost of maintenance (COM) model is proposed to emphasize the role of opportunity and infant mortality costs in maintenance. This model captures different cost components through the PAF categories, where each is compounded by direct, opportunity, and infant mortality costs. The COM model is employed to estimate maintenance costs of current transformers in a regional transmission division of an electric utility in Latin America. Results show that opportunity costs can account for more than 80% of total maintenance costs, and infant mortality costs can represent more than 15% of these costs. Journal: The Engineering Economist Pages: 112-127 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2016.1152619 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1152619 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:112-127 Template-Type: ReDIF-Article 1.0 Author-Name: Neal A. Lewis Author-X-Name-First: Neal A. Author-X-Name-Last: Lewis Title: Infrastructure investment, an engineering perspective Journal: The Engineering Economist Pages: 156-159 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2016.1172143 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1172143 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:156-159 Template-Type: ReDIF-Article 1.0 Author-Name: Hamid R. Parsaei Author-X-Name-First: Hamid R. Author-X-Name-Last: Parsaei Title: In memory of Dr. G. T. Stevens, Jr., professor and chair emeritus, University of Texas Arlington Journal: The Engineering Economist Pages: 155-155 Issue: 2 Volume: 61 Year: 2016 Month: 4 X-DOI: 10.1080/0013791X.2016.1172144 File-URL: http://hdl.handle.net/10.1080/0013791X.2016.1172144 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:61:y:2016:i:2:p:155-155 Template-Type: ReDIF-Article 1.0 Author-Name: Clay Koschnick Author-X-Name-First: Clay Author-X-Name-Last: Koschnick Author-Name: Joseph C. Hartman Author-X-Name-First: Joseph C. Author-X-Name-Last: Hartman Title: Using performance-based warranties to influence consumer purchase decisions Abstract: Traditional warranty analysis focuses on the reliability of a product and offers warranty designs that compensate a consumer if the item fails. We introduce the concept of a performance-based warranty (PBW) that guarantees that a product will operate at or above some baseline level of performance, such as a minimum energy efficiency for an appliance. We illustrate how consumer behavior can change in the presence of a PBW and define the parameters for which a manufacturer may increase revenue. Finally, we present an algorithm to solve for the optimal PBW design given a consumer’s belief about the expected performance of the product. Journal: The Engineering Economist Pages: 1-26 Issue: 1 Volume: 65 Year: 2020 Month: 1 X-DOI: 10.1080/0013791X.2019.1642430 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1642430 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:1:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: Adil BaykasoÄŸlu Author-X-Name-First: Adil Author-X-Name-Last: BaykasoÄŸlu Author-Name: Kemal Subulan Author-X-Name-First: Kemal Author-X-Name-Last: Subulan Author-Name: Hülya Güçdemir Author-X-Name-First: Hülya Author-X-Name-Last: Güçdemir Author-Name: Nurhan Dudaklı Author-X-Name-First: Nurhan Author-X-Name-Last: Dudaklı Author-Name: Derya Eren Akyol Author-X-Name-First: Derya Author-X-Name-Last: Eren Akyol Title: Revenue management for make-to-order manufacturing systems with a real-life application Abstract: Due to successful applications of revenue management in the airline industry, in recent years, there has been a growing interest to adopt revenue management in make-to-order (MTO) manufacturing systems. Several interrelated decision problems such as order acceptance/rejection, short-term capacity planning, due date assignment, and order scheduling need to be studied simultaneously in order to manage revenues effectively in MTO manufacturing systems. Both the producer’s and customer’s requirements need to be taken into account through some negotiation mechanisms that are sensitive to the service-level reputation of the manufacturing companies. In this article, we propose a new dynamic bid price–based revenue management model that considers all of the aforementioned decision problems simultaneously. A simulation optimization approach is utilized in order to determine the best possible values of control parameters for bid price, due date assignment, and price increment/reduction mechanisms. The performance of the proposed integrated revenue management model is tested on both a hypothetical example and a real problem of a bridal gown company. The computational results show that the proposed model provides significant improvements in total revenue compared to other static and dynamic bid price policies. Journal: The Engineering Economist Pages: 27-65 Issue: 1 Volume: 65 Year: 2020 Month: 1 X-DOI: 10.1080/0013791X.2019.1571145 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1571145 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:1:p:27-65 Template-Type: ReDIF-Article 1.0 Author-Name: Imre Szilágyi Author-X-Name-First: Imre Author-X-Name-Last: Szilágyi Author-Name: Zoltán Sebestyén Author-X-Name-First: Zoltán Author-X-Name-Last: Sebestyén Author-Name: Tamás Tóth Author-X-Name-First: Tamás Author-X-Name-Last: Tóth Title: Project Ranking in Petroleum Exploration Abstract: Project ranking based on project value is an essential management task for organizations that face resource bottlenecks. Project value focuses on the hard elements of projects that can be expressed in monetary terms. In the petroleum exploration business, however, there is also soft information, like effects on corporate liquidity, advantages of compliance with the strategic goals, or learning potential and organizational development, which may change the ranking hierarchy. The aim of this research is to provide a solution for incorporating industry-based selected soft data in the project ranking process. The process is illustrated with a case study. We took the structured system of criteria identified from the petroleum industry. Journal: The Engineering Economist Pages: 66-87 Issue: 1 Volume: 65 Year: 2020 Month: 1 X-DOI: 10.1080/0013791X.2019.1593570 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1593570 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:1:p:66-87 Template-Type: ReDIF-Article 1.0 Author-Name: Vicki M. Bier Author-X-Name-First: Vicki M. Author-X-Name-Last: Bier Author-Name: Yuqun Zhou Author-X-Name-First: Yuqun Author-X-Name-Last: Zhou Author-Name: Hongru Du Author-X-Name-First: Hongru Author-X-Name-Last: Du Title: Game-theoretic modeling of pre-disaster relocation Abstract: Sea-level rise due to climate change is clearly an important problem. This paper uses game theory in conjunction with discounting to explore strategies by which governments might encourage pre-disaster relocation by residents living in areas at high risk of flooding due to sea-level rise. We find that offering a subsidy (e.g., a partial buyout) can be effective if government has a significantly lower discount rate than residents. We also present extensions to our model, exploring the use of a fixed annual benefit after relocation (instead of a one-time subsidy), and hyperbolic instead of standard exponential discounting. Numerical sensitivity analysis elucidates many important factors affecting the timing of anticipatory relocation, since for example relocating too soon may be costly to both residents and government if flooding risk is increasing only gradually. This conceptual model also provides a foundation for future studies that quantify the model with more realistic parameter values (e.g., realistic estimates of flooding probabilities), and alternative behavioral models of resident decision making. Journal: The Engineering Economist Pages: 89-113 Issue: 2 Volume: 65 Year: 2020 Month: 4 X-DOI: 10.1080/0013791X.2019.1677837 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1677837 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:89-113 Template-Type: ReDIF-Article 1.0 Author-Name: Javier Gutiérrez Castro Author-X-Name-First: Javier Gutiérrez Author-X-Name-Last: Castro Author-Name: Edison Américo Huarsaya Tito Author-X-Name-First: Edison Américo Huarsaya Author-X-Name-Last: Tito Author-Name: Luiz Eduardo Teixeira Brandão Author-X-Name-First: Luiz Eduardo Teixeira Author-X-Name-Last: Brandão Author-Name: Leonardo Lima Gomes Author-X-Name-First: Leonardo Lima Author-X-Name-Last: Gomes Title: Crypto-assets portfolio optimization under the omega measure Abstract: Crypto-currencies, or crypto-assets, represent a new class of investment assets. The traditional portfolio analysis approach of Markowitz is not appropriate for use with portfolios containing crypto-assets, as the model requires that the investor have a quadratic utility function or that the returns be normally distributed, which isn’t the case for crypto-assets. We develop a portfolio optimization model based on the Omega measure which is more comprehensive than the Markowitz model, and apply this to four crypto-asset investment portfolios by means of a numerical application. The results indicate that these portfolios should favor traditional market assets over crypto-assets. In the case of portfolios formed only by crypto-assets, there is no clear preference in favor of any crypto-asset in particular. Journal: The Engineering Economist Pages: 114-134 Issue: 2 Volume: 65 Year: 2020 Month: 4 X-DOI: 10.1080/0013791X.2019.1668098 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1668098 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:114-134 Template-Type: ReDIF-Article 1.0 Author-Name: Cenk Budayan Author-X-Name-First: Cenk Author-X-Name-Last: Budayan Author-Name: Irem Dikmen Author-X-Name-First: Irem Author-X-Name-Last: Dikmen Author-Name: M. Talat Birgonul Author-X-Name-First: M. Talat Author-X-Name-Last: Birgonul Title: Construction cost map of European countries Abstract: In the globalized business world, construction companies start to seek new opportunities to invest on an international basis in order to gain profit. Therefore, construction companies have to conduct not only national projects but also international projects to be competitive. However, although these international projects can be profitable, the construction companies face many challenges in the management of these projects due to the country-specific problems and conditions. This can lead to variation in the management of similar projects conducted in different countries. In particular, cost estimation in different countries is a challenging task for construction companies. Therefore, in order to provide insights about construction cost in different countries, different organizations publish construction cost indices. However, some criticisms related to the reliability and usability of these indices are stated. In this study, a new concept, called a cost map, is proposed by developing a framework based on twelve macro level parameters. The cost map is applied to 37 European countries. The data related to these parameters are collected using different databases. European countries are clustered by using a self-organizing map. As a result of this study, the cost map is determined as a reliable and convenient tool for a cost comparison. Journal: The Engineering Economist Pages: 135-157 Issue: 2 Volume: 65 Year: 2020 Month: 4 X-DOI: 10.1080/0013791X.2019.1668097 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1668097 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:135-157 Template-Type: ReDIF-Article 1.0 Author-Name: Yousaf Ali Author-X-Name-First: Yousaf Author-X-Name-Last: Ali Author-Name: Muhammad Sabir Author-X-Name-First: Muhammad Author-X-Name-Last: Sabir Author-Name: Muhammad Bilal Author-X-Name-First: Muhammad Author-X-Name-Last: Bilal Author-Name: Mehnab Ali Author-X-Name-First: Mehnab Author-X-Name-Last: Ali Author-Name: Arshad Ali Khan Author-X-Name-First: Arshad Ali Author-X-Name-Last: Khan Title: Economic viability of foreign investment in railways: a case study of the China-Pakistan Economic Corridor (CPEC) Abstract: Pakistan Railways has faced a severe financial crisis in recent years. Pakistan has recently become a partner with China in a mega-investment project under an agreement called the China-Pakistan Economic Corridor (CPEC). Among other things, CPEC also includes a range of investments in Pakistan Railways. This particular study focuses on the analysis of US$8.2 billion investment in the upgrade and expansion of the Karachi-Peshawar railways link, which is also known as the ML-1 (Main Line 1). The study found ML-1 as economically viable with a payback period of 10 years. Furthermore, ML-1 project investment is expected to result in uplifting Pakistan Railways, mainly through an increase in freight and passenger transportation. Some risk factors may hinder the expected economic return from the CPEC investment in Pakistan Railways. These factors include consistency in the government policies, the status of the Pakistani economy in upcoming years, and law and order situations in the country. The study has a utility for the governments of both countries and larger business communities have stakes in the trade between the two countries. It is equally beneficial for the international community, businesses (both in China and Pakistan) and locals of the region associated with the CPEC infrastructure. Journal: The Engineering Economist Pages: 158-175 Issue: 2 Volume: 65 Year: 2020 Month: 4 X-DOI: 10.1080/0013791X.2019.1668096 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1668096 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:2:p:158-175 Template-Type: ReDIF-Article 1.0 Author-Name: Francisco Salas-Molina Author-X-Name-First: Francisco Author-X-Name-Last: Salas-Molina Author-Name: Juan A. RodrÃguez-Aguilar Author-X-Name-First: Juan A. Author-X-Name-Last: RodrÃguez-Aguilar Author-Name: David Pla-Santamaria Author-X-Name-First: David Author-X-Name-Last: Pla-Santamaria Title: Boundless multiobjective models for cash management Abstract: Cash management models are usually based on a set of bounds that complicate the selection of the optimal policies due to nonlinearity. We here propose to linearize cash management models to guarantee optimality through linear-quadratic multiobjective compromise programming models. We illustrate our approach through a reformulation of the suboptimal state-of-the-art Gormley-Meade’s model to achieve optimality. Furthermore, we introduce a much simpler formulation that we call the boundless model that also provides optimal solutions without using bounds. Results from a sensitivity analysis using real data sets from 54 different companies show that our boundless model is highly robust to cash flow prediction errors. Journal: The Engineering Economist Pages: 363-381 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1456596 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1456596 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:363-381 Template-Type: ReDIF-Article 1.0 Author-Name: Youngmin Kim Author-X-Name-First: Youngmin Author-X-Name-Last: Kim Author-Name: David Enke Author-X-Name-First: David Author-X-Name-Last: Enke Title: A dynamic target volatility strategy for asset allocation using artificial neural networks Abstract: A challenge to developing data-driven approaches in finance and trading is the limited availability of data because periods of instability, such as during financial market crises, are relatively rare. This study applies a stability-oriented approach (SOA) based on statistical tests to compare data for the current period to a past set of data for a stable period, providing higher reliability due to a more abundant source of data. Based on an SOA, this study uses an artificial neural network (ANN), which is one of the commonly applied machine learning algorithms, for simultaneously forecasting the volatility and classifying the level of market stability. In addition, this study develops a dynamic target volatility strategy for asset allocation using an ANN to enhance the ability of a target volatility strategy that is established for automatically allocating capital between a risky asset and a risk-free cash position. In order to examine the impact of the proposed strategy, the results are compared to the buy-and-hold strategy, the static asset allocation strategy, and the conventional target volatility strategy using different volatility forecasting methodologies. An empirical case study of the proposed strategy is simulated in both the Korean and U.S. stock markets. Journal: The Engineering Economist Pages: 273-290 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1461287 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1461287 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:273-290 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas O. Boucher Author-X-Name-First: Thomas O. Author-X-Name-Last: Boucher Title: On the generosity and effectiveness of the research and development tax credit Abstract: In this article, we study the use of the international standard for measuring the generosity of research and development tax subsidies, the B-index, as a predictor of the effectiveness of a subsidy. We find a close relationship, with some modifications of the B-index required. We demonstrate how a synthesis of the B-index and a structural model of a firm's wealth-maximizing behavior can be used to evaluate policy proposals regarding modifications to the research and development tax credit. Journal: The Engineering Economist Pages: 319-342 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1465619 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1465619 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:319-342 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammadreza Sharifi Author-X-Name-First: Mohammadreza Author-X-Name-Last: Sharifi Author-Name: Roy H. Kwon Author-X-Name-First: Roy H. Author-X-Name-Last: Kwon Title: Performance-based contract design under cost uncertainty: A scenario-based bilevel programming approach Abstract: This article considers a principal agent model for structuring a performance-based contract in the presence of fixed cost and cost-plus contracts. A scenario-based bilevel programming approach is considered to determine the values of key contract parameters. Additionally, the risk of cost uncertainty is considered in the model in the form of conditional value at risk (CVaR). The incorporation of risk of cost uncertainty can mitigate the impact of extreme events in the tail of the customer's total cost distribution. The numerical results find that at higher risk aversion levels, the customer is willing to pay more to the supplier and at the same time accept a smaller percentage of the shared cost between the supplier and the customer, which indicates the shift of the risk to the supplier. Although the customer is paying more in higher risk aversion levels, less cost is incurred in cases of realization of extreme events compared to the lower risk aversion levels. At lower risk aversion levels, the customer sets a smaller value of incentives for the supplier. Journal: The Engineering Economist Pages: 291-318 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1467990 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1467990 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:291-318 Template-Type: ReDIF-Article 1.0 Author-Name: Hüseyin Sarper Author-X-Name-First: Hüseyin Author-X-Name-Last: Sarper Author-Name: Paul Chacon Author-X-Name-First: Paul Author-X-Name-Last: Chacon Author-Name: Musa DemirtaÅŸ Author-X-Name-First: Musa Author-X-Name-Last: DemirtaÅŸ Author-Name: Igor Melnykov Author-X-Name-First: Igor Author-X-Name-Last: Melnykov Author-Name: Gökçe Palak Author-X-Name-First: Gökçe Author-X-Name-Last: Palak Author-Name: Jane M. Fraser Author-X-Name-First: Jane M. Author-X-Name-Last: Fraser Title: Distribution of the internal and external rates of return in a partially stochastic oil pump problem Abstract: This article revisits a classic two-period engineering economy problem known as the oil pump problem and adds randomness to its cash flows one at a time. Conditional cumulative probability density functions of the internal and unconditional cumulative probability density functions of the external rates of return are reported. The analytical results are verified with Monte Carlo simulation. A procedure is proposed to assess project desirability by using the probability of project acceptance as the output. The cumulative distribution functions of both rates are used in numerical examples to illustrate how project desirability or acceptance probabilities can be calculated. It is shown that the distribution of the external rate of return yields the same probability of acceptance as the distribution of the internal rate of return. This article provides an up-to-date and exhaustive review of the literature on the distribution of the rate of return in stochastic investment problems. The review also shows that the oil pump problem is still popular and widely discussed. Journal: The Engineering Economist Pages: 343-362 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1468945 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1468945 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:343-362 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Wellington Award nominations Journal: The Engineering Economist Pages: 382-382 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1537550 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1537550 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:382-382 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: The Engineering Economist Journal: The Engineering Economist Pages: 383-383 Issue: 4 Volume: 63 Year: 2018 Month: 10 X-DOI: 10.1080/0013791X.2018.1537552 File-URL: http://hdl.handle.net/10.1080/0013791X.2018.1537552 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:63:y:2018:i:4:p:383-383 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph H. Wilck Author-X-Name-First: Joseph H. Author-X-Name-Last: Wilck Title: Introduction to the special issue on engineering economy education Journal: The Engineering Economist Pages: 177-178 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1784512 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1784512 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:177-178 Template-Type: ReDIF-Article 1.0 Author-Name: Karen M. Bursic Author-X-Name-First: Karen M. Author-X-Name-Last: Bursic Title: An engineering economy concept inventory Abstract: There has been considerable recent emphasis on valid assessment of learning in engineering education. When new teaching pedagogies are introduced, it can be very challenging to demonstrate increases in learning of course concepts. While there are a number of accepted concept inventories available for some engineering topics (statics and dynamics, heat and energy, signals and systems, and statistics), reliable and valid tools for assessing learning are not readily available for many curriculum areas, including engineering economy. This paper discusses the reliability and validity of the Engineering Economy Concept Inventory (EECI) that can be used to assess learning in any introductory engineering economy course. Development of the EECI began in 2009 for use in assessing the effectiveness of model-eliciting activities in the classroom and has since been revised and reformulated a number of times. In the fall of 2018, the EECI was administered at multiple institutions for further evaluation of its validity and results from these groups of students are presented. The paper concludes with remarks regarding the reliability and validity of the instrument and recommendations for its use as a tool to assess knowledge in engineering economy. Journal: The Engineering Economist Pages: 179-194 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1777360 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1777360 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:179-194 Template-Type: ReDIF-Article 1.0 Author-Name: Destenie Nock Author-X-Name-First: Destenie Author-X-Name-Last: Nock Title: “Let’s Bid!†- A modular activity to promote interest in engineering economy Abstract: This article presents a modular activity designed to promote interest and understanding of engineering economics concepts in a complex environment. Through a competition game, called “Let’s Bid!â€, the students are able to understand the relationship between technological characteristics and supply and demand equilibrium in electricity markets, and discuss how uncertainty impacts investments in generation capacity and firm pricing strategies. This innovative teaching method was implemented in middle school, high school, and undergraduate college settings. Each implementation took less 60 minutes, and resulted in a strong student interest and understanding of engineering economics concepts (i.e., supply-demand equilibrium, risk, and markets). Journal: The Engineering Economist Pages: 195-212 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1745977 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1745977 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:195-212 Template-Type: ReDIF-Article 1.0 Author-Name: Vrishtee Rane Author-X-Name-First: Vrishtee Author-X-Name-Last: Rane Author-Name: Cameron A. MacKenzie Author-X-Name-First: Cameron A. Author-X-Name-Last: MacKenzie Title: Evaluating students with online testing modules in engineering economics: A comparision of student performance with online testing and with traditional assessments Abstract: Engineering economics courses often require students to take time-constrained, in-class exams in which they solve problems by hand, possibly referring to interest rate tables. Many students rely on partial credit to successfully pass exams. Outside of the classroom, professionals rely on computers to solve engineering economics problems, which raises the question of whether engineering economics courses are correctly assessing student performance. This article describes the study of a large engineering economics class using a non-conventional testing method. Student performance was evaluated using online testing modules with a stringent passing criterion, and the tests could be taken multiple times. The questions for each testing attempt were pulled from a database so that students received a new question every time. We compare the performance of students who were assessed using traditional methods with the performance of students assessed with these online testing modules. Our analysis shows that, overall, students who were assessed using the online testing modules earned better grades than students who were assessed via traditional methods. The analysis also discusses several benefits and drawbacks to using online assessments compared with traditional methods. The online assessment method could be useful in large engineering courses that are formula-based. Journal: The Engineering Economist Pages: 213-235 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1784336 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1784336 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:213-235 Template-Type: ReDIF-Article 1.0 Author-Name: James Burns Author-X-Name-First: James Author-X-Name-Last: Burns Author-Name: Bob White Author-X-Name-First: Bob Author-X-Name-Last: White Author-Name: Anna Konstant Author-X-Name-First: Anna Author-X-Name-Last: Konstant Title: Engineering economy as a vibrant and relevant course in the engineering programs of today and tomorrow Abstract: Engineering economy has been studied by the majority of engineering students for many years, yet its place in engineering education is often misunderstood. Logic suggests that the engineering economy course would be highly valued since it is the only course many engineering students will take related to financial matters, but instead there is evidence that the subject is being marginalized. While pressures to reduce program credit hours and changes to the Fundamentals of Engineering exam may play a role in this, perhaps engineering economy has not sufficiently evolved to meet the needs of students or the realities of the contemporary workplace. What can be done to ensure that engineering economy fulfills its potential as an important part of engineering education? There may be few clear-cut answers, but we believe that engineering economy should shift toward a future characterized by rigorous coursework grounded in engineering design principles and applications of risk and uncertainty. This has been our goal in teaching engineering economy at Western Michigan University for many years. The purpose of this paper is to communicate the essential elements of a strategy that has helped to make the course a vibrant component of several engineering programs. Journal: The Engineering Economist Pages: 236-258 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1781309 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1781309 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:236-258 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph C. Hartman Author-X-Name-First: Joseph C. Author-X-Name-Last: Hartman Title: Investment decisions and the logic of valuation. Linking finance, accounting, and engineering Journal: The Engineering Economist Pages: 259-261 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1784515 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1784515 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:259-261 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph H. Wilck Author-X-Name-First: Joseph H. Author-X-Name-Last: Wilck Title: Cashflows: A python library for computations in financial analytics developed by Juan David Velásquez-Henao and Ibeth Karina Vergara-Baquero Journal: The Engineering Economist Pages: 262-263 Issue: 3 Volume: 65 Year: 2020 Month: 7 X-DOI: 10.1080/0013791X.2020.1784516 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1784516 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:3:p:262-263 Template-Type: ReDIF-Article 1.0 Author-Name: Sarah M. Ryan Author-X-Name-First: Sarah M. Author-X-Name-Last: Ryan Title: Letter from the editor Journal: The Engineering Economist Pages: 265-265 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2020.1852662 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1852662 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:265-265 Template-Type: ReDIF-Article 1.0 Author-Name: K. Jo Min Author-X-Name-First: K. Jo Author-X-Name-Last: Min Author-Name: Laura Lilienkamp Author-X-Name-First: Laura Author-X-Name-Last: Lilienkamp Author-Name: John Jackman Author-X-Name-First: John Author-X-Name-Last: Jackman Author-Name: Chung-Hsiao Wang Author-X-Name-First: Chung-Hsiao Author-X-Name-Last: Wang Title: Supply contracts for critical and strategic materials of high volatility and their ramifications for supply chains Abstract: For critical and strategic materials such as a rare earth element or crude oil, we study a supply chain consisting of an intermediary/producer facing a highly volatile market to its customers and a local supplier at a different region subject to a fixed term supply contract. By viewing the opportunity to sign this contract as a real option, we construct a supply contract model and analytically derive the optimal contract-signing threshold price from the intermediary/producer perspective. Based on this threshold, we show how the relationship among the threshold price, lead time, and contract duration results in a classification of the supply chain’s preferences for lead time length, and to concrete guidelines for using the lead time and contract duration as tradable negotiation tools for supply chain contracts. Journal: The Engineering Economist Pages: 266-287 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2020.1712508 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1712508 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:266-287 Template-Type: ReDIF-Article 1.0 Author-Name: F. Mariscal Author-X-Name-First: F. Author-X-Name-Last: Mariscal Author-Name: T. Reyes Author-X-Name-First: T. Author-X-Name-Last: Reyes Author-Name: E. Sauma Author-X-Name-First: E. Author-X-Name-Last: Sauma Title: Valuing flexibility in transmission expansion planning from the perspective of a social planner: A methodology and an application to the Chilean power system Abstract: We study the value of adding flexibility to Transmission Expansion Planning (TEP) projects from the perspective of a social planner using real options. Due to the deregulation of electricity markets, TEP projects currently face multiple uncertainties. These uncertainties often cause traditional project valuation methods to recommend sub-optimal investment decisions. Additionally, to incorporate the effects of uncertainties on the valuation of TEP projects, current literature rely on some critical simplifications that do not fit well with the real operations of a power market. This paper models the power market in a realistic way by combining an equilibrium model, to assess the power market equilibrium that the TEP project will generate, with a valuation model based on real options, to incorporate the value of flexibility. The methodology is applied to determine the value of adding capacity expansion flexibility to a portion of the rigid TEP project that connects the main two interconnected systems in Chile since 2018. Our results show that, in this case, adding flexibility increases the net expected social welfare by $14.03 million. Several sensitivity analyses confirm that this flexibility has more value when uncertainty is higher and/or investment costs are lower. Journal: The Engineering Economist Pages: 288-320 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2020.1712509 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1712509 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:288-320 Template-Type: ReDIF-Article 1.0 Author-Name: Borliang Chen Author-X-Name-First: Borliang Author-X-Name-Last: Chen Title: Optimal capital structure of government-subsidized private participation in infrastructure projects Abstract: A government-subsidized private participation in infrastructure (PPI) project is a solution to attract private investors to invest in financially non-viable infrastructure projects with high social benefits. A government-subsidized PPI project comprises three financing sources: government subsidy, equity, and debt. For government-subsidized PPI projects, the government subsidy level must be determined before the optimal debt ratio can be determined. A government subsidy level that is too low may lead to the project being non-bankable for financial institutes and a level that is too high may result in high excess returns for project investors. This paper develops cooperative game models, which are multiple–variable game models, to determine optimal solutions for four major decision variables – the government subsidy, tariff, debt ratio, and interest rate for project negotiation for PPI projects. This three–party game model is developed to identify terms and conditions that optimize the total benefits of financially