Estimation Of Cost Function Research Articles

Policy Reforms and Productivity Change in the Dutch Drinking Water Industry: A Time Series Analysis 1980–2015

In the last four decades, the Dutch drinking water industry has undergone two major policy reforms, namely the consolidation of the industry by stimulating mergers and the introduction of yardstick competition by applying benchmarks. This paper addresses the question of whether these two instruments have improved productivity. Productivity changes are derived from an estimated cost function. The effects of average scale as well as the introduction of a form of yardstick competition on productivity are formally tested. Estimation is conducted on the basis of time series data in the period 1980-2015. Industry consolidation has taken place over a long period of time. Yardstick competition was introduced in 1997 on a voluntary basis. It shows that total factor productivity was rather stable in the period 1980-1998. Since 1998, annual productivity growth has been substantial (about 0.6% on average). There was an obvious break point in 1998, providing clear evidence that the introduction of the benchmark instrument has affected productivity change. Moreover, there are various indications that benchmarking has also contributed to improving quality and sustainability. We could not find any empirical evidence for the hypothesis that consolidation of the industry has improved productivity.

A Risk-Averse Stochastic Dynamic Programming Approach to Energy Hub Optimal Dispatch

This paper studies the optimal operation problem of an energy hub with multiple energy sources to serve stochastic electricity and heat loads in the presence of uncertain prices as well as operational constraints, such as minimum uptime and downtime requirements. Price and demand uncertainties are modeled by stochastic processes. The goal is to minimize some risk functional of the energy hub operational cost. A stochastic dynamic optimization formulation is introduced for the problem. An approximate dynamic programming framework, based on cost function approximation, is proposed to obtain dynamic dispatch policies. The approach enables a risk-sensitive energy hub operator to consider a non-differentiable risk measure and various constraints. The performance of the approach for the energy hub dispatch problem and characteristics of the storage levels are numerically investigated.

The More the Merrier? Detecting Impacts of Bank Regulation After the Global Financial Crisis

Abstract Governments worldwide reacted swiftly to the global financial crisis by tougher regulations. This paper investigates the impacts of the regulatory environment on operating costs using panel data of 2,200 German banks over the timeframe from 1999 to 2014. We estimate cost functions with and without proxies for regulation and analyze the results with respect to period, bank size, and group affiliation. Our results show that regulatory costs were peaking in 2001, 2008, and lately since 2012. Most interesting, however, is the asymmetry of regulation: Whereas the cost effects were symmetric for all banks until 2003, the last ten years were different. Larger institutions and savings banks could neutralize the impacts of increasing regulation on operating costs. In contrast, smaller banks, especially if they are cooperative banks, were facing significant cost increases. We therefore expect unintended structural shifts like a reduction in the diversity of banks, which are negative for competition, service quality, and for the stability of the financial system. Zusammenfassung Weltweit wurde als Folge der globalen Finanzkrise die Regulierung des Finanzsektors verschärft. Dieser Beitrag geht der Frage nach, welche Konsequenzen diese Regulierungsmaßnahmen für die operativen Kosten im Bankengeschäft haben. Auf der Basis von Paneldaten von 2,200 in Deutschland aktiven Banken über den Zeitraum von 1999 bis 2014 schätzen wir Kostenfunktionen mit und ohne Proxies für Regulierung und werten die Ergebnisse nach Beobachtungsjahr, Bankengröße, und Gruppenzugehörigkeit aus. Unsere Ergebnisse zeigen Kostenspitzen in den Jahren 2001, 2008, und zuletzt seit 2012. Am interessantesten sind jedoch die asymmetrischen Effekte der Bankenregulierung: Während unsere Modelle bis einschließlich 2003 nahezu gleichmäßige Kostenbelastungen anzeigen, änderte sich dies deutlich mit dem Jahr 2004. Im Gegensatz zu großen Institute und Sparkassen, die die Regulierungskosten nahezu neutralisieren konnten, sahen sich kleine Institute und Genossenschaftsbanken mit deutlichen Kostensteigerungen konfrontiert. Als Folge dieser asymmetrischen Kostenwirkungen staatlicher Bankenregulierung erwarten wir unbeabsichtigte Strukturveränderungen wie z.B. Konzentrationsprozesse, die sich negativ auf Wettbewerb, Dienstleistungsqualität, und letztendlich auch negativ auf die Stabilität des gesamten Finanzsystems auswirken werden. JEL Classification: G21, G38

