Cost Assumptions Research Articles

PCN52 IMPACT OF LOWER COST BIOSIMILAR OPTIONS ON PATIENTS IN THE U.S. HEALTHCARE SYSTEM

This study assessed the potential impact of physician-administered biosimilars for the originator products trastuzumab, bevacizumab, and rituximab on patient out-of-pocket cost in the U.S. healthcare system. A retrospective medical claims analysis evaluated claims for patients taking trastuzumab, bevacizumab, and rituximab in 2018 and 2019. Expected patient cost reductions due to biosimilars were modeled using a Markov model based on pricing assumptions for biosimilars and current patient costs for originator products based on payer coverage and type of cost (deductible, coinsurance, co-pay). A total of 24,164 trastuzumab claims, 24,641 bevacizumab claims, and 18,113 rituximab claims in 2018 and 2019 were analyzed. Of the average monthly system cost savings, patients could see 7% of the savings for trastuzumab’s biosimilars ($1,692 average system savings), 8% for bevacizumab’s biosimilars ($1,875), and 9% for rituximab’s biosimilars ($7,697). Patients whose cost sharing is based on coinsurance could see a direct cost reduction due to the lower cost of biosimilars, impacting 13%-17% of all claims, 12%-16% of which are Medicare Fee-for-Service patients without supplemental insurance. Some commercial patients (5%-12%) and Medicare Advantage patients (21%-23%) who face coinsurance could also experience cost savings. While total spend may not change for commercial and Medicare Advantage patients due to U.S. mandated out-of-pocket limits, patient costs could be redistributed across more procedures for 17% to 25% of all claims. Physician-administered biosimilars are driving down the cost of care to the U.S. healthcare system. However, only a portion of patients realize the savings generated by biosimilars, specifically patients who face coinsurance. The U.S. healthcare system limits annual out-of-pocket expenses for commercial and Medicare Advantage patients, eliminating a portion of cost saving realized by patients with high cost healthcare expenses. Without system changes, these dynamics pose a risk to the use of biosimilars in the U.S. market.

The global climate value of offshore wind energy

We estimate the climate value of offshore wind energy with a highly flexible, forward-looking method that estimates the value in a consistent manner under a range of policies, including carbon caps and taxes. Backward looking methods measure the damages avoided due to emissions reductions attributed to renewable energy under an existing policy structure. Under a carbon cap, however, the climate value of offshore wind energy comes entirely from reducing the cost of meeting the cap. Our method for estimating the prospective climate value compares both climate damages and abatement costs in cases with and without offshore wind energy. This climate value can be compared to the costs of reducing barriers to new technologies, such as streamlining approval processes. The climate value depends on the cost of offshore wind technology, the climate policy under consideration, the severity of damages from climate change, and the discount rate. In the absence of a binding climate policy, the climate value of offshore wind energy ranges from $246 billion to $2.5 trillion under central assumptions about damages and discount rate, and can reach over $30 trillion under certain assumptions (low discount rate, high damages, low technology costs). The value of technical change—of moving from the highest cost to lowest cost assumptions about the technology—is estimated to be $300 billion even under the most unfavorable assumptions, dwarfing worldwide R&D investment in all wind energy technology. Using this method, we find that new low carbon technologies can provide a hedge against uncertainty and error in climate policies.

Economic pipe diameter of settling slurries

The notion of economic pipe size is extended to the case of settling slurries, which are commonly found in high tonnage, long distance pipelines of mineral ores. Water, energy and pipe infrastructure costs have been considered under the premise that the objective of this kind of infrastructure is to transport solids but not water. Unit costs for pipes have been expressed based on pipe weight or diameter. In the first case, both an assumption of a linear dependency of the pipe wall thickness with outside diameter and the special case of prescribed, outside diameter-independent pipe wall thickness, have been considered. On the other hand, a typical assumption of cost expressed as a potential function of the pipe diameter has been assumed to compare with the present model. A dimensionless formulation of the problem, including the requirement of turbulent flow transport above the deposit limit is proposed. Differently from previous analyses, made for homogeneous fluids, the present approach does not require a particular form of the friction factor. To this purpose it is shown, based on the general form of the dependency of the friction factor with the Reynolds number, that the friction factor that minimizes the operation and infrastructure cost is the maximum possible within the turbulent regime, i.e. that corresponding to the laminar-turbulent transition. Optimal conditions feature: (1) the solid concentration should be the largest possible provided safe transport is ensured, (2) the optimal pipe diameter is controlled either by costs and turbulent transition or by the deposit limit condition (not both of them simultaneously), where a dimensionless parameter has been derived to identify the relevant solution. Results with the present cost scheme have been extended to the case of homogeneous fluids.