non-viable PPI projects, which can lead to successful PPI project negotiations. The Kaohsiung cable car project in Taiwan is used for demonstration purposes. The results of the analysis show that optimal solutions for the three financing sources - government subsidy, equity, and debt - can be determined by the models. Journal: The Engineering Economist Pages: 321-338 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2019.1707923 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1707923 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:321-338 Template-Type: ReDIF-Article 1.0 Author-Name: Yuri Yatsenko Author-X-Name-First: Yuri Author-X-Name-Last: Yatsenko Author-Name: Natali Hritonenko Author-X-Name-First: Natali Author-X-Name-Last: Hritonenko Author-Name: Seilkhan Boranbayev Author-X-Name-First: Seilkhan Author-X-Name-Last: Boranbayev Title: Non-equal-life asset replacement under evolving technology: A multi-cycle approach Abstract: This paper studies the cost-minimizing serial asset replacement problem under changing operating and replacement costs. Technological improvements affect these costs in different ways, which leads to different duration of sequential replacement cycles of the same asset. Therefore, a firm should optimize a chain of consecutive asset replacements using available information about future costs. We offer a novel multi-cycle algorithm for making such replacement decisions and prove that it converges to the infinite-horizon solution when the number of cycles increases. Important qualitative properties of the obtained optimal non-equal-life replacement strategies are derived, and practical recommendations are discussed. Journal: The Engineering Economist Pages: 339-362 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2020.1716126 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1716126 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:339-362 Template-Type: ReDIF-Article 1.0 Author-Name: Boris Klebanov Author-X-Name-First: Boris Author-X-Name-Last: Klebanov Title: Rates of return of investments whose timings are specified by a probability distribution Abstract: In this paper we describe an approach for calculating the rates of return of investments whose timing is uncertain. In the framework of the approach, we calculate the expected value of the rate of return. We extend the deterministic Endpoints and Modified Dietz rate of return models by viewing the investments transaction timings as random variables. Our main working assumption is that the transaction timings are uniformly distributed in a certain time interval. We study a series of new rate of return models that have a wide range of practical applications. Our results generalize some well-known rate of return formulas, including the renowned Modified Dietz formula. The models introduced in this paper provide one-period rates of return compliant with the Global Investment Performance Standards (GIPS) requirements. They can be used for GIPS-compliant calculations. Journal: The Engineering Economist Pages: 363-380 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2019.1680784 File-URL: http://hdl.handle.net/10.1080/0013791X.2019.1680784 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:363-380 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Call for Nominations for the Institute of Industrial and Systems Engineers Wellington Award Journal: The Engineering Economist Pages: 381-381 Issue: 4 Volume: 65 Year: 2020 Month: 10 X-DOI: 10.1080/0013791X.2020.1837532 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1837532 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:65:y:2020:i:4:p:381-381 Template-Type: ReDIF-Article 1.0 Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the Editor Journal: The Engineering Economist Pages: 1-2 Issue: 1 Volume: 66 Year: 2021 Month: 2 X-DOI: 10.1080/0013791X.2021.1894008 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1894008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:1:p:1-2 Template-Type: ReDIF-Article 1.0 Author-Name: Kyongsun Kim Author-X-Name-First: Kyongsun Author-X-Name-Last: Kim Author-Name: Chan S. Park Author-X-Name-First: Chan S. Author-X-Name-Last: Park Title: Pricing real options based on linear loss functions and conditional value at risk Abstract: The main purpose of this paper is to expand real option analysis out of the realm of pure financial option pricing techniques. To overcome many of the well-known concerns by adopting the financial option pricing techniques for modeling real options problems such as replicating portfolio concept, geometric Brownian motion as underlying stochastic process, and estimating project volatility, we propose an alternative real option valuation based on the loss function approach. The option value determined by the loss function approach is equivalent to the expected value of perfect information (EVPI) in decision analysis. It basically sets the upper bound of risk premium to pay in retaining the options. In practice, many firms utilize the concept of Value at Risk to manage their portfolio risk. If a firm sets a target VAR, then we may be able to link this VAR in refining the actual risk premium to pay in hedging the risk embedded in the investment. With this practice in mind, we present a logic to figure out an appropriate amount of real option premium to pay for a given level of risk tolerance. A comprehensive example is presented to demonstrate the computational procedures as well as economic interpretations on the outcomes. Journal: The Engineering Economist Pages: 3-26 Issue: 1 Volume: 66 Year: 2020 Month: 12 X-DOI: 10.1080/0013791X.2020.1867273 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1867273 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2020:i:1:p:3-26 Template-Type: ReDIF-Article 1.0 Author-Name: Catarina Almeida Author-X-Name-First: Catarina Author-X-Name-Last: Almeida Author-Name: Inês Teotónio Author-X-Name-First: Inês Author-X-Name-Last: Teotónio Author-Name: Cristina Matos Silva Author-X-Name-First: Cristina Matos Author-X-Name-Last: Silva Author-Name: Carlos Oliveira Cruz Author-X-Name-First: Carlos Oliveira Author-X-Name-Last: Cruz Title: Socioeconomic feasibility of green roofs and walls in public buildings: The case study of primary schools in Portugal Abstract: Green infrastructure has been applied in urban areas to mitigate the negative effects of urbanization and promote the efficient use of resources. This study suggests a methodology for assessing the economic value of installing green roofs and green walls in public buildings, particularly in primary schools. The economic evaluation considers costs and benefits from three perspectives—(i) infrastructure, (ii) users, and (iii) environment—using three levels of analysis (i) financial, (ii) economic, and (iii) socio-environmental. The methodology is applied to ten alternative green roofs/walls scenarios in two primary schools in Lisbon, Portugal, for validation purposes. The cost-benefit analysis is carried out for a 40 and 50-year life cycle, using a 6.67% discount rate. The results show that all scenarios are feasible. The final benefit-cost ratios range between 3.01 and 34.99. A sensitivity analysis shows that the installation cost, esthetic improvement, and increased sound insulation have a significant impact on the results. Journal: The Engineering Economist Pages: 27-50 Issue: 1 Volume: 66 Year: 2021 Month: 1 X-DOI: 10.1080/0013791X.2020.1748255 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1748255 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:1:p:27-50 Template-Type: ReDIF-Article 1.0 Author-Name: Xi Luo Author-X-Name-First: Xi Author-X-Name-Last: Luo Author-Name: Yanfeng Liu Author-X-Name-First: Yanfeng Author-X-Name-Last: Liu Author-Name: Xiaojun Liu Author-X-Name-First: Xiaojun Author-X-Name-Last: Liu Title: Multi-objective optimization and cost-based output pricing of a standalone hybrid energy system integrated with desalination Abstract: The design and operation of hybrid energy systems, which are relevant to remote islands characterized by energy and water supply shortage, have been extensively investigated. However, determining the costs of different system outputs is still a challenging task. In this study, a multi-objective optimization was performed to obtain the optimal design parameters of a hybrid energy system integrated with desalination. As each consumer demand (inclusive of electrical, cooling, and water demands) is highly coupled to the other, output pricing was performed based on cost allocation using the cooperative game theory. The results show that cooling, electricity, and desalinized water can be co-generated efficiently and economically, and the electrical, cooling, and water demands should bear 13.40%, 53.90%, and 32.70%, respectively, of the annualized costs of the entire hybrid energy system. In the proposed model, the cooling demand has the strongest coupling characteristic, whereas the electrical demand has the weakest, because the electricity waste from the photovoltaic/thermal panels allows easier integration of the cooling demands with other demands, for the consumption of excess solar power. Journal: The Engineering Economist Pages: 51-70 Issue: 1 Volume: 66 Year: 2020 Month: 11 X-DOI: 10.1080/0013791X.2020.1853862 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1853862 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2020:i:1:p:51-70 Template-Type: ReDIF-Article 1.0 Author-Name: Anastasia N. Blaset Kastro Author-X-Name-First: Anastasia N. Author-X-Name-Last: Blaset Kastro Author-Name: Nikolay Yu Kulakov Author-X-Name-First: Nikolay Yu Author-X-Name-Last: Kulakov Title: Risk-adjusted discount rates and the present value of risky nonconventional projects Abstract: An appropriate risk adjustment technique applied to discount rate for evaluating stochastic negative cash flows is discussed. The proposed approach considers a future cash flow as a response to an investment or a borrowing rather than an independent cash flow. As discount rates applied to evaluate investments and borrowings have different meanings, the generalized net present value method is more appropriate to value cash flows with opposite signs. The given method uses two different rates: the finance rate is applied to discount positive present values (PVs) and the reinvestment rate – to discount negative PVs of a nonconventional project. It is shown that these rates are adjusted for risk relatively to their risk-free values in an opposite way. A universal relationship between risk penalty and risk premium is derived from the assumption that investment and borrowing risks are equal in their value. Journal: The Engineering Economist Pages: 71-88 Issue: 1 Volume: 66 Year: 2020 Month: 9 X-DOI: 10.1080/0013791X.2020.1815918 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1815918 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2020:i:1:p:71-88 Template-Type: ReDIF-Article 1.0 Author-Name: Dowon Kim Author-X-Name-First: Dowon Author-X-Name-Last: Kim Author-Name: Kyoung-Kuk Kim Author-X-Name-First: Kyoung-Kuk Author-X-Name-Last: Kim Author-Name: Jiwoong Lee Author-X-Name-First: Jiwoong Author-X-Name-Last: Lee Title: Term structures and scenario-based social discount rates under smooth ambiguity Abstract: Many studies estimate social discount rates based on the Ramsey rule. The rule has been augmented in various ways in order to reflect the decision maker’s attitude toward risk and uncertainty. In this article, we adopt the recursive utility with ambiguity of Ju and Miao and develop a general social discount rate formula via the utility gradient method. The derived formula allows us to obtain the three-way explicit separation of risk aversion, intertemporal substitution, and ambiguity aversion as in Traeger. It also goes beyond the classical two-period setting and thus term structures of social discount rates under ambiguity can be studied. Due to the generality of this approach, we can directly apply the well-known growth scenarios under climate change so as to derive scenario-based social discount rates, which can be used as a guide in practice to assess climate change policies or related projects. Journal: The Engineering Economist Pages: 121-149 Issue: 2 Volume: 66 Year: 2021 Month: 4 X-DOI: 10.1080/0013791X.2020.1781990 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1781990 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:2:p:121-149 Template-Type: ReDIF-Article 1.0 Author-Name: David Islip Author-X-Name-First: David Author-X-Name-Last: Islip Author-Name: Jason Z. Wei Author-X-Name-First: Jason Z. Author-X-Name-Last: Wei Author-Name: Roy H. Kwon Author-X-Name-First: Roy H. Author-X-Name-Last: Kwon Title: Managing construction risk with weather derivatives Abstract: Among construction industry participants, weather has been perceived to be one of the most critical factors impacting project cash-flows. The overall impact of weather on the contractor’s project objectives is non-trivial due to construction industry incentive structures and contract specifics. This paper presents a framework that leverages stylized facts from the construction industry to motivate the use of weather derivatives in managing the non-trivial weather impacts. The proposed framework is demonstrated using data provided by a large construction contractor. We show that weather derivative portfolios used for hedging purposes by the contractor can address the contractor’s aversion for losses as well as the complicated relationship between weather and construction. Furthermore, weather derivative hedging reduces the contractor’s incentive to partake in risk chasing behavior in the face of weather delays and reduces the likelihood of the contractor exploiting other claims channels within the project contract. Journal: The Engineering Economist Pages: 150-184 Issue: 2 Volume: 66 Year: 2021 Month: 4 X-DOI: 10.1080/0013791X.2020.1733721 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1733721 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:2:p:150-184 Template-Type: ReDIF-Article 1.0 Author-Name: Gordon Hazen Author-X-Name-First: Gordon Author-X-Name-Last: Hazen Author-Name: Carlo Alberto Magni Author-X-Name-First: Carlo Alberto Author-X-Name-Last: Magni Title: Average internal rate of return for risky projects Abstract: The average internal rate of return (AIRR) fixes many deficiencies associated with the traditional internal rate of return (IRR), including apparent inconsistency with net present value (NPV). The AIRR approach breaks down project NPV into scale (the capital invested) and economic efficiency (the AIRR), and maintains NPV consistency for accept/reject decisions. Here we examine extensions of the AIRR to risky capital asset projects, a domain where the IRR appears intractable. We show that one can uniquely break down a risky NPV into a risk-sensitive project scale and a risk-sensitive extended AIRR, representing risky project efficiency, so that consistency with NPV for accept/reject decisions is maintained in the certainty-equivalent sense, in direct analogy to the deterministic case. This novel breakdown gives managerial insight by helping determine a risky project’s locus of uncertainty, be it the project scale, or economic efficiency, or both. In this way, risky features of competing projects can be explored in more detail, leading to insights substantiating the NPV ranking. We also show that under risk neutrality, the expected AIRR is equal to the AIRR of the expected cash flow, a property that notoriously fails for the stochastic IRR. Journal: The Engineering Economist Pages: 90-120 Issue: 2 Volume: 66 Year: 2021 Month: 4 X-DOI: 10.1080/0013791X.2021.1894284 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1894284 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:2:p:90-120 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Letter from the Editor Journal: The Engineering Economist Pages: 89-89 Issue: 2 Volume: 66 Year: 2021 Month: 4 X-DOI: 10.1080/0013791X.2021.1923680 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1923680 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:2:p:89-89 Template-Type: ReDIF-Article 1.0 Author-Name: David C. Rode Author-X-Name-First: David C. Author-X-Name-Last: Rode Author-Name: Paul S. Fischbeck Author-X-Name-First: Paul S. Author-X-Name-Last: Fischbeck Title: The levelized cost of energy and regulatory uncertainty in plant lifetimes Abstract: The levelized cost of energy is commonly used in both policymaking and capital investment decisions. It unitizes capital costs by amortizing them over an assumed asset life. The life of the asset is usually assumed to be known with certainty. But in many electric power applications, the life is both uncertain and subject to regulatory shocks. In these cases, the standard levelized cost of energy calculation is incorrect and potentially misleading. We propose a corrected version of this measure using expectation under a probability model for shortened life and show its implications for several investment and policy applications. Journal: The Engineering Economist Pages: 187-205 Issue: 3 Volume: 66 Year: 2021 Month: 8 X-DOI: 10.1080/0013791X.2021.1933283 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1933283 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:3:p:187-205 Template-Type: ReDIF-Article 1.0 Author-Name: Amir Rajabian Author-X-Name-First: Amir Author-X-Name-Last: Rajabian Author-Name: Mageed Ghaleb Author-X-Name-First: Mageed Author-X-Name-Last: Ghaleb Author-Name: Sharareh Taghipour Author-X-Name-First: Sharareh Author-X-Name-Last: Taghipour Title: Optimal