Pricing average price advertising options when underlying spot market prices are discontinuous

Advertising options have been recently studied as a special type of guaranteed contracts in online advertising, which are an alternative sales mechanism to real-time auctions. An advertising option is a contract which gives its buyer a right but not obligation to enter into transactions to purchase page views or link clicks at one or multiple pre-specified prices in a specific future period. Different from typical guaranteed contracts, the option buyer pays a lower upfront fee but can have greater flexibility and more control of advertising. Many studies on advertising options so far have been restricted to the situations where the option payoff is determined by the underlying spot market price at a specific time point and the price evolution over time is assumed to be continuous. The former leads to a biased calculation of option payoff and the latter is invalid empirically for many online advertising slots. This paper addresses these two limitations by proposing a new advertising option pricing framework. First, the option payoff is calculated based on an average price over a specific future period. Therefore, the option becomes path-dependent. The average price is measured by the power mean, which contains several existing option payoff functions as its special cases. Second, jump-diffusion stochastic models are used to describe the movement of the underlying spot market price, which incorporate several important statistical properties including jumps and spikes, non-normality, and absence of autocorrelations. A general option pricing algorithm is obtained based on Monte Carlo simulation. In addition, an explicit pricing formula is derived for the case when the option payoff is based on the geometric mean. This pricing formula is also a generalized version of several other option pricing models discussed in related studies.Comment: IEEE Transactions on Knowledge and Data Engineering, 201

People in the E-Business: New Challenges, New Solutions

[Excerpt] Human Resource Planning Society’s (HRPS) annual State of the Art/Practice (SOTA/P) study has become an integral contributor to HRPS’s mission of providing leading edge thinking to its members. Past efforts conducted in 1995, 1996, 1997, 1998, and 1999 have focused on identifying the issues on the horizon that will have a significant impact on the field of Human Resources (HR). This year, in a divergence from past practice, the SOTA/P effort aimed at developing a deeper understanding of one critical issue having a profound impact on organizations and HR, the rise of e-business. The rise of e-business has been both rapid and dramatic. One estimate puts the rate of adoption of the internet at 4,000 new users each hour (eMarketer, 1999) resulting in the expectation of 250 million people on line by the end of 2000, and 350 million by 2005 (Nua, 1999). E-commerce is expected to reach $1.3 trillion by 2003, and of that, 87 percent will go to the business to business (B2B) and 13 percent to the business to consumer (B2C) segments, respectively (Plumely, 2000)

Network design decisions in supply chain planning

Structuring global supply chain networks is a complex decision-making process. The typical inputs to such a process consist of a set of customer zones to serve, a set of products to be manufactured and distributed, demand projections for the different customer zones, and information about future conditions, costs (e.g. for production and transportation) and resources (e.g. capacities, available raw materials). Given the above inputs, companies have to decide where to locate new service facilities (e.g. plants, warehouses), how to allocate procurement and production activities to the variousmanufacturing facilities, and how to manage the transportation of products through the supply chain network in order to satisfy customer demands. We propose a mathematical modelling framework capturing many practical aspects of network design problems simultaneously. For problems of reasonable size we report on computational experience with standard mathematical programming software. The discussion is extended with other decisions required by many real-life applications in strategic supply chain planning. In particular, the multi-period nature of some decisions is addressed by a more comprehensivemodel, which is solved by a specially tailored heuristic approach. The numerical results suggest that the solution procedure can identify high quality solutions within reasonable computational time

Wage and employment decisions in the Russian economy : an analysis of developments in 1992

The authors analyze changes in the Russian labor market in 1992. They focus on the path of wages and employment in a context of partial price liberalization and considerable ambiguity about government and central bank policy. Under the former Soviet economy, the firm was the bedrock of the centrally planned system. The relaxation of centralized controls did not result in substantial employment losses partly because of the implicit moral economy of the system and partly because of continuing constraints on wages. In 1992, the wage structure and employment levels in the economy's state sector exhibited surprising stability, reflecting the system's immense inertia. Despite announced regime changes, at the end of 1992 the number of jobseekers was no more than 1.5 percent of the labor force. But significant changes have been made: wage and employment decisions have been widely liberalized; some restraints on labor mobility have been removed; changes have also been made in ownership title; and there has been some expansion in the private sector, as yet largely concentrated in services. These substantive changes are important for future expectations about entitlements to jobs and incomes, but the changes remain restricted and the sources of these restrictions imply significant economic costs. The underpinning of the current stagflation is the inability to break the soft budget constraint on state firms and to impose realistically a systematic, transparent set of constraints on the firms'financing demands. This has combined with the firms'continuing ability to exercise market power alongside weak controls on wage claims. Employment transitions have been dominated by high levels of quits at the base of the skill structure. Involuntary separations have been limited, involving mostly women and white collar workers. Firms commonly provide de facto unemployment compensation to workers in the form of minimum wage payments with little or no work requirement. There is evidence of some increase in the proportion of laid-off workers among the unemployed, but firms seem to prefer hoarding labor in light of uncertainty about policy, firm, or product-specific market prospects. Wages have been more volatile. Wages initially bore almost all of the adjustment costs, but have shown mild recovery thereafter. Lax monetary policy and decentralized insider power, giving rise to relative employment stability and real wage rigidity, are powerful ingredients for hyperinflation.Economic Theory&Research,Environmental Economics&Policies,Health Monitoring&Evaluation,Banks&Banking Reform,Municipal Financial Management

MENUING SOFTWARE: APPLICATION TO THE GENERAL MANAGER'S NEED

This paper demonstrates a robust approach to general manager computer use. The approach is shown to systematically integrate a diverse collection of user selected applications. It is implemented through the use of currently available shareware and public domain software at low cost. The developed prototype follows accepted psychological choice, Management Information System (MIS) and/or Decision Support System (DDS) principles. It is easily modified by a user, said to be any general management team member, as the environment changes. Team member roles, concerns, styles, and interests can be accommodated in the design or re-design. The prototype and approach is friendly to occasional users. One basic installation can serve several users. It will work on a network of computers. It offers a sense of staying in control to the individual. Complexities of application choice and access are hidden. Data transfer between applications is automated. Extension educators and business consultants can also use a similar approach for accessing a wide variety of applications. Further work will likely improve the basic approach. In the meantime, the gain from using this approach as it stands is quickly available.Research Methods/ Statistical Methods,

Rethinking China.s Path of Industrialization

This study shows that China.s post-1949 state-led industrialization has closely followed an underlying path that began in the late nineteenth century. It was initiated by pressing national defence needs and has since been motivated by the same and strong incentives for a faster catch-up with the West despite radical regime shifts. Government determined or influenced resource allocation benefited selected industries and hence nurtured vested interest groups connecting and integrating with the ruling elite, which have strengthened and sustained the path. This means that the path is inherently inefficient which is evidenced by a newly constructed dataset. Reform measures can only temporarily improve efficiency performance, but are unable to break the path in the absence of a genuine political democracy.government engineered industrialization, path dependence, central planning, economic reform, efficiency

Modeling, Control and Optimisation of Hybrid Systems in a Manufacturing Setting

This study comprises a body of work that investigates the performance of hybrid manufacturing systems. And we have provided a valuable insight into the development of the optimisation techniques for hybrid manufacturing system. With the primary objective of developing prac-tical mathematical algorithms that balance trade-o? cost between product quality and completion time. For sta-bility criterion, a sliding mode control was deployed

Help Wanted: a lead state workforce official

Help Wanted: A lead state workforce official is a review of Ohio's multi-agency state workforce structure and a blueprint for strengthening workforce development in Ohio. CRP found that the state faces a deficit of workers with the 21st century education and skills needed by employers. In Ohio, 46% of Ohio adults ages 18 to 64 -- 3.3 million -- have no postsecondary education, a figure worse