The impact of risk attitude, uncertainty and disequilibria on optimal production and inventory

1985 ◽  
Vol 19 (1) ◽  
pp. 51-75 ◽  
Author(s):  
Karl Aiginger
Keyword(s):  
Risk Attitude ◽  
Optimal Production ◽  
Attitude Uncertainty ◽  
The Impact

Risk Attitude and Corporate Investment under Output Market Uncertainty: Evidence from The Mekong River Delta, Vietnam

2016 ◽  
pp. 59-70
Author(s):  
Ninh Le Khuong ◽  
Nghiem Le Tan ◽  
Tho Huynh Huu
Keyword(s):  
Negative Relationship ◽  
Risk Attitude ◽  
Business Strategies ◽  
Risk Averse ◽  
Market Uncertainty ◽  
Firm Investment ◽  
Output Market ◽  
The Impact ◽  
The Relationship

This paper aims to detect the impact of firm managers’ risk attitude on the relationship between the degree of output market uncertainty and firm investment. The findings show that there is a negative relationship between these two aspects for risk-averse managers while there is a positive relationship for risk-loving ones, since they have different utility functions. Based on the findings, this paper proposes recommendations for firm managers to take into account when making investment decisions and long-term business strategies as well.

Impact of Quality of Unfamiliar Shopping App on Initial Trust Formation: A Moderated Mediation of Risk Attitude

2021 ◽  
pp. 097226292098454
Author(s):  
Vipul Patel ◽  
Richa Pandit
Keyword(s):  
Information Search ◽  
Purchase Intention ◽  
Risk Attitude ◽  
Moderated Mediation ◽  
Primary Concern ◽  
Initial Trust ◽  
Trust Formation ◽  
Online Retailers ◽  
The Impact

Today, all phases of consumers' buying process from pre-information search, evaluation of alternatives, order placing and post-purchase service are conducted in shopping apps installed in smartphones. A shopping app is omnipresent and is a powerful retail channel for retailers all over the world. However, the primary concern for many customers is that online shopping is not secure. This insecurity is more if customers have to purchase from an unfamiliar shopping app. Customers generally hesitate to purchase using unfamiliar shopping apps, unless they feel that the app is trustworthy. Based on the survey of 264 respondents, this study attempts to measure the impact of the quality of unfamiliar shopping apps on initial trust formation and subsequently, purchase intention. An attempt was also made to study the moderated mediation impact of risk attitude on the relationship between shopping app quality and initial trust formation. The findings of this paper may be of practical use for the online retailers by providing a better understanding of the adoption of unfamiliar shopping apps among prospective customers. It will also provide strategic inputs to online retailers to craft suitable strategies for the adoption of unfamiliar shopping apps.

Analytical redefinition of DOL and managerial investment decisions

2014 ◽  
Vol 40 (7) ◽  
pp. 734-754 ◽  
Author(s):  
Yoram Kroll ◽  
David Yechiam Aharon
Keyword(s):  
Large Scale ◽  
Investment Decision ◽  
Production Level ◽  
Fixed Cost ◽  
Theoretical Formulation ◽  
Optimal Production ◽  
Demand Shocks ◽  
Content Type ◽  
Operating Leverage ◽  
The Impact

Purpose – The purpose of this paper is to develop alternative analytical measures for the degree of operating leverage (DOL) that reflect the impact of uncertain demand shocks in the product's market on optimal production levels, sales and profits of the firm. Design/methodology/approach – The elasticity measures are constructed according to a theoretical formulation of optimal production level that corresponds to demand shocks for given predetermined levels of fixed cost. Findings – The paper suggests two main findings. First, the analytical marginal DOL is at least twice the traditional DOL depending on the structure of the shock, the production function and demand's elasticity. The traditional DOL is equal to the measure only when large-scale negative demand prompts the firm to abandon production. Second, the paper also provides an analytical measure of DOL in terms of elasticity of profit to sales rather than to production level. Both theoretically and empirically elasticity of profit to sales can be better measured and better reflects risk. Research limitations/implications – This paper should be extended to encompass multiple shocks on demand and supply while investigating the empirical multi variants distribution of the shocks. Practical implications – The model can be used by managers who are well informed about the fixed and variable costs of their firm. The model determines the mean profit- risk trade off which is an important factor in all investment decision problems. Originality/value – Surprisingly and according to the best knowledge, this paper is the first attempt in the literature for alternative analytical DOLs’ formulations that is coherent with basic economic theories of optimal production level under risk.

scholarly journals Impacts of PST on Optimal Production and Marketing Decisions of a Grow-Finish Hog Farm Operation

1993 ◽  
Vol 22 (2) ◽  
pp. 166-174 ◽  
Author(s):  
Ramu Govindasamy ◽  
Donald J. Liu ◽  
James Kliebenstein
Keyword(s):  
Feed Efficiency ◽  
Turnover Rate ◽  
New Technology ◽  
Market Price ◽  
Primary Response ◽  
Price Effect ◽  
Optimal Production ◽  
Meat Price ◽  
Aggregate Supply ◽  
The Impact