Replacement, Retrofit, and Management of a Fleet of Assets under Regulations of an Emissions Trading System Abstract: This paper presents a model for parallel replacement and improvement for a fleet of assets to minimize both the economic costs and greenhouse gas (GHG) emissions where the emissions are limited by an emissions trading system also known as cap-and-trade. The firm which owns the assets has the options of using, storing, improving, or salvaging them. Different technological types and their performances have been considered for the assets. The firm has the option of purchasing new assets from varying technologies and/or improving its existing assets to a higher-performance type. The model considers the possibility of both banking the emission allowances or trading them in the market. The model was applied to data from a fleet of excavators in Ontario, Canada. The model and the findings of this case study could help emitter firms to simultaneously manage the emissions and costs of their assets in a jurisdiction regulated by cap-and-trade. Journal: The Engineering Economist Pages: 225-244 Issue: 3 Volume: 66 Year: 2021 Month: 8 X-DOI: 10.1080/0013791X.2020.1853863 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1853863 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:3:p:225-244 Template-Type: ReDIF-Article 1.0 Author-Name: Kyung-Taek Kim Author-X-Name-First: Kyung-Taek Author-X-Name-Last: Kim Author-Name: Donghyun An Author-X-Name-First: Donghyun Author-X-Name-Last: An Author-Name: Deok-Joo Lee Author-X-Name-First: Deok-Joo Author-X-Name-Last: Lee Title: Economic service life of equipment under uncertain revenues: A real options approach Abstract: Companies which utilize equipment as a critical manufacturing asset should resolve the problem of economic replacement. In this article, a case study of equipment replacement for an auto parts manufacturer is presented. We derive a formula to calculate the expected service life using a classical binomial real options model under revenue uncertainty. A sensitivity analysis shows that the initial cost of the equipment has the largest impact on the expected service life in this case study. The presented real option model is applicable to manufacturing companies which seek to the solution of economic equipment replacement under revenue uncertainty. Journal: The Engineering Economist Pages: 245-261 Issue: 3 Volume: 66 Year: 2021 Month: 8 X-DOI: 10.1080/0013791X.2021.1946226 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1946226 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:3:p:245-261 Template-Type: ReDIF-Article 1.0 Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 185-186 Issue: 3 Volume: 66 Year: 2021 Month: 8 X-DOI: 10.1080/0013791X.2021.1962498 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1962498 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:3:p:185-186 Template-Type: ReDIF-Article 1.0 Author-Name: Jingu Jang Author-X-Name-First: Jingu Author-X-Name-Last: Jang Author-Name: Moonkyu Seo Author-X-Name-First: Moonkyu Author-X-Name-Last: Seo Author-Name: Giwon Nam Author-X-Name-First: Giwon Author-X-Name-Last: Nam Author-Name: Deok-Joo Lee Author-X-Name-First: Deok-Joo Author-X-Name-Last: Lee Title: Economic feasibility of the investment in residential photovoltaics system considering the effects of subsidy policies: A Korean case Abstract: The economic feasibility of the investment is critical for residential users’ decision making in investing in photovoltaic (PV) systems because the high costs of installing PV technology may be burdensome. Therefore, governments in many countries have been implementing policies to reduce the economic burden of household users' PV investments and thus promote solar energy to household users. The purpose of this paper is to perform an economic feasibility analysis of investments in residential PV systems that considers the effects of several subsidy plan alternatives using the empirical data of Korea. The result shows that the residential PV investment project would be economically viable without subsidy; however, a payback period exceeds 8 years, which could be perceived by residential customers as too long to be attractive enough to invest in a PV system at present. In addition, we found that the net present value is highest under the production based subsidy scheme, whereas the payback period is shortest with a lump-sum subsidy. Journal: The Engineering Economist Pages: 206-224 Issue: 3 Volume: 66 Year: 2021 Month: 8 X-DOI: 10.1080/0013791X.2020.1831119 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1831119 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:3:p:206-224 Template-Type: ReDIF-Article 1.0 Author-Name: James Rutherford Cuthbert Author-X-Name-First: James Rutherford Author-X-Name-Last: Cuthbert Title: Sequel to “partitioning transaction vectors into pure investmentsâ€: A new sufficient condition for transactions to have a unique IRR and some results on the distribution of IRRs Abstract: An article by the same author in The Engineering Economist in 2018 (vol. 63(2), 143–157) proved that any transaction could be uniquely partitioned into a sequence of pure investments with strictly decreasing internal rates of return (IRRs). This article uses that result to prove a new condition for a transaction to have a unique IRR and also gives some information on how the IRRs of a transaction must be distributed. Journal: The Engineering Economist Pages: 303-318 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2021.1929624 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1929624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:303-318 Template-Type: ReDIF-Article 1.0 Author-Name: Kihyung Kim Author-X-Name-First: Kihyung Author-X-Name-Last: Kim Author-Name: Abhijit Deshmukh Author-X-Name-First: Abhijit Author-X-Name-Last: Deshmukh Title: Bandwagon Investment Equilibrium of Investment Timing Games Abstract: Empirical research reports various behaviors exhibited by investors, including voluntary concurrent investments, which are called bandwagon investments. However, the current theoretical understanding is still limited in explaining under which condition the investment bandwagon effect occurs. We investigate the closed-loop subgame perfect equilibrium of an investment timing game that describes voluntary simultaneous investments. We show that investors are on the investment bandwagon when (1) they expand their current capacities and (2) the second mover’s additional profit rate exceeds a threshold value. Otherwise, investors invest sequentially. This result explains the frequently observed investment herd effect. Journal: The Engineering Economist Pages: 265-278 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2020.1829222 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1829222 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:265-278 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Letter from the editor Journal: The Engineering Economist Pages: 263-264 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2021.2004657 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2004657 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:263-264 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Nominations are being accepted for American Society for Engineering Education National Engineering Economy Teaching Excellence Award Journal: The Engineering Economist Pages: 347-347 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2021.2005938 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2005938 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:347-347 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Nominations are being accepted for Institute of Industrial and Systems Engineers Wellington Award Journal: The Engineering Economist Pages: 346-346 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2021.2005939 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2005939 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:346-346 Template-Type: ReDIF-Article 1.0 Author-Name: Carlo Alberto Magni Author-X-Name-First: Carlo Alberto Author-X-Name-Last: Magni Title: Internal rates of return and shareholder value creation Abstract: We propose a genuinely internal approach to project valuation and decision based on the average Return On Investment (ROI), obtained as the ratio of total operating profit (NOPAT) to total invested capital or, equivalently, as the ratio of net cash flow to total invested capital. The approach presented enables decomposing the economic value created into the project scale (total capital invested) and the economic efficiency, obtained as the difference between average ROI and a suitably adjusted weighted average cost of capital (WACC). We show that a project’s average ROI is equal to the weighted mean of the average Return On Equity (ROE) (total net income divided by total equity capital) and the average Return On Debt (ROD) (total interest expenses to total debt outstanding) and show that the average ROE itself correctly measures shareholder value creation when compared with a suitably adjusted cost of equity. We show that the internal average-based approach presented is also valid under the more general assumption of time-varying cost of capital. Journal: The Engineering Economist Pages: 279-302 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2020.1867679 File-URL: http://hdl.handle.net/10.1080/0013791X.2020.1867679 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:279-302 Template-Type: ReDIF-Article 1.0 Author-Name: Eduardo Nesi Bubicz Author-X-Name-First: Eduardo Author-X-Name-Last: Nesi Bubicz Author-Name: Tiago Pascoal Filomena Author-X-Name-First: Tiago Author-X-Name-Last: Pascoal Filomena Author-Name: Leonardo Riegel Sant’Anna Author-X-Name-First: Leonardo Author-X-Name-Last: Riegel Sant’Anna Author-Name: Eduardo Bered Fernandes Vieira Author-X-Name-First: Eduardo Author-X-Name-Last: Bered Fernandes Vieira Title: Rebalancing index tracking portfolios with cumulative sum (CUSUM) control charts Abstract: In this study, we use the cumulative sum (CUSUM) control chart methodology to regulate index tracking portfolio updates over time, as we seek to make the rebalancing decision endogenous to the portfolio selection problem. We use data from two stock markets (United States and Brazil), and we estimate CUSUM based portfolios as well as portfolios using fixed rebalancing time windows. We also provide a comparison with the exponentially weighted moving average (EWMA) control chart methodology. Our findings show the suitability of CUSUM, in a dynamic condition in which we have more portfolio updates when tracking performance is poor (usually during periods when markets have more volatility) and lower updates when tracking performance is effective. Journal: The Engineering Economist Pages: 319-345 Issue: 4 Volume: 66 Year: 2021 Month: 12 X-DOI: 10.1080/0013791X.2021.1936320 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1936320 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:66:y:2021:i:4:p:319-345 Template-Type: ReDIF-Article 1.0 Author-Name: Mohamad Zarean Author-X-Name-First: Mohamad Author-X-Name-Last: Zarean Author-Name: Ahmad Reza Sayadi Author-X-Name-First: Ahmad Reza Author-X-Name-Last: Sayadi Author-Name: Amin Alah Mousavi Author-X-Name-First: Amin Alah Author-X-Name-Last: Mousavi Title: Case study of an equivalent annual cost model for economic lifetime for construction vehicles under cost uncertainty Abstract: Whereas the practical importance of the Economic Lifetime (EL) is well-known, selecting the proper process has always been a dilemma. In this respect, classical methods dating back to one century ago are generally favored, but using them in a data-driven approach still has particular shortcomings. This paper aims to present a Life Cycle Cost (LCC) model determining the EL of a truck while fluctuation in historical data deepens through its lifespan. The equivalent annual cost of LCC is developed based on Operating and Maintenance (O&M) costs along with the resale value. The O&M cost was estimated deterministically and stochastically using regression analysis and Brownian-Motion-based simulation. The resale value was modeled by employing a genetic algorithm. The model capability was evaluated using real data of a seven cubic-meters truck hauling rock-fill materials in a dam construction project. The optimal EL was estimated on average 105 months in deterministic condition, while it was 88-145 months at the 70% confidence level using non-deterministic approach. Journal: The Engineering Economist Pages: 75-93 Issue: 1 Volume: 67 Year: 2022 Month: 1 X-DOI: 10.1080/0013791X.2022.2028048 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2028048 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:1:p:75-93 Template-Type: ReDIF-Article 1.0 Author-Name: K. Jo Min Author-X-Name-First: K. Jo Author-X-Name-Last: Min Author-Name: John Jackman Author-X-Name-First: John Author-X-Name-Last: Jackman Title: Real Option-Based decision model for fuel saving devices in transportation vehicles under flexible design Abstract: Operations that depend on transportation vehicles experience a high degree of uncertainty in fuel costs. We construct and analyze the engineering economic problem of how to value flexibility when the vehicle design under consideration enables fuel savings in the future by incurring an initial cost for the vehicle to incorporate features that will support future modifications. For a vehicle manufacturer working with a customer, we derive the optimal threshold fuel costs to incorporate such features and to decommission under the net benefit maximization through a real options approach. From these derivations as well as an illustrative example in the case of winglets for aircraft, we present the managerial insights and economic implications of the flexible design in transportation vehicles. Journal: The Engineering Economist Pages: 2-24 Issue: 1 Volume: 67 Year: 2022 Month: 1 X-DOI: 10.1080/0013791X.2021.2017094 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2017094 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:1:p:2-24 Template-Type: ReDIF-Article 1.0 Author-Name: Ramin Giahi Author-X-Name-First: Ramin Author-X-Name-Last: Giahi Author-Name: Cameron A. MacKenzie Author-X-Name-First: Cameron A. Author-X-Name-Last: MacKenzie Author-Name: Chao Hu Author-X-Name-First: Chao Author-X-Name-Last: Hu Title: Optimizing the flexible design of hybrid renewable energy systems Abstract: Engineering systems often operate for a long period of time under varying conditions. The system should be designed based on the best available information at the time of the decision. Designers should also account for future uncertainties in the initial design of the system. The initial design may or may not change as the future evolves and conditions change. The goal of this study is to optimize the design of a hybrid renewable energy system (HRES) to deliver electricity under highly uncertain demand. This research explores designing the hybrid system while taking into account uncertainties over a long period of time (i.e., 20 years in this study). The objective is to minimize the expected discounted cost of the HRES during the next 20 years. A design solution may also be flexible, which means that the design can be adapted or modified in the future to meet new scenarios. This article incorporates flexibility or capacity expansion into engineering design under long-range uncertainty when the objective function is evaluated via a Monte Carlo simulation. The value of expanding capacity is measured by comparing the cost without capacity expansion and cost with capacity expansion. Journal: The Engineering Economist Pages: 25-51 Issue: 1 Volume: 67 Year: 2022 Month: 1 X-DOI: 10.1080/0013791X.2022.2028047 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2028047 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:1:p:25-51 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Letter from the Editor Journal: The Engineering Economist Pages: 1-1 Issue: 1 Volume: 67 Year: 2022 Month: 1 X-DOI: 10.1080/0013791X.2022.2048224 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2048224 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:1:p:1-1 Template-Type: ReDIF-Article 1.0 Author-Name: Zhenyao Wu Author-X-Name-First: Zhenyao Author-X-Name-Last: Wu Author-Name: Shinya Hanaoka Author-X-Name-First: Shinya Author-X-Name-Last: Hanaoka Author-Name: Bin Shuai Author-X-Name-First: Bin Author-X-Name-Last: Shuai Title: Modeling optimal thresholds for minimum traffic guarantee in public–private partnership (PPP) highway projects Abstract: Optimal upper and lower thresholds model for traffic guarantee are proposed to optimize the risk allocation between a government and a concessionaire considering the perspective of lenders and the risk tolerances of the participants. In this study, the condition for the lender to provide the loan is that the default probability of the project does not exceed the acceptable maximum default probability of the lender. The proposed model uses risk weights to reflect the risk tolerances of government and the concessionaire and adopts a Gini coefficient for risk to describe the rationality of risk allocation. The application of the model to a highway project shows that a traffic guarantee with optimal thresholds effectively balances the project risks for both the government and concessionaire. Journal: The Engineering Economist Pages: 52-74 Issue: 1 Volume: 67 Year: 2022 Month: 1 X-DOI: 10.1080/0013791X.2021.2015498 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2015498 