Short-term discounting

However, it should also be emphasized that list prices of manufactured fibers are ceiling prices and do not reflect the short-term discounts, allowances, and special arrangements that are given in a free marketplace when the demand for any manufactured fiber softens. 

The coupon process represents the cash flow investors receive while they hold the bond. Assume that a bond s term can be divided into very small intervals of length dt and that it is possible to buy very short-term discount bonds, such as Treasury strips, maturing at the end of each such interval and paying an annualized rate r t). This rate is the short, or instantaneous, rate, which in mathematical bond analysis is defined as the rate of interest charged on a loan taken out at time t that matures almost immediately. The short rate is given by formulas (3.10) and (311). 

Faced with a short-term discount, it is optimal for retailers to pass through only a fraction of the discount to the customer, keeping the test for themselves. Simultaneously, it is optimal for retailers to increase the purchase lot size and forward huy for future periods. Thus, trade promotions often lead to an increase of cycle inventory in a supply chain without a significant increase in customer demand. 

The second is the relative stability of prices of the manufactured fibers on short-term and even long-term bases, as compared with fluctuations in the prices for the natural fibers where governmentally imposed stability has not been in effect. Data are not presented about it in this text, but in the first half of the twentieth century there was a saying in the textile industry that the person who made or lost money for the company was the one who was responsible for buying cotton and wool futures. However, it should also be emphasized that list prices of manufactured fibers are ceiling prices and do not reflect the short-term discounts, allowances, and special arrangements that are given in a free marketplace when the demand for any manufactured fiber softens. 

Accounts payable, also called trade credit, are the major source of short-term financing. Accounts payable normally amount to about 40 percent of the current liabihties of a manufacturing company. Such short-term financing is relatively expensive when available discounts are lost. 

Rational consumers who discount future value/ / / tittle will not start to consume much of the good. People who discount future value very little, less than intermediate discounters, might be able to cut down from a high level of consumption (if they find themselves there) if the long-term reduction in welfare matters more to them than the short-term gain (for instance, in relief from withdrawal symptoms). 

Assuming that coal will be required Tor several future decades as a major source of energy, what options are open for the near, intermediate, and far term There is a considerable consensus that converting raw coal into essentially a new form of fuel, as through gasification, liquefaction, or treated solid forms, will provide minimum ultimate impact on the environment. Discounting the obvious conservation of energy (easy to preach difficult to practice 1, there arc two main avenues of approach for the immediate and short term ... 

Short-term in vivo and in vitro tests that can give an indication of initiation and promotion activity may also provide supportive evidence for a particular stochastic response. However, lack of positive results for genetic toxicity does not necessarily provide a basis for discounting positive results in long-term animal studies. 

In our match factory, the cost of equipment and of management would be regarded as fixed you cannot change these costs much on a short term. The cost of red phosphoms is variable the more matches you make, the more phosphoms you have to buy. Costs are never tmly fixed you can increase the size of management if the company expands. Also they seldom rise in a completely linear fashion with production - if you expand production you may be able to get phosphoms with a discount. So, tme variable costs do not exist either. Even so, the division is useful for discussing more-or-less stable operations. 

Until now, prices offered by local utilities were not considered attractive by producers (around US 28/MWh, 2000 US, for long term contracts and US 6,5/MWh for short-term contracts). There is not yet legislation to improve biomass-origin electricity generation. The purchase of this energy by the utilities is not mandatory and special discounts (up to 100%) on wheeling tariffs are available only for electricity from small hydro. 

A short-rate model can be used to derive a complete term structure. We can illustrate this by showing how the model can be used to price discount bonds of any maturity. The derivation is not shown here. Let P t, T) be the price of a risk-free zero-coupon bond at time t maturing at time T that has a maturity value of 1. This price is a random process, although we know that the price at time T will be 1. Assume that an investor holds this bond, which has been financed by borrowing funds of value C,. Therefore, at any time t the value of the short cash position must be C,= —P(t, T) otherwise, there would be an arbitrage position. The value of the short cash position is growing at a rate dictated by the short-term risk-free rate r, and this rate is given by... 

We assume that the short-term interest rates follow the following Vasicek discount bond prices stochastic process ... 

Current ratio is a liquidity measure computed by dividing the current assets by current liabilities it measures short-term solvency or the ability of a firm to meet current liabilities. Because current assets include inventory that may or may not be convertible into immediate cash, the quick ratio is frequently used in addition to the current ratio. The quick ratio is calculated by dividing cash plus marketable securities and discounted receivables by current liabilities. Satisfactory values for these two ratios are 1.2-2.0 for current ratio and 1.0-1.2 for quick ratio. 

In all instances of a supply chain the first step is to forecast what the customer demand will be in the future. It is important to note that is not possible to produce a perfect forecast as there are so many variables affecting a future demand, such as past demand, promotion and advertising of the product, market share, state of the economy, price discounts, competition and new products introduction. Peter Drucker once said the best way to predict future is to create it . There are also some recognized characteristics of forecasts, for example, there will always be a forecast error, longer-term forecasts are less accurate than short-term forecasts and aggregate forecasts are usually more accurate than individual forecasts. 

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