This paper examines the impact of PST on the optimal production/marketing decisions of a grow-finish hog farm operation. The analysis evaluates PST from three angles: the feed efficiency effect, the leaner meat price effect, and the aggregate-supply-induced price effect. When limited to the feed efficiency effect only, the primary response to the new technology is to increase the animal turnover rate of the operation. When the leaner meat price effect is also included, marketing weight increases while turnover rate remains relatively unchanged. Additionally, if the increased aggregate supply depressed the market price by more than 10%, the benefits from improved feed efficiency and leaner meat will be completely dissipated. Aggregate price adjustments (reductions) of less than 10 percent maintained positive producer benefits resulting from improved feed efficiency and leaner meat.

scholarly journals Joint Optimal Production Planning for Complex Supply Chains Constrained by Carbon Emission Abatement Policies

2014 ◽  
Vol 2014 ◽  
pp. 1-14 ◽  
Author(s):  
Longfei He ◽  
Zhaoguang Xu ◽  
Zhanwen Niu
Keyword(s):  
Supply Chains ◽  
Production Planning ◽  
Emission Reduction ◽  
Carbon Emission ◽  
Joint Production ◽  
Optimal Production ◽  
Carbon Emission Reduction ◽  
Regulatory Policies ◽  
Emission Regulation ◽  
The Impact

We focus on the joint production planning of complex supply chains facing stochastic demands and being constrained by carbon emission reduction policies. We pick two typical carbon emission reduction policies to research how emission regulation influences the profit and carbon footprint of a typical supply chain. We use the input-output model to capture the interrelated demand link between an arbitrary pair of two nodes in scenarios without or with carbon emission constraints. We design optimization algorithm to obtain joint optimal production quantities combination for maximizing overall profit under regulatory policies, respectively. Furthermore, numerical studies by featuring exponentially distributed demand compare systemwide performances in various scenarios. We build the “carbon emission elasticity of profit (CEEP)” index as a metric to evaluate the impact of regulatory policies on both chainwide emissions and profit. Our results manifest that by facilitating the mandatory emission cap in proper installation within the network one can balance well effective emission reduction and associated acceptable profit loss. The outcome that CEEP index when implementing Carbon emission tax is elastic implies that the scale of profit loss is greater than that of emission reduction, which shows that this policy is less effective than mandatory cap from industry standpoint at least.

scholarly journals An optimal production/maintenance strategy under lease contract with warranty periods

2016 ◽  
Vol 22 (1) ◽  
pp. 35-50 ◽  
Author(s):  
Zied Hajej ◽  
Nidhal Rezg ◽  
Gharbi ali
Keyword(s):  
Failure Rate ◽  
Maintenance Strategy ◽  
Maintenance Policy ◽  
Production Rates ◽  
Optimal Production ◽  
Content Type ◽  
Total Cost ◽  
Lease Contract ◽  
Optimal Maintenance ◽  
The Impact

Purpose – The purpose of this paper is to investigate the optimal production policy and maintenance strategy for leased equipment under a lease contract with warranty periods. In order to have steady revenue, the lessor (owner) of the equipment may provide guaranty periods to encourage the lessee to sign a lease contract with a longer lease period. Design/methodology/approach – Under this production/maintenance scheme, the mathematical model of the expected total cost is developed and the optimal production planning and the corresponding optimal maintenance policy are derived by choosing the optimal warranty periods for the lessee in order to minimize the total cost. Findings – The influence of the production rates variation in the equipment degradation is considered by an increased failure rate according to both time and production rates. The impact of warranty periods on optimal maintenance planning will be studied thereafter. Finally, numerical examples are given to illustrate the analytical study and the effects of the warranty periods variation during the lease periods on the maintenance policy and consequently on the total cost. Originality/value – The paper proposes a new idea of production and maintenance coupling in the leasing aspect. This study shows that it has a novelty and originality relative to this type of problem which considers and proposes a new maintenance strategy for leasing contract. This originality characterized by the influence of two factors on the equipment maintenance strategy. First factor is the influence of the production variation production rates on the machine degradation degree that is new in the literature charactering by analytical equation that shows the evolution of the machine failure rate according to its use (which is in our case the production rate for each period) respecting in the same time the continuity of the equipment reliability for a period to another.

scholarly journals Effective Risk Management In Organizations:The Nigerian Experience

2013 ◽  
Vol 10 (8) ◽  
pp. 1878-1883
Author(s):  
Ndubuisi Okolo ◽  
Okonkwo Rita Ifeoma ◽  
Ifeoma Amakor
Keyword(s):  
Risk Management ◽  
Content Analysis ◽  
Subject Matter ◽  
Risk Attitude ◽  
Proactive Approach ◽  
Risk Appetite ◽  
The Subject ◽  
Risk Culture ◽  
Corporate Risk ◽  
The Impact

This study is an investigation on effective risk management with respect to organizations in Nigeria. The objective of the paper is to examine factors militating against effective risk management in organizations. The paper adopted content analysis of library materials, journal publications, internet materials and other documented materials relevant to the subject matter. It was concluded that effective risk management is a proactive approach towards mitigating the impact of threats, maximizing opportunities and optimizing the achievement of objectives. It was recommended that managers of organizations in Nigeria should imbibe and articulate good corporate risk attitude, strong risk culture and clearer risk appetite.

