Production Of Capital Goods Research Articles

Integrated location and inventory planning in service parts logistics with last-mile delivery outsourcing

Outsourcing last-mile delivery to express companies provides an innovative strategy for capital goods manufacturers to improve service parts logistics. Given delivery dilemma due to geographically dispersed customers and low-frequency uncertain demands, we develop an integrated location and inventory problem with last-mile delivery outsourcing in a two-echelon service parts logistics. The proposed non-linear mixed integer programming model captures important decisions involving (1) location of local warehouses, (2) customer allocation to opened local warehouses, (3) inventory levels at these local warehouses, (4) outsourcing or self-operating last-mile delivery. We then replace service level constraints that cause nonlinearity with two new sets of constraints, and construct a linear mixed integer formulation that could be solved by GUROBI solver for some small-scale problems. It is still a challenging problem for large scale case, for which we propose an adaptive large neighbourhood search (ALNS) algorithm. Our extensive computational experiments verify the effectiveness of our model and algorithm. Computational experiments’ results indicate that outsourcing last-mile delivery amounting to around 12 % total cost savings on average, compared to self-operating in a real-world large instance from our research partner. Furthermore, we test some key parameters with computational experiments, and provide some managerial implications.

Contribution of capital goods production to social impacts: A life cycle perspective for a circular desalination plant

The production of capital goods is often ignored in the life cycle inventory phase of life cycle assessment studies. In this study, we investigated whether capital goods production, i.e., manufacturing of capital equipment and construction of infrastructure, and operation affect the results of the social life cycle assessment (S-LCA), using a case study of a desalination plant with multiple co-products in Lampedusa, Italy. The assessment was conducted using the PSILCA database to evaluate 20 impact subcategories and four stakeholder categories: Workers, Value chain actors, Society and Local community. Monetary data were collected for the manufacturing of equipment, labor and miscellaneous work during plant construction, working hours of employees during operation, consumed electricity and chemicals, and recovered materials during operation. Furthermore, multi-functionality was addressed through substitution, system expansion, and economic allocation to examine how these approaches affected the results. The functional unit was 1 m3 industrial water. Equipment manufacturing and plant construction contributed up to 15% to stakeholder categories and between 2% and 75% to impact subcategories of the substitution approach, and up to 51% for impact subcategories of system expansion and economic allocation. Equipment manufacturing and plant construction contributed to a high extent to “Health and safety” (of Workers), “Discrimination” and “Local employment” due to the construction and electrical sectors. Credits in substitution lead to a lower contribution of the operational stage and negative societal impact values. If S-LCA practitioners must limit the considered impact subcategories, for generic or site-specific analysis, the “Health and safety” (Workers), “Local employment”, and “Fair salary” should be investigated.

Organization of an engineering center for industrial import substitution

Objectives. Following the imposition of sanctions against the Russian Federation, which included a ban on thesupply of foreign electronic equipment—including automation systems—to Russian enterprises, the continuingdevelopment of science and technology in Russia became a question of ensuring technological sovereignty accordingto the principle of import substitution. According to plans developed by the Ministry of Industry and Trade of theRussian Federation, the policy of import substitution, including automation systems, will ensure the replacement ofimported equipment with domestic counterparts.Methods. Approaches underlying the joint project of MIREA ‒ Russian Technological University and EnvironmentalIndustrial Policy Center to solve the problems of import substitution are described. Various substitution strategiesavailable in the world experience, as well as objective and subjective obstacles to their implementation in Russia,including the insufficiency of domestic regulatory legal acts and previously formed attachments to importedtechnologies and regulatory frameworks, are considered. Distinctive features of contemporary external relations areadduced to the necessity and urgency of developing technological sovereignty. The main functional requirementsfor a software and hardware platform for developing modern automated control systems (ACS) for mechanicalengineering applications, as well as the required capabilities of an engineering center for solving applied problemsof overcoming import dependence, are described. The components of the production of capital goods (engineering)and its role in the product life cycle are shown.Results. The selection of a pilot engineering object comprising a sectional glass-forming machine, along with asoftware-hardware complex including elements of industrial electronics and ACS, is justified. The main functionalelements of the ACS and their interrelations are shown.Conclusions. The results confirm the necessity of achieving complete import substitution for the creation of digitalproducts. Prospects for cooperation with interested organizations are shown.