Highway Planning and Design in the Qinghai–Tibet Plateau of China: A Cost–Safety Balance Perspective

Abstract Engineering designs for mountainous highways emphasize compliance checking to ensure safety. However, relying solely on compliance checking may lead designers to minimize costs at the expense of high risk indicators, since the overall risk level of the highway design is unknown to the designers. This paper describes a method for the simultaneous consideration of traffic safety risks and the associated cost burden related to the appropriate planning and design of a mountainous highway. The method can be carried out in four steps: First, the highway design is represented by a new parametric framework to extract the key design variables that affect not only the life-cycle cost but also the operational safety. Second, the relationship between the life-cycle cost and the operational safety risk factors is established in the cost-estimation functions. Third, a fault tree analysis (FTA) is introduced to identify the traffic risk factors from the design variables. The safety performance of the design solutions is also assessed by the generalized linear-regression model. Fourth, a theory of acceptable risk analysis is introduced to the traffic safety assessment, and a computing algorithm is proposed to solve for a cost-efficient optimal solution within the range of acceptable risk, in order to help decision-makers. This approach was applied and examined in the Sichuan–Tibet Highway engineering project, which is located in a complex area with a large elevation gradient and a wide range of mountains. The experimental results show that the proposed approach significantly improved both the safety and cost performance of the project in the study area.

Inverse Optimization: Closed-Form Solutions, Geometry, and Goodness of Fit

In classical inverse linear optimization, one assumes that a given solution is a candidate to be optimal. Real data are imperfect and noisy, so there is no guarantee that this assumption is satisfied. Inspired by regression, this paper presents a unified framework for cost function estimation in linear optimization comprising a general inverse optimization model and a corresponding goodness-of-fit metric. Although our inverse optimization model is nonconvex, we derive a closed-form solution and present the geometric intuition. Our goodness-of-fit metric, ρ, the coefficient of complementarity, has similar properties to R2 from regression and is quasi-convex in the input data, leading to an intuitive geometric interpretation. While ρ is computable in polynomial time, we derive a lower bound that possesses the same properties, is tight for several important model variations, and is even easier to compute. We demonstrate the application of our framework for model estimation and evaluation in production planning and cancer therapy. This paper was accepted by Yinyu Ye, optimization.

Two-Stage Multi-attribute Auction Mechanism for Price Discovery and Winner Determination

This paper proposes a two-stage multi-attribute auction mechanism for market price discovery and to determine the winning bidder. In the first stage, the buyer announces a multi-attribute value function and a set of budget levels. The bidders submit sealed-bids for quality attributes against each budget level announced. The buyer uses the proposed procedure to estimate the cost function of each vendor and to determine the reservation quality for prequalification. Using these estimated cost functions, the buyer derives the optimal scoring function. In the second stage, the buyer announces the scoring function and conducts an open bid ascending auction using the qualified set of vendors from the first stage to determine the winner. The main purpose of the mechanism is to provide detailed information to the buyer about the procurement environment. This helps the buyer to make informed decisions while designing an appropriate scoring function. We showed that the proposed mechanism induces competitive bids from the vendors and there is no incentive for them to deviate from quality values submitted in the first stage.

Scale economies in the Korean airline industry since the entry of low-cost carriers

This paper investigates how the economies of scale in the Korean airline industry have changed since the emergence of low-cost carriers (LCCs). Our sample consists of 66 firm-years from 2008 to 2017. We estimate the translog cost function (TCF) to determine the changes in scale economies during the sample period. The TCF represented airlines' cost function more appropriately than the Cobb-Douglas model. The estimated cost function suggests that overall economies of scale have prevailed in the Korean airline industry since the entry of LCCs. Depending on the type of airline business, scale economies seem to be exhausted for full-service carriers, whereas LCCs have enjoyed economies of scale.

