Showing papers on "Capacity utilization published in 1983"

Efficiency and competition in the airline industry

Abstract: After reviewing some recent developments in the airline industry, this article tests two hypotheses that were central to the argument for deregulation: (1) that CAB regulation caused airlines to employ excess capacity relative to the capacity that would be provided under unregulated competition; and (2) that potential competition would keep fares at cost even in highly concentrated markets. An econometric analysis of these hypotheses based on postderegulation data suggests that the excess capacity hypothesis is essentially confirmed. In contrast, the pattern of fares in late 1980 and early 1981 does not support the potential competition hypothesis that fares are independent of market concentration.

Product Diversity, Economies of Scale, and International Trade

Abstract: The paper develops new testable implications for monopolistic competition in the open economy. Within a two-sector model we explore how international trade affects plant size, the degree of product diversity, and excess capacity. The analysis then focuses on how trade affects the degree of domestic and international concentration, intersectoral capital mobility, and output in the competitive sector. Finally, we compare the model to the traditional Hecksher-Ohlin model and find that many of the central propositions still hold.

Foreign Students' Demand for United States Higher Education

Abstract: The demand for college education is expected to decline absolutely in the decades ahead as the size of the young college eligible population declines.1 However, the supply of student slots in higher education is relatively inelastic due to a large fixed capital stock and a high proportion of tenured faculty. The result is likely to be excess capacity in American higher education in the coming decades. In response to this potential decline in demand and the difficulties in reducing their existing capacity, institutions of higher education are expected to explore alternatives for increasing or maintaining their enrollment levels. The feasible alternatives are to lower

Physical distribution management in international marketing

Abstract: The International Physical Distribution Environment Involvement in international markets requires an awareness of the variables — both controllable and uncontrollable — which impact on a firm's distribution network. Political, legal, social and economic conditions, market structure and competition and the level of distribution technology available are all uncontrollable factors which influence a firm's distribution planning. Strategy must be directed towards administering physical distribution components so as to minimise costs and provide an acceptable level of customer service. Companies should acknowledge the differences that exist between domestic and foreign activities, and within overseas markets, country variations, regarding levels of customer service and inventory and transportation facilities that can be provided and the associated costs involved. Key managerial elements include packaging and labelling and warehousing and storage facilities dependent upon distribution systems required. Channel of Distribution Strategies Besides market potential, there are a number of reasons for entering international markets — an advanced domestic product life cycle, excess capacity, less internal overseas competition, geographical diversification and, perhaps, for materials/components saving. Four principle strategies for overseas involvement are available: exporting, licencing, joint ventures and ownership. In general firms may follow more than one strategy between markets and as circumstances change in individual market areas. Management of the Export Shipment Export distributors, customs house brokers and foreign freight forwarders are amongst the major organisations involved in exporting activity. Documentation remains of paramount importance. Operating in an unfamiliar financial environment, it is essential that account is taken of exchange rates, tax considerations, levels of inflation and other financial aspects affecting physical distribution; all will impact on profit levels and, if mismanaged or overlooked, will generate losses. Managing International Physical Distribution Activities International distribution management is complex. Success requires the correct answers to a number of difficult issues in order to develop the optimal distribution system for each target market. Planning, implementation and control of all international physical distribution activities is essential to the success of any foreign marketing efforts.

Anticipated Collusion and Excess Capacity

Abstract: This paper examines an industry where output is determined collusively, with output shares allocated on the basis of relative capacity. Capacity is chosen non-cooperatively, providing an apparently clear incentive for firms to install excess capacity. Although excess capacity equilibria (ECE) may arise, capacity constrained equilibria (CCE) will occur from some parameter values. However, if an ECE occurs, firms will be strictly worse off under this partial cooperation than in the fully non-cooperative setting: partial collusion does more harm than good. The Stackleberg solution coincides with the symmetric Nash equilibrium in the ECE. Entry deterrence is also considered.

