Sale Decisions Research Articles

Equilibrium in a Distribution Network with Transaction Costs

The paper addressed a situation of how a retail chain consisting of suppliers, agents, and distributors transformed while the costs of transactions increased. When the costs increased, the orders and deliveries between relevant interest groups resulted in the formation of the most costs’ tolerant retail chain. The participants of the most tolerant chain remained in equilibrium under condition that in any transaction the gain of trade exceeded the transaction cost. Making to buy and sale decisions, the participants of the chain supposed to follow the rules and norms of what the author called a monotonic game.

NBC-Universal Uses a Novel Qualitative Forecasting Technique to Predict Advertising Demand

NBC-Universal (NBCU), a subsidiary of the General Electric Company (GE), implemented a novel demand prediction and analysis system to support its annual upfront market. The upfront market is a brief period in late May when the television networks sell a majority of their on-air advertising inventory. The system uses an innovative combination of the Delphi method and the Grass Roots forecasting methodology to estimate demand for television commercial time. We embedded this forecasting methodology within a workflow system that automates the demand estimates gathering process and seamlessly integrates into NBCU's existing sales systems. Since 2004, over 200 sales and finance personnel at NBCU have been using the system to support sales decisions during the upfront market when NBCU signs advertising deals worth over $4.5 billion. The system enables NBCU to sell and analyze pricing scenarios across all of NBCU's television properties with ease and sophistication, while predicting demand with a high accuracy. NBCU's sales leaders credit the system with having given them a unique competitive advantage.

Perceived Organizational Ethics and the Ethical Decisions of Sales and Marketing Personnel

Using a scenario-based approach, this study analyzed data collected from marketers with sales backgrounds and investigated the impact of perceived organizational ethics on their ethical issue recognition, ethical judgments, and ethical behavioral intentions. The results indicated that perceived organizational ethics, which was operationalized with two separate measures, was positively related to both the ethical judgments and expressed behavioral intentions of respondents. Further, ethical issue recognition was positively associated with ethical judgments and expressed behavioral intentions, and ethical judgments were positively related to ethical behavioral intentions. The findings suggest that, in order to enhance sales professionals’ ethical reasoning, organizations should focus on developing an ethical context that is relevant to the issues confronted by sales professionals in their work and that is as specific as possible with regard to these ethical dilemmas.

Mutual Fund Timing Strategies - Application of Gil Blake's Strategy to Indian Markets

In this study, the feasibility of using timing strategy as an investment tool to generate satisfactory return is analysed. For this purpose, the strategies and operating philosophy of Gil Blake has been tested on Indian mutual fund markets. Based on Gil Blakes' model, an automated decision support model has been developed to provide signals for making investment and sale decisions. The model was used to test the effectiveness of timing strategy to generate superior returns on a sample of 56 mutual fund schemes and sector and market indices belonging to different industries. The results indicate that it is feasible to time the market and take appropriate buy and sell decision to improve the returns in relation to the mutual fund schemes, though it is not feasible with all mutual fund schemes. It is noted that, the two key factors that determine the success of this model are: the number of stocks included in the mutual fund scheme and the momentum and swings of the stocks in the mutual fund.

A dynamic bio-economic model for analyzing deforestation and degradation: An application to woodlands in Uganda