When Are Designers Willing to Take Risks? How Concept Creativity and Prototype Fidelity Influence Perceived Risk

2018 ◽  
Author(s):  
Elizabeth M. Starkey ◽  
Jessica Menold ◽  
Scarlett R. Miller
Keyword(s):  
Perceived Risk ◽  
Engineering Students ◽  
Risk Attitude ◽  
Individual Risk ◽  
Concept Selection ◽  
The Right ◽  
The Impact ◽  
Different Levels ◽  
Selection Of

Building prototypes is an important part of the concept selection phase of the design process, where fuzzy ideas get represented to support communication and decision making. However, previous studies have shown that prototypes generate different levels of user feedback based on their fidelity and aesthetics. Furthermore, prior research on concept selection has shown that individual risk attitude effects how individuals select ideas, as creative ideas are perceived to be riskier in comparison to less creative ideas. While the role of risk has been investigated in concept selection, there is lack of research on how risk is related to the selection of prototypes at various levels of fidelity. Thus, the purpose of this study was to investigate the impact of prototype fidelity, concept creativity, and risk aversion, on perceived riskiness and concept selection through a between-subjects study with 72 engineering students. The results revealed that there was a “goldilocks” effect in which students choose concepts with “just the right amount” of novelty, not too much and not too little, as long as quality was adequate. In addition, the prototype fidelity of a concept had an interaction with uniqueness, indicating that unique concepts are more likely to be perceived as less risky if presented at higher levels of fidelity.

An investigation of the impact of financial literacy, risk attitude, and saving motives on the attenuation of mutual fund investors’ disposition bias

2017 ◽  
Vol 43 (3) ◽  
pp. 282-298 ◽  
Author(s):  
Sara Jonsson ◽  
Inga-Lill Söderberg ◽  
Mats Wilhelmsson
Keyword(s):  
Interest Rates ◽  
Mutual Fund ◽  
Financial Literacy ◽  
Risk Attitude ◽  
Individual Characteristics ◽  
Disposition Effect ◽  
Content Type ◽  
Fine Grained ◽  
Separate Model ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of financial literacy, risk attitude, and saving motives on the attenuation of mutual fund investors’ disposition bias. Specifically, the authors focus on individual characteristics explaining the investors’ propensity to sell shares in a poorly performing mutual fund. Design/methodology/approach The study relies on survey data collected from 1,564 Swedish households in 2013. The authors test the hypotheses considering three different portfolio compositions and portfolio performances. Each composition corresponds to a dependent variable and a separate model which are estimated using ordinal logistic regression. Findings The authors find that different forms of financial literacy affect attenuation of the disposition effect. Specifically, the authors find that knowledge about mutual funds and knowledge about current market conditions affect the attenuation of the disposition effect, whereas the authors find no support for the effect of “technical financial knowledge” (e.g. the ability to calculate compound interest rates). The authors also find no support for the effects of risk attitude and saving motives on the attenuation of the disposition bias. Originality/value The findings suggest a need for a more fine-grained conceptualization of the financial literacy concept and its effect on investors’ disposition bias. Since an important implication of the findings is that financial literacy could potentially help people overcome behavioral bias, the study provides insights for policymakers as well as into the discussion on the design of consumer education programs.

“Carne Fraca”

2019 ◽  
Vol 122 (2) ◽  
pp. 722-735
Author(s):  
Filipe Quevedo-Silva ◽  
Otavio Freire ◽  
Caroline Pauletto Spanhol-Finocchio
Keyword(s):  
Risk Perception ◽  
Perceived Risk ◽  
Purchase Intention ◽  
Positive Impact ◽  
Risk Attitude ◽  
Content Type ◽  
National Crisis ◽  
Cast Doubt ◽  
Negative Effect ◽  
The Impact

Purpose Over the last few years, several events have reduced the consumer confidence in relation to food safety. Recently, one event that triggered discussions and concern among consumers in Brazil was the “Carne Fraca” operation which cast doubt on the quality and safety of Brazilian beef. The purpose of this paper is to analyse the impact of the news regarding a national crisis in beef production on consumers’ assessment and purchase intention of beef. Design/methodology/approach A quantitative study was conducted involving 417 respondents in Brazil. The procedure for the analysis consisted of the investigation of two models, incorporating mediation and moderation effects. Findings The results show that news on the crisis had a positive impact on risk perception. This impact was negatively moderated by consumer scepticism. Risk perception had a negative effect on the assessment of beef and purchase intention. These effects were negatively affected by risk attitude. The news directly affected consumers’ assessment of beef and indirectly affected purchase intention through mediation of perceived risk. Originality/value This study proposes two models, analysing the effect of the media on consumers’ assessment of beef and purchase intention, mediated by risk perception. Furthermore, the models analyse the moderating effects of scepticism and consumers’ risk attitude.

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