Scale economies in the Korean airline industry since the entry of low-cost carriers

This paper investigates how the economies of scale in the Korean airline industry have changed since the emergence of low-cost carriers (LCCs). Our sample consists of 66 firm-years from 2008 to 2017. We estimate the translog cost function (TCF) to determine the changes in scale economies during the sample period. The TCF represented airlines' cost function more appropriately than the Cobb-Douglas model. The estimated cost function suggests that overall economies of scale have prevailed in the Korean airline industry since the entry of LCCs. Depending on the type of airline business, scale economies seem to be exhausted for full-service carriers, whereas LCCs have enjoyed economies of scale.

Incremental Approximate Dynamic Programming for Nonlinear Adaptive Tracking Control with Partial Observability

Approximate dynamic programming is a class of reinforcement learning, which solves adaptive, optimal control problems and tackles the curse of dimensionality with function approximators. Within this category, linear approximate dynamic programming provides a model-free control method by systematically using a quadratic cost-to-go function. Although efficient, linear approximate dynamic programming methods are difficult to apply to nonlinear systems or time-varying systems. To overcome the above limitations, this paper proposes an adaptive nonlinear tracking control method based on incremental approximate dynamic programming, which combines the advantages of linear approximate dynamic programming and incremental nonlinear control techniques. This is a model-free method for unknown, nonlinear systems and time-varying references. The trait of separating the local model information from the cost function approximation makes this method an option for partially observable control problems. This paper, therefore, proposes two reference tracking controllers for different observability conditions: the direct measurement of the full state, and the partially observable tracking error. In each condition, two algorithms are developed for off-line learning and online learning, respectively. These algorithms are applied to attitude control of a spacecraft disturbed by internal liquid sloshing. The results demonstrate that the proposed algorithms accurately deal with the unknown, time-varying internal dynamics while retaining efficient control, even with only partial observability.

Influence of supply-side factors on voluntary medical male circumcision costs in Kenya, Rwanda, South Africa, and Zambia.

BackgroundIn this study, we described facility-level voluntary medical male circumcision (VMMC) unit cost, examined unit cost variation across facilities, and investigated key facility characteristics associated with unit cost variation.MethodsWe used data from 107 facilities in Kenya, Rwanda, South Africa, and Zambia covering 2011 or 2012. We used micro-costing to estimate economic costs from the service provider’s perspective. Average annual costs per client were estimated in 2013 United States dollars (US$). Econometric analysis was used to explore the relationship between VMMC total and unit cost and facility characteristics.ResultsAverage VMMC unit cost ranged from US$66 (SD US$79) in Kenya to US$160 (SD US$144) in South Africa. Total cost function estimates were consistent with economies of scale and scope. We found a negative association between the number of VMMC clients and VMMC unit cost with a 3% decrease in unit cost for every 10% increase in number of clients and we found a negative association between the provision of other HIV services and VMMC unit cost. Also, VMMC unit cost was lower in primary health care facilities than in hospitals, and lower in facilities implementing task shifting.ConclusionsSubstantial efficiency gains could be made in VMMC service delivery in all countries. Options to increase efficiency of VMMC programs in the short term include focusing service provision in high yield sites when demand is high, focusing on task shifting, and taking advantage of efficiencies created by integrating HIV services. In the longer term, reductions in VMMC unit cost are likely by increasing the volume of clients at facilities by implementing effective demand generation activities.

Computationally Simple MMSE (A-Optimal) Adaptive Beam-Pattern Design for MIMO Active Sensing Systems via a Linear-Gaussian Approximation

This paper presents an approximate minimum mean squared error (MMSE) adaptive beam-pattern design (ABD) method for MIMO active sensing systems. The proposed approximate MMSE ABD method leverages the physics of the MIMO arrays to provide a linear-Gaussian approximation that is specific to MIMO active sensing systems, and yields a computationally simple optimization problem. Computational complexity analysis confirms this theoretical reduction in the number of floating-point operations required, most notably that evaluation of the proposed approximate optimization cost function grows polynomially with the number of targets being tracked, whereas for evaluation of the exact cost the growth is exponential. Additionally, numerical results indicate that, even for a simple scenario with a single target being tracked, the proposed approximate MMSE ABD method does indeed reduce the mean squared error of target parameter estimation compared to the nonadaptive case, with a reduction in computation time of four orders of magnitude compared to exact MMSE ABD.

