Economics Insights @ CBS

This article treats the dynamic lot size model with quantity discount in purchase price. We study the problem with two different cost structures: the all-units-discount cost structure and the incremental-discount cost structure. We solve the problem under both discount cost structures by dynamic programming algorithms of complexity O(T³) and O(T²), respectively, with T the number of periods in the planning horizon.

Infinitesimal perturbation analysis is a method of obtaining estimates of performance sensitivity through simulation of a stochastic system. Expressions are derived for the limiting value of a broad class of such estimators associated with queueing networks, in terms of the unique solution to a set of linear equations. The approach used is to augment the underlying queueing process with information about which servers have been "perturbed" and by how much.

The issue of providing segment disclosures has renewed significance because the Securities & Exchange Commission (SEC) has been considering the extension of segment disclosures, both line-of-business (LOB) and geographically segmented (GEOG), to all interim financial statements. To determine whether GEOG data provide incremental information about the earnings process, the specific contribution of sales and income GEOG data was evaluated by estimating their predictive ability. Two sets of GEOG predictions were used in the predictive accuracy tests.

In this study we consider managerial earnings forecasts as voluntary information releases and compare their properties with predictions from a screening or signaling scenario.

Two methods are presented for estimating performance derivatives from simulation of multi-class queueing networks for sensitivity analysis. The methods use approximate subnetwork aggregation to reduce the problem to a single-class derivative estimation problem with which a modified infinitesimal perturbation analysis algorithm is used. The modified algorithm treats a subnetwork as though it had been aggregated, but is actually applied to the original (non-aggregated) network.