The Impact of Household Consumption and Investment on Economic Growth

In real economic activity, economic growth is the financial development of goods and services sold by the state, such as increased production of industrial goods, infrastructure development, increased number of schools, increased production of goods. services, and increased production of capital goods. This study aims to determine the effect of household consumption and investment on Indonesia's economic growth. This is a quantitative study and uses Indonesian data. This quantitative research uses the Ordinary Least Square (OLS) method and secondary data in the form of time series data collected by BPS (Central Bureau of Statistics). This study was analyzed using a multiple linear regression analysis model conducted with SPSS version 21 software. The variable of this research is economic growth in terms of GDP at constant prices, based on usage, household consumption and investment in Indonesia. The results showed that (1) household consumption had a significant negative effect on Indonesia's economic growth, (2) investment had a significant positive effect on Indonesia's economic growth, and (3) simultaneously household consumption and investment had a significant positive effect on Indonesia's economic growth.

Designing Industrial Product-Service System (PSS) Pilot Projects in Manufacturing Companies: A Proposed Process for Product and Customer Selection

AbstractThis paper proposes an approach for capital goods manufacturers to design Product-Service System (PSS) pilot projects by selecting appropriate products and customers. The authors conducted a single-case empirical study as a part of an ongoing action research project to maximise the learnings from a pilot project while minimising expenditure in extensive trial and error PSS solution testing. Two sets of criteria were elicited for product and customer selection, respectively, followed by a description of the ideal product and customer attributes for each of the three most common PSS archetypes.

Place-based Industrial Policy and Changes in the Manufacturing Sector in North-East India

Place-based or location-based policies are policy instruments used in addressing the challenges of economic inequalities and disparities across underperforming areas and disadvantaged regions. The eight states in North-East India (NEI) are behind other states in various spheres of economic development, particularly in terms of their contribution to India’s manufacturing sector. Based on the data from Annual Survey of Industries at disaggregated (two-digit) level, this study examines the changes in the manufacturing landscape in the region during the period of implementation of place-based industrial policy from 1997–1998 to 2016–2017. Using structural ratios and technical coefficients, location quotient and kinked exponential model, the study presents the changing profile of manufacturing industries in the region for the period under study. The performance of NEI’s manufacturing sector is explained in terms of rising capital intensity, falling employment and increased labour productivity. Though there is a visible shift from industries manufacturing food products towards chemicals and non-metallic minerals, the region’s industrial base remains less diversified and lacks capital goods production.

A Classical-Keynes Model of Money and Finance for Transiting Economies

Marx stands for ‘classical’ and ‘Keynes’ is represented by the stock-flow-consistent framework of Godley–Cripps–Lavoie. Agriculture proxies for basics in the classical departmental schema and does not dissolve into manufacturing. We establish the primacy of commercial/central bank money in the production and circulation of basics. Financial institutions mediate between savers and investors in the production of capital goods. Finally, corporations can issue shares to underwrite their investment plans. Financialisation is captured by share buybacks. JEL Codes: B52, E12