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:1:p:52-74 Template-Type: ReDIF-Article 1.0 Author-Name: Behnam Babaei S. A. Author-X-Name-First: Behnam Author-X-Name-Last: Babaei S. A. Author-Name: Abdollah J. Jassbi Author-X-Name-First: Abdollah J. Author-X-Name-Last: Jassbi Title: Technical note: Modified simple average internal rate of return Abstract: One of the most attractive indexes to select the best investment decision is internal rate of return (IRR) measure, but it has some significant faults both in practice and theoretically. Multiple attempts have been made to resolve the IRR challenges, but none of them are perfect. This article presents the Modified Simple Average Internal Rate of Return criterion as a profitability index for calculating a unique rate of return for all various types of cash flow streams so that obtained results are consistent with the net present value method in accept/reject decisions. The presented method is simple to compute and is capable of resolving all known IRR defects including when the resulting rate is greater than −1. Journal: The Engineering Economist Pages: 157-169 Issue: 2 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2021.1944413 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1944413 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:2:p:157-169 Template-Type: ReDIF-Article 1.0 Author-Name: Sergio Cabrales Author-X-Name-First: Sergio Author-X-Name-Last: Cabrales Author-Name: Rafael Bautista Author-X-Name-First: Rafael Author-X-Name-Last: Bautista Author-Name: Isabella Madiedo Author-X-Name-First: Isabella Author-X-Name-Last: Madiedo Author-Name: MarÃa Galindo Author-X-Name-First: MarÃa Author-X-Name-Last: Galindo Title: A methodology for temperature option pricing in the equatorial regions Abstract: Weather derivatives are financial instruments that can be used by organizations or individuals to hedge risks associated with adverse weather conditions. Weather conditions can directly decrease profits by affecting the volume of sales or costs. This paper develops a methodology for temperature option pricing in equatorial regions. In this approach, temperature is forecast by combining deterministic and stochastic models. We find that forecasting daily temperature with a model that combines a truncated third-order Fourier series with a mean reversion stochastic process proves the most accurate for pricing the options. The methodology is calibrated with data gathered in Bogotá, Colombia, using Monte Carlo simulations. Journal: The Engineering Economist Pages: 96-111 Issue: 2 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2021.2000086 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2000086 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:2:p:96-111 Template-Type: ReDIF-Article 1.0 Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 95-95 Issue: 2 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2022.2087848 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2087848 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:2:p:95-95 Template-Type: ReDIF-Article 1.0 Author-Name: Frank Lefley Author-X-Name-First: Frank Author-X-Name-Last: Lefley Author-Name: Petra MareÅ¡ová Author-X-Name-First: Petra Author-X-Name-Last: MareÅ¡ová Author-Name: Eva Hamplová Author-X-Name-First: Eva Author-X-Name-Last: Hamplová Author-Name: Václav JaneÄek Author-X-Name-First: Václav Author-X-Name-Last: JaneÄek Title: The influence of gender-diverse boards on post-audit practices: A UK SME study Abstract: This article extends the project-engineering management/post-audit literature into the field of business ethics and board gender diversity. As a result, it fills an important gap in the literature. Board gender diversity is an important issue with ramifications on corporate decision-making. Based on a sample of 163 UK small-medium enterprises (SMEs), our research shows differences between gender diverse (GD) boards and male-only boards in post-audit (P-A) practices. GD boards conduct more post-audits and adopt a more formal approach to post-audit procedures. There are significant differences between the two board types concerning the reasons for undertaking post-audits and the non-adoption of post-audits (P-As). An interesting observation is in the area of risk aversion, as we find an inconsistency between those SMEs that conduct P-As and those that do not. This inconsistency may reflect the earlier literature, which is inconclusive in its findings concerning females’ attitudes to risk. A further interesting observation from the data analysis shows that GD Boards appear to be more focused, while male boards are more diverse in their responses. This article is of relevance and general interest to engineering economists in an investment appraisal, P-A, project management, and governance environment, fostering diversity and equality in regulating corporate activities, assisting practitioners and policy-makers in understanding the importance of monitoring capital projects, and the role played by gender-diverse boards. Journal: The Engineering Economist Pages: 112-130 Issue: 2 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2021.2000685 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.2000685 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:2:p:112-130 Template-Type: ReDIF-Article 1.0 Author-Name: Jeong-Gi Lee Author-X-Name-First: Jeong-Gi Author-X-Name-Last: Lee Author-Name: Deok-Joo Lee Author-X-Name-First: Deok-Joo Author-X-Name-Last: Lee Author-Name: Piao Ri Author-X-Name-First: Piao Author-X-Name-Last: Ri Author-Name: Kyung-Taek Kim Author-X-Name-First: Kyung-Taek Author-X-Name-Last: Kim Author-Name: Sung-Joon Park Author-X-Name-First: Sung-Joon Author-X-Name-Last: Park Title: Case study: An assessment of the economic service life of research equipment in the Korean public research institutes Abstract: Recently, as the effective use of research equipment has been regarded as a prerequisite condition to maximize research and development (R&D) outcomes, the problem of replacing aging or obsolete research equipment has become important. The purpose of this article is to assess the economic life of R&D equipment empirically using data gathered from public R&D institutes in Korea. We developed a systematic model to apply traditional engineering economic concepts and estimated the economic service life of research equipment based on size and utilization purpose of the equipment. Finally, this study suggests a policy scheme for efficient replacement of research equipment based on our estimation results. Journal: The Engineering Economist Pages: 131-156 Issue: 2 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2021.1995093 File-URL: http://hdl.handle.net/10.1080/0013791X.2021.1995093 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:2:p:131-156 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2047851_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220823T191300 git hash: 39867e6e2f Author-Name: Liangchuan Wu Author-X-Name-First: Liangchuan Author-X-Name-Last: Wu Author-Name: Yuju Wang Author-X-Name-First: Yuju Author-X-Name-Last: Wang Author-Name: Liang-Hong Wu Author-X-Name-First: Liang-Hong Author-X-Name-Last: Wu Title: Modeling index tracking portfolio based on stochastic dominance for stock selection Abstract: We propose a three-step method using the stochastic dominance (SD) approach on stock filtering to determine the number and candidate stocks in a portfolio. We empirically prove that our model can be used to efficiently construct a partial tracking portfolio and replicate the return of the index. First, the low standard deviation feature is found in the proposed portfolio using SD for the risk avoider. Second, our model generates constituents for a portfolio and fills the gap in the index tracking strategy. Third, the portfolios chosen from the SD-based model outperform the FTSE index and traditional index trackers’ returns. Artificial intelligence algorithms of weighting constituents can be examined in future research. Journal: The Engineering Economist Pages: 172-194 Issue: 3 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2022.2047851 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2047851 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:3:p:172-194 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2079787_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220823T191300 git hash: 39867e6e2f Author-Name: Bo Yan Author-X-Name-First: Bo Author-X-Name-Last: Yan Author-Name: Yanping Liu Author-X-Name-First: Yanping Author-X-Name-Last: Liu Author-Name: Zijie Jin Author-X-Name-First: Zijie Author-X-Name-Last: Jin Title: Decisions on capital-constrained supply chains with credit guarantees and bankruptcy costs Abstract: A supply chain financing model that the core supplier provides credit guarantee for the capital-constrained retailer to bank loans is concerned. The model takes the credit guarantee, bankruptcy cost, and salvage value of products into account, and analyzes the decision-making behaviors of supply chain participants, including the bank. The optimal decisions of order quantity, wholesale price, loan interest rate and bankruptcy threshold are obtained, as well as the relationship between these decisions and other factors. Results show that the supplier can adjust the credit guarantee coefficient to increase its profit and lower the profit of the retailer, which will cause instability in the supply chain. Then the joint contract of revenue-sharing and fixed payment is designed. Under this contract, the profit of each supply chain member can be improved, but the revenue-sharing contract and the fixed payment contract alone cannot achieve this effect. Journal: The Engineering Economist Pages: 234-263 Issue: 3 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2022.2079787 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2079787 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:3:p:234-263 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2107129_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220823T191300 git hash: 39867e6e2f Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 171-171 Issue: 3 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2022.2107129 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2107129 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:3:p:171-171 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2077492_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220823T191300 git hash: 39867e6e2f Author-Name: Chih-Yang Tsai Author-X-Name-First: Chih-Yang Author-X-Name-Last: Tsai Title: On a holistic view of supply chain financial performance and strategic position Abstract: Measuring corporate financial performance is an essential task in many supply chain decisions, such as supply chain strategic positioning and partner selection. This study introduces an analytical approach that can quickly scan financial data of many companies and produce a summary measure for each company. The approach offers organizations a less wearing way to obtain a holistic view of all target companies’ financial performance patterns, which imply the underlying supply chain strategies. The strategy map, a two-dimensional representation of the summary, provides a comprehensible means to apprehend the relative strategic position and measure the similarity between companies. The approach relies on three popular machine learning models, forecasting, clustering, and classification. It takes multi-year, multi-variate financial time series from the three standard financial statements, learns the patterns from the data, and tunes model parameters to configure the final settings for future applications. The input data needed are relatively easy to obtain and the self-learning modules only require modest domain knowledge to apply the approach. Its noise reduction, outlier detection, and feature selection functions ensure a consistent and robust performance. The empirical test using data from all US manufacturers and traders listed on NYSE and NASDAQ demonstrates the efficacy of the approach. Journal: The Engineering Economist Pages: 195-217 Issue: 3 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2022.2077492 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2077492 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:3:p:195-217 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2078023_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220823T191300 git hash: 39867e6e2f Author-Name: Bernardo León-Camacho Author-X-Name-First: Bernardo Author-X-Name-Last: León-Camacho Author-Name: Andrés Mora-Valencia Author-X-Name-First: Andrés Author-X-Name-Last: Mora-Valencia Author-Name: Javier Perote Author-X-Name-First: Javier Author-X-Name-Last: Perote Title: Modified variance incorporating high-order moments in risk measure with Gram-Charlier returns Abstract: This paper introduces a new risk measure for portfolio choice and compares its performance with two related metrics, namely the behavioral variance and the modified variance by using a Taylor’s expansion. The methodology for our proposal naturally incorporates investor attitudes to risk related to skewness and kurtosis by assuming a Gram-Charlier return distribution. The so-obtained risk measures represent a more reliable description of portfolio risk and encompass the cases where high-order moments are not relevant characteristics (i.e. under normality). Our results show the outperformance of our proposal for different risk tolerance parameters considering the minimum variance and Sharpe ratio criteria by employing random portfolio optimization technique for 11 sets of stocks. Journal: The Engineering Economist Pages: 218-233 Issue: 3 Volume: 67 Year: 2022 Month: 7 X-DOI: 10.1080/0013791X.2022.2078023 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2078023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:3:p:218-233 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2158537_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: The Editors Title: Letter from the editor Journal: The Engineering Economist Pages: 265-265 Issue: 4 Volume: 67 Year: 2022 Month: 10 X-DOI: 10.1080/0013791X.2022.2158537 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2158537 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:4:p:265-265 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2105463_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Jaehun Sim Author-X-Name-First: Jaehun Author-X-Name-Last: Sim Author-Name: Vittaldas V. Prabhu Author-X-Name-First: Vittaldas V. Author-X-Name-Last: Prabhu Title: The impact of credit risk on cash-bullwhip in supply chain Abstract: Because cash flow is a critical issue for companies, it is important to effectively operate cash flow to mitigate liquidity risks. However, compared with research on the bullwhip effect, few studies have analyzed the effects and causes of the cash-flow bullwhip in the supply chain. None has considered the influence of credit risk on the cash-flow bullwhip effect from downstream to upstream throughout the supply chain. Thus, this study develops a mathematical model to investigate the influence of credit risk on the cash-flow bullwhip. To achieve this, it analyzes the variability of each member’s account receivable, account payable, and cash level along with three financial performance measures: account receivable turnover, account payable turnover, and cash conversion cycle. The excessive inventory level created by the bullwhip effect is known to cause the cash-bullwhip effect, which leads to supply chain members experiencing liquidity problems. However, the results of this study demonstrate that a consideration of credit risk increases the amounts of account receivable, account payable, and cash from downstream members to upstream members. In addition, this study demonstrates that when considering the credit risk, the account receivable turnover index accurately illustrates the cash-bullwhip effect of each member throughout the supply chain. Journal: The Engineering Economist Pages: 266-287 Issue: 4 Volume: 67 Year: 2022 Month: 10 X-DOI: 10.1080/0013791X.2022.2105463 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2105463 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:4:p:266-287 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2048330_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Fabian Rosner Author-X-Name-First: Fabian Author-X-Name-Last: Rosner Author-Name: Dandan Yang Author-X-Name-First: Dandan Author-X-Name-Last: Yang Author-Name: Ashok Rao Author-X-Name-First: Ashok Author-X-Name-Last: Rao Author-Name: Scott Samuelsen Author-X-Name-First: Scott Author-X-Name-Last: Samuelsen Title: Gas turbine price projection for n-th plant equipment cost Abstract: Historically, gas turbines (GTs) have been engineered for natural gas applications and costs are commonly estimated on a $/kW basis. However, when studying advanced power systems such as solid oxide fuel cell-GT hybrids or other unconventional applications, this commonly used cost basis cannot accurately predict the GT cost under these novel operating conditions, which ultimately leads to inaccurate economic evaluations of the entire power system. In this study, a parametric cost estimation approach has been utilized to identify the main cost drivers based upon the GT’s on-design operating condition: I) GT air mass flow rate, II) GT compression ratio and III) GT turbine inlet temperature. Based on these characteristics, a GT cost correlation has been derived which is able to predict the GT genset price with an accuracy level of R2 = 97.5%. Journal: The Engineering Economist