Assessing Service Level Targets in Production and Inventory Planning*

In production and stock planning, the relationship between customer service, defined as the ability to meet demand for finished goods from in-stock inventory, and expected profits or expected costs can be represented by a simple reliability curve. The shape of this curve depends upon the parameters of the demand process, specifically the expected level of demand, standard deviation and correlation structure, as well as upon the capacities and initial state of the production and inventory system. A model is presented which explicitly determines this trade-off curve for a firm. The model is intended both as an operational model to aid managers in setting revenue and service targets which are compatible with the capacities and resources of the firm, and as a tool for exploring relationships between the parameters of the demand process and the constraints of the physical production and inventory system. The results illustrate that the level of risk depends strongly on the variability of the demand process, the cost structure, the capacities and initial state of the system and, to a lesser extent, the correlation in demand between succeeding periods. Results suggest that establishing service level targets consistent with the firm's strategic orientation must be done in consideration of both the characteristics of the demand process and the capacities of the production and inventory system. The model provides a tool for estimating the premium above unit cost which must be paid to provide a designated service level.     

REPUTATION EFFECTS IN THE MARKET OF CERTIFIERS: EVIDENCE FROM THE AUDIT INDUSTRY

Certifiers verify unobserved product characteristics for buyers and thereby alleviate informational asymmetries and facilitate trade. When sellers pay for the certification, however, certifiers can be tempted to bias their opinion to favor sellers. Indeed, accounting scandals and inflated credit ratings suggest sellers may prefer to select dishonest certifiers. I test this proposition by estimating the effect of adverse quality signals on audit demand. Exploiting the natural experiment of Arthur Andersen's demise, I find that auditors with worse quality signals experience a fall in demand. This suggests that reputation effects are at work even in the presence of conflicts of interest. (JEL L15, L8, M4)     

Anarchy in Iceland? The global left,pirates and socialists in post-crash Icelandic politics

ABSTRACT

The historically stable Icelandic political party system has been uprooted since the 2008 financial crisis. In this paper, we explore to what extent the global left movement of anarchists and socialists has manifested in Icelandic politics in this period. We provide a historical overview, starting with the 2008 financial crisis which brought to power the first entirely left-wing government in the country's history, but also gave birth to numerous new political parties that alternately united and divided socialists, anarchists and reformers. The Pirate Party spearheaded this movement from the 2013 elections, but internal disputes have plagued the party in recent years, and both they and the Left Greens now have a fresh challenge from the left: the Socialist Party. We conclude that the current prospects for a united uprising of these movements are dim, although history suggests that they can work together when focusing on common goals of political reform.     

The Market for Non‐Executive Directors: Does Acquisition Performance Influence Future Board Seats?

This paper investigates whether non‐executive directors associated with good (bad) board decisions are subsequently rewarded (penalized) in the market for directors. This question is addressed by assessing whether the post‐acquisition performance of acquiring companies influences the number of non‐executive directorships that non‐executives involved in these acquisitions hold subsequent to the acquisition. We find that non‐executives on the boards of acquirers that increase (omit or cut) their dividend subsequently hold more (fewer) non‐executive directorships in listed companies. Our findings suggest that the non‐executive labour market is efficient and rewards (penalizes) non‐executives for good (bad) acquisitions.     

Two-scale spatial models for binary data

A spatial lattice model for binary data is constructed from two spatial scales linked through conditional probabilities. A coarse grid of lattice locations is specified, and all remaining locations (which we call the background) capture fine-scale spatial dependence. Binary data on the coarse grid are modelled with an autologistic distribution, conditional on the binary process on the background. The background behaviour is captured through a hidden Gaussian process after a logit transformation on its Bernoulli success probabilities. The likelihood is then the product of the (conditional) autologistic probability distribution and the hidden Gaussian–Bernoulli process. The parameters of the new model come from both spatial scales. A series of simulations illustrates the spatial-dependence properties of the model and likelihood-based methods are used to estimate its parameters. Presence–absence data of corn borers in the roots of corn plants are used to illustrate how the model is fitted.     

Ní cothram na Féinne é sin: Cricket,Lexicography and Cultural Purity in Ireland1

This article explores the relationship between the game of cricket and the Irish language in Ireland. In our analysis, dictionaries are invoked as indices of formations of cultural purity and political power, documents of defiance, tools of codification, assertions of confidence, representations of linguistic identity. By examining the treatment of the term “cricket” in Irish language dictionaries from the eighteenth-century to the present day, we find an index of cultural values, responding and adapting to ongoing changing cultural power and capital. This demonstrates how the game, and its translated presence in the lexicography of the native language, functions as a form of cultural hybridity in the nineteenth-century, yet is cleansed in the twentieth as part of the process of Irish cultural purity (as it fights for an established postcolonial nationhood). The article offers a new way of understanding social and linguistic conventions, in the context of the colonial/postcolonial, and how such conventions function in the field of sport. Given the dominance (with the exception of India) of English as the lingua franca of sport's colonial and ludic diffusion, the article's ability to access and interrogate the processes of inclusion/exclusion in the linguistic and sporting Irish setting marks it out as an original and innovative way of understanding how cultural transfers occurred and were later annulled.     

Endogeneity: How Failure to Correct for it can Cause Wrong Inferences and Some Remedies

Although researchers in business and management are becoming increasingly aware of the importance of endogeneity affecting regression analysis, they frequently do not have the right methodological toolkit to adjust for this issue. In this paper we discuss such a toolkit. There are also areas in business and management research which to date seem to be mostly oblivious about the endogeneity issue. We highlight such an area, which studies the question of whether firms that are cross‐listed on a foreign stock exchange are charged premium fees by their auditors. When the same methodology (pooled ordinary least squares) as in the existing literature is used, the existence of an audit fee premium for cross‐listed firms seems to be confirmed. However, once methodologies are used which adjust for the various types of endogeneity (i.e. omitted variable bias, simultaneous and dynamic endogeneity) there is no longer support for the existence of such a generalized premium. Hence, not only do we illustrate that failure to adjust for endogeneity has severe consequences such as drawing the wrong inferences, but we also review various ways to control for the different types of endogeneity.     

The Symmetry Rule: A Seven‐Year Study of Symptoms and Explanatory Labels Among Gulf War Veterans

Noticing medical symptoms can cause one to search for explanatory labels such as “ate bad food” or even “exposed to anthrax,” and perhaps these labels may cause new symptom reports. The present study examined whether there is empirical support for this symptom‐label “symmetry rule.” We interviewed veterans (N= 362) from the Gulf War Registry in 1995 and 2002 about their medical symptoms and about their exposure to war‐related hazards and stressors. Health symptom reports were strongly correlated between the two time periods and showed relatively stable mean levels, whereas recall of war‐related exposures was notably unstable. Veterans starting with fewer medical symptoms recalled fewer war‐related exposures seven years later. Initial recollection of chemical and biological warfare exposure (but not other exposures) longitudinally predicted novel medical symptoms. The findings generally support the symmetry rule hypotheses, although the evidence for the label to symptom link was less strong. The findings account for some variability in symptoms and exposure recall over time, but they do not, on their own, account for the Gulf War veterans' elevated number of unexplained medical symptoms.