Level Of Capacity Utilization Research Articles

A new long term load management model for asset governance of electrical distribution systems

Long term load management (LTLM) is one of the key factors in making decisions regarding new investments in distribution systems. However, none of the previous studies have investigated the effect of external factors such as governance, urban planning and social behavior factors on LTLM. In this paper, a new LTLM model is proposed to determine the influence of external factors on LTLM. Distribution system development indices have been used to obtain asset governance targets; these indices can help Distribution Companies (DISCOs) compromise between reliability and running the system economically. Capacity utilization and the number of maneuver points are used here to do LTLM and improve asset governance. Numerical studies on a real distribution system (city with population about 200,000) have been conducted and sensitivity analysis of maneuver points and capacity utilization level with respect to external factors is studied and analyzed. The results show the feasibility of the proposed LTLM to obtain higher efficiency from the viewpoint of cost and quality service compared to conventional LTLM.

Detecting illegal activities: the case of cartels

This paper considers enhancements of a comparatively new method to detect cartels, the System of Cartel Markers (SCM), introduced by Blanckenburg and Geist (Int Adv Econ Res 15(4):421–436, 2009). The aim of SCM is to find illegal collusion on legal markets with observable market data. It uses expected behavior patterns such as low level of capacity utilization, slackness of price adjustments to exogenous shocks, excess rates of return, nearly constant capacities, less price changes and lower variance of capacity growth rate. However, the testing of cost efficiency is lacking so far. Following Leibenstein’s (Am Econ Rev 56:392–415, 1966) X-inefficiency theory, we assume that cartel members face lower competition and hence, tend to be less cost efficient. Therefore, we enhance SCM and use cost efficiency as a further marker in order to detect cartels. We apply SCM to the German cement cartel and find empirical support for some markers. The proposed methodology may be used for antitrust screening and regulatory purposes.

A method to assess capacity utilization in short cycle functional layouts

The aim of this article is to indicate that methods of monitoring capacity utilization applied in the processing industry such as cement production can be used in the metalworking industry that has a high level of capacity utilization. The process approach to establishing the level of capacity utilization can be employed in conditions of balanced line production, or when there are components of large-scale production, as well as short production cycles. The results of the analysis indicate that when the level of capacity utilization is high, this variable can be observed per day as stochastic, while, per machine, it can be a random variable. In the metalworking industry it is possible to monitor a larger number of factors related to operating and not operating machines, whereas in the processing industry the factor of work is generally only a single-machining time and factors of not operating are connected only to breakdowns or regular maintenance. To monitor capacity utilization in the processing industry, it is possible to apply a work-sampling method as well as the continual streaming method. The possibility common for both industries is to represent the monitoring of capacity utilization over time and to test the mastering of that stochastic function via control limits that are optimal when defined by 2SD.

Innovation policy for defense acquisition and dynamics of productive efficiency: A DEA application to the Korean defense industry

Summary This study evaluates the effects of innovation policy for defense acquisition on productive efficiency of Korean defense firms. After identifying the efficiency gaps among the production units by applying Data Envelopment Analysis (DEA) to the production data of 1997–2004, the determinants affecting the input mix decisions of defense firms are analyzed through the Tobit regression analysis. The results identify competition in the market, capacity utilization level, R&D investment, and the firm's defense revenue share as the influential factors to the productive efficiency of Korean defense firms.

Accounting Performance, Cost Strucutre, and Firms' Capacity Investment Decisions

This study examines the effects of accounting based performance-measures, cost structure, and operational factors on firms' capacity investment decisions. We combine insights from operations and accounting theory and posit that accounting performance measures such as contribution margin as well the proportion of fixed cost in the cost structure interact with operational factors such as capacity utilization and demand variability to influence firms' capacity investments. Empirical analyses using department-level data from the US hospital industry for the period 1998 to 2005 indicate that superior accounting performance, a high proportion of fixed costs in the cost structure, high levels of capacity utilization, and large variability of demand have positive effects on capacity investment decisions. In addition to these independent effects, we hypothesize and find interactions between operational and accounting factors. Accounting performance negatively interacts with capacity utilization in influencing capacity decisions. Demand variability influences the noise in accounting performance measures and hence negatively interacts with accounting performance in determining capacity decisions. In addition, the proportion of fixed costs interacts with capacity utilization to influence capacity investment decisions such that firms with a higher proportion of fixed costs in their cost structure place a higher weight on capacity utilization when making investment decisions. This empirical study fills a gap in the capacity investment literature and contributes to the understanding of operational and accounting determinants of firms' capacity investment behaviors.

PENGUKURAN CAPACITY UTILIZATION BERDASARKAN PENDEKATAN DUAL COST PADA INDUSTRI PENGOLAHAN DI INDONESIA

This study estimates the level of capacity utilization using the dual cost approach in which capacity utilization is measured by the deviation of shadow cost to observe cost. This approach provides valuable economic analysis which is not offered by the traditional or engineering approach, such as the production cost structure and the production system efficiency. The estimation results of 1996-2003 annual data on nine industries sub sector using panel data shows that the estimated capacity utilizations based on dual cost approach tend to exceed those of traditional approach. However, in general, the level of capacity utilization is still below full capacity although some of the industries have reached the level of 80%. The empirical results also shows that in term of output gap indicator, the dual cost capacity utilization outperforms the traditional one so that it can be used as a better tool in monetary policy formulation process.Keywords: Capacity utilization, Capital and Investments, Cost Function, Panel dataJEL Classification: C23, D24, E22

PENGUKURAN NAICU PADA SEKTOR INDUSTRI PENGOLAHAN BERDASARKAN DUAL COST CAPACITY UTILIZATION

Following the study on the measurement of capacity utilization of manufacturing industries in Indonesia (Tjahjono, Husman, and Sianipar (2005)), this paper estimates the level of NAICU, Non-Accelerating Inflation rate of Capacity Utilization. According to this concept, NAICU is the level of capacity utilization consistent with stable inflation. If the level of capacity utilization exceeds the level of NAICU, then there will be pressure on inflation to accelerate. On the contrary, there won»t be acceleration on inflation if the level of capacity utilization below the level of NAICU. Using the threshold method based on Hansen (1999), the empirical result shows that dual cost capacity utilization of manufacturing industries are generally below the level of NAICU, which is 80%.Keyword: Capacity utilization, inflation, threshold regression, panel.JEL Classification: D24, E31, C12, C33

Shakeouts, Innovation, and Industrial Strategy and Policy

My students of industrial organization play a game in which they manage mock companies producing the same product. Each team periodically chooses levels of investment, capacity utilization, and research spending, and keeps track of its resulting bank balances. An hour after the game begins, typically half of the companies have gone out of business and market share is spread unevenly among the few survivors. The game mirrors a real empirical phenomenon in which, after an initial buildup in number of firms, most industries experience a drop-off or “shakeout” in the number of firms. Sometimes the shakeouts are quite dramatic: in US automobile manufacture, 98.9 per cent of producers exited between 1896, the date an automobile was first commercially produced, and 1967, shortly before Japanese entrants arrived. The top panel of Figure 1 illustrates the rise and fall in the number of US automobile producers, which rose to a peak of (by one measure) 293 firms in 1909 only to fall to 7 survivors by 1955.

Endividamento externo e controles de capitais: uma análise computacional de um modelo macrodinâmico Pós-keynesiano

O presente artigo analisa o impacto dos controles de capitais sobre a trajetória temporal de uma série de variáveis macroeconômicas para economias em desenvolvimento a partir de um modelo pós-keynesiano de economia aberta e sem governo. Inicialmente, apresentamos um modelo macroeconômico que introduz o controle de capitais como variável de escolha de política econômica. A partir da análise de estabilidade do modelo deduzimos um conjunto de valores economicamente plausíveis para os parâmetros. Com base nestes parâmetros analisamos o comportamento dinâmico do grau de utilização da capacidade produtiva, do endividamento externo, das exportações líquidas e da taxa de juros sob diferentes condições iniciais. Na seqüência, analisamos a sensibilidade da economia a choques externos como, por exemplo, variações da taxa de juros internacional e do fluxo internacional de comércio. Nesse contexto, constatamos que os controles de capitais podem contribuir para a redução da volatilidade da dívida externa a choques exógenos, mas amplificam os efeitos desses choques sobre o grau de utilização da capacidade produtiva. Desta forma, a desejabilidade da adoção de controles de capitais é condicional às preferências da sociedade no que se refere à volatilidade do grau de utilização da capacidade vis-à-vis à volatilidade do endividamento externo.

Capacity constraints to the adoption of new interventions: consultation time and the Integrated Management of Childhood Illness in Brazil

Information on how health workers spend their time can help programme managers determine whether it is possible to add new services or activities to their schedules and at what cost. One set of interventions with the potential to reduce under-five mortality is training of facility-based health workers according to the guidelines for Integrated Management of Childhood Illness (IMCI), along with improvements to supervision, procurement and information systems that are part of the IMCI strategy. Although it has been shown that IMCI is associated with improved quality of care, it is important to determine if it also requires additional consultation time. To investigate the amount of time required to provide clinical care to children under 5 years based on IMCI compared with routine care, a time and motion study was conducted in Northeast Brazil. IMCI-trained providers spent 1 minute and 26 seconds longer per consultation with under-fives than untrained providers, holding confounding factors constant at the mean levels observed in the sample. The difference was greater when patient load was low, and decreased as the number of patients a provider saw per day increased. This has three implications. First, the ability of the system to absorb new technologies depends on current capacity utilization. Secondly, the cost of treating a child also depends on the level of capacity utilization, at least in terms of provider time. Thirdly, where patient loads are high it is important to determine if the quality of care required for IMCI can be maintained.

Cost Information and Pricing: Empirical Evidence

This study examines the relation between prices and unit allocated costs. In an analysis of 8,179 service price observations from private hospitals in California, I find that the level of capacity utilization positively affects the association between prices and unit allocated costs, while the level of demand uncertainty negatively affects this association. The results provide empirical evidence on the role of allocated costs in pricing, showing specifically that in departments with a high level of capacity utilization, the opportunity costs involved in the use of capacity resources lead to an increased association between allocated costs and prices. However, as the measurement error of allocated costs increases in departments with a high level of demand uncertainty, the association between prices and allocated costs diminishes.

Energy consumption and capacity utilization of galvanizing furnaces

An explicit equation leading to a method for improving furnace efficiency is presented. This equation is dimensionless and can be applied to furnaces of any size and fuel type for the purposes of comparison. The implications for current furnace design are discussed. Currently the technique most commonly used to reduce energy consumption in galvanizing furnaces is to increase burner turndown. This is shown by the analysis presented here actually to worsen the thermal efficiency of the furnace, particularly at low levels of capacity utilization. Galvanizing furnaces are different to many furnaces used within industry, as a quantity of material (in this case zinc) is kept molten within the furnace at all times, even outside production periods. The dimensionless analysis can, however, be applied to furnaces with the same operational function as a galvanizing furnace, such as some furnaces utilized within the glass industry.

Macroeconomic Factors of Post-crisis Growth

Russia has managed to achieve spectacular success after the 1998 crisis. High rates of economic growth have been first of all conditioned by low level of industrial capacity utilization in the pre-crisis period. Other factors have also played an important role: the positive conjuncture of world oil prices; dynamics of relative prices; changes in economic subjects' behavior. In order to make economic growth sustainable it is necessary to implement deep structural changes in the country.

Choosing the Federal Reserve Chair: Lessons from History

This paper demonstrates that the key determinants of policy success have been policymakers' views about how the economy works and what monetary policy can accomplish. In the first major section of the paper, the authors analyze the narrative record of the Federal Reserve to discover what policymakers believed and why they chose the policies they did. The authors find that the well-tempered monetary policies of the 1950s and of the 1980s and 1990s stemmed from a conviction that inflation has high costs and few benefits, together with realistic views about the sustainable level of unemployment and the determinants of inflation. In contrast, the profligate policies of the late 1960s and 1970s stemmed initially from a belief in a permanent tradeoff between inflation and unemployment, and later from a natural rate framework with a highly optimistic estimate of the natural rate of unemployment and a highly pessimistic estimate of the sensitivity of inflation to economic slack. And the deflationary policies of the late 1930s stemmed from a belief that the economy could overheat at low levels of capacity utilization and that monetary ease could do little to stimulate a depressed economy.