Cyclic gradient descent optimisation for joint MAP estimation of channel and phase noise in orthogonal frequency division multiplexing

This study addresses the statistically optimal channel estimation for orthogonal frequency division multiplexing systems in the presence of phase noise (PHN). The maximum a posteriori (MAP) cost function for the joint estimation of channel transfer function (CTF) and PHN is presented, which utilises the prior statistical knowledge of PHN spectral components without the assumption of small PHN. The frequency-domain estimation of unknown frequency selective fading makes the method simpler, compared with the estimation of channel impulse response in time domain. An iterative cyclic gradient descent optimisation algorithm is derived to minimise the cost function over the unknown CTF and PHN. Cramer-Rao lower bound is analysed and compared with the simulation results to illustrate that the proposed joint MAP estimation can achieve near optimum performance.

Control Design of a Marine Vessel System Using Reinforcement Learning

Abstract In this paper, our main goal is to solve optimal control problem by using reinforcement learning (RL) algorithm for marine surface vessel system with known dynamic. And this algorithm is an optimal control algorithm based on policy iteration (PI), and it can obtain the suitable approximations of cost function and the optimized control policy. There are two neural networks (NNs), where critic NN aims to estimate the cost-to-go and actor NN is utilized to design suitable input controller and minimize the tracking error. A novel tuning method is given for critic NN and actor NN. The stability and convergence are proven by Lyapunov’s direct method. Finally, the numerical simulations are conducted to demonstrate the feasibility and superiority of presented algorithm.

Comparison of Stochastic Gradient-Based Optimization Techniques for Nonlinear Satellite Image Coregistration Problem

Information-oriented intensity-based cost functions are generally used for optimization frameworks in automatic satellite image registration. Optimization mechanics which updates the transform parameters in the iterative loop requires estimation of derivatives of the cost function to set-up update rules that retrieve the deformation model between the image pairs. Application of stochastic approximation of cost function and its derivatives for solving optimization problems while the objective function is non-differentiable or non-smooth or computed with noise is encountered in real-world problems. The known methods of approximation for solving these problems use the idea of stochastic gradient and certain rules of changing the step length for ensuring convergence. In this article, satellite image coregistration problem is chosen for comparing the performance of two important stochastic optimizers like adaptive stochastic gradient descent and simultaneous perturbation stochastic approximation. Coregistration datasets from Resourcesat-2 LISS-4 MX sensor are chosen for different terrains and features to study subpixel accuracies of order better than 1/20th of a pixel achieved in the comparison of two different optimization techniques employed in intensity-based automatic image registration framework.

دراسة اقتصادیة تحلیلیة لمحصول قصب السکر فی مصر

The study aimed mainly to measure the economic efficiency of resources used in the production of sugar cane in Egypt, estimate the optimal size of the production and its bulks profits, and estimate the efficiency of sugar cane production factories. The research based on secondary data during the period 1995-2016 , we used a descriptive and quantitative analysis of the data and estimated some economic and productivity efficiency indicators as well.The most important results can be summarized as follows:For the standard estimation of the sugar cane production functions, we confirmed of the effect of both the labor component, the rental value of the land element and the time component which reflects technological development.For the standard estimation of the sugar cane cost functions, the optimal size of production was estimated at 50.9 tons, the optimum capacity was achieved at 1.04 acres and the size of bulks production profits 67.61 tons, was achieved at an area of 1.38 acres. The estimation of supply elasticity was shown to be less than 1 which indicates that the optimal policy for increasing production is cost reduction.The efficiency of the sugar cane production factories was approximately 51.86% Abu Qurqas factory, 54.22% Gerga factory, 85.70% Nag Hammadi factory, 77.79% Deshna factory, 93.51% qus factory, 98.63% Armant factory, for Advo and Kom Ombo factories work with an operating capacity exceeding their design capacity of approximately 114.26% and 103.99% respectively. This indicates that the majority of these factories are not working at full operational capacity.By studying the areas targeted for the sugar cane crop uses, it was found that 76.3% of the sugar cane was directed to factories, 3.93% for honey extractors, 3.81% for seeds, and 16.75% as fresh consumption.recommendations:To achieve economic efficiency we must rationalize the use of human labor, mechanical and animal forces.The size of the farm must not be less than the optimal size of the production which is a 1.04 acres.The size of the farm must not be more than 1.38 acres in order to bulks profits of farmers.The necessity of operating the sugar cane factories at full capacity, either by reducing the quantities of leaks or by increasing the sugar cane through increasing its area or productivity, and work on updating , developing and benefiting of technological development.Work on the development of new varieties of sugar cane with low water requirements.Attempt to develop a strict law that obliges farmers to supply their entire crop of cane to sugar factories without any other uses, especially in the main production governorates.

