Impact on investment decisions

In the considered case study the simulation results had significant impact on investment decisions within the tank farm and on the agreements negotiated with the service partners responsible for the external buffers. 

First, it is a static model, which therefore does not capture the impact on investment decisions or, alternatively, the restraint of the potential threat of entrants or regulatory intervention put on power generators to keep prices down. In the long run, new investment is required, and therefore the best estimate for long-term power prices is the cost of the entry of a new generator. This... 

Reinaud, 1,2003. Emissions Trading and its Possible Impacts on Investment Decisions in the Power Sector. IEA Information Paper, Paris. 

Prom an economic point of view, the competitive distortions caused by asymmetric carbon prices appear to affect only few sectors, which account for a relatively small share of GDP (e.g. Reinaud, 2005 McKinsey and Ecofys, 2006 Hourcade et al., 2007 Morgenstern et al., 2007) the reason being that carbon is only one among several factors of production for which prices differ. Thus, a significant impact on investment decisions across two capped economies appears unlikely - in particular if the permit prices of the cap-and-trade systems are not too different. 

Before an investment decision is made, consideration must be given to certain qualitative factors and their impact on the decision-making process. In some cases, these may be the controlling factors. The qualitative measures or criteria are outlined in Tables 16.2 to 16.4. 

Capital investment decisions are best made within the context of a life-cycle cost analysis. Life-cycle cost analysis focuses on the costs incurred over the life of the investment, assuming only candidate investments are considered that meet minimally acceptable performance standards in terms of the non-inonetary impacts of the investment. Using life-cycle analysis, the capital investment decision takes into account not just the initial acquisition or purchase cost, but maintenance, energy use, the expected life of the investment, and the opportunity cost of capital. When revenue considerations are prominent, an alternative method of analysis such as net benefit or net present value may be preferred. 

Indeed, the need for capital investment in a CMO may not have been originally anticipated or planned for and may impact on the whole decision making process. Additional costs and time need to be set aside for training and equipment validation, e.g. PQ/IQ/OQ (process qualification/ installation qualification/ operational qualification), and if this includes equipment with radically different operating principles than currently available on site then additional costs will be required for equipment-specific operating personnel and training. 

This paper results from work completed in 1979 (and updated in 1980) to evaluate the emerging supply/demand, cost/price outlook for the fertilizer commodities phosphate rock, upgraded phosphates, sulfur, and sulfuric acid. Our purpose here is to publish, in part, our analysis of recent trends and events which impact on sulfur supply and demand, and to use these together with available production cost data to project price behavior for sulfur over the near term. Such projections are helpful to managers of large industrial firms as one of several tools available to them in making investment, contract, marketing, or other major decisions. This paper is necessarily limited in scope, and will attempt to summarize the world outlook with emphasis on the North American scene. 

The costs of compliance with pollution abatement regulations have been documented in many company, industry, and Government studies. These costs obviously impact on company growth, investment decisions, and allocation of resources among competing company priorities. Such increased costs of company activities impact on technological innovation in several ways. Upgrading of production processes may be postponed. Investments in facilities... 

Feils DJ, Sabac FM (2000) The impact of political risk on the foreign direct investment decision A capital budgeting analysis. The Engineering Economist 45 129-143... 

An increase in management safety culture should have the same impact on safety outcomes as an increase in worker participation in safety decision making, for similar reasons as more management resources are employed toward integrating safety within overall corporate strategy—and as more ways are foimd to minimize post-injury retum-to-work hurdles—accident costs will be reduced. To the extent this happens, the returns to safety investments increase, the level of job safety rises, and time away from work because of injuries falls. Higher values... 

Another feature is the existence of production, decision-making, and planning activities. The decision-making and planning functions may not be costly in terms of direct expense, but they heavily influence costs in other activities. An activity such as A21 Forecast Aspermuten Requirements can have a profound impact on the efficiency of the supply chain, affecting capital investment in plant and equipment, inventory, and productivity. 

No company — or supply chain, for that matter — will stay in business if it just covers direct costs. They must recover fixed costs as well. But awareness of direct costing and its impact on behavior is important to supply chain decisions on pricing and investments. A decision to participate as a supply chain partner should consider direct costs and contribution to profit. In our Acme case study (see Chapter 10), the company chose to focus on high contribution, as opposed to high contribution margin business as part of its strategy. If our houseware executive had followed the same path, the company would have taken the Sears offer. 

Van Mieghem and Dada [154] focus on a single-period, two-stage process with an initial decision, e.g. production decision, followed by a realization of demand, followed by another decision, e.g. pricing decision they also consider the capacity investment decision. After the capacity is determined, production is limited, so excess sales are lost. They show how to solve this problem, and they also consider the impact of competition. They find that conditions dictate whether price postponement or production postponement is more valuable to a firm. Specifically they show that the former is likely to be more valuable if demand variability, marginal production, and holding costs are low. 

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