Patellofemoral arthroplasty is cheaper and more effective in the short term than total knee arthroplasty for isolated patellofemoral osteoarthritis: cost-effectiveness analysis based on a randomized trial.

The aim is to assess the cost-effectiveness of patellofemoral arthroplasty (PFA) in comparison with total knee arthroplasty (TKA) for the treatment of isolated patellofemoral osteoarthritis (OA) based on prospectively collected data on health outcomes and resource use from a blinded, randomized, clinical trial. A total of 100 patients with isolated patellofemoral osteoarthritis were randomized to receive either PFA or TKA by experienced knee surgeons trained in using both implants. Patients completed patient-reported outcomes including EuroQol five-dimension questionnaire (EQ-5D) and 6-Item Short-Form Health Survey questionnaire (SF-6D) before the procedure. The scores were completed again after six weeks, three, six, and nine months, and again after one- and two-year post-surgery and yearly henceforth. Time-weighted outcome measures were constructed. Cost data were obtained from clinical registrations and patient-reported questionnaires. Incremental gain in health outcomes (quality-adjusted life-years (QALYs)) and incremental costs were compared for the two groups of patients. Net monetary benefit was calculated assuming a threshold value of €10,000, €35,000, and €50,000 per QALY and used to test the statistical uncertainty and central assumptions about outcomes and costs. The PFA group had an incremental 12 month EQ-5D gain of 0.056 (95% confidence interval (CI) 0.01 to 0.10) and an incremental 12 month cost of minus €328 (95% CI 836 to 180). PFA therefore dominates TKA by providing better and cheaper outcomes than TKA. The net monetary benefit of PFA was €887 (95% CI 324 to 1450) with the €10,000 threshold, and it was consistently positive when different measures of outcomes and different cost assumptions were used. This study provides robust evidence that PFA from a one-year hospital management perspective is cheaper and provides better outcomes than TKA when applied to patients with isolated patellofemoral osteoarthritis and performed by experienced knee surgeons. Cite this article: Bone Joint J 2020;102-B(4):449-457.

Atlas international business case: Examining globalization and economic indicators for the scrap metal recycling industry

Atlas Scrap Metal is an automobile recycler that reclaims and sells steel and other mixed metals. The purpose of the Atlas international business case is to allow you to explore how revenues, costs and production functions vary across countries and are influenced by global economic forces. The case requires you to research and analyze global economic data to determine which export markets are likely to offer the highest bids for Atlas’ product of reclaimed mixed metals. Often revenues and costs such as direct labor, materials and overhead are given in accounting cases and problems. This case provides you with an opportunity to consider the economic forces, and volatility, that influence revenue and cost assumptions. There is a companion case, Atlas managerial accounting case: Examining joint products in the international scrap metal recycling industry, which quantitatively analyzes the company’s decision to export the mixed metals or to process the metals further. The Atlas scrap metal cases were inspired by Adam Minter's 2013 book Junkyard Planet and introduce you to the business of recycling scrap metal as a component of sustainability.