Hayek’s Best Test of a Good Economist

A careful reading of the quotations that Hayek left us upon his death on hundreds of cards explains what is, in his opinion, the ultimate and definitive test of whether or not someone is a true economist. It is curious to draw attention to the fact that Hayek had already referred to this matter in Appendix III to his Pure Theory of Capital, which he wrote in 1941 and which ends with the following words: «More than ever it seems to me to be true that the complete apprehension of the doctrine that ‘de-mand of commodities is not demand for labour’ is ‘the best test of an economist’» (Hayek 1976, p. 439). Here, Hayek wishes to highlight one of the key points of the theory of capital: the real productive structure is very complex and is formed by many stages, in such a way that an increase in the demand for con-sumer commodities will always be detrimental to employment in the stages furthest away from consumption (which is precisely where most of the workers are employed). Or, in other words, the employers can perfectly well earn money, even if their rev-enue (or «aggregate demand») drops, if they reduce their costs by replacing labour by capital equipment, thus indirectly gen-erating a significant demand for employment in the stages of capital goods production furthest away from consumption (Huerta de Soto 1998, pp. 213-313).
 It is more than illustrative how Hayek, in the select group of quotations on economic theory that he has left us in hundreds of his handwriting cards, wished to refer, once again, to these key ideas of the theory of capital. Effectively, Hayek now tells us that «Investment is more discouraged than stimulated by a high de-mand for consumer goods, and so is employment because in an ad-vancing economy more workers are employed to work for the distant fu-ture than for the present»(emphasis added). And he also says that «In the end is the decrease of final demand at current prices that leads to new investment to reduce costs». Therefore, Hayek con-cludes that «employment is not determined by aggregate demand». In short, for Hayek, the best test for an economist is to understand the implicit fallacy contained in the underconsumption theories and in what is called the shrift paradox or paradox of saving: «It is not consumer’s demand that secures the generation of incomes. It is investment of the excess of incomes over consumer’s expendi-tures which keeps incomes up». A large number of economists are unable to understand these principles because they adopt the macroeconomic aggregate approach that Hayek considers to be a serious error that leads, in the final analysis, to social engineering and socialism («Socialism is based on macroeconomics —a scien-tific error»). The only way of understanding what happens at «macro» level is by using microeconomics: «We can understand the macrosociety only by microeconomics». Furthermore, even the Chicago School monetarists are victims of this error: «Even Milton Friedman is reported to have once said ‘we are all Keynesians now’». The approach based on the model of equilibrium and mac-roeconomics is erroneous because «a science which starts with the conceit that it posses information which it cannot obtain is not a science». The same may be said of Welfare Economics, which, for Hayek, is «the spurious scientific foundation of socialist policies».

A case of 55 years of servitisation in the frozen concentrated orange juice industry

Although the term servitisation was coined in the late 1980s, this paper identifies and investigates a case that has been practiced in Brazil since 1963 by a capital goods manufacturer, which is focused on supplying machines and services to largest producers of frozen concentrated orange juice in country. Therefore, the aim of this paper is to describe and analyse the main characteristics of this case. Methodology used corresponds to an exploratory and in-depth case study conducted from supplier company perspective, but also by investigating its main customer company (dual approach). Data obtained were described and analysed using a framework designed for this purpose that is based on three classic publications on the subject. Results demonstrate a case of extreme servitisation, even for standards considered in present literature.

Molybdenum alloying in high-performance flat-rolled steel grades

Considerable progress in developing flat-rolled steel grades has been made by the Chinese steel industry over the recent two decades. The increasing demand for high-performance products to be used in infrastructural projects as well as in production of consumer and capital goods has been driving this development until today. The installation of state-of-the-art steel making and rolling facilities has provided the possibility of processing the most advanced steel grades. The production of high-performance steel grades relies on specific alloying elements of which molybdenum is one of the most powerful. China is nearly self-sufficient in molybdenum supplies. This paper highlights the potential and advantages of molybdenum alloying over the entire range of flat-rolled steel products. Specific aspects of steel property improvement with respect to particular applications are indicated.

Intermediate services’ impact on capital goods production

Abstract: The literature on intermediate services has shown that this sector contributes to industrial competitiveness and productivity rises. The production frontier is used to determine whether intermediate services contributed to the growth of capital goods production in the period between 1995 and 2009. The results found corroborate the hypothesis that the greater use of inputs from the sector results in an increase in the capital goods production in developed countries and indicate that this relationship is much weaker for developing countries. The growth of the capital goods sector’s productivity depends on the emergence of a growing symbiotic relationship between intermediate services and new communication technologies. The presence of these services helps to explain the greater dynamism of the capital goods sector in developed countries.

Free trade relations between Iran and India

In today's turbulent and complicated world, many developing countries have placed priority on free trade and investment in the various sectors of the economy in order to stay on the path of development and economic growth. Free trade and the formation of capital as one of the vital variables of growth Economic is considered, which will increase the productive forces of society through the production of capital goods, in order to enable them to produce the necessary commodities. The role of free trade and foreign investment in the planning of developing countries that now have high economic growth cannot be ignored. In India and Iran, the history of trade and investment has been formed more or less parallel to investment developments in different countries of the world. But the course of its evolutions and fluctuations in the course of international trade and the inflow of foreign capital have been more influenced by political developments and the specific political conditions of countries in different periods of time, and only economic goals have not been effective in this process. Hence, according to the information obtained through the primary and secondary data, India-Iran trade relations are positive and developing.

