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Unit Revenue (unit + revenue)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	50%

Selected Abstracts

Discounting decision for enterprises with high fixed cost and low variable cost

INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH, Issue 2 2006
Ping Hui Hsu
Abstract Higher sales are the key to increased profit, especially for low variable cost industries. The use of quantity discount to promote business is an important way to increase sales. This study evaluates the use of discount, prepaid, multiple-purchase credit to increase sales. The purpose is to develop a strategy to maximize the unit revenue by simultaneously determining the discount rate and utility. A numerical example and sensitivity analysis are given to illustrate the theory. [source]

Optimal farm size in an uncertain land market: the case of Kyrgyz Republic

AGRICULTURAL ECONOMICS, Issue 2009
Sara Savastano
Option value theory; Farm size; Uncertainty; Irreversibility Abstract This article applies a real options model to the problem of land development. Making use of the 1998,2001 Kyrgyz Household Budget Survey, we show that when the hypothesis of decreasing return to scale holds, the relation between the threshold value of revenue per hectare and the amount of land cultivated is positive. In addition, the relation between the threshold and the amount of land owned is positive in the case of continuous supply of land and negative when there is discontinuous supply of land. The direct consequence is that, in the first case, smaller farms will be more willing to rent land and exercise the option where, in the second case, larger farms will exercise first. The results suggest three main conclusions: (i) the combination of uncertainty and irreversibility is an important factor in land development decisions, (ii) farmer behavior is consistent with the continuous profit maximization model, and (iii) farming unit revenue tends to be positively related to farm size, once uncertainty is properly accounted for. [source]

Nash bargaining over allocations in inventory pooling contracts

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 6 2008
Eran Hanany
Abstract When facing uncertain demand, several firms may consider pooling their inventories leading to the emergence of two key contractual issues. How much should each produce or purchase for inventory purposes? How should inventory be allocated when shortages occur to some of the firms? Previously, if the allocations issue was considered, it was undertaken through evaluation of the consequences of an arbitrary priority scheme. We consider both these issues within a Nash bargaining solution (NBS) cooperative framework. The firms may not be risk neutral, hence a nontransferable utility bargaining game is defined. Thus the physical pooling mechanism itself must benefit the firms, even without any monetary transfers. The firms may be asymmetric in the sense of having different unit production costs and unit revenues. Our assumption with respect to shortage allocation is that a firm not suffering from a shortfall, will not be affected by any of the other firms' shortages. For two risk neutral firms, the NBS is shown to award priority on all inventory produced to the firm with higher ratio of unit revenue to unit production cost. Nevertheless, the arrangement is also beneficial for the other firm contributing to the total production. We provide examples of Uniform and Bernoulli demand distributions, for which the problem can be solved analytically. For firms with constant absolute risk aversion, the agreement may not award priority to any firm. Analytically solvable examples allow additional insights, e.g. that higher risk aversion can, for some problem parameters, cause an increase in the sum of quantities produced, which is not the case in a single newsvendor setting. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008 [source]