550 Real World Treatment Trends for Patients TBSA ≤ 20%: Evaluating Important Shifts in Care and Budget Impact of ASCS Adoption

Abstract Introduction Treatment pathways in burn care are typically determined based on burn center (BC) and patient characteristics, although decisions may be influenced by anecdotal experience, personal preference, and hospital policies/purchasing decisions. Health economic (HE) evaluations can support improved decision-making, identifying the most cost-effective interventions for tailored care. A novel burn care model (BEACON) was developed with burn surgeons over several years and validated through numerous publications, including an assessment of the HE impacts of autologous skin cell suspension (ASCS) use for definitive burn closure. To ensure that BEACON accurately represents the current state of care, it is vital to update data that underpins model projections. This study collected real world data on practice patterns and patient outcomes for the most commonly seen burns (TBSA ≤ 20%) to update the current understanding of standard of care (SOC) costs and outcomes and to refine estimates on the impact of ASCS use in TBSA ≤ 20% patients. Methods Data was collected from a 10% sample of BCs, including: BC and patient characteristics, resource use, inpatient costs, and length of stay (LOS). NBR based inputs in BEACON were updated to reflect survey data for patients with TBSA ≤ 20%, with the ability to view data as a national aggregate sample and across BC characteristics. BEACON estimates patient and BC costs and outcomes across a spectrum of patient profiles (age, gender, inhalation injury, comorbidity status, burn depth, TBSA) and combines information on each patient profile to understand annual budget impact. Key outcomes were compared across the survey sample and published NBR trends. Using the updated BEACON, the BC budget impact of ASCS in burns TBSA ≤ 20% was assessed. Results The survey was collected from 16+ BCs, focusing on inpatient encounters in 2018. LOS was lower than NBR estimates, with some centers reporting LOS per %TBSA far below 1 d/%TBSA. Using the detailed bottom-up estimation of cost from BEACON with survey data, trends suggest total hospital costs for SOC are lower than published NBR charges given shorter LOS and updated cost and resource use assumption. Conclusions Compared to NBR 8.0, contemporary data suggests that fewer small TBSA burns are being treated in the inpatient setting; those treated have a LOS below NBR estimates. When using real world data, the impact of ASCS use in burns TBSA ≤ 20% was still calculated to be cost saving to a BC overall, given reductions in LOS and number of definitive closure procedures. Incorporating ASCS into appropriate TBSA ≤ 20% procedures can still result in a positive financial impact for BCs. Applicability of Research to Practice

Who will watch the watchers? On optimal monitoring networks

Consider a moral hazard scenario in which a monitor must detect deviations to provide proper incentives to attain an efficient outcome. What if the monitor himself were to deviate after being bribed by his monitored subject? In this paper, I model a multi-agent public-good provision game in which each player prefers shirking to working in the absence of exogenous enforcement and can bribe those assigned to monitor him. I find that an optimally designed monitoring structure must have players arranged in a core-periphery network, with a small group of heavily monitored players who monitor all the others. In this network, a perfect Bayesian equilibrium (PBE) is supported in which shirking is prevented, bribery among the players ceases and total monitoring costs are minimized. Furthermore, the efficiency of this core-periphery structure is robust under different cost assumptions and monitoring schedules. In addition, the spread of bribery can be prevented as long as all the “core” players do not collude.

Pipeline analysis of a vaccine candidate portfolio for diseases of poverty using the Portfolio-To-Impact modelling tool.

Background: The Portfolio-To-Impact (P2I) P2I model is a recently developed product portfolio tool that enables users to estimate the funding needs to move a portfolio of candidate health products, such as vaccines and drugs, along the product development path from late stage preclinical to phase III clinical trials, as well as potential product launches over time. In this study we describe the use of this tool for analysing the vaccine portfolio of the European Vaccine Initiative (EVI). This portfolio includes vaccine candidates for various diseases of poverty and emerging infectious diseases at different stages of development. Methods: Portfolio analyses were conducted using the existing assumptions integrated in the P2I tool, as well as modified assumptions for costs, cycle times, and probabilities of success based on EVI's own internal data related to vaccine development. Results: According to the P2I tool, the total estimated cost to move the 18 candidates currently in the EVI portfolio along the pipeline to launch would be about US $470 million, and there would be 0.69 expected launches across all six diseases in EVI's portfolio combined during the period 2019-2031. Running of the model using EVI-internal parameters resulted in a significant increase in the expected product launches. Conclusions:Not all the assumptions underlying the P2I tool could be tested in our study due to limited amount of data available. Nevertheless, we expect that the accelerated clinical testing of vaccines (and drugs) based on the use of controlled human infection models that are increasingly available, as well as the accelerated approval by regulatory authorities that exists for example for serious conditions, will speed up product development and result in significant cost reduction. Project findings as well as potential future modifications of the P2I tool are discussed with the aim to improve the underlying methodology of the P2I model.

