Developing a Medium-Term Debt-Management Strategy for the Government of Canada

As the Government of Canada’s fiscal agent, the Bank of Canada provides strategic policy advice on the management of the government’s debt, in addition to being responsible for conducting debt-management operations. In this article, the authors review the evolution of the debt strategy over the past 20 years and outline the complex process of developing a sound strategy that balances various cost and risk considerations. This includes an examination of the tools and practices used to develop the new medium-term debt-management strategy, such as the modelling approach involved, market consultations and various debt-management metrics.

Does strengthening Collective Action Clauses (CACs) help?

In a model with both issues of sovereign debtor moral hazard and creditor coordination under incomplete information, we show that the resulting conflict between ex ante and interim efficiency limits the welfare impact of strengthening CACs. Conditional on default, we show that an interim efficient CAC threshold exists and improving creditor coordination results in welfare gains. However, when ex ante efficiency requires the sovereign debtor to choose actions that reduce the probability of default, improved creditor coordination reduces ex ante efficiency and the interim efficient CAC threshold is higher than the ex ante efficient CAC threshold.Sovereign Debt ; Coordination ; Moral Hazard ; Collective Action Clauses ; Ex Ante ; Ex Post ; Efficiency

Timing and ordering decisions under single and dual product rollover strategies

Ankara : The Department of Industrial Engineering and the Graduate School of Engineering and Science of Bilkent University, 2011.Thesis (Master's) -- Bilkent University, 2011.Includes bibliographical references leaves 67-69.In many industries, firms replace products that have been introduced to the market and that are in advanced stages of their life cycles. The process of introducing a new product and eventually displacing an old one is referred to as product rollover. In planning for new product introduction, it is very important that careful business decisions are made for phasing out the old product, as the related costs may be significant. In this thesis, we study the ordering and timing decisions of a supplier for successive generations of a product under two different strategies: single product rollover and dual product rollover. In both cases, we present models explicitly accounting for inventory holding costs, salvage value, lost sale cost, demand uncertainty of both the products and product cannibalization. We report the results of an extensive numerical study to investigate the structural properties of the expected profit function, and how the optimal timing and ordering decisions change under different settings.Aras, Ahmet KorhanM.S

Product rollover strategy and inventory policy of a monopoly manufacturing substitutable products

Ankara : The Department of Industrial Engineering and the Institute of Engineering and Sciences of Bilkent University, 2010.Thesis (Master's) -- Bilkent University, 2010.Includes bibliographical references leaves 107-112.In many industries, effective management of product rollovers is extremely important for being able to survive. In management of product rollovers, timing decision; i.e., time to introduce of a secondary product and time to phase out a primal product is critical. Inventory policy is another factor that affects management of rollovers. In this study, we analyze primary rollover strategy of a monopoly manufacturing two substitute products together with its contingency strategies over a two period planning term. Specifically, we consider four different primary rollover strategies, namely Base Strategy, IS Strategy, ISES Strategy and IFES Strategy, derived with existence/non-existence of the products. Base Strategy is associated with the case where we decide to introduce and sell only the primary product. On the other hand, IS Strategy brings introduction of a newer (secondary) product in the second period. If monopoly chooses to make its move with IFES Strategy, it introduces both of the products simultaneously in the first period while phasing out the primary product in the beginning of the next period. Another alternative strategy, ISES Strategy, would be selling products in different periods, primary product first and secondary product next. When a primary strategy is selected, there is a commitment to this strategy. In this study, to reflect market conditions, we consider two alternative demand forms; multiplicative and additive forms and there is an adjustment to market through inventory policy. Firm replenishes its stocks with an order-up-to policy in each period where demands for these substitute products are assumed to be correlated and these products assumed to be substitutable; i.e., there exists stockout-induced substitution between the products.In the analysis, we determine the optimal inventory levels when a specified rollover strategy is executed. Moreover, we explore the conditions, which play important role in making rollover strategies. Furthermore, factors that affect early and late introduction of a new product into the market are investigated. We also discuss the factors that motivate a monopoly to introduce a new product.Koca, EsmaM.S

Essays on Issues in New Product Introduction: Product Rollovers, Information Provision, and Return Policies

In this dissertation we study several key issues faced by firms while introducing new products to market. The first essay looks at product rollovers: introduction of a new product generation while phasing out the old one. We study the strategic decision of dual vs. single roll jointly with operational decisions of inventory and pricing during this transitional period. Our results confirm previous findings and uncover the role and interaction of several parameters that were not examined before. In the second essay, we investigate the role of information provision and return policies in the consumer purchasing behavior and on the overall market outcome. We build a novel model of consumer learning, and we attain significant analytical findings without making any distributional assumptions. We then fully study the joint optimization problem analytically under uniform valuations. In the third essay, we study competition in the framework described in the second essay and we identify the potential Nash equilibria and associated conditions. Our findings demonstrate the effect of competition on return policy and information provision decisions and provide insight on some real-life observations

A game theory model of the physician preference item supply chain

Many types of medical devices (e.g., orthopedic implants, stents, and pacemakers) have significantly higher costs and more frequent product innovations than commodity items. These physician preference items (PPI) are procured through a unique supply chain, in which physicians select which products updates to adopt, based upon clinical preference. PPI manufacturers are motivated to update products frequently to remain competitive and enhance revenues by incorporating new product features embedded in the PPI. Due to the PPI updates, physicians must progress through a learning curve after adopting a new product generation. Often, manufacturers will employ sales representatives to assist physicians with PPI learning. However, hospitals are left to address the increasing costs associated with the new product generation. This work uses a game-theoretic approach to understand how an average physician\u27s learning curve affects the manufacturer\u27s optimal product update pace. Additionally, the impacts of sales representatives and hospital cost control efforts are studied. Results indicate that not only is the manufacturer\u27s product update pace dependent upon physician learning, but also both the manufacturer and the physician benefit when a new PPI product generation requires a shorter amount of time to be mastered. Finally, we see that a hospital\u27s PPI cost control strategy may need to vary for different devices, based upon their objectives as either a value-focused or research-focused hospital

Disclosure and Rollover Risk

This paper studies whether and to what extent transparent disclosure prevents inefficient liquidation arising from rollover risk. We model an illiquid but solvent borrower who can design a public signal about what creditors can recover from forcing liquidation, and what their claims would be worth if the firm survives. We find that the signal structure that minimizes rollover risk never identifies liquidation or continuation values, and that borrowers can commit to this structure. Moreover, if creditors can impose disclosure requirements, they may increase inefficient liquidation, in order to pool states to increase the amount they expect to recover from defaults