Pages: 325-330 Issue: 4 Volume: 67 Year: 2022 Month: 10 X-DOI: 10.1080/0013791X.2022.2048330 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2048330 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:4:p:325-330 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2121883_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Mehdi Seifbarghy Author-X-Name-First: Mehdi Author-X-Name-Last: Seifbarghy Author-Name: Mohsen Hamidi Author-X-Name-First: Mohsen Author-X-Name-Last: Hamidi Author-Name: Wichai Chattinnawat Author-X-Name-First: Wichai Author-X-Name-Last: Chattinnawat Title: Optimizing the quality level of raw materials based on material flow cost accounting in a production system with rework Abstract: The concept of Material Flow Cost Accounting (MFCA) was developed by a German textile company in late 1980s through their projects for environmental management. The major objectives of MFCA are to increase transparency of material flow and energy usage along with their environmental and financial impacts. MFCA traces a variety of measures from material productivity metrics to crucial environmental indexes. Most of the existing researches on MFCA focus on conceptual models. A major research gap is the lack of mathematical optimization models which use the MFCA logic to support managerial decisions. This is the first known study in which a comprehensive mathematical optimization model has been developed based on MFCA cost logic, i.e., positive and negative costs. The model is named MFCABOM (MFCA-Based Optimization Model) in this paper. In addition, we have incorporated the quality cost of raw materials into the MFCABOM. The MFCABOM determines the optimal quality level of raw materials in a production system with rework. A numerical example has been solved and discussed to assess the performance and validity of the MFCABOM. The results show that the MFCABOM can strongly support production managers in selecting the optimal quality level of raw materials based on MFCA cost logic. Journal: The Engineering Economist Pages: 288-305 Issue: 4 Volume: 67 Year: 2022 Month: 10 X-DOI: 10.1080/0013791X.2022.2121883 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2121883 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:4:p:288-305 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2065395_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Tugba Karabiyik Author-X-Name-First: Tugba Author-X-Name-Last: Karabiyik Author-Name: Alejandra J. Magana Author-X-Name-First: Alejandra J. Author-X-Name-Last: Magana Author-Name: Brittany A. Newell Author-X-Name-First: Brittany A. Author-X-Name-Last: Newell Title: First-year undergraduate students’ economic decision outcomes in engineering design Abstract: Economic decisions are a crucial part of the engineering design process as designers aim to minimize the cost and maximize the system’s benefits. This study focuses on first-year undergraduate students’ economic decision-making process when they trade off costs and benefits during a design challenge. In addition, we characterized students’ patterns of outcomes derived from economic decisions using the cost-benefit analysis (CBA) method during the design process. Our results suggest that students took different approaches, such as being conservative, moderately conservative, moderate, and aggressive when they tradeoff their design goals. Implications of this study relate to (a) the characterization of different approaches for trading-off design goals and (b) the use of the cost-benefit analysis method as a tool to assess students’ final designs to decide which alternative design is better. In addition, students can use the CBA method to make informed decisions while designing to optimize their design solutions. Journal: The Engineering Economist Pages: 306-324 Issue: 4 Volume: 67 Year: 2022 Month: 10 X-DOI: 10.1080/0013791X.2022.2065395 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2065395 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:67:y:2022:i:4:p:306-324 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2194089_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: The Editors Title: Letter from the editor Journal: The Engineering Economist Pages: 1-1 Issue: 1 Volume: 68 Year: 2023 Month: 1 X-DOI: 10.1080/0013791X.2023.2194089 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2194089 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:1:p:1-1 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2139029_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Paul M. Johnson Author-X-Name-First: Paul M. Author-X-Name-Last: Johnson Author-Name: Hiba Baroud Author-X-Name-First: Hiba Author-X-Name-Last: Baroud Author-Name: Craig Philip Author-X-Name-First: Craig Author-X-Name-Last: Philip Author-Name: Mark Abkowitz Author-X-Name-First: Mark Author-X-Name-Last: Abkowitz Title: An integrated approach to evaluating inland waterway disruptions using economic interdependence, agent-based, and Bayesian models Abstract: The U.S. inland waterways play a vital role in the domestic economy, but extreme weather events, especially floods, perennially threaten to disrupt their operations. Here, we develop a data-driven approach to analyzing economic risks due to flood closures along the inland waterways that combines agent-based, economic interdependence, and Bayesian modeling. We demonstrate our framework by evaluating economic impacts of various flood disruptions along the Upper Mississippi River and determining cases where a publicly operated, flood-resilient port located near the mouth of the river can reroute shipments and mitigate production losses for the region. We find that Illinois, Louisiana, Minnesota, and Missouri are the states that suffer the most production losses from flood disruptions and that agriculture and chemical manufacturing are the most impacted industries. However, during floods whose return periods exceed 30-years, the flood resilient port becomes cost-effective in mitigating losses for the region. Our methodology can be easily extended to other hazards and sections of the inland waterways. Journal: The Engineering Economist Pages: 2-19 Issue: 1 Volume: 68 Year: 2023 Month: 1 X-DOI: 10.1080/0013791X.2022.2139029 File-URL: http://hdl.handle.net/10.1080/0013791X.2022.2139029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:1:p:2-19 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2179708_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Wolfgang M. Grimm Author-X-Name-First: Wolfgang M. Author-X-Name-Last: Grimm Title: On volatile growth: Simple fitting of exponential functions taking into account values of every observation with any signs, applied to readily calculate a novel covariance-invariant CAGR Abstract: The commonly used compound annual growth rate CAGR does not consider volatility, and its calculation fails for time series beginning or terminating with a zero or negative value, which may be the case for a company’s earnings history. Thus, a modification of the standard definition is proposed, derived from a covariance-invariant mapping of observations to a two-parameter exponential model. The novel growth rate is called “covariance-invariant CAGR“, which becomes CAGR for the special case of steady growth at a constant rate. It can be obtained using different options such as a chart, look-up table or formula. Further, the extension of the model by an additive constant may be used if negative values dominate. The approach is viewed as easy to apply as the log-linear model but with a superior performance. Compared to nonlinear least-squares regression, unique solutions can be obtained that allow a rather quick calculation. Journal: The Engineering Economist Pages: 34-58 Issue: 1 Volume: 68 Year: 2023 Month: 1 X-DOI: 10.1080/0013791X.2023.2179708 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2179708 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:1:p:34-58 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2179709_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Eda Boltürk Author-X-Name-First: Eda Author-X-Name-Last: Boltürk Author-Name: Elif Haktanır Author-X-Name-First: Elif Author-X-Name-Last: Haktanır Title: Decomposed fuzzy cost-benefit analysis and an application on ophthalmologic robot selection Abstract: Cost-benefit analysis is a benefit measurement method that compares the cost required to realize the product, service or result with the benefits to be obtained. It allows future earnings to be calculated with the present value of money and different projects can be compared. In this study, the uncertainties of decision maker inputs were reflected in a more realistic way by dealing with the cost-benefit analysis under decomposed fuzzy sets. The contribution of this study to the literature are the decomposed fuzzy linguistic term scale, which is proposed for the first time, and the new equations and formulations developed for cost-benefit analysis under fuzziness. This study also contributes to the successful applicability of engineering economics issues and financial analysis methods under fuzziness. Journal: The Engineering Economist Pages: 20-33 Issue: 1 Volume: 68 Year: 2023 Month: 1 X-DOI: 10.1080/0013791X.2023.2179709 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2179709 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:1:p:20-33 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2172242_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Seyed Mahdi Mirkhorsandi Langaroudi Author-X-Name-First: Seyed Mahdi Author-X-Name-Last: Mirkhorsandi Langaroudi Author-Name: Hossein Khosravi Author-X-Name-First: Hossein Author-X-Name-Last: Khosravi Author-Name: Alireza Davoodi Author-X-Name-First: Alireza Author-X-Name-Last: Davoodi Author-Name: Seyed Mojtaba Movahedifar Author-X-Name-First: Seyed Mojtaba Author-X-Name-Last: Movahedifar Title: Cash holding management for self-financing phase-able and non-phase-able project portfolio selection and scheduling problems Abstract: This article presents a novel mathematical model for managing the level of cash reserves for the self-financing phase-able as well as non-phase-able project portfolio selection and scheduling problems. Practically, the executive managers of project-oriented organizations tend to keep cash within their organization to increase their decision-making power. Although this allows managers and investors to invest in future economic projects, it imposes opportunity costs on owners and investors, in which case maintaining cash reserves can turn out to be a major challenge between owners and executive managers. This issue becomes more acute when the project-based organization operates self-financing. Because the financing is limited to the revenues of the finished projects, money withdrawn from the project account without proper management exacerbates financial constraints. Consequently, managers will bypass some future valuable investment opportunities. In this article, from the point of view of cash holding, the expectations of managers and investors in a self-financing phase-able and non-phase-able project-based organization will be met simultaneously. The proposed model is a nonlinear integer program. After linearization, an example is provided to illustrate the applicability and performance of the proposed model. Journal: The Engineering Economist Pages: 82-98 Issue: 2 Volume: 68 Year: 2023 Month: 4 X-DOI: 10.1080/0013791X.2023.2172242 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2172242 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:2:p:82-98 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2205858_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Makhfud Efendy Author-X-Name-First: Makhfud Author-X-Name-Last: Efendy Author-Name: Muhammad Syarif Author-X-Name-First: Muhammad Author-X-Name-Last: Syarif Author-Name: Nizar Amir Author-X-Name-First: Nizar Author-X-Name-Last: Amir Author-Name: Rachmad Hidayat Author-X-Name-First: Rachmad Author-X-Name-Last: Hidayat Title: Economic Feasibility Case Study of Developing a Salt Production Plant Abstract: Indonesia is a net salt importer with plans to eliminate salt import dependency through the industry’s development and collaboration with higher education institutions. Considering net present value (NPV), internal rate of return (IRR), benefit–cost ratio (B/C ratio), and return on investment (ROI), this case study analyzes the economic feasibility of developing a mini salt production plant. All the economic indices suggest that the project is feasible, specifically NPV, IRR, net B/C ratio, and ROI are IDR 5.3 billion, 42.83%, 1.61, and 395% respectively over 10 years. Thus, the project is economically feasible and can help eliminate import dependency and the higher educational institution’s outstanding contribution. Journal: The Engineering Economist Pages: 99-121 Issue: 2 Volume: 68 Year: 2023 Month: 4 X-DOI: 10.1080/0013791X.2023.2205858 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2205858 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:2:p:99-121 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2208505_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 59-59 Issue: 2 Volume: 68 Year: 2023 Month: 4 X-DOI: 10.1080/0013791X.2023.2208505 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2208505 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:2:p:59-59 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2205841_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Pan Tang Author-X-Name-First: Pan Author-X-Name-Last: Tang Author-Name: Xin Tang Author-X-Name-First: Xin Author-X-Name-Last: Tang Author-Name: Wentao Yu Author-X-Name-First: Wentao Author-X-Name-Last: Yu Title: Intraday trend prediction of stock indices with machine learning approaches Abstract: In recent years, as research at the intersection of machine learning and finance has grown, predicting stock price movements has become a particularly intriguing issue. Current research focuses primarily on using historical data of the previous day to predict stock movements for the following day, whereas fewer studies use the trading day’s opening data to predict market movements for the current day. We predict intraday price movements of the SSE-50 (Shanghai Securities 50 Index) using stock market opening data as input. Specifically, decision tree, extreme gradient boosting (XGBoost), random forest, support vector machines (SVM), and long-short-term memory are developed to predict the movements of the SSE-50 index utilizing opening price data of various time intervals. We also design three trading strategies when different time frequencies of data are used. At the same time-frequency, the results demonstrate that SVM with Gaussian and linear kernels outperform others. The forecasting accuracy at 10-min frequency approaches 70%, which is close to the results at longer time intervals, indicating that intraday trend can be determined by opening price fluctuations and the first 10-min data contains sufficient information to predict the trend for the entire trading day. In addition, trading methods based on the forecast of daily, weekly, and monthly SSE-50 price movement outperform buy-and-hold strategies. Daily trading performs better than the other two strategies. The outcomes of this research can expand the use of machine learning in quantitative trading and enrich intraday trading techniques further. Journal: The Engineering Economist Pages: 60-81 Issue: 2 Volume: 68 Year: 2023 Month: 4 X-DOI: 10.1080/0013791X.2023.2205841 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2205841 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:2:p:60-81 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2246240_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 123-124 Issue: 3 Volume: 68 Year: 2023 Month: 7 X-DOI: 10.1080/0013791X.2023.2246240 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2246240 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:3:p:123-124 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2209562_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Yuehuan He Author-X-Name-First: Yuehuan Author-X-Name-Last: He Author-Name: Roy Kwon Author-X-Name-First: Roy Author-X-Name-Last: Kwon Title: Optimization-based tail risk hedging of the S&P 500 index Abstract: In this paper, we present a mixed risk-return optimization framework for selecting long put option positions for hedging the tail risk of investments in the S&P 500 index. A tractable formulation is developed by constructing hypothetical portfolios that are constantly rolling put options. Variance and sample CVaR are used as risk measures. The models are tested against out-of-sample historical S&P 500 index values as well as the values of the index paired with long put options of varying strike prices. The optimized hedged portfolio could provide sufficient protection in market downturns while not losing significant return the long horizons. This is achieved by dynamically adjusting the put option compositions to market trends in a timely manner. Allocations to different put options are analyzed in various market trends and investor risk aversion levels. The strategy overcomes the traditional drawbacks of protective put strategies and outperforms both directly investing in the underlying asset and holding a constant long position in a particular put option. Journal: The Engineering Economist Pages: 153-168 Issue: 3 Volume: 68 Year: 2023 Month: 7 X-DOI: 10.1080/0013791X.2023.2209562 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2209562 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:3:p:153-168 