Comparing detailed and less detailed pre‐lineup instructions

SummaryIt is generally agreed that proper pre‐lineup instructions can reduce the rate of mistaken identifications of innocent suspects. However, the exact nature of these instructions has not been empirically established. We compared the effects of the detailed pre‐lineup instructions recommended by the US Department of Justice to a simple instruction that the perpetrator may or may not be present. Both forms of unbiased instructions significantly reduced mistaken identifications when compared with biased instructions. Comparison of performance using the utility‐based analysis deviation from perfect performance demonstrated that unbiased instructions are to be preferred under assumptions of low base rates or high costs of mistaken identifications and do as well as biased instructions under assumptions of high base rates or low cost of misidentification.

Protecting timberland RMZs through carbon markets: A protocol for riparian carbon offsets

Riparian Management Zone (RMZ) allocations can place a burden on landowners due to restrictions (sometimes prohibitions) on harvesting. The opportunity cost for the landowner may be minimized by shifting the primary management objective in RMZs from timber production to compensation for above-ground carbon. Our primary objective was to compare long-term net revenue generating potential of RMZs under three scenarios: (I) compensation for carbon credits without harvesting; (II) partial harvesting using Best Management Practices (BMP) guidelines without carbon credits; (III) partial harvesting combined with carbon credits as per the California Compliance Offset Protocol. Basic stand data on trees of 2.5 cm and higher were collected in riparian forest plots along headwater streams within two experimental forests in the northeast US. The USFS Forest Vegetation Simulator was used to simulate growth and yield and schedule management activities over 20-year cutting cycles. Timber volumes and registry offset credits along with their market values were calculated for the respective scenarios and a Net Present Value (NPV) and Equal Annual Equivalent (EAE) analysis was performed under assumptions of constant prices and costs. The initial aboveground carbon stocks at both locations were 32% and 140% higher than the average value for their assessment areas. Having above-average carbon stocks and basal areas between 30 and 33 m2/ha, all scenarios returned positive NPVs and EAEs. The hardwood riparian forest had a higher NPV and EAE by not participating in the carbon markets and pursuing partial harvesting as per BMP guidelines (Scenario II) at lower discount rates but had higher NPVs and EAEs under carbon markets at higher discount rates (Scenario I and III). The conifer/mixed species riparian forest provided greater positive net revenue flows by participating in the carbon markets either in a no harvesting scenario or under partial harvesting as per guidelines in the Protocol (Scenarios I and III). Our results indicate that a protocol for compensating landowners with large forest holdings for riparian carbon offsets provides an opportunity to generate positive net revenues in scenarios in which state BMP guidelines may restrict harvesting in RMZs. Given the high density of ecologically critical headwater streams in the Northeast and potential RMZ restrictions, the carbon offset option provides landowners with the opportunity to remain economically viable.

Pipeline analysis of a vaccine candidate portfolio for diseases of poverty using the Portfolio-To-Impact modelling tool

Background: The Portfolio-To-Impact (P2I) P2I model is a recently developed product portfolio tool that enables users to estimate the funding needs to move a portfolio of candidate health products, such as vaccines and drugs, along the product development path from late stage preclinical to phase III clinical trials, as well as potential product launches over time. In this study we describe the use of this tool for analysing the vaccine portfolio of the European Vaccine Initiative (EVI). This portfolio includes vaccine candidates for various diseases of poverty and emerging infectious diseases at different stages of development. Methods: Portfolio analyses were conducted using the existing assumptions integrated in the P2I tool, as well as modified assumptions for costs, cycle times, and probabilities of success based on EVI’s own internal data related to vaccine development. Results: According to the P2I tool, the total estimated cost to move the 18 candidates currently in the EVI portfolio along the pipeline to launch would be about US $470 million, and there would be 0.69 expected launches across all six diseases in EVI’s portfolio combined during the period 2019-2031. Running of the model using EVI-internal parameters resulted in a significant increase in the expected product launches. Conclusions: Not all the assumptions underlying the P2I tool could be tested in our study due to limited amount of data available. Nevertheless, we expect that the accelerated clinical testing of vaccines (and drugs) based on the use of controlled human infection models that are increasingly available, as well as the accelerated approval by regulatory authorities that exists for example for serious conditions, will speed up product development and result in significant cost reduction. Project findings as well as potential future modifications of the P2I tool are discussed with the aim to improve the underlying methodology of the P2I model.