Better profit formulas for new business models: capital goods industries in a fragmented market

Purpose Over the past years, traditional manufacturers of capital goods, such as Siemens, ABB and GE, have seen their business environments transform. As a response to these changes, firms began to change their business models from providing singularly developed, integrated one-off solutions to offering modular, mass-customizable systems, including increasingly sophisticated services. This paper aims to support such manufacturers in overcoming uncertainties in designing innovative profit formulas in this new approach. Design/methodology/approach This study is based on an 18-month research project at a multinational, multi-scope manufacturer in the capital goods industry. Findings To innovate profit formulas, this study recommends a three-step approach: first, categorize your customer requirements along new dimensions for each project; second, apply smart and novel combinations of competition- and value-based pricing and cost strategies within projects; and third, calculate your profits at the feature level instead of the aggregated project level. Based on this approach, managers can categorize projects through an introduced matrix tool and identify ways to improve profitability. Research limitations/implications Findings are applicable to the capital goods industry and to comparable sectors where vendors can tailor product features for each customer individually. Originality/value This study will help managers to overcome the challenge of rethinking ways of operating that are long established and, until now, very successful. It sets out a methodology – the profitability matrix – that managers can use to analyze the profitability of a specific customer offering and suggests ways to improve it based on a novel three-step approach for designing new profit formulas.

Dyadic alignment in capital goods companies

PurposeThe purpose of this paper is to identify the main factors of the dyadic alignment in the supply chain of capital goods companies.Design/methodology/approachA survey was conducted among 159 respondents (53 supplier companies, 53 manufacturers and 53 clients).FindingsUsing structural equation modelling, no evidence of alignment between suppliers and manufacturers was identified. However, for the manufacturers, there is a partial mediation effect of the operational capabilities in the relationship between supply chain management and business performance.Originality/valueThis research investigates whether there is a dyadic alignment among supplier–manufacturer, manufacturer–customer and supplier–customer from the capital goods manufacturers’ perspective.

Basic structure of lessons learned approach to improve manufacturing processes: A case study

Abstract Manufacturers of complex mass consumer products and industrial capital goods - like automobiles, washing machines, machine tools - aim long-term product reliability during the usage phase. A large percentage of failing units in the product fleet caused by manufacturing faults can lead to significant risks for the manufacturer. Depending on failure mode and number of failing units, these can be related to reliability, financial, or image risks. Preconditions are controlled and capable manufacturing technologies and processes to avoid failures regarding the product. The learning process that is based on manufacturing weak points and failures (process and technology) of the past is one of the possibilities to ensure a continuous improvement of manufacturing processes from previous to subsequently following manufacturing generation. This means saving of structured knowledge regarding a long manufacturing period, depending on the products generation and manufacturing phases (e.g., automobiles: 5-6 years, smart phones: 2 years). This paper outlines a Lesson Learned approach on how to analyse, save and prioritise Lesson Learned issues - based on structured weak point data and information - out of an actual manufacturing process period to improve manufacturing control, capability, and quality of the subsequently manufacturing process generation. Furthermore, the paper shows a case study regarding the industrial application of the Lesson Learned approach for manufacturing planning based on previous manufacturing experience.

Unscripted economics in an industrial community

One third of US manufacturing jobs disappeared between 2001 and 2009 and the conventional explanations (low wages overseas, robots taking over) do not apply to the capital goods producers in Keene, New Hampshire, where the author teaches. Local firms compete with high wage counterparts and firms using robots hire people as well. De/reindustrialisation ascertains the cause(s) of industrial contraction – or success. Students visit plants in the local industrial base and conduct oral history interviews, analyse annual reports and apply specific concepts of economic theory. The course is interdisciplinary, involves undergraduate research and civic engagement and uses open education assignments. Unscripted learning has proved the great motivator, as students navigate their oral history interviews and the community presentation. The course succeeds in motivating students and it serves the community, conveys research skills and pushes the teacher to take economic theory in practical directions.