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2229620_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Xiaoshi Guo Author-X-Name-First: Xiaoshi Author-X-Name-Last: Guo Author-Name: Sarah M. Ryan Author-X-Name-First: Sarah M. Author-X-Name-Last: Ryan Title: Avoiding momentum crashes using stochastic mean-CVaR optimization with time-varying risk aversion Abstract: In occasions called momentum crashes, the usually effective cross-sectional momentum strategy for financial asset allocation produces drastically negative returns. We develop a stochastic mean-risk optimization model featuring CVaR to control the risk, dynamically adjusted CVaR tail probability and objective function weight, and return scenarios generated by hybrid moment-matching. In a 95-year backtest, portfolios rebalanced by our method provide higher returns and lower risk than those rebalanced by a cross-sectional momentum heuristic, while avoiding momentum crashes. Journal: The Engineering Economist Pages: 125-152 Issue: 3 Volume: 68 Year: 2023 Month: 7 X-DOI: 10.1080/0013791X.2023.2229620 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2229620 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:3:p:125-152 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2209080_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Liang-Hong Wu Author-X-Name-First: Liang-Hong Author-X-Name-Last: Wu Author-Name: Khire Rushikesh Ulhas Author-X-Name-First: Khire Rushikesh Author-X-Name-Last: Ulhas Author-Name: Kim Hua Tan Author-X-Name-First: Kim Hua Author-X-Name-Last: Tan Author-Name: Liangchuan Wu Author-X-Name-First: Liangchuan Author-X-Name-Last: Wu Title: The S curve: A dynamic view of in ERP evaluation Abstract: Previous Enterprise Resource Planning (ERP) evaluation methods using closed-form solutions have ignored the unique characteristics of ERP’s life cycle. We propose a lifecycle model based on simulation and stochastic processes to capture and evaluate ERP’s value, including additional key factors. Our results show that accounting for the life cycle, ERP value differs from traditional wisdom and supports decision making from various factors and scopes, considering ERP’s implementation’s unique characteristics. Journal: The Engineering Economist Pages: 169-188 Issue: 3 Volume: 68 Year: 2023 Month: 7 X-DOI: 10.1080/0013791X.2023.2209080 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2209080 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:3:p:169-188 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2245828_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231209T012025 git hash: e41d04c31c Author-Name: Tom Arnold Author-X-Name-First: Tom Author-X-Name-Last: Arnold Author-Name: Timothy Falcon Crack Author-X-Name-First: Timothy Falcon Author-X-Name-Last: Crack Author-Name: Cassandra D. Marshall Author-X-Name-First: Cassandra D. Author-X-Name-Last: Marshall Author-Name: Adam Schwartz Author-X-Name-First: Adam Author-X-Name-Last: Schwartz Title: Introducing a real option framework for EVA/MVA analysis Abstract: The importance of including real option analysis (ROA) in traditional net present value (NPV) analysis has been demonstrated in the literature: ROA values the flexibility to defer, expand, contract, or abandon an investment project, allowing for dynamic decision making. However, methods to apply ROA for firms that utilize economic value added (EVA) and market value added (MVA) for project valuation purposes are not available. This article presents a novel framework that allows for an EVA/MVA analysis to be incorporated into a binomial tree option pricing model. This new EVA/MVA-embedded binomial tree framework not only allows for the consideration of real managerial options within EVA/MVA analysis but also demonstrates its equivalence to the traditional ROA used to adjust NPV. The benefits of this development are that EVA/MVA with an embedded binomial tree is deemed to be an equally valid and robust technique to traditional NPV analysis as opposed to simply being viewed as an alternative or competing measure of project value. This further validates the choice of some firms’ use of EVA/MVA and shows that strategic ROA can be incorporated into corporate decision making. Journal: The Engineering Economist Pages: 190-210 Issue: 4 Volume: 68 Year: 2023 Month: 10 X-DOI: 10.1080/0013791X.2023.2245828 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2245828 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:4:p:190-210 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2275629_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231209T012025 git hash: e41d04c31c Author-Name: Francisco J. DÃaz-Borrego Author-X-Name-First: Francisco J. Author-X-Name-Last: DÃaz-Borrego Author-Name: Félix Jiménez Naharro Author-X-Name-First: Félix Author-X-Name-Last: Jiménez Naharro Author-Name: MarÃa del Mar Miras-RodrÃguez Author-X-Name-First: MarÃa del Mar Author-X-Name-Last: Miras-RodrÃguez Title: Managing a High Uncertainty Scenario through a Real Option Assessment: Evidence from a Copper Concentrate Trader Abstract: Commodity markets are highly volatile markets where uncertainty management is critical for success. Certain commodities, such as copper concentrates, experience even higher levels of volatility and uncertainty. This is fundamentally due to the absence of a reference market that allows for a transparent price discovery, along with many factors affecting the price and trade of any commodity. Traders also lack the possibility of fully hedging their exposure to copper concentrate prices as there is no derivative market directly available for the commodity. Consequently, this paper analyses the copper concentrate trading business resorting to the Real Options methodology to assess the high volatility and uncertainty which dominates in this area of commodity markets. The results obtained indicate that this method can be applied by copper concentrate traders to separate the price uncertainty from their business operative and financial planning for the future. This provides them with a reliable tool to lower the level of uncertainty affecting their long-term goals, as well as keeping the risk that they are taking under control. It also gives them higher managerial flexibility. Journal: The Engineering Economist Pages: 230-254 Issue: 4 Volume: 68 Year: 2023 Month: 10 X-DOI: 10.1080/0013791X.2023.2275629 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2275629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:4:p:230-254 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2292870_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231209T012025 git hash: e41d04c31c Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 189-189 Issue: 4 Volume: 68 Year: 2023 Month: 10 X-DOI: 10.1080/0013791X.2023.2292870 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2292870 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:4:p:189-189 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2253234_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231209T012025 git hash: e41d04c31c Author-Name: Morris G. Danielson Author-X-Name-First: Morris G. Author-X-Name-Last: Danielson Title: Investor expectations and the AIRR model Abstract: The two-stage growth model (Danielson, 1998) empowers analysts to quantify the growth expectations supporting a firm’s stock price. This article merges that two-stage growth model with the AIRR model developed by Magni (2010, 2013). The new model simplifies the calculation of the firm’s expected competitive advantage period and the expected annual growth rate. The new model can be used to quantify expectations for both dividend and non-dividend paying firms and when the return on new investments or the required return on equity might not be constant in the future. Journal: The Engineering Economist Pages: 211-229 Issue: 4 Volume: 68 Year: 2023 Month: 10 X-DOI: 10.1080/0013791X.2023.2253234 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2253234 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:68:y:2023:i:4:p:211-229 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2314673_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Kung-Jeng Wang Author-X-Name-First: Kung-Jeng Author-X-Name-Last: Wang Author-Name: Melissa T. A. Simarmata Author-X-Name-First: Melissa T. A. Author-X-Name-Last: Simarmata Title: Fuzzy activity-based costing: An investment evaluation approach for management information system of a smart factory Abstract: The investment in a smart manufacturing factory with corresponding management information systems is strategic, complex, and costly. This paper aims to develop a cost estimation framework for a smart factory management information system (SFMIS). This paper proposed a fuzzy activity-based costing (FABC) model for the evaluation of the SFMIS under conditions of uncertainty. The model presented a multi-step procedure to do the identification, estimation, determination, calculation, and computation of the resource costs, activity costs, and systems as cost objects. The fuzzy Delphi method is adopted, and seventeen experts are surveyed in two rounds of a questionnaire assessing the importance of resources, activities, systems, and industry type and company size. The proposed FABC cost estimation model is illustrated by a case study. This model can identify and allocate resources and estimate SFMIS costs accurately and efficiently. By using this FABC cost evaluation framework, policymakers facilitate smart factory implementation for its management information system under uncertainty. Journal: The Engineering Economist Pages: 66-86 Issue: 1 Volume: 69 Year: 2024 Month: 1 X-DOI: 10.1080/0013791X.2024.2314673 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2314673 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:1:p:66-86 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2315820_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 1-1 Issue: 1 Volume: 69 Year: 2024 Month: 1 X-DOI: 10.1080/0013791X.2024.2315820 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2315820 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:1:p:1-1 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2274063_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Hwayong Choi Author-X-Name-First: Hwayong Author-X-Name-Last: Choi Author-Name: Chungmok Lee Author-X-Name-First: Chungmok Author-X-Name-Last: Lee Author-Name: Sungsoo Park Author-X-Name-First: Sungsoo Author-X-Name-Last: Park Title: The column generation approach to the mean-risk model for the portfolio selection problem with spillover risk aversion Abstract: In this article, we propose extensions of the general mean-risk portfolio selection models to limit the spillover effect of risk. We use the conditional value at risk (CoVaR) as a measure to identify the spillover risk contribution of securities. The goal is to find a portfolio that minimizes general risk measures while the spillover risk contribution is limited. Based on the frameworks of the general mean-risk models, we additionally guarantee that a portfolio has limited spillover risk contributions. To solve these problems efficiently, we propose a Dantzig-Wolfe decomposition reformulation that yields a strong continuous relaxation bound by introducing a set of feasible investment patterns. We develop an algorithm that incorporates a column generation procedure to reduce the spillover effect of tail risk in subproblems. Finally, we present the performance of the portfolios using real historical data. The results show that our model can provide better portfolios than the general mean-risk models. Journal: The Engineering Economist Pages: 37-65 Issue: 1 Volume: 69 Year: 2024 Month: 1 X-DOI: 10.1080/0013791X.2023.2274063 File-URL: http://hdl.handle.net/10.1080/0013791X.2023.2274063 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:1:p:37-65 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2314310_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Nattawoot Koowattanatianchai Author-X-Name-First: Nattawoot Author-X-Name-Last: Koowattanatianchai Author-Name: Michael B. Charles Author-X-Name-First: Michael B. Author-X-Name-Last: Charles Author-Name: Michael A. Kortt Author-X-Name-First: Michael A. Author-X-Name-Last: Kortt Title: A deterministic economic model of optimal asset scrapping under the effects of taxes and inflation Abstract: This study investigates optimal asset scrapping conditions under taxation and inflation by adjusting Koowattanatianchai and Charles’s (2015) model on optimal asset duration, which omits the scrapping problem. We decompose the overall effects of taxation and inflation on the optimal scrapping policy into direct and indirect effects via the discount rate, and find that contradictory results in the existing literature of asset scrapping are all correct since they are compartments of our generalized framework. Simulation analysis is also conducted using the Thai logistics industry, with the results confirming the properties of the developed model and highlighting the importance of inflation and taxation in the surrounding economic context. Journal: The Engineering Economist Pages: 2-36 Issue: 1 Volume: 69 Year: 2024 Month: 1 X-DOI: 10.1080/0013791X.2024.2314310 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2314310 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:1:p:2-36 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2328528_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Chintan Patil Author-X-Name-First: Chintan Author-X-Name-Last: Patil Author-Name: Vittaldas V. Prabhu Author-X-Name-First: Vittaldas V. Author-X-Name-Last: Prabhu Title: Supply chain cash-flow bullwhip effect: An analytical model for working capital variance propagation Abstract: This research article probes the cash-flow bullwhip effect (CFB), a phenomenon precipitating an increase in the fluctuations of working capital within supply chains. A novel analytical model is proposed to delve into the CFB within a multi-echelon, serial supply chain, taking factors into account, such as demand autocorrelation, procurement lead time, and payment lead times. Our study implies that extended procurement lead times contribute to a heightened CFB, and a substantial discrepancy between a firm’s payment lead time and that of its customers results in a more pronounced CFB. Importantly, adopting shorter payment lead times for customers and extending them for suppliers can inflate the cash-flow bullwhip for all three constituent entities: the echelon, its customers, and suppliers. Our quantitative analysis reveals that strategies, such as payment batching and divulging end-customer demand information can mitigate the cash-flow bullwhip by as much as 49.5 and 53.7%, respectively. Empirical inspection of the CFB experienced by a sample of 786 companies from 2010 to 2019 demonstrates that ∼65% of these companies intensify their working capital variance. This underscores the need for cautious management of working capital variance and the adoption of suitable inventory and payment strategies to forestall financial turmoil within the supply chain. Journal: The Engineering Economist Pages: 129-161 Issue: 2 Volume: 69 Year: 2024 Month: 4 X-DOI: 10.1080/0013791X.2024.2328528 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2328528 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:2:p:129-161 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2370103_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Heather Nachtmann Author-X-Name-First: Heather Author-X-Name-Last: Nachtmann Title: Letter from the editor Journal: The Engineering Economist Pages: 87-87 Issue: 2 Volume: 69 Year: 2024 Month: 4 X-DOI: 10.1080/0013791X.2024.2370103 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2370103 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:2:p:87-87 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2340030_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Gyutai Kim Author-X-Name-First: Gyutai Author-X-Name-Last: Kim Author-Name: Luke Miller Author-X-Name-First: Luke Author-X-Name-Last: Miller Author-Name: Jung Woo Baek Author-X-Name-First: Jung Woo Author-X-Name-Last: Baek Title: An opportunity cost model to value deferral options Abstract: This study discusses a real options valuation approach based on the familiar opportunity cost concept. After demonstrating the equivalence of the opportunity model to the binomial lattice approach of Cox, Ross, and Rubinstein (CRR), we discuss its attributes through simple numerical examples. In contrast to the CRR approach, the transparency of the opportunity model provides an intuitive and economical baseline for managerial discussions and decision-making. We focus on the opportunity costs inherently embedded in the real options value (ROV); therefore, our study is distinct from most other studies, which consider them as the exogenous input to the ROV. Journal: The Engineering Economist Pages: 88-107 Issue: 2 Volume: 69 Year: 2024 Month: 4 X-DOI: 10.1080/0013791X.2024.2340030 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2340030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:2:p:88-107 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2340029_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Qiang Chen Author-X-Name-First: Qiang Author-X-Name-Last: Chen Author-Name: Xiaoqing Zhang Author-X-Name-First: Xiaoqing Author-X-Name-Last: Zhang Author-Name: Shuang Liu Author-X-Name-First: Shuang Author-X-Name-Last: Liu Author-Name: Weixiao Zhu Author-X-Name-First: Weixiao Author-X-Name-Last: Zhu Title: The inventory bullwhip effect in the online retail supply chain considering the price discount based on different forecasting