Geography, Transportation, and Endogenous Trade Costs

In this paper, we study the role of the transportation sector in world trade. We build a spatial model that centers on the interaction of the market for (oceanic) transportation services and the market for world trade in goods. The model delivers equilibrium trade flows, as well as equilibrium trade costs (shipping prices). Using detailed data on vessel movements and shipping prices, we document novel facts about shipping patterns; we then flexibly estimate our model. We use this setup to demonstrate that the transportation sector (i) attenuates differences in the comparative advantage across countries; (ii) generates network effects in trade costs; and (iii) dampens the impact of shocks on trade flows. These three mechanisms reveal a new role for geography in international trade that was previously concealed by the frequently‐used assumption of exogenous trade costs. Finally, we illustrate how our setup can be used for policy analysis by evaluating the impact of future and existing infrastructure projects (e.g., Northwest Passage, Panama Canal).

Firm Heterogeneity in Production-Based Asset Pricing: The Role of Habit Sensitivity and Lumpy Investment

I study the interaction between lumpy investment and asset prices in both time-series and cross-section. To this end, I work with a variant of habit sensitivity function introduced in Campbell & Cochrane (1999). The model produces 100% equity volatility of data by generating volatile marginal utility under the assumption of non-convex adjustment costs. Second, the model reproduces nearly 100% equity premiums of data because it assigns large weights on precautionary savings and constrained firms, respectively. Furthermore, the model can rationalise considerable size premiums as small firms absorb more productivity risks. Finally, the model matches key macroeconomic moments and the cross-sectional investment rate.

Regularization lemmas and convergence in total variation

We provide a simple abstract formalism of integration by parts under which we obtain some regularization lemmas. These lemmas apply to any sequence of random variables $(F_{n})$ which are smooth and non-degenerated in some sense and enable one to upgrade the distance of convergence from smooth Wasserstein distances to total variation in a quantitative way. This is a well studied topic and one can consult for instance [3, 11, 14, 20] and the references therein for an overview of this issue. Each of the aforementioned references share the fact that some non-degeneracy is required along the whole sequence. We provide here the first result removing this costly assumption as we require only non-degeneracy at the limit. The price to pay is to control the smooth Wasserstein distance between the Malliavin matrix of the sequence and its limit, which is particularly easy in the context of Gaussian limit as the Malliavin matrix is deterministic. We then recover, in a slightly weaker form, the main findings of [19]. Another application concerns the approximation of the semi-group of a diffusion process by the Euler scheme in a quantitative way and under the Hörmander condition.

Commercial-scale hybrid solar photovoltaic - diesel systems in select Arab countries with weak grids: An integrated appraisal

Solar photovoltaic (PV) diesel hybrid systems are effective solutions for sustainable energy transition in countries where utility grids are intermittent. An ‘integrated appraisal’ of 'hybrid solar (PV) - diesel' systems are carried out to assess their overall energetic, environmental, financial and economic performances. The study carries out the analysis of hybridized solar photovoltaic energy using first-hand data and information collected from the Palestinian, Lebanese and Iraqi commercial and/or industrial sectors, adopting several scenarios of tariff and diesel fuel prices, capital costs assumptions, solar PV curtailment, and values for environmental damage adopted from life-cycle impact assessment methods that allow for monetization and are globally valid. Results show that hybrid PV-diesel systems have largely beneficial energy, environmental and economic performances in all three countries, whereas their financial performance are also positive for Palestine and Lebanon, however less promising in Iraq, mainly due Iraq's heavily subsidized electricity tariff. The study concludes with policy recommendations focused on promoting solar PV in the commercial and/or industrial sectors, namely: the gradual phasing-out of fossil fuel subsidies, the effective execution of net-metering, the provision of subsidized sustainable energy loans, and carefully designed energy management systems.

