Market-pricing model

Early research on accident costs applied the market-pricing model. Here, the analyst registers the actual losses due to accidents for different production factors such as lost working hours, materials and production. These are assessed in monetary units by applying the market prices for each factor. The cost of lost working hours, for example, is set as equal to the hourly wage. Heinrich pioneered this work. He distinguished between direct and indirect costs, where direct costs are those paid by the insurer to the victim (Heinrich, 1959). Indirect (or hidden) costs include costs directly carried by... 

The different cost elements of the market-pricing model have been further systematised in the Accident-Consequence-Tree method. It displays the... 

In Norway, a series of ex post-accident cost studies have been performed within the chemical, metallurgical and mechanical industries (Sklet and Mostue, 1993). When the market-pricing model was applied, average costs to the company of accidents were about 1000 euro. They were lowest in the chemical industry (800 euro) and highest in the metallurgic industry (1100 euro). Costs increased with the severity of the accident. Costs to the company for permanent disabilities and fatalities varied between 1500 and 10000 euro. Uninsured salary to the injured worker accounted for between 74 per cent and 90 per cent of the total costs for the temporary disabilities. In-plant accident costs were significantly less than 1 per cent of the salary costs. 

Table 13.3 shows a simple scheme for the registration of accident costs. It is based on the market-pricing model and is intended for use by the investigators as a complement to the ordinary investigation form. In most practical circumstances, the lost working hours due to sickness leave will dominate the monetary losses. A simple alternative is to include the first line of the table in the form for routine accident investigations. 

In chapter 4 of his thesis, Borrell17 studies selective financing and price-cap regulation. The model he applies, Dixit and Stiglitz s monopolistic competition model, poses certain problems. The preference for variety and the fact that utility depends on the number of units consumed are not so clear as in other markets. The model does not take into account the complex relationship between doctor and patient. The fact that innovation only represents a fixed cost also raises doubts. 

Lababidi et al. (2004) incorporate uncertainty and stochastic market prices and raw material costs for a petrochemical case. They modeled market price and raw material price uncertainty as given and analyzed the effects on production utilization. They initially observed that prices can have significant influence on production plans and utilization. 

An overview is provided of the North American PE Foam Market. Historical market growth rate and market dynamics are presented as well as a forecast to 2007. An analysis is also presented of the forces that impact PE foam demand and pricing based upon Michael Porter s well-known five-market forces model for analysing industries and markets. Application of this model will provide some insight into dynamics that should be considered in creating a robust business plan. 3 refs. 

The above formulation is an extension of the deterministic model explained in Chapter 5. We will mainly explain the stochastic part of the above formulation. The above formulation is a two-stage stochastic mixed-integer linear programming (MILP) model. Objective function (9.1) minimizes the first stage variables and the penalized second stage variables. The production over the target demand is penalized as an additional inventory cost per ton of refinery and petrochemical products. Similarly, shortfall in a certain product demand is assumed to be satisfied at the product spot market price. The recourse variables V [ +, , V e)+ and V e[ in... 

The traditional model is based on costs of auxiliary material (e.g. chemicals, solvents) influenced by world market prices and the competitive situation in the market. Due to the comparability of the products the user can very easily find out the most favourable offer. 

New products are notoriously difficult to model and one of the most sensitive factors in such models is the product s proposed price. Consequently qualitative research is most frequently required to derive pricing models for the market and the product. Many times products have been launched with entirely false... 

Using these assumptions, a model was constructed to predict market price, total sales, individual firm output, and individual firm profits. At first glance, the assumption over which there may be greatest concern is that firms compete on quantity. Experience suggests that, in many markets, firms compete on price. However, the economic literature has shown that the outcome predicted by the Cournot model may also be realized when firms first choose their capacity levels and then only later compete on price (Kreps and Sheinkman, 1983). 

The dynamic optimisation problem P2 now results in a single variable algebraic optimisation problem. The only variable to be optimised is the batch time t. The solution of the problem does no longer require full integration of the model equations. This method will solve the maximum profit problem very cheaply under frequently changing market prices of (CD/, CB0, C ) and will thus determine new optimum batch time for the plant. The optimal values of C, Dh r, QR, etc. can now be determined using the functions represented by Equations 9.2-9.5. 

Production costs per tonne of base oil are calculated by dividing the total annual costs by the total annual production of base oils. Net feedstock cost can be calculated in several ways, but it will not necessarily be identical to the cost of crude oil. As the base oil plant in a sense competes with fuel production units for feedstock, the basic feedstock cost to the lubricant base oil complex should be determined by the alternative value of that feedstock if it were used to make mainstream fuels products. The by-products of base oil manufacture also have values for blending into fuel streams or in some cases for direct sale as speciality products, such as waxes and bitumen. Credit must be given for these products so that the net value of the hydrocarbon content of the base oil can be calculated. Refineries use sophisticated linear programming computer models to optimise refinery operations based on different crude oil input, process yields, market prices, production targets, etc. 

Capital asset pricing model An economic model of equilibrium in capital markets which predicts rates of return on all risky assets as a function of their correlation (or covariance) with the overall market portfolio. 

The data required for operation of the model consist of the resource availabilities of the various types of biomass feedstocks, the process economics of biomass conversion options, a framework of energy demands and market prices, and a set of three parameters that are used to describe the interaction of the biomass-derived products with the markets in which they compete. 

The market penetration model converts the average market prices into marginal prices before use in the steady-state market share analysis. The equation used for this purpose is ... 

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