Product environmental footprint of a cross-laminated timber system: a case study in Italy

This study aims to apply the product environmental footprint (PEF) methodology to a wooden wall element, the Massiv–Holz–Mauer® (MHM), in an existing building in Northern Italy. The PEF is a multi-criteria measure of the environmental performance of products throughout their life cycle (European Commission 2013). The environmental footprint of the MHM wall element was calculated for the impact categories required by the PEF, using a cradle-to-grave approach. Foreground data was collected at each life stage and completed using data from the Ecoinvent 3.1 database (Wernet et al. 2016). An additional analysis (optional according to the PEF methodology) was conducted for assessing the sustainability of forest management in the sites where wood is extracted from, using data from the forest management plan. The results show that, for most of the environmental indicators, the use phase has the highest environmental impact, followed by the production, end-of-life, raw material acquisition, and construction phases. These results depend on the different duration of the life cycle phases, and on the attribution of the total operational energy of the building to the structural components of the wall, though other factors, such as the efficiency of the heating system, may be responsible. Future PEF sectorial specification should specify how to account for the use phase of structural building components. For the majority of the impact categories, the impact is mainly due to processes that occur in the background system, such as production of capital goods and construction of facilities and storehouses. The wooden material production generates relatively low impacts, thanks to the fact that the wood is sourced locally and from forests where a close-to-nature forest management is adopted, characterized by natural regeneration without the use of fertilizers and pesticides. This study shows that the PEF methodology can be successfully applied to a single wood supply chain, allowing the identification of the main hotspots and actions for reducing the environmental impacts. The PEF leaves space for additional environmental information, which, for some product categories, may play an important role. In the case of wood products, we suggest the inclusion of an assessment, even qualitative, of the sustainability of forest management.

Endogenizing Capital in MRIO Models: The Implications for Consumption-Based Accounting.

Nearly 30% of global greenhouse gas emissions are associated with the production of capital goods. Consumption-based emission calculations based on multiregional input-output (MRIO) models allocate emissions occurring in the production of intermediate goods to the final goods produced in an economy. Like intermediate goods, capital goods are used in production processes; yet the emissions associated with their production are not allocated to the industries using them. As a result, the carbon footprint of final consumption as well as emissions embodied in trade are currently underestimated. Here, we address this problem by endogenizing capital transactions in the EXIOBASE global MRIO database, thereby allocating emissions from capital goods to final consumption. We find that endogenizing capital substantially increases the carbon footprint of final consumption (by up to 57% for some countries), and that the gap between production-based and consumption-based emissions increases for most countries. We also find that the global emissions embodied in trade increase by up to 11%, and that current patterns of bilaterally traded emissions are amplified. Furthermore, endogenizing capital leads to a 3-fold increase in the carbon footprint of certain product categories. The results suggest that our approach constitutes an important improvement to current input-output methodology.

What do aggregate saving rates (not) show?

Abstract The aggregate saving indicator does not directly reflect changes in individuals’ microeconomic behavior. From the official statistics’ point of view, households choose between spending, which generates additional income and consumption in the economy, and setting money aside, which does not. Formally, households may not (if the authors disregard housing investment) choose to save, because the aggregate saving statistical indicator is a residual concept defined as the ensuing difference between aggregate disposable income and consumption. It measures the change in net worth, which, in a closed economy, may only be generated by the production of capital goods and an increase in inventories. Using an agent-based model, the authors show that shocks unrelated to structural changes in households’ behavior may generate positively correlated fluctuations in the aggregate saving rate, productivity growth and lending. Meanwhile, a genuine increase in the average individual propensity to save is not necessarily associated with a higher aggregate saving rate.

Zasady odliczania podatku VAT przy nabyciu dóbr inwestycyjnych w świetle orzecznictwa Trybunału Sprawiedliwości Unii Europejskiej a finanse przedsiębiorstw

There are different systems of VAT deductibility, in case of purchase or production of capital goods, designed to safeguard tax neutrality. The systems, determined by the intended purpose of the good, have various consequences for finances of enterprises. The article aims at identifying and analysing of the systems of VAT deductibility as regards expenditure on purchase or production of capital goods with the assessment of its impact on finances of enterprises.