Exploring cost-effective transitions to fossil independent transportation in the future energy system of Denmark

In this paper, in the light of national targets of a fossil independent future Danish energy system, cost-effective deep decarbonisation solutions in transportation have been explored under base-, alternative technical-, and policy scenarios in the TIMES modelling environment. The TIMES-DK model was further developed to concurrently represent all emerging transport technologies (ETTs) in road- and off-road transport applications, disaggregated transport technologies and service demands segmentation to capture consumers preferences and heterogeneity, and to endogenise fuel infrastructures. The model runs optimise the societal surplus in between 2010 and 2050. There is a particular focus on the role of gas in transport. The results reveal that in between 2020 and 2040, natural gas (NG) could cost-efficiently serve as a transition fuel. Decarbonisation pace and fuel infrastructure assumptions were found to have a large impact on the NG adoption levels. This study showed that the combined use of liquid biofuels (mainly biomethanol), upgraded biogas, electricity, and hydrogen fuels would deliver cost-effective deep decarbonisation by 2050; however, their various decarbonisation roles vary within and across transport segments. Depending on the decarbonisation pace, a marginal CO2 abatement cost of 419–549 €/ton (or 1–1.29 €/L gasoline) is required by 2050 in Denmark. The results also showed that 25% and 30% cost reductions of BEVs and hydrogen fuel cell vehicles (HFCVs), compared to our central cost assumptions, would increase their respective adoption by 36% and 66% towards 2050. They show high market shares particularly in the medium size segment than in the small and large segments. Competition for limited biomass resources coupled with higher fuel demand results in adoption of ETTs.

Motivational Interviewing to Encourage Quit Attempts Among Smokers Not Ready to Quit: A Trial-Based Economic Analysis.

This study used data from a randomized controlled trial evaluating the efficacy of motivational interviewing (MI) relative to health education (HE) and brief advice (BA) to encourage quit attempts and cessation in order to determine their relative cost-effectiveness. Urban community residents (n = 255) with low desire to quit smoking were randomized to MI, HE, or BA which differed in communication style and/or number of treatment sessions. Incremental cost-effectiveness ratios were used to compare the intensive interventions (MI and HE) to BA for facilitating quit attempts and smoking cessation. Costs were calculated from the perspective of an agency that might engage in program delivery. Sensitivity analysis examined different assumptions for MI training and pharmacotherapy costs. Total intervention delivery time costs per participant for MI, HE, and BA were $46.63, $42.87, and $2.4, respectively. Cost-effectiveness ratios per quit attempt at 24 weeks were $380 for MI, $272 for HE, and $209 for BA. The cost per additional quit attempt for MI and HE relative to BA was $508 and $301, respectively. The cost per additional quit for MI and HE relative to BA was $2030 and $752, respectively. Four separate sensitivity analyses conducted in our study did not change the conclusion the HE had a lower Incremental Cost-Effectiveness Ratio for both quit attempts and cessation. HE was the most cost-effective of the three types of smoking cessation induction therapies and therefore may be preferable for smokers who are less motivated to quit. Providing valuable cost information in choosing different clinical methods for motivating smokers to quit. All direct costs and activity-based time costs associated with delivering the intervention were analyzed from the perspective of an agency that may wish to replicate these strategies. A randomized controlled trial evaluating the efficacy of MI relative to HE and BA to encourage quit attempts and cessation determined their relative cost-effectiveness. HE was the most cost-effective of the three types of smoking cessation induction therapies and therefore may be preferable. Despite guideline recommendations, MI may not be the best approach to encourage quit attempts in diverse populations. Rather, a structured, intensive HE intervention might be the most cost-effective alternative.

