Organizational Unit:

Scheller College of Business

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https://hdl.handle.net/1853/70690

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Office of the Provost and Executive Vice President for Academic Affairs

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Institute for Leadership and Social Impact

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https://finding-aids.library.gatech.edu/agents/corporate_entities/255

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Publication Search Results

Now showing 1 - 10 of 48

Simple Newsvendor Bounds for Inventory Distribution Systems

(Georgia Institute of Technology, 2006-12-19) Lystad, Erik D.

To date, closed form optimal solutions for stocking levels in arborescent multiechelon inventory systems have not been obtained. These problems exhibit the joint difficulties of requiring an allocation policy as well as a stocking policy, and the multidimensional nature of their state space makes dynamic programming formulations impractical. In this dissertation, we introduce procedures that approximate multiechelon networks with sets of single installation problems. We first use this technique to solve for base-stock levels in a distribution network with asymmetric retailers. Second, we use this technique to analyze delayed differentiation production processes and provide guidance as to when the strategy is most warranted. Third, we modify the technique to account for inventory that exhibits perishability and solve for stocking policies for distribution systems when the inventory has a fixed shelf life.
Cash Flow Trends and their Fundamental Drivers: A Study of the S&P 500 Non-Financials

(Georgia Institute of Technology, 2006-12) Mulford, Charles W. ; Thomson, Elizabeth

This report examines cash flow trends for the S&P 500 non-financials and the drivers behind those trends. Included are data on selected cash flow measures and their drivers, insights to the cash cycle and recent earnings quality indicator trends. Among the findings noted for the four-quarters ended June 30, 2006 relative to March 31, 2006: • Core operating cash flow and operating cash flow continued to increase, driven by revenue increases and an improvement in the operating cushion %. The cash cycle, however, lengthened slightly, in-line with seasonal trends. • Free cash flow declined, even as operating cash flow increased, due to an increase in capital spending. • The Earnings Quality Indicator declined due to an increase in earnings at a rate that was faster than the observed increase in operating cash flow. Year-end data, calculated to exclude seasonal factors, should be reviewed carefully for definitive trends. Data for this research was provided by Cash Flow Analytics, LLC. Charles Mulford is a principal in Cash Flow Analytics, LLC.
Governance in the Mutual Fund Industry

(Georgia Institute of Technology, 2006-11-17) Xuan, Lei

The first essay examines how board structure affects manager dismissal decisions in mutual funds. We first find some evidence suggesting that the likelihood of managerial replacement is higher when fund boards are more independent and receive lower levels of compensation. Manager turnover is more likely when funds underperform the objective average. We then investigate the manager turnover decision conditional on the funds experiencing a merger. We find that funds with more independent boards are more likely to employ target managers with a track record of superior performance. Overall, these results suggest that more independent boards make manager retention/replacement decisions in the interests of their shareholders. The second essay studies the relationship between managerial ownership and mutual fund performance. We first document that almost half of the mutual fund managers own shares in their funds, though the absolute amount of investment is modest. Fund future performance is positively related to the level of manager ownership. Manager ownership is higher in equity funds than bond funds, in funds with better past performance, smaller sizes, and where managers have been in charge for a longer time period. When we decompose manager ownership into predicted and residual parts, we find that both components are significant in explaining fund future performance. Our findings suggest that managerial ownership has desirable incentive attributes for mutual fund investors. The third essay investigates how managerial ownership affects the investment behavior of portfolio managers. We first examine the disposition effect exhibited by different fund managers, and find that those with positive ownership show significantly less disposition effect. Specifically, they sell losers faster and hold on to winner stocks for a longer period. Disposition effect is less pronounced in bigger funds, funds with smaller boards, and funds with higher percentage of board independence. We then test the relation between managerial ownership and the tournament behavior, investigating how the degree of managers manipulation of fund volatilities in the latter part of a year is related to their personal stakes in the funds. However, we do not find evidence suggesting the existence of such a relationship.
Optimal Customized Pricing in Competitive Settings

( 2006-10-14) Ferguson, Mark E. ; Agrawal, Vishal

In this paper, we study pricing situations where a firm provides a price quote in the presence of uncertainty in the competitive landscape and the preferences of the buyer. We review two possible customized-pricing bid-response models used in practice which can be developed from the historical information available to the firm based on previous bidding opportunities. We show how these models may be used to exploit the differences in the market segments to generate optimal price quotes given the characteristics of the current bid opportunity. We also show how the models may be adjusted depending on the amount of historical bid information available to the user. Finally, we test the two methods on two industry datasets to compare their performance and estimate the percent improvement in expected profits that may be possible from their use.
Product Quality Choice, Competition, and Supply Chain Design

( 2006-10-14) Ferguson, Mark E. ; Kavadias, Stylianos

We explore the interplay between product design choices and their effect on the supply chain transactions. A large number of industrial business-to-business transactions indicates that product design choices, and the definition of the overall product performance (quality), is relying on "off the shelf" standardized components, and it influences the component pricing. We develop a normative model that highlights the drivers for the different industrial settings and we consider end product markets with quality sensitive heterogenous consumers (vertical differentiation). We find that depending on the industry concentration at the different tiers of the supply chain, the timing of the product definition by the OEM has a substantial effect on the transacting firms payoff, as well as on other relevant metrics (total supply chain profits, social welfare). By examining the potential action sequences across the transacting firms, we identify the incentives for each firm to accomplish a decision earlier or later in the strategic interaction. Interestingly, the standard notion of the "leader" advantage in the transaction does not hold always, due to the indirect effect of the component cost on the end-product market, through the indirect link between the product performance and the total market served. Therefore, the OEM may benefit more from finalizing the end product specifications based on known component costs. Along similar lines, the supplier may benefit from a "follower" position in the sequence of decisions. Finally, the severity of competition in any of the two tiers may be diluted by a specific sequence, depending on the available nformation at the monopolistic tier.
Purchasing Speculative Inventory for Price Sensitive Demand

( 2006-09-16) Ferguson, Mark E. ; Ketzenberg, Michael E. ; Kuik, Roelof

The problem studied is one of buying and selling products cost eficiently over a number of periods in a finite horizon setting. Unit purchase costs vary across periods acording to some known distribution and demand is deterministic but dependent on the price charged for the product. Thus, the problem becomes one of exploiting opportunities to “forward buy” and sell profitably in the face of costs for carrying product.
Expert Opinions: Current Pricing and Revenue Management Practice Across U.S. Industries

( 2006-09-16) Ferguson, Mark E. ; Garrow, Laurie A. ; Swann, Julie ; Keskinocak, Pinar

On May 18, 2006, the second annual Revenue Management and Price Optimization conference was held at the Georgia Institute of Technology. The theme of the conference was on how the Internet is changing traditional revenue management and pricing practices. The conference brought together experts and thought leaders from more than 30 companies; spanning airlines, hotels, car rentals, cruise lines, apartment rentals, aircraft manufacturing, retailing, distribution, e-mail marketing, on-line travel, logistics, sports, performing arts, software providers, and others. This paper summarizes the key discussions from this conference and synthesizes experts’ perspectives on near-term opportunities and challenges facing their industries.
The "Killer Application" of Revenue Management: Harrah’s Cherokee Casino & Hotel (ed.1)

( 2006-09-16) Ferguson, Mark E. ; Metters, Richard ; Crystal, Carolyn Roberts

Harrah’s Cherokee Casino and Hotel is an extreme example of revenue management techniques. Typical revenue management installations yield revenue enhancements of 3-7%. Harrah’s, chainwide, has seen 15% improvements, with Harrah’s Cherokee Casino and Hotel perhaps the most excessive beneficiary, despite serving no alcohol and having no table games. We investigate what drives this phenomenal success.
Single Stage Heuristic for Perishable Inventory Control in Two-Echelon Supply Chains

( 2006-09-16) Ferguson, Mark E. ; Lystad, Erik D. ; Alexopoulos, Christos

We study the problem of determining stocking levels for fixed-life perishable products in a two-echelon supply chain. We consider both serial chains and distribution networks consisting of a warehouse and n non-identical retail locations. Inventory retains constant utility throughout its lifetime, lead-times are deterministic, there are no fixed ordering costs, and unmet demand is backlogged. Although an extensive literature exists for the nonperishable product case, the consideration of perishability significantly complicates the problem. For instance, a major complication is the need to track the age of inventory as well as its position in the supply chain, adding a dimension to the already burdensome state space of dynamic programming formulations. We provide accurate single-stage heuristics for determining the stocking levels for two-echelon supply chains. We use these heuristics to develop insight and intuition into the proper management of perishable inventory. Our heuristics are robust, easy-to-use, and simple enough to be implemented using spreadsheet applications.
The Cash Flow Classification of Distributions Received from Unconsolidated Entities

(Georgia Institute of Technology, 2006-09) Mulford, Charles W. ; Comiskey, Eugene E.

In this research report we examine the cash flow classification of distributions received from equity-accounted investments and find some problematic classifications. Distributions exceeded by investee earnings are considered to be returns oninvestment, indicating an operating cash flow classification is appropriate. Distributions that are returns of investment, that is, paid out of capital, are properly classified as investing cash flow. Out of a sample of 107 firms, 70 classify all of the distributions received into operating cash flow. This is not surprising since these investor firms report equity earnings that appear to exceed the distributions received. However, 19 firms classify all distributions received into investing cash flow. For 13 of these firms, earnings exceeded all of the distributions received, suggesting that they too were being paid a return on investment. As a result, the distributions received arguably should be included in operating cash flow. A revision of the operating cash flow of these 13 firms increases their operating cash flow by as much as 107%, with mean and median increases of 16% and 5%, respectively. Direct clarification obtained from some of the sample firms sheds light on the decisions made. However, even with clarification, an operating cash flow classification appears to be more appropriate. Given the importance of operating cash flow to a firm's performance, the report's findings have implications for analysts and investors who will want to make sure that distributions received are properly classified. Managements and auditors will want to review cash flow classifications for distributions received from equity-accounted investments to ensure accurate reporting.