Demand For Intermediate Goods Research Articles

A hybrid manufacturing system with demand for intermediate goods and controllable make-to-stock production rate

This paper presents a two-stage hybrid manufacturing system in which the first stage produces semifinished products to store as intermediate inventory in a make-to-stock mode, whereas the second stage produces customized products from semifinished goods in a make-to-order mode. The system faces external demand for semifinished goods with a compound Poisson process and has the option of controlling the make-to-stock production rate. We study the problem of coordinating the controls of order admission, make-to-stock production rate, and inventory rationing for SP demand. The problem is formulated as a Markov decision process model. We identify the structural properties of optimal policies to maximize the long-run average profit. Using a numerical experiment, we examine how the flexibility in make-to-stock production rate and the inventory rationing for semifinished product demand can affect the system performance. We also propose a heuristic and evaluate its effectiveness using example problems.

Monetary policy of a small open economy in the world production chain

In the world production chain there is a small economy that outsources production to its upstream, sells intermediate goods to its downstream and consumes imported final goods. It is shown that in responding to shocks from demand for intermediate goods, from the wage rate in the upstream and from the currency exchange rate between the upstream and downstream countries, the monetary policy of the small country is insignificant in the sense that any attempt of changing its monetary stance to raise national welfare will be offset by the movements of exchange rates.

The macroeconomic impact of foreign labour influx into the industrialized nation state and the complementary policies

This paper makes a numerical assessment on the macroeconomic impact of foreign labor influx into the industrialized nation state allowing free trade in goods but imposing an immigration quota on labor, and then explores the complementary policies for the impact of foreign labor influx. One of the main findings is that immigration itself brings welfare gains only if prices are flexible, but a skill-biased intake policy can bring a much larger welfare gain. The complementary policy options to boost welfare gains by immigration increase are monetary expansion, adopting foreign components more, and influencing foreign demand for intermediate goods indirectly by inviting foreign direct investment. For these policies to cope, the destination country should try to correct the market structure so that prices can be flexible.

The Demand for Intermediate Goods in an Input–Output Framework: a methodological note

This methodological note suggests the use of the maximum eigenvalues of the matrices of the direct input–output coefficients and of the coefficients of vertically integrated sectors as indicators of the aggregate intensity of the demand for intermediate goods. Such indicators have the desirable property of being independent from both relative prices and the composition of final demand and reflect therefore only the structural characteristics of the productive system.

A Mathematical Programming Approach to a Network Development Problem

The allocation of investment to a transportation system cannot be prescribed without accounting for the interdependencies that relate the transportation system to the larger economic system of which it is a part. Like all other sectors of the economy, the transportation sector must function within the operating conditions and constraints determined by the other sectors of the economy. In turn, the transportation system influences the performance and operating structure of the rest of the economy. These interdependencies are of course complicated by the fact they occur dynamically as both the transportation system and the other sectors of the economy evolve through time. Despite the significance of these interactions, very few models have been developed which explicitly account for these interrelations, particularly within a planning context. (See for example Bronzini et. al. [4] and Amano and Fujita [1].) Most models of this sort attempt to effect a rather complex amalgamation among input-output, econometric, and transportation sub-models. By far the best known model is the complex simulation model developed within the Brookings Transport Research Program [11]. In this model, an attempt is made to trace the effects of transportation system improvements through the economic system to a point where they ,can be directly and unambiguously compared in terms of their effect on gross domestic (or regional) product, the rate of inflation, and national and regional employment. However, none of these criteria are directly altered by changes in unit transport costs or capacity. Generally, the effects on such measures represent the outcomes of the interaction of a number of complex interrelated processes involving changes in the derived demand for intermediate goods, adjustments in the levels of production, inventory, and investment, and ultimately in the locational profitability of economic activity. Many of these mechanisms involve behavioral decisions and time lags and, thus, cannot be specified by simple mathematical functions. The particular form of the functions chosen by Kresge and Roberts [11] to simulate the required functions in their empirical work on Colombia has been severely criticized by Holland [9, pp. 21-23]: