Relative Profit Margin Research Articles

Co‐op advertising in randomly fluctuating markets

We consider a dynamic Stackelberg game between a manufacturer and a retailer facing a randomly changing market environment (boom–bust cycle) modeled as a Markov process over time. The manufacturer announces the national advertising effort and a cooperative (co‐op) advertising subsidy, and the retailer sets the local advertising effort. We derive the optimal feedback equilibrium advertising strategies and show that the channel members are forward‐looking in their advertising decisions. In the single‐crisis case, both the necessary and sufficient conditions for a positive subsidy reveal that the subsidy decision hinges on the relative profit margins before and after the crisis. Our comparative statics analysis indicates that the presence of national advertising enriches the members' advertising behaviors significantly. Furthermore, the pre‐crisis (post‐crisis) aggregate advertising contribution of the supply chain generally decreases (increases) in the damage rate and the crisis likelihood, as in the single‐firm case. But the individual advertising behaviors of the members may exhibit richer structures, depending on the comparative advantages of the members in each state. In addition, our numerical studies demonstrate that channel members can suffer sizable losses when they adopt myopic advertising strategies over their regime‐switching counterparts. Finally, we extend our analysis to incorporate retail and brand competition and show that the channel members' advertising behaviors are reasonably consistent with those without competition.

Cost Analysis of Different Mixture Rates and Sowing Methods of Anatolian Clover (Trifolium resupinatum L.) and Italian Ryegrass (Lolium multiflorum Lam.)

The study was carried out between 2015 and 2016 in accordance with the split plots in randomized blocks research design with 3 replications, which aimed to determine the optimal mixture rate for the production design. The results of the research were made into agricultural implementation and cost analysis was performed. Relative profit margin was used in determining the most favorable mixture rate that will be included in the production design. According to the application results, the production threshold was exceeded in all mixtures. The highest gross production value (95.90 USD da-1) and production cost (59.05 USD da-1) was obtained from the sole Anatolian Clover among the forage crop mixtures. Whereas; the lowest gross production value (71.32 USD da-1) and production cost (58.60 USD) was detected in the sole Italian ryegrass application. In addition to this, it was found that the highest relative profit margin (1.62) had been achieved in sole Anatolian clover. 50% Anatolian clover + 50% Italian ryegrass (K2) (1.40), 25% Anatolian clover + 75% Italian ryegrass (K3) (1.38) were followed to sole Anatolian clover, in terms of mixture rates. Perdenpedicular row sowing (E3) had the highest relative profit margin (1.45) in this study according to the sowing methods. As a consequently, perpendicular rows (E3) and sole Anatolian clover (T), 25A.C + 75 I.R (K3) were the most suitable sowing method and mixture ratios under Anatolian conditions, respectively.

Real exchange rate and relative profit margins: Evidence from non-linear ARDL models for Mexico

ABSTRACTWhile many studies have documented the positive effect the real exchange rate (RER) can have on the rate of economic growth in developing countries, the channels of this effect are not yet well understood. The paper contributes to this literature by studying the pass-through of the RER into aggregate relative profit margins in the manufacturing and whole tradables sectors with respect to non-tradables in Mexico during the period 1990–2017. Based on estimates from non-linear error-correction ARDL models, the paper shows the RER affects relative profit margins asymmetrically – with larger reductions after appreciations than increases after depreciations – and that this asymmetry comes from the asymmetric adjustment of both relative costs and to lower extent relative prices. The results support the hypothesis of an RER’s tradables-led economic growth channel and help explain why the RER may affect capital accumulation asymmetrically, with stronger negative effects from appreciations than the positive effects of depreciations, as reported in recent research on Mexico.

Factors influencing conversion of rubber lands to alternative crops in Sri Lanka: a case study in Palindanuwara in Kalutara District

Using binary logistic model with primary data collected from a sample of 300 former and present rubber smallholders in Palindanuwara DS division in Kalutara district, this study attempts to answer the question of why rubber smallholders convert to alternative crops despite increasing rubber prices. Our findings concludes that the individual decision to transit from rubber to alternative crops is positively influenced by expected net income and expected leisure time after conversion. Relative profit margin of the old crop (rubber) compared to the new crops is found to negatively influence the decision to convert. However, conversion at national level is mostly due to money illusion where smallholders misinterpret an increase in relative income as an increase in relative profit. Smallholders’ gender, age and education were proven irrelevant to the decision of convert.

Estimation of flexibility of an organization on the ground of the calculation of profit margin rate

The article deals with the problem of the flexibility of an organization as the ability to adapt effectively to the external environment. The authors have identified and investigated different approaches to estimating the flexibility of an organization on the ground of flexibility grading, calculation of the general index of flexibility as well as the calculation of flexibility’s ranking score. We have identified the advantages and disadvantages of these approaches. A new method of the estimation of an organization’s flexibility on the ground of the calculation of relative profit margin has been developed. This method is the multifunctional assessment tool of enterprise’s functionability in the current context of difficult and volatile economic environment. It allows in the early stage to identify negative trends in the production and financial figures and thus, it enables the organizational leadership to take steps in advance in order to avert a crisis in its activity. Keeping the profit margin at the same rate at the forced contraction of output, because of the negative impact of external factors, will confirm that the organization has adapted to the external environment and, therefore, it is flexible. The organization can be considered with margin rate beginning to low up to zero value as an organization with an insufficient level of flexibility that is at the “zone of crisis†and it is characterized by the depletion of reserved funds and reduction of current assets. Loss-maker is nonflexible and the presence of loss means that the organization has an evident sign of crisis and it can be bankrupt.

Quantifying the Agronomic and Economic Performance of Hybrid and Conventional Rice Varieties

The objective of this research is to estimate and compare the agronomic and economic performance of hybrid and conventional rice (Oryza sativa L.) varieties in the Mid‐South of the United States. The introduction of hybrid rice for commercial production has given producers an alternative to traditionally cultivated, conventional (inbred) lines. Adoption rates of hybrid rice have grown to over 40% in some regions of the Mid‐South; however, its milling quality is a concern. Producer revenues are based on both rough (paddy) rice yield and postharvest processing, or milling. Hence, producers receive prices at the mill that are directly affected by the milling quality of the delivered rice. In this study, we used 3500 observations from 2003 to 2013 with detailed weather, yield, and milling data in 23 locations across Arkansas and Mississippi to estimate differences in the paddy (quantity) and milled rice yield (quality) between hybrid and conventional cultivars. Moreover, we used a multivariate regression framework to estimate yields and economic returns for Clearfield (imidazolinone tolerant; CL) and non‐CL varieties. We found that hybrid varieties had a paddy yield premium over conventional varieties of 1.66 Mg ha−1 and 1.82 Mg ha−1 for CL varieties. The results show that hybrids had a lower milling quality than the conventional varieties, yet the milling quality exceeded industry standards in 97.5% of the observations. On average, hybrid varieties outperform conventional rice varieties in terms of absolute profit per hectare and relative profit margin, defined as profit per cost of production, for both CL and non‐CL varieties.Core Ideas Rice producers’ revenue is based on both rough rice yield and the subsequent milling outcome. Early hybrid lines had high paddy but low milling yields which questioned their economic status. We find that hybrids had a distinct paddy yield advantage over inbred lines. We find hybrids had a lower milling quality than inbred lines but exceed industry standards. We find hybrids outperform inbred varieties in absolute, profit ha−1 and relative profit margin.

Investment and the real exchange rate’s profitability channel in Mexico

The paper estimates different versions of an equation for private investment in Mexico during the post-liberalization period 1988–2013, with the aim of studying the operation of the recently discussed real exchange rate’s profitability channel. During this period, the real exchange rate (RER) was broadly positively correlated with the Mexican price/wage ratio and the Mexican/US relative profit margin in the manufacturing sector, particularly so when the RER experienced large fluctuations, before the end of disinflation in the early 2000s. In the estimations, the effect of the profit margin appears to be ‘deeper’, wiping out the effect of the RER when the two variables are included together in the investment equation. From this, the paper argues that the positive effect of the RER on investment, observed in previous studies that omitted the profit margin, reflects indirectly the positive link of the RER with the profit margin, supporting the existence of a profitability channel in Mexico.

Study on Information Truth-Telling in Manufacturing Supply Chain

This paper presents a three-stage game model between one manufacture and n retailers. If the retailers share their forecasts truthfully, the manufacturer always benefits; On the other hand, the profits of the retailers always worse off by disclosing their demand information to the manufacturer. The information distortion phenomenon is the direct result of each party exploiting its private information to appropriate the gains from information sharing. If the manufacturer and the retailers can agree on their relative profit margins or profits prior to information sharing, the retailers will share their information truthfully and both parties may benefit from information sharing.

Single firm product diffusion model for single-function and fusion products

The prosperity of multifunction products (also referred to as fusion products) has changed the landscape of the marketplace for several electronics products. To illustrate, as fusion products gain popularity in cellular phones and office machines, we observe that single-function products (e.g., stand-alone PDAs and stand-alone scanners) gradually disappear from the market as they are supplanted by fusion products. This paper presents a product diffusion model that captures the diffusion transition from two distinct single-function products into one fusion product. We investigate the optimal launch time of the fusion product under various conditions and conduct a numerical analysis to demonstrate the dynamics among the three products. Similar to previous multi-generation single product diffusion models, we find that the planning horizon, the products’ relative profit margin, and substitution effects are important to the launch time decision. However, there are several unique factors that warrant special consideration when a firm introduces a fusion product to the market: the firm’s competitive role, buyer consolidation of purchases to a multi-function product, the fusion technology and the age of current single-function products.

Effects of Nonnormal Distributions on Highway Construction Acceptance Pay Factor Calculation

Percent within limits (PWL) is a commonly used quality control/quality assurance measure of highway pavement materials and construction, and it is a popular index for adjusting pay factors. However, PWL is based on the assumption of normal distribution of quality characteristics (e.g., concrete compressive strength and asphalt air voids). Skewness and kurtosis, which are common forms of statistical nonnormal distributions, can potentially bias the acceptance pay factor calculations. To examine this potential pay bias, simulations were performed to investigate the magnitude and the direction (overestimation or underestimation) of pay factor calculations. The study revealed that for both one-sided and two-sided specification limits, bias in pay factors not only did vary in magnitude but also reversed in direction over various ranges of PWL. These analyses showed that for a one-sided upper specification limit, on average, a positive skewness and kurtosis can underestimate the pay factor of an acceptable quality level population by 0.90%, and overestimates a rejectable quality level population by 3.8%. This leads to falsely penalizing acceptable products and rewarding bad products. The same was true for two-sided limits, which again varied based upon the percent of defective materials at the tails of the distribution. This is a very important issue because these biases in pay factors can easily upset the relative profit margins of the contractor. Furthermore, this may not be easily detectable without a detailed and sophisticated analysis as outlined in this paper. For multiple quality characteristics based pay factors, analyses showed that the combined magnitude of these biases was not linearly cumulative. Findings of the study indicate that bias in pay was higher for lots with fewer sublots and higher skewness and kurtosis.

Airline seat allocation competition

AbstractThis paper examines the classical seat allocation problem under competition between two airlines with different cost structure. The cost asymmetry that has been ignored in the yield management literature can be caused by either operations or distributions. We investigate the decision problem of two airlines offering two identical fare classes under both the simultaneous and sequential allocations. For both allocation cases, we show the existence, uniqueness and stability of pure‐strategy Nash equilibrium under a reasonable condition on the ratios of relative profit margins of the two fare classes. We find that there will be fewer seats protected for the full‐fare class if the discount seats can be booked first. We found that the asymmetry in costs has two effects on the equilibrium solutions: (a) an airline behaves aggressively for the fare class where it enjoys a cost advantage; (b) an airline tends to balance the trade‐offs internally when it has absolute cost advantage in both fare classes. In deriving the collusive solution for both cases for comparative purposes, we discover new insights by solving the two‐flight, two‐fare seat allocation problem with different cost structures on the two flights. In particular, we show that rivalry in full‐fare seat protection leads to a Prisoners' Dilemma for the carriers. Finally, a numerical example is used to illustrate various analytical results.

Information sharing in supply chains: Incentives for information distortion

The existing literature on supply chain information sharing assumes that information is shared truthfully. Unless each party can verify the authenticity of the other party's information, manufacturers and retailers may divulge false information for their own benefit. These information distortions may reduce the benefit levels or even stop information sharing in supply chains. We analyze the incentives for manufacturers and retailers within a supply chain to distort information when they share it and propose a mechanism that results in truthful information sharing. We consider a make-to-order supply chain consisting of a single manufacturer and a single retailer. The manufacturer and the retailer set prices based on their private forecasts of uncertain demand. If both parties share their forecasts truthfully, the manufacturer always benefits; however, the retailer benefits only if the manufacturer sets a lower wholesale price when information is shared compared to when information is not shared. However, we show that the manufacturer and the retailer, respectively, have an incentive to overstate and understate their forecasts while sharing information. The information distortion phenomenon is the direct result of each party exploiting its private information to appropriate the gains from information sharing. We show that the incentives to distort information are eliminated and both parties benefit from information sharing if the manufacturer and the retailer can agree on their relative profit margins prior to information sharing.

Sectoral Patterns of Distribution in Slowly Growing Economies: The case of nine OECD countries in the 1980s and 1990s

Slow productivity growth has put pressure on the distribution of income between wages and profits in ways that are not amenable to a US versus Europe dichotomy but vary between sectors (especially between manufacturing and service activities) as well as among countries. Over the 1980s and the 1990s, wage flexibility and profit margin flexibility in service sectors-characterised, respectively, by high shares of total employment and high shares of total profits-outlined three growth patterns: countries adjusting to slow productivity growth by means of considerable flexibility in relative wages in services (as in the US, the UK and Germany); adjustment through flexibility in relative profit margins (as in France, Canada and Sweden); and finally, an absence of change in the sectoral structure of distribution (as in Japan, Italy and Belgium). These patterns may be associated with either changes in wage and profit rates or structural adjustments (such as changes in the share of part time jobs, or changes in the composition of the capital stock). They are shown to be an important influence on the prospect of a resumption of high productivity growth.

Progress in wood residue use in California

The manufacture of products from wood may be described as a reduction process, and this reduction in volume from raw material to product occurs at nearly all levels within the industry. It begins with tremendous quantities of residues-not waste-in the woods and continues on through the processing. It is fairly common in some manufacturing to convert less than half of the raw material into a final product. Recovery is seldom greater than 75%. From the industry's standpoint, "waste" is defined as a failure to recover the value inherent in a given amount of raw material. "Residue" is the remnant of the original raw material left after the economic value has been removed. By these definitions, some waste unquestionably occurs within the industry, but by far the biggest problem is with residues. These residues occur in huge volumes and have a negative value because of the costs of disposal. Since use of residues is becoming increasingly important, I hope to present here some of the reasons for this increase in use, the status of the current harvest and utilization, and data on use of residues for products. There are specific economic and political reasons for the effort to increase the utilization of wood residues. Foremost is a simple need for a greater recovery of product from the log. This need is based on increased competition for both raw materials and markets, which has resulted in higher stumpage costs, and a lower relative profit margin. Furthermore, the industry in the west is faced with a changing timber supply as the stand is converted to younger and smaller trees.