methods Abstract: With the improvement of the new generation information technology, and the development of online economy, the customer behavior has gradually changed. The online economy has gradually become a new economic growth point. Many online platforms attract customers to purchase new products through different kinds of price discounts. In this article, we discuss the inventory bullwhip effect (IBE) in an online retail supply chain (ORSC) considering the price discount based on the different forecasting methods. Moreover, we discuss the influence of them on the IBE. When the price discount, the moving average forecasting method (MA), the exponential smoothing forecasting method (ES), and the minimum mean squared error forecasting method (MMSE) are considered, we consider an ORSC including of a manufacturer and an online platform, and the quantitative models of the BE and the IBE are discussed. This article finds that when the price sensitivity coefficient is very low, the online platform’s IBE is the lowest when the online platform adopts the MMSE method. Moreover, when the price discount gradually increases, the IBE of the online platform is also increasing. Moreover, it is gradually increasing when the expectation price difference coefficient becomes gradually increasing. Journal: The Engineering Economist Pages: 108-128 Issue: 2 Volume: 69 Year: 2024 Month: 4 X-DOI: 10.1080/0013791X.2024.2340029 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2340029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:2:p:108-128 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2328526_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Satya Verma Author-X-Name-First: Satya Author-X-Name-Last: Verma Author-Name: Satya Prakash Sahu Author-X-Name-First: Satya Prakash Author-X-Name-Last: Sahu Author-Name: Tirath Prasad Sahu Author-X-Name-First: Tirath Prasad Author-X-Name-Last: Sahu Title: Wavelet decomposition-based multi-stage feature engineering and optimized ensemble classifier for stock market prediction Abstract: Expanded feature engineering to handle complex and noisy stock data is not much explored in financial forecasting. Along with feature engineering, hyperparameter tuning is also important. This paper provides a solution to handle these issues by elaborating on Discrete Wavelet Transform (DWT)-based feature engineering and hyperparameter-tuned ensemble model. The Multi-Stage Feature Engineering (MSFE) is proposed in which DWT-based decomposition is utilized to handle the noise. DWT decomposition expands the features; therefore, two-stage feature reduction is proposed in which first the filter method is used, and then the probabilistic method is utilized. Next, hyperparameter tuning of the ensemble model is offered through Particle Swarm Optimization (PSO). The proposed model is named as Wavelet-Particle Swarm Optimization (WPSO). WPSO is tested and evaluated on the three stock indices (NIFTY, NASDAQ, and NYSE), and provided 92.51%, 94.18%, and 87.62% accuracy for NIFTY, NASDAQ, and NYSE, respectively. The WPSO is validated by comparing it with state-of-the-art methods. The performance of the WPSO is statistically analyzed through the Bonferroni–Dunn post hoc test where WPSO positioned at rank 1 for all the evaluation metric and datasets. The WPSO empirically verifies that improving feature quality through MSFE and hyperparameter tuning of ensemble model significantly improves the predictive outcomes. Journal: The Engineering Economist Pages: 213-238 Issue: 3 Volume: 69 Year: 2024 Month: 7 X-DOI: 10.1080/0013791X.2024.2328526 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2328526 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:3:p:213-238 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2402688_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Alexandre Granzer-Guay Author-X-Name-First: Alexandre Author-X-Name-Last: Granzer-Guay Author-Name: Roy H. Kwon Author-X-Name-First: Roy H. Author-X-Name-Last: Kwon Title: Risk-return adaptive receding Horizon Index Tracking Strategy Abstract: Index tracking is a well-established financial strategy for passive investing. Typical index tracking models are single period in nature, deriving an optimal tracking portfolio based on future price/return estimates, using most if not all index constituent assets. In this article, we propose a framework for index tracking that can accommodate multi-periods and asset selection. First, we propose a risk-return-based index tracking strategy within a multi-period adaptive receding horizon framework. The framework demonstrates strong tracking fidelity with the benchmark whilst accounting for future tracking states. We then adapt a Penalized Alternating Direction Method (PADM) to the multi-period framework to efficiently enforce a limit on tracking portfolio size (cardinality). The PADM produces high-quality solutions to the cardinality-constrained models and can be used effectively in both low and higher re-balancing frequency environments. Finally, we generalize our base multi-period formulation to an enhanced index tracking strategy, which can easily accommodate possible portfolio manager (PM) preferences. We present computational results that indicate that our cardinality-constrained and non-cardinality-constrained adaptive receding horizon framework for index tracking yields high tracking accuracy when compared to equivalent single-period or return-based models used in a rolling horizon framework. Journal: The Engineering Economist Pages: 189-212 Issue: 3 Volume: 69 Year: 2024 Month: 7 X-DOI: 10.1080/0013791X.2024.2402688 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2402688 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:3:p:189-212 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2403803_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: The Editors Title: Letter from the editor Journal: The Engineering Economist Pages: 163-163 Issue: 3 Volume: 69 Year: 2024 Month: 7 X-DOI: 10.1080/0013791X.2024.2403803 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2403803 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:3:p:163-163 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2367198_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Robert R. Inman Author-X-Name-First: Robert R. Author-X-Name-Last: Inman Author-Name: Maya Bam Author-X-Name-First: Maya Author-X-Name-Last: Bam Title: Incorporating Cost Risk in Supplier Selection for Long Term Contracts Abstract: Purchasing firms naturally select the supplier with the lowest total cost. Often overlooked is the impact of the duration of long-term contracts (common in the automotive industry). We provide a method to quantify how risk escalates with contract duration. Our method applies to virtually all cost elements. For clarity, we demonstrate it on logistics costs that can change over a long horizon, resulting in a change in the relative attractiveness of candidate suppliers. We simulate a case study to estimate the likelihood that each supplier will provide the lowest cost over the contract duration. Finally, we quantify the risk reduction afforded by dividing a long contract into a sequence of shorter contracts. Journal: The Engineering Economist Pages: 164-188 Issue: 3 Volume: 69 Year: 2024 Month: 7 X-DOI: 10.1080/0013791X.2024.2367198 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2367198 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:3:p:164-188 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2439706_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: The Editors Title: Letter from the editor Journal: The Engineering Economist Pages: 239-240 Issue: 4 Volume: 69 Year: 2024 Month: 10 X-DOI: 10.1080/0013791X.2024.2439706 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2439706 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:4:p:239-240 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2438145_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Óscar Gutiérrez Author-X-Name-First: Óscar Author-X-Name-Last: Gutiérrez Title: The impact of tracking costs on real options Abstract: This article presents a real options model that explicitly takes into account the tracking costs required to follow the evolution of an investment opportunity. We find the impacts of tracking costs on investment timing are far from negligible. For typical parameter configurations, tracking costs lead to consequential corrections to the standard solution. In addition, the option to discard the investment opportunity becomes relevant. The impact of tracking costs on investments is more evident for low levels of volatility. In some cases, the optimal policy is similar to the Net Present Value rule. Journal: The Engineering Economist Pages: 241-254 Issue: 4 Volume: 69 Year: 2024 Month: 10 X-DOI: 10.1080/0013791X.2024.2438145 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2438145 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:4:p:241-254 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2435881_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Damaris Chieregato Vicentin Author-X-Name-First: Damaris Chieregato Author-X-Name-Last: Vicentin Author-Name: Paulo Nocera Alves Junior Author-X-Name-First: Paulo Nocera Author-X-Name-Last: Alves Junior Author-Name: Geeta Duppati Author-X-Name-First: Geeta Author-X-Name-Last: Duppati Author-Name: Pedro Carlos Oprime Author-X-Name-First: Pedro Carlos Author-X-Name-Last: Oprime Title: Equipment replacement: A literature review of the stochastic approach using artificial intelligence Abstract: Replacing productive equipment is necessary due to its deterioration, which involves failure costs. However, studies on equipment replacement often lack stochastic approaches. Incorporating randomness into decision models enhanced the quality of equipment replacement decisions. In this sense, this study examines the methods used in the literature through topics generated by Latent Dirichlet Allocation. The Onion Latent Dirichlet Allocation method was used to analyze the secondary layer of a high-concentrated topic. Based on the perplexity analysis, ten main topics were identified and examined. The results suggest that most articles employ the dynamic programming method within a stochastic context, highlighting its advanced development in the literature. Journal: The Engineering Economist Pages: 255-284 Issue: 4 Volume: 69 Year: 2024 Month: 10 X-DOI: 10.1080/0013791X.2024.2435881 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2435881 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:4:p:255-284 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2431339_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: José Donizetti de Lima Author-X-Name-First: José Author-X-Name-Last: Donizetti de Lima Author-Name: Rômel da Rosa da Silva Author-X-Name-First: Rômel Author-X-Name-Last: da Rosa da Silva Author-Name: Géremi Gilson Dranka Author-X-Name-First: Géremi Gilson Author-X-Name-Last: Dranka Author-Name: Matheus Henrique Dal Molin Ribeiro Author-X-Name-First: Matheus Author-X-Name-Last: Henrique Dal Molin Ribeiro Author-Name: Luiz Fernando Puttow Southier Author-X-Name-First: Luiz Fernando Puttow Author-X-Name-Last: Southier Title: Introducing conditional expected loss: A novel metric for risk investment analysis Abstract: Risk analysis is crucial in real asset investment projects. However, existing risk measures like VaR (value at risk) and CVaR (conditional value at risk) may not fully capture potential losses in such scenarios. Consequently, the current literature lacks an indicator that accurately estimates the expected value in the event of financial insufficiency. To fill this gap, this article introduces the conditional expected loss (CEL) metric, a novel approach that estimates the average loss expected in the event of financial deficits within an investment project and provides extensive numerical modeling and a detailed real-world example. This novel metric enhances risk analysis and decision making, particularly evaluating financial insufficiency within projects with limited managerial flexibility and a higher likelihood of financial deficits. By incorporating CEL alongside other risk and return metrics, practitioners gain a more comprehensive understanding of project risks, ultimately leading to better investment choices. Journal: The Engineering Economist Pages: 285-312 Issue: 4 Volume: 69 Year: 2024 Month: 10 X-DOI: 10.1080/0013791X.2024.2431339 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2431339 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:69:y:2024:i:4:p:285-312 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2464130_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Bingzi Jin Author-X-Name-First: Bingzi Author-X-Name-Last: Jin Author-Name: Xiaojie Xu Author-X-Name-First: Xiaojie Author-X-Name-Last: Xu Title: Machine learning platinum price predictions Abstract: Throughout history, governments and investors have placed trust in price predictions for a wide range of commodities. This research explores the complex problem of forecasting daily platinum prices for the United States using time-series data spanning from January 02, 1969 to March 15, 2024. Estimates have not received enough attention in previous studies for this important assessment of commodity pricing. Here, price projections are created by using Gaussian process regression algorithms that are estimated with the use of cross-validation procedures and Bayesian optimization techniques. Arriving at the relative root mean square error of 1.5486%, our empirical prediction method yields relatively precise price projections for the out-of-sample phase covering 04/03/2013–03/15/2024. Price prediction models can be used by governments and investors to make informed decisions regarding the platinum business. Journal: The Engineering Economist Pages: 30-56 Issue: 1-2 Volume: 70 Year: 2025 Month: 4 X-DOI: 10.1080/0013791X.2025.2464130 File-URL: http://hdl.handle.net/10.1080/0013791X.2025.2464130 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:70:y:2025:i:1-2:p:30-56 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2438140_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Adil Baykasoglu Author-X-Name-First: Adil Author-X-Name-Last: Baykasoglu Author-Name: Elif Yoruk Author-X-Name-First: Elif Author-X-Name-Last: Yoruk Title: A practical revenue management approach for car parks via dynamically optimized self-adjusting bid pricing Abstract: Nowadays, there are major parking problems in crowded cities. This situation results in a loss of time and money for drivers and increased traffic congestion. Since car parks are vastly demanded facilities in crowded cities, the application of effective pricing strategies within parking reservation systems has the potential to increase revenues of the car parks and reduce the undesirable effects of parking problems. In this research, previous studies in the literature that are focused on revenue management (RM) in car parks are examined, and available solution procedures are discussed in some detail. A practical data-driven bid-price-based dynamic pricing methodology is developed in this study to maximize the expected revenue of a car park. The developed pricing system increases the weekly revenue of the car park by 15%. Since the developed pricing methodology is a data-driven based approach, it can also be generalized and applied to other systems that would benefit from dynamic pricing. Journal: The Engineering Economist Pages: 1-29 Issue: 1-2 Volume: 70 Year: 2025 Month: 4 X-DOI: 10.1080/0013791X.2024.2438140 File-URL: http://hdl.handle.net/10.1080/0013791X.2024.2438140 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:70:y:2025:i:1-2:p:1-29 Template-Type: ReDIF-Article 1.0 # input file: UTEE_A_2489362_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Ning Li Author-X-Name-First: Ning Author-X-Name-Last: Li Author-Name: Guanghui Zhu Author-X-Name-First: Guanghui Author-X-Name-Last: Zhu Author-Name: Yong Niu Author-X-Name-First: Yong Author-X-Name-Last: Niu Author-Name: Meilan Sun Author-X-Name-First: Meilan Author-X-Name-Last: Sun Title: Fast and stable portfolios through Huber’s criterion for constrained index tracking Abstract: A portfolio with numerous small and illiquid positions typically leads to high transaction costs and the need for frequent rebalancing. To address this issue, one could opt for a sparse portfolio strategy that can effectively track the benchmark index while simplifying portfolio management and reducing transaction costs. However, this approach requires prior specification of the maximum number of assets that can be selected. The computational complexity of cardinality-constrained optimization, particularly in high-dimensional settings, makes the regularization method a more preferable choice to handle such constraints. In this article, we introduce a more efficient index tracking method using penalized Huber loss regression, which automatically selects assets and allocates capital under a set of general convex constraints. Furthermore, we derive a fast algorithm based on coordinate descent to solve the resulting optimization problem. We also empirically evaluate the proposed methodology on real-world data sets. Promising results demonstrate the superiority of the proposed method in terms of tracking error and running time. Journal: The Engineering Economist Pages: 57-71 Issue: 1-2 Volume: 70 Year: 2025 Month: 4 X-DOI: 10.1080/0013791X.2025.2489362 File-URL: http://hdl.handle.net/10.1080/0013791X.2025.2489362 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:uteexx:v:70:y:2025:i:1-2:p:57-71