Research needs for capacity planning

Abstract: The body of technical literature related to the subject of capacity planning is so vast that it is unrealistic to make even a superficial survey of the existing knowledge about this subject. The purpose of this report is to classify knowledge regarding capacity planning, to identify the strengths and weaknesses of knowledge about the major water system components that fall within each classification, and to suggest research priorities. The basic concern of capacity planning is the question of how large to build, so the word capacity is used interchangeably with size and scale. However, capacity planning also includes consideration of where and when to build. If a city builds a supply reservoir with sufficient capacity to serve neighboring communities for example, the other communities will not need to decide where to build. Similarly, if a reservoir is large, decisions about when to expand capacity can be delayed. The interrelationship among capacity, location, and timing decisions is well described by Manne.1 Most municipal water facilities are designed with greater capacity than that required to satisfy immediate demands. The reason for this is recognized as a function of economy of scale on one hand and increasing demand on the other.2 In some cases the amount of excess capacity is selected arbitrarily, but in most cases the capacity of a project is based on the expected demand at the end of a given design period. Therefore demand plays an important role in capacity planning. At the simplest level, historic demands are projected into the future, and the flow at the end of the design period is selected as the target for setting capacity of the system. This approach implicitly assumes that the effect of price on the quantity of water demanded will be the same in the future as it has been in the past. More realistically, the technical literature includes some capacity planning models that account for both price sensitivity to demand and shifts in demand over time. A common classification for water facilities is whether

Cost Analysis for Dual Source Weapon Procurement

Abstract: : It is widely held that competition can produce savings in the acquisition cost of weapon systems. However, a recent study of seven programs shows only three generated sufficient savings to offset the investments required to obtain them. Our study finds that the savings depends on how 'hungry' producers are. When a loss has resulted, capacity utilization has been above 80%.

The current status and perspectives of fissile material availability in the world through the year 2000

Abstract: Using a realistic evaluation of the likely development of commercial nuclear power, it is projected that some 428,000 MW(electric) of capacity will be in operation by the year 2000 in noncommunist countries. The availability of fissile material to support this program primarily hinges on the viability of two main industries, namely, the production of natural uranium and enrichment. The demand for natural uranium corresponding to this nuclear program is projected to amount to some 940,000 metric tons of uranium (MTU) through the end of the century. Currently defined reserves in the lower cost of recovery category (i.e., up to $80/kgU) amount to 1.75 million MTU so that such reserves can more than adequately cover needs. When the category of reasonably assured resources of some 550,000 MTU are also taken into account, needs can be covered well into the first half of the next century. There is currently a significant overcapacity for the mining and milling of uranium, and presently definable capacity should be able to meet the annual demand on a worldwide basis until the mid-1990s. However, buyer purchasing strategies and the level of prices will be important to ensure that production will remain or be made available when needed.more » The demand for enrichment services by the year 2000 will amount to some 47,000 metric tons of separative work units (MTSWU)/yr. Production capacity in operation, under construction, and firmly planned will have attained 45,400 MTSWU/yr by 1990. Further expansion of capacity is possible with very modest lead times. Only a very small increase in capacity would in principle be needed to cover demand in excess of the then existing capacity in the last two or three years of the 1990s. Demand could also be met by a very limited amount of preproduction from the excess capacity of previous years.« less

Cartels, Profits, and Excess Capacity

Abstract: A model of a collusive duopoly in which each firm has limited capacity is studied. The negotiated output quotas depend on the bargaining power of the firms, which derives from the damage the firms can do by cutting prices. For fixed capacities, the unit profit of the small firm is at least as large as that of the large firm, and the relative position of the small firm is better when demand is low. When the capacities can be chosen once-and-for-all, there is excess capacity in equilibrium so long as the cost of capacity is not too high. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. (This abstract was borrowed from another version of this item.)

Massive transfers of resources

Abstract: What lies behind the call for massive transfers of resources from the rich to the poor countries? What proposals for such transfers have been made? Do these proposals represent an application of Keynesianism to the problems of international development and, if so, is this application legitimate?

Capacity Planning: A Case Study From Cigarette Production

Abstract: It is conventional for a manufacturing company to equip itself to cope with a demand greater than that considered most likely to arise. Often the costs associated with excess capacity are not high, and so little energy is expended on determining least‐cost solutions and options close to them. Increases in machinery costs in the mid 1970s necessitated one cigarette manufacturer to rethink its policy towards machinery purchase; in particular that governing the size of its machinery contingency allowance—the machinery to hold over and above that required to meet the most likely forecast of demand. This article describes the background to the reframing of this policy on machinery acquisition, including an analysis of the structure of demand for cigarettes and ways of achieving an appropriate level of supply.

Expectations, capital formation, sales and capacity utilization

Abstract: A model is developed and tested to relate capital formation, sales and capacity utilization in manufacturing to expected inflation and expected interest rates through anticipated real wealth effects. Expected future inflation causes purchases of storeable manufactured goods in advance and accumulations of physical capital. The former increases capacity utilization, while the latter decreases it. Expected increases in interest rates have an impact on sales and capital formation opposite to that of expected increases in prices. Finally, if expected inflation is accompanied by a propertionate increase in expected interest rates, sales decline more than capital formation, and hence capacity utilization contracts.