Closing reference prices

Two mid-term objectives are closely related to the principal goal of RP. The first of them has to do with encouraging price competition, as it provides an incentive for companies to bring their prices close to the reference level. This is precisely one of the reasons why the European Commission5 recommends RP. The second mid-term objective concerns incentives, as it takes into account the cost-effectiveness ratio of prescription drags by increasing the financial responsibility of patients, which in turn may influence prescriber decisions. It is important to note that, unlike in traditional co-payment, under this system the patient s share of the cost of the product is avoidable if the patient and/or doctor select a product with a price that does not exceed the reference price. 

After the close of business each day the DMO publishes reference prices and the equivalent gross redemption yields for each gilt on its news screens. The final reference price is based on closing two-way prices supplied by each GEMM at the end of the day. The prices, previously referred to as CGO reference prices but now following the merger of the CGO with CREST, called DMO or gilt reference prices, are frequently used in the calculation of settlement proceeds in repo and stock loan transactions. 

Note that a number of complicating factors have been left out for clarity For instance, in the EMF equation, activities instead of concentrations should be used. Activities are related to concentrations by a multiplicative activity coefficient that itself is sensitive to the concentrations of all ions in the solution. The reference electrode necessary to close the circuit also generates a (diffusion) potential that is a complex function of activities and ion mobilities. Furthermore, the slope S of the electrode function is an experimentally determined parameter subject to error. The essential point, though, is that the DVM-clipped voltages appear in the exponent and that cheap equipment extracts a heavy price in terms of accuracy and precision (viz. quantization noise such an instrument typically displays the result in a 1 mV, 0.1 mV, 0.01 mV, or 0.001 mV format a two-decimal instrument clips a 345.678. .. mV result to 345.67 mV, that is it does not round up ... 78 to ... 8 ). 

Similarly to players in many other commodity industries, petrochemical makers have for decades fumbled the challenge of how to keep up with steady growth in world demand for chemicals, yet not outstrip that demand and see prices sink and their profits evaporate due to oversupply. Industry players tend to simultaneously invest in new capacity in the wake of product shortages that trigger dramatic price and profit increases - referred to in the industry as fly-ups - ultimately resulting in the next price slump. Investment is then starved until demand overtakes supply, and the cycle repeats. Profitability tends to closely track the capacity addition cycle profits fall after capacity additions. 

The most accurate method for determining process equipment costs is to obtain firm bids from fabricators or suppliers. Often, fabricators can supply quick estimates which will be very close to the bid price but will not involve too much time. Second best in reliability are cost values from the file of past purchase orders. When used for pricing new equipment, purchase-order prices must be corrected to the current cost index. Limited information on process-equipment costs has also been published in various engineering journals. Costs, based on January 1, 1990 prices, for a large number of different types and capacities of equipment are presented in Chaps. 14 through 16. A convenient reference to these various cost figures is given in the Table of Contents and in the subject index. 

The two systems described by Tables 7.1 and 7.2 are evaluated. For ease of discussion, the flow-sheet described by Table 7.1 where all possible cracked products are sold at prevailing market prices is referred to as OPEN. The case where some of the product is recycled to feed or fuel (Table 7.2) is referred to as CLOSED. 

Because the future values for the reference index are not known, it is not possible to calculate the redemption yield of an FRN. On the coupon-reset dates, the note will be priced precisely at par. Between these dates, it will trade very close to par, because of the way the coupon resets. If market rates rise between reset dates, the note will trade slightly below par if rates fall, it will trade slightly above par. This makes FRNs behavior very similar to that of money market instruments traded on a yield basis, although, of course, the notes have much longer maturities. FRNs can thus be viewed either as money market instruments or as alternatives to conventional bonds. Similarly, they can be analyzed using two approaches. 

The pressure for substitutions arises from market conditions. Material shortages and price increases force processors to seek means of relief. They will sometimes offer an equivalent material. Equivalent is, however, an ambiguous term when referring to plastics. It cannot mean precisely the same resin because resins are covered by patents and, therefore, each one is somewhat different than the others in its behavior and properties. Therefore, whether the alternative resin is close enough to the specified material to be acceptable depends on the application. Product engineers find it difficult to rely on processors recommendations because they are primarily concerned with producing the part to a level which will achieve acceptance by the... 

Reduction of procurement cost is necessary but not sufficient for competitiveness. One needs to ensure that suppliers are doing their best in terms of innovation in products and processes, quality, on time delivery and, of course, price (refer to Chap. 4 on suppliers). As Toyota has shown, building close relationship with suppliers minimizes uncertainty in most transactions. The idea is to sense and eliminate problems in the supply line, before they happen. The way relationships are structured is a key to setting expectations. Good relationships depend on good communications, and a sense of fairness. As an example, Toyota has found a way to integrate different functions to form a supplier-partnering hierarchy (Liker and... 

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