Erreichbarkeiten und Einwohnerpotenziale Zentraler Orte

In the course of up-dating the State Development Plan for the federal state of Thuringia, and against the backdrop of dwindling populations and improvements in accessibility, the decision was taken to overhaul the “central-place” concept introduced in 1993. Drawing on accessibility analyses based on private-car use, the future population potentials of so-called “higher-order centres” have been recalculated in order to gauge the long-term significance of such centres for spatial planning within the state. In the light of current levels of infrastructure endowment and capacity utilisation, the authors are able to proceed to formulating recommendations for a future system of “central places” which strives to mediate between blanket supply and economic viability. The current and anticipated shortcomings thus revealed in respect of accessibility provide important pointers toward the types of supplementary structure-policy measures which the state will need to adopt in the future.

Is there a natural level of capacity utilization?

Previous studies of the Phillips Curve using capacity, utilization have estimated NAIRCU to be in the neighborhood of 82%. These studies estimate NAIRCU by imposing the restriction that there is no stable long run relationship between capacity utilization and the rate of inflation. The authors of these studies test the validity of this restricted model by estimating a model of the Phillips Curve, which has no supply-side variables. However, the actual estimates of NAIRCU are derived from restricted models, which include supply side variables. This article replicates these findings and then tests the validity of the restriction using a correctly specified model. An important finding is that the restriction is not valid and therefore the models used to produce estimates of NAIRCU are misspecified. Our findings call into question the existence of a vertical long run Phillips Curve. The implications of our findings are that the FED was overly cautious in raising interest rates to slow the economy and that the policy of pursuing “full employment” is still viable.

Production and supply management strategies in Nordic paper mills

The traditional production management strategy in paper manufacturing is based on a volume-intensive approach. This involves the measurement of overall performance or productivity, while aiming at a high level of capacity utilisation and minimum waste levels. This approach has proved successful in mills producing high volumes with a limited and standardised product range. The situation changes radically when paper and board products are being tailored to customer-specified dimensions and quantities. The volume-based approach is no longer appropriate, and production has to be controlled by an approach that considers inventory performance along the full length of the supply chains. This paper presents five empirical examples to illustrate the use of the two strategies. The detailed analyses of production cycles, the logistical solutions applied and the inventory levels at various stages of the supply chain, show that the Nordic paper industry is slow, with average lead times of 79 days to market. When production cycles are reduced and logistical alternatives are fully exploited, it can be seen that 30% of the inventories can be regarded as slack. The summary of the cases shows that speedier operations easily generate direct cost savings amounting to 2–5% of annual turnover. All these results can be achieved without additional investment; all that is required is a change in production planning principles and logistical control procedures. The paper concludes with a challenge to the Nordic paper industry to be the first in its field to achieve the higher level of productivity that faster operations can generate.

Productivity and profitability trends in an environment of reform

Work systems usually have to be appraised in relation to set objectives. A primary objective is to increase productivity. Productivity increases help to ameliorate the attendant inflationary pressures that drive the vicious cycle of increasing costs. In this work, we examine the performance of two print media work systems in an environment of structural reform in a developing economy. The first is privately owned, while a government agency owns the majority stake in the second. We review the productivity and profitability trends and recommend a relaxation of the existing rigid pricing regimes imposed by the regulatory agency. Differences arising from the performance of both organisations are partly traceable to the quality of the work force, level of capacity utilisation, pricing regimes, technology of production employed and skills development training schemes adopted.

The shift level of the utilization of capacity as the stochastic variable in work sampling

This paper aims to explain and justify the necessity and the importance of using the shift level of the utilization of capacity as the stochastic variable in determining the total level of the capacity utilization in the production process by using the method of work sampling. The aim of the paper is realized through experimental research on the work sample containing 74 Serbian companies. The conclusion is that the shift level of capacity utilization as the stochastic variable in work sampling is the model that solves the problem of determining the total level of capacity utilization in a convenient way with accurate results.

Small-scale enterprise policy in developing countries: an analysis of India's reservation policy

This paper examines the effects of India's reservation policy to help the small-scale enterprises. Empirical tests showed three main results. Firstly, reservation has increased the number of production units, per item produced. Secondly, the units that produce mainly reserved items have higher levels of installed capacities, than those making mainly unreserved items, but the former do not have higher levels of production, thereby resulting in significantly lower levels of capacity utilisation. Thirdly, reservation has not helped reduce the problem of closures of small units. The empirical results suggest that reservation may have brought little help to production and employment in the small-scale units nor to the consumers of their products, while at the same time it may have restricted production and employment in the large units. Thus reservation may have caused a loss in overall economic welfare. Copyright © 1999 John Wiley & Sons, Ltd.