Optimal in-store inventory policy for omnichannel retailers in franchising networks

Purpose The purpose of this paper is to characterize the optimal ordering and allocation policy for a store replenishment decision in the context of an omnichannel retailer in a franchise network. The authors further show that a myopic policy is optimal, which circumvents the curse of dimensionality for the multi-period inventory model and help store managers optimize their decisions about the amount of inventory to stock for both online and offline demands and the percentage of inventory to reserve for online orders. Design/methodology/approach This research is trigged by several managerial studies which suggest reserving a certain percentage of the in-store inventory for online orders as a good store inventory allocation practice for omnichannel retailers in a franchise network. The authors used an analytical model to develop this practice by clarifying how store managers can decide on the amount of inventory to replenish and the percentage to reserve for online orders. Findings This study develops a finite horizon, periodic review inventory model to identify an optimal and dynamic replenishment and allocation policy. The analysis uncovers the system’s fundamental structural property concavity. The research shows that, due to this property, the optimal replenishment policy is a base-stock policy. The latter is due to the base stock level being independent of the initial inventory at hand, and the optimal allocation level being non-decreasing on the base-stock level. Research limitations/implications This study contributes to the literature on store inventory management for omnichannel retailers in a franchise network by investigating their optimal store inventory ordering and allocation policy. Nevertheless, the zero-lead time and zero-setup cost assumptions limit the findings. Practical implications Insights into an optimal store inventory policy may guide franchisee store managers to decide on the amount of inventory to replenish and the percentage to reserve for online orders. Originality/value The originality of this paper lies in its focus on in-store inventory management for omnichannel retailers in a franchise network. The findings are helpful for franchisor retailers to implement the omnichannel strategy at the level of in-store inventory management. Beyond using incentive systems, the franchisor should leverage legitimate powers by mentioning a relevant measure in their contracts with their franchisee to minimize their channel conflicts and ensure their customers have seamless shopping experiences.

Changes in the Product Costing Process Driven by Implementation of an Integrated Information System in a Production Company

Abstract The article deals with product costing in a manufacturing company and change of costing methodology from normal to standard costing caused by a new integrated information system implementation. The aim of the article is to show the impact of a new integrated information system on product costing. In order to show the consequences of changing the methodology of product costing from normal to standard costing variances between standard costing and normal costing in an international production company were analyzed. For this research comparative analysis was used of unit costs before and after the new system implementation for finished goods. Ten percent of the items had a variance of more than 30% which was caused by errors in the new system settings and mistakes in the normal costs in the old system. The impact of the change of the costing methodology was shown by calculation of the difference between normal cost values and standard cost values ten months after the new integrated information system implementation. To verify the accuracy of standard costs settings, standard costs were compared to actual costs for finished goods and semi-finished goods. In the tenth period only 30% of finished goods and 42% of semi-finished goods showed a variance between standard costs and actual costs lower than 20%. It means that for the rest of the items standard cost assumptions should be checked and corrected. The results of the study indicate that a change in product costing methodology driven by new integrated information system implementation has an impact on company revenues. The direction of the change depends on the accuracy of previous system settings. It is impossible to implement a new system without increase or decrease of sales. The most important limitation of the research is that only one manufacturing company was studied. This was connected with data availability. The research methodology can be used by manufacturing companies to assess the impact of new integrated system implementation on their revenues. Literature concerning integrated information system implementation focuses on its advantages and disadvantages therefore the author of the article wants to concentrate on its impact on the profit and loss account, specifically on revenues.

Planning for low-cost renewable energy

Renewable energy is increasingly cost-competitive with conventional generation technologies. Traditional approaches to utility resource planning and resource investment and procurement (“acquisition”) will, however, prevent utilities from taking fuller advantage of low-cost renewable resources. This paper describes three areas where enhancements in utility resource planning can more accurately reflect the benefits and costs of renewable generation: (1) how operational uncertainties associated with wind and solar generation are characterized in planning models; (2) how reliability services provided by wind and solar generation are valued in planning models; and (3) alignment between cost assumptions used in planning and market conditions. The paper also describes three areas where enhancements in utility resource acquisition can better align decision-making with market outcomes: (1) reducing the time between planning-procurement cycles; (2) shifting from a needs-based to an opportunity-based approach to planning and acquisition; and (3) ensuring comparability among different technology and ownership options. Nascent efforts to resolve challenges in these six areas illustrate the need for utilities and state regulators to expand and upgrade their analytical capabilities.