This study is an effort at developing a dynamic non-linear programming bio-economic model capable of analyzing deforestation and degradation processes in the Ugandan woodlands. The model is unique in capturing the entire systems behavior affecting deforestation and degradation, approximated through changes in forest area and stand density. Thus the model incorporates biological factors, such as growth, the socio-economic factors and related interactions between them. A matrix growth sub-model for the woodlands, accounting for diameter increment, mortality, recruitment and harvest of trees, was imbedded in the overall model to account for the stock changes over the planning horizon. The socio-economic factors and relations affecting the woodland deforestation and degradation processes are addressed through incorporation of three sets of activities, namely, crop cultivation, livestock raising and wood harvesting for firewood and charcoal. Demand and supply relations for these activities are linked through behavioral, structural and accounting equations. The production, consumption, and sale decisions are assumed to be made simultaneously by the households. Though, the model can be successfully used at different levels and planning horizons, a village is the decision making unit over the period 2003–2020 for the purpose of this study. The net present value of cash flows is taken as a proxy measure for utility that is sought to be maximized under six alternate scenarios, including the base scenario. Under the base scenario, 46.7% woodland clearing for cultivation and 42.1% reduction in biomass density were observed over the model planning horizon. Under the scenarios with improved agricultural yields and increased charcoal prices and taxes, the clearing of available woodland was predicted at 98.3%. Biomass density was observed to decline by about 11.9% and 15.5% with the imposition of wood harvest and charcoal quotas. It was observed that none of the policy interventions in this study resulted in reduced degradation and deforestation, which posits a dilemma to the policy makers and implementers. However, we conclude that a well implemented system for taxes or quota restrictions would enhance sustainable resource use in the remaining woodland areas. These interventions are highly limited by implementation and enforcement problems that need to be properly addressed by policy makers and planners.

Self‐protection vs opportunity seeking in business buying behavior: an experimental study

PurposeTheories on industrial buying behavior differ fundamentally with regard to motivation and direction of industrial purchasing decisions. This becomes extremely in the case of new institutional economics, highlighting administrative aspects, and market process theory, focusing on entrepreneurial aspects of buying decisions. This paper aims to challenge these approaches by setting up an experimental design. Decisions of sales and purchasing managers were investigated with respect to their motivation of self‐protection or opportunity seeking.Design/methodology/approachThe contribution is based on an experimental design. The design is based on a prospect theory scenario. Prospect theory states that successful economic agents show a stronger tendency towards self‐protection, whereas under‐performing economic agents are willing to bear greater risks in search for opportunities.FindingsThe results suggest that indeed out‐performers show a tendency to risk avoidance and under‐performers are willing to bear more risks. The most important implication is that new institutional economics‐based approaches to buying behavior are not universally valid. However, they apply to specific situations. In that respect the contribution shows a direction for the proper application of transaction cost‐based concepts.Practical implicationsManagers are advised to take the economic performance of their customer companies into account. Outperforming companies are more responsive to measures for self‐protection. Under‐performing customers may be more tolerant towards risk if it is compensated with the expectation of better opportunities.Originality/valueThe empirical research is new in so far as it is the first to apply a prospect theory framework to a business market environment. The results show clearly that the methodology, as originally applied in prospect theory, needs refinement when transferred to a business market context.

A hybrid model by clustering and evolving fuzzy rules for sales decision supports in printed circuit board industry

This research develops a hybrid model by integrating Self Organization Map (SOM) neural network, Genetic Algorithms (GA) and Fuzzy Rule Base (FRB) to forecast the future sales of a printed circuit board factory. This hybrid model encompasses two novel concepts: (1) clustering an FRB into different clusters, thus the interaction between fuzzy rules is reduced and a more accurate prediction model can be established, and (2) evolving an FRB by optimizing the number of fuzzy terms of the input and output variables, thus the prediction accuracy of the FRB is further improved. Numerical data of various affecting factors and actual demand of the past 5 years of the printed circuit board (PCB) factory are collected and inputted into the hybrid model for future monthly sales forecasting. Experimental results show the effectiveness of the hybrid model when comparing it with other approaches. However, the theoretical development of the validity of clustering an FRB into sub clusters remains to be proven.

Selling their Best for Little: The Riddle of Ecuador's Failed Attempt to Assist Communal Farmers

In the 1980s, Ecuador began an expensive project providing primary irrigation canals to the Santa Elena Peninsula. The intended beneficiaries were the region's communal farmers. Instead, virtually all irrigable lands have been sold to large farmers and land speculators, usually at exceedingly low prices. While political and economic abuses explain some of these sales, introduction into a communal setting of an innovation which improved returns to capital relative to labor made land divestitures almost inevitable. With effectively no access to credit, communal farmers had little ability to invest in secondary irrigation systems. Moreover, because users of irrigable lands did not fully control communal sales decisions, as these lands became attractive to others, dispossession risks rose. The net result was that reservation prices for holding these lands fell among communal farmers at the same time of increased demands for these assets by those outside the comunas. Implications for development strategies are also discussed.
 