Influence of attitudes and perceptions on deprivation cost functions

Appropriate objective function for post-disaster humanitarian logistics models must be a matter based on minimizing social costs. Such social costs require the estimation of proper Deprivation Cost Functions (DCFs). This paper estimates more explanatory DCFs by analyzing the role of psychosocial factors using hybrid Latent Variable – Discrete Choice Models with data from a stated choice survey applied in Colombia. The results demonstrate that risk perception, safety culture, and confidence in Emergency Response Systems play a major role in an individual’s disaster preparedness and in capturing individuals' heterogeneity for the estimation of DCFs.

Cost Function and Optimal Boundaries for a Two-level Inventory System with Information Sharing and Two Identical Retailers

In this paper, we consider a two-echelon inventory system with a central warehouse and two identical retailers employing information sharing. Transportation times to each retailer and the warehouse are constant. Retailers face independent Poisson demand and apply continuous review policy, -policy. The warehouse initiates with m batches (of given size ) and places an order to an outside supplier when a retailer’s inventory position reaches , where is the inventory position considered by central warehouse and is a non-negative constant. So far, an approximate cost function as well as exact analysis of system for only one retailer has been proposed. However, the derivation of the exact value of the expected total cost of this system for more than one retailer, is still an open question. This paper attempts to meet this challenge and derive the exact cost function for two retailers. To achieve this purpose, we resort to conditional probability to split the problem into two simpler problems then we obtain the exact expected total cost of the system.

Observer-Based Adaptive Fuzzy Fault-Tolerant Optimal Control for SISO Nonlinear Systems.

This paper investigates adaptive fuzzy output feedback fault-tolerant optimal control problem for a class of single-input and single-output nonlinear systems in strict feedback form. The considered nonlinear systems contain unknown nonaffine nonlinear faults and unmeasured states. Fuzzy logic systems are used to approximate cost function and unknown nonlinear functions, respectively. It is assumed that the states of the systems to be controlled are unmeasurable, thus an adaptive state observer is developed. To solve the nonaffine nonlinear fault control design problem, filtered signals are introduced into the adaptive backstepping control design procedures, and in the framework of adaptive critic technique and fault-tolerant control technique, a novel adaptive fuzzy fault-tolerant optimal control scheme is developed. The stability of the closed-loop system is proved by using Lyapunov stability theory. The simulation results verify the effectiveness of the proposed control strategy.

Semidefinite Relaxation Algorithm for Multisource Localization Using TDOA Measurements with Range Constraints

Multiple sources localization based on time difference of arrival (TDOA) measurements is investigated in this paper. Different from the traditional methods, a novel and practical multisource localization algorithm is proposed by adopting a priori information of relative distance among emitting sources. Since the maximum likelihood (ML) cost function for multisource estimation is highly nonconvex, the semidefinite relaxation (SDR) is utilized to reformulate the ML cost function. A robust estimator is obtained, which can be solved by semidefinite programming (SDP). Moreover, the constrained Cramér‐Rao bound is also derived as a benchmark by considering the range constraints between sources. Simulation results verify the superior performance of the proposed algorithm over the traditional methods.

Striation-based source depth estimation with a vertical line array in the deep ocean.

A striation-based method with a vertical line array is proposed for source depth estimation. Broadband striation structures of direct and surface-reflected arrivals after propagating to receivers near the ocean bottom are applied. A tracking algorithm for the striation structures is proposed based on the extended Kalman filter. A cost function for source depth estimation is presented by matching the traces of the measured striations with a library of model-based traces under different source depths. The method is demonstrated on array data collected during an acoustic research experiment in the South China Sea in 2016.