Economics Insights @ CBS

We analyze gated, exhaustive service of an infinite-server system with vacations. Customers enter a queue in a Poisson stream. The servers, working in parallel, serve customers in stages. A stage begins with all customers transferred from the queue to the servers (the gate opens). The servers then begin serving these customers, all simultaneously. The stage ends when their services are completed. Service is exhaustive because the servers must again examine the queue to see if any new customers arrived during the last stage. If there are any, a new stage begins.

A signalling hypothesis of leveraged buyout (LBO) capital structure is examined, wherein the promoters of an LBO unambiguously convey their commitment to generate and distribute free cash flow to investors by assuming debt service obligations high enough to exhaust free cash flow during the initial phase of the LBO operation. The signalling equilibrium results in an equity value consistent with the promoters' expectations concerning free cash flow and permits them to keep the value released by the LBO.

This paper concerns dynamic part dispatch decisions in electronic test systems with random yield. A discrete time, multiproduct, miltistage production system is used as a model for the test system with the objective to minimize the sum of inventory holding, backlogging, and overtime costs over a finite horizon. Exact results for such systems have been limited to either single-stage, multiple time period, or multistage, single time period problems with a single product. Here we develop two approximate policies: the linear decision rule, and the myopic resource allocation.

This article outlines research developments that reconcile both fundamental analysis and accounting measurement to the modern theory of valuation. Three features of accounting suggest it may play a role. First, it has the nominal attributes of a value measurement system. The financial accounting process is focused on tracking the book value of equity or net worth. The final entry in the periodic accounting cycle is the close to book values.