Performance Evaluation and Corporate Income Taxes in a Sequential Delegation Setting

We consider a sequential delegation setting where a firm delegates an investment decision and, subsequently, a sales decision to a privately informed manager. For both these decisions, corporate income taxes have real effects. We show that compensating the manager based on pre-tax residual income can ensure after-tax NPV-maximization (goal congruence) for each decision problem in isolation. However, this metric fails if both decisions are nontrivial, since it requires asset-specific hurdle rates and hence precludes asset aggregation. After-tax residual income metrics (e.g., EVA) allow the firm to consistently apply its after-tax cost of capital as the hurdle rate to its aggregate asset base. Moreover, we show that accelerated tax depreciation may explain why firms in practice use more accelerated depreciation schedules than those suggested by previous studies. Our findings also rationalize the widespread use of dirty surplus accounting for windfall gains and losses for managerial retention purposes.

Comparative costs of negotiated versus competitive bond sales: new evidence from state general obligation bonds

Previous work on the interest cost implications of the municipal bond underwriting method of sale decision has produced results asserting that competitive bid sales result in lower interest costs. However, negotiated offerings still dominate the municipal market. This paper invokes financial certification theory to explain the apparent paradox. After correcting for selection bias which is predicted by the theoretical model, empirical estimates show that for a sample of state general obligation bonds, negotiated offerings have at worst no higher and perhaps lower interest costs.

Pharmacy student knowledge, attitudes, and beliefs about selling syringes to injection drug users.

To explore pharmacy school education and pharmacy students' knowledge, attitudes, and beliefs about human immunodeficiency virus (HIV) and acquired immunodeficiency syndrome (AIDS), drug use, and syringe sales to injection drug users (IDUs). Qualitative study of a convenience sample of pharmacy school students. A pharmacy school in the southeastern United States. Two focus groups and nine in-depth interviews were conducted about HIV/AIDS education and counseling, syringe sales to possible IDUs, and related pharmacy school education. 19 Doctor of Pharmacy students, including 88 students in their third professional year and 11 in their fourth professional year. Most participants believed that they would benefit from more class time on HIV/AIDS topics, including AIDS treatment medications and HIV prevention. Most participants believed that the laws and regulations governing syringe sales in their state were vague, leaving syringe sale decisions to pharmacists' discretion. Nine study participants supported selling syringes to possible IDUs, five opposed it, and five were undecided or ambivalent. Classroom education focused on addiction to prescription drugs, with limited attention to illicit drug use. Pharmacy students have divided opinions about selling syringes to IDUs. To prepare students for helping their patients with drug-use problems, pharmacy schools should increase training about HIV/AIDS and addiction. Policy makers should consider changing laws and regulations of syringe sales to recognize prevention of blood-borne infections as a legitimate medical purpose for selling syringes to IDUs.

Individual and structural influences shaping pharmacists' decisions to sell syringes to injection drug users in Atlanta, Georgia.

To better understand the individual (e.g., attitudes and beliefs) and structural (e.g., laws and regulations) factors that influence and shape pharmacists' decisions about selling syringes to injection drug users (IDUs). Qualitative research. Metropolitan Atlanta. PARICIPANTS: 20 practicing pharmacists who work in or near areas of high drug use in Atlanta, and nine pharmacists who are considered leaders in their profession in Georgia. Semistructured, in-depth interviews. Individual and structural factors that influence pharmacists' decisions about selling syringes to IDUs. Pharmacists reported that they use their professional discretion in making syringe sale decisions and that these decisions are influenced by individuals factors such as their personal attitudes and beliefs about the nature and causes of drug use, and by structural factors such as the Georgia Board of Pharmacy regulation stating that syringes cannot be sold if they will be used for an "unlawful purpose." IDUs' access to sterile syringes from pharmacies in Atlanta, would likely be increased by (1) providing practicing pharmacists with professional education programs that describe the broad professional support for IDU access to sterile syringes and why blood-borne infection prevention is a legitimate medical purpose for selling syringes and (2) removing or modifying the restrictive Board of Pharmacy regulation governing syringe sales.

An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions

We examine whether taxes affect stock sales by mutual funds. For certain funds, the expected amount of a given stock sold in a given quarter is 62% greater when liquidation would trigger a capital loss equal to 1% of the value of the portfolio than when a like-size gain would be triggered, a greater effect than is associated with either contemporaneous excess stock returns of 50% or unexpected EPS equal to 50% of the stock price. For growth funds, responses to tax factors are consistent from year to year, and dispositions vary with the year-to-date realized gain.

Retail Sales: A Study of Pricing Behavior in Supermarkets

This article examines temporary price reductions, or sales, on ketchup products in supermarkets in Springfield, Missouri, between 1986 and 1988. The descriptive data analysis indicates that intertemporal demand effects are present. A model of intertemporal pricing in which demand increases with the number of time periods since the last sale is considered and confronted with the data. The estimates indicate that demand increases in the time elapsed since the last sale. The timing of ketchup sales is well explained by the number of time periods since the last sale. Also, competition between retailers for accumulated shoppers influences the sale decision.

Discussion of "An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions"

Huddart and Narayanan use quarterly data on the portfolio composition of mutual funds to investigate whether mutual fund managers engage in tax planning. More specifically, they ask whether capital gains taxes affect the probability that fund managers will sell individual securities. In recent years, individuals have increasingly chosen to invest in mutual funds instead of individual stocks. Consequently, mutual funds control an ever-greater portion of the total money invested in the markets. 1 Since mutual funds are pass-through entities for tax purposes, this shift from individual investing to professional managers has also transferred the opportunity and responsibility for tax planning to institutional managers. The question of whether fund managers tax plan is important because the benefits of efficient tax planning are sizable as compared to other activities undertaken by fund managers, such as attempts to time the market. When you talk to mutual fund managers about tax planning, and I have spoken to at least a dozen about this, the majority will readily admit that they ignore tax effects in their trading decisions. Why do they ignore taxes? Fund managers offer three reasons, also noted in the paper. First, the focus in the industry has always been on pre-tax returns. Pre-tax returns are reported in advertisements and used for comparisons to other funds, thus affecting fund flows, and some managers are partially compensated based on pre-tax returns. Secondly, fund managers claim to be unaware of the marginal tax rate of their investors. I say claim to be unaware, because if you press them further, fund managers tell you that they can find out what portion of their investors are investing through non-taxable accounts (e.g., IRAs), which provides a good sense of their investors’ marginal tax rates. Lastly, fund managers may assume that investors will sort themselves into tax clienteles and invest taxable money only in tax sensitive funds. However, it is only over the past five to ten years that major investment advisors, such as Vanguard and Fidelity, have created special ‘tax efficient’ funds. Few of these tax efficient funds were available during the sample period of this study.

An economic replacement model with probabilistic asset utilization

Traditional economic replacement analysis provides asset purchase and sale decisions over a given horizon based on expected purchase, operating, maintenance and salvage costs. As these costs are dependent on asset utilization, a constant or predetermined usage is generally assumed. However, due to randomness in operations, such as customer demand, these expected utilization schedules may not be realized in practice, thus invalidating the replacement schedule. This paper examines the effect of probabilistic asset utilization on replacement decisions through the use of dynamic programming. The solution determines minimum expected cost decisions for each state defined by the asset's age and cumulative utilization in each period. These decisions generalize the definition of the economic life of an asset to include age and cumulative utilization. Assumptions common to replacement analysis allow the state space to grow linearly with time, avoiding dynamic programming's ‘curse of dimensionality’. Examples with time invariant and variant economics are presented and compared to traditional solution procedures

Sales and Elections as Methods for Transferring Corporate Control

Delaware case law has rendered the tender offer obsolete as a method for purchasing a company whose directors oppose the acquisition. A potential acquirer facing target opposition today must run an insurgent director slate, in the expectation that its directors are more likely to sell. The Delaware courts have not justified their preference for elections over markets as the preferred vehicle for implementing changes in control. Informal scholarly analyses ask transaction cost questions, such as whether proxy contests are more costly than takeovers. This article attempts to break new ground by asking whether there are systematic differences in the performance of elections and markets in the corporate context. Recent models of voting processes, we argue, strongly suggest that elections are inferior to markets. Proxy contest elections sometimes can be won by incumbent managements when a transfer of control would be efficient, a conclusion consistent with the sparse data; and the proxy election process aggregates information regarding the sale decision less well than markets do, thereby implying that proxy voters are less well-informed. Theory and data thus suggest, at the least, that the intellectual burden of proof should change: the task now is to justify using elections to transfer control despite their apparent deficiencies. The article briefly considers the policy implications of this change in perspective.

An economic replacement model with probabilistic asset utilization

Traditional economic replacement analysis provides asset purchase and sale decisions over a given horizon based on expected purchase, operating, maintenance and salvage costs. As these costs are dependent on asset utilization, a constant or predetermined usage is generally assumed. However, due to randomness in operations, such as customer demand, these expected utilization schedules may not be realized in practice, thus invalidating the replacement schedule. This paper examines the effect of probabilistic asset utilization on replacement decisions through the use of dynamic programming. The solution determines minimum expected cost decisions for each state defined by the asset's age and cumulative utilization in each period. These decisions generalize the definition of the economic life of an asset to include age and cumulative utilization. Assumptions common to replacement analysis allow the state space to grow linearly with time, avoiding dynamic programming's `curse of dimensionality'. Examples with time invariant and variant economics are presented and compared to traditional solution procedures.

Residential‐Mortgage Lending Discrimination and Lender‐Risk‐Compensating Policies

The Boston Federal Reserve study (Munnell et al. 1996) concluded that illegal discrimination is a statistically significant contributor to the observed gap between white and minority residential‐mortgage rejection rates. The Boston study speculated that discrimination arises because lenders do not equally apply risk compensation or mitigation policies for imperfect loans. Using the same 1990 Boston loan application data, our study specifically examines the relation between compensating policies and discrimination. Since compensating policies are encouraged by secondary‐mortgage‐market sale guidelines, we model both the lender's origination decision and its loan sale decision. Using a rule‐based artificial‐intelligence technique applied to each lender, we infer compensating policies (rules) that equally apply to all races and explain lending decisions. A minority‐race indicator loses its statistical significance when an indicator of compensating‐policy violations appears in the loan accept–reject equation. This result reflects the fact that the risk levels of marginal minority loans tend to be more extreme than those of marginal white loans. However, the result does not necessarily reject the existence of discrimination. Equally applied policies may be empirically indistinguishable from unfairly applied policies. In addition, equally applied policies may fail the adverse‐impact doctrine if they do not serve a business necessity (such as profits). The industry's move away from discretionary, rule‐based decisions to mortgage scoring answers the need for a decision framework that rigorously uses loan performance to evaluate all loan applicants fairly.

Reallocating Water from Agriculture to the Environment under a Voluntary Purchase Program

Pressure is increasing to reallocate water from agriculture to the environment. This article examines the performance of a federal program in Nevada's Lahontan Valley under which water rights are purchased from willing sellers for environmental restoration. Based on a data set combining information on growers' personal and financial characteristics with physical characteristics of their farms, a model is estimated that explains who sells their water rights to the government. Results indicate that personal characteristics, especially short-term financial constraints, have a powerful influence on the sales decision. This finding suggests that the environmental agencies may wish to more actively target growers operating on poor quality soils or on the periphery of irrigation projects to attain a more efficient outcome.