Social safety net

respectively the unit overage cost (as we regard the pure cost context) and b the unit penalty of not serving demand (or unit backorder cost) respectively the unit underage cost. Then, the target inventory B is equal to the mean demand µ plus safety stock SS. The safety stock consists of k times the standard deviation σ. In the basic newsvendor case the optimal k is defined by the inverse of the assumed demand distribution of the critical fractile cf (underage cost divided by underage plus…

1. Theory of Production and Costs, Long and Short-Run Equilibrium a. As LTC (q) = 9 + q2, the long run average cost curve of a representative Greek firm is LATC (q) = (9/q) +q, and this is minimized where the LAC is minimized when LATC=MC⇒ (9/q) + q = 2*q ⇒ q=3. Thus output per firm is 3 (see diagram, point X). Long run domestic supply curve could be found by setting price equal to marginal cost at minimum LAC: p=2*q= (2)*(3) = 6, this supply curve is a horizontal line at p =6. In the short run…

Expansion Project’s Evaluation Artic PLC presented an expansion programme to invest in two different projects, in order to correctly evaluate its projects, it was used three evaluation models and the results is possible to see below: 3.1 Net Present Value (NPV) The Net Present Value (NPV) illustrates the value between future cash flow of an investment and the amount of money invested. According to the NPV was calculated for project D and E (See Appendix), it was showed that both projects have…

When it comes to the study of Economics, it can be very hard to implement a policy without being subjective. Different economic models and economic theories bring different points of views on climate change. Different models give us a different insight on climate change and whether we should still place importance on climate change for the good of human kind or for the good of the governance of the country. Economics is the study of how people choose to use and allocate their resources. As…

What is Kisan Vikas Patra? Kisan Vikas Patra (KVP) is a saving certificate scheme that was launched in 1988 by India Post. It is a small saving scheme that focuses on doubling the money of investors in a period of 112 months or 9 years and 4 months. Withdrawal and Re-Introduction The scheme was quite successful in the earlier years but was closed after the intervention of the Indian Government in 2011. The closure happened after the Government of India set up a committee to determine the…

quantifies, and subtracts all the negative costs (John Reh, 2014). Obviously, this is a simple and general way of defining what organizations deem as an extremely important part of the capital budgeting process. The three primary tools of CBA are Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PP). Starting with NPV, organizations determine the present value of all future cash flows (in and out) from the proposed project and add them together. Surbhi (2015) stated NPV…

Univariate Binomial Tree Cox, Ross and Rubinstein (1979) developed the binomial option pricing model which converges to the Black-Scholes formula in the continuous limit and demonstrates the advantage in valuing American-style options. The model approximates the behavior of an asset price by the upward and downward changes in the asset price over a particular interval of time. As shown in Figure 1, an asset with a current price of S follows a multiplicative binomial process in which the…

1.2. How Far? Entropy What is entropy? The interaction of energy and matter governs our lives. We take for granted our ability to use chemicals in batteries to produce sound from MP3 Player. We get into a car and use petrol to travel in hours distance that would have taken our ancestors days. Energy and matter interact on other scales too –from the remnants of the explosion of star hundreds of light years in diameter, to the nucleus of an atom 10-9 mm in diameter. The way in which energy and…

Contractual Issues SEC was awarded competed for the Orion Shield Project in hopes that it would become a successful R&D effort of $500M spread over twenty years. As the winner of the phase 1 project they were awarded the project with a fixed budget of $2.2M over 10-months. This type of contract would be identified as a Firm Fixed Price (FFP) contract. This means that Gary would have no flexibility of the project costs if the price on any of the components increases. This implies that Gary and…

1. Why do price changes cause a budget line to pivot while income changes cause a budget line to shifting a parallel manner? Price changes cause a spending line to rotate, when it does this is opens up more open door for various mixes and divider climbing that beforehand were not reasonable. Income changes causes a spending line to move in a parallel way since it's twofold the first wage and you can now bear the cost of twice as a great part of the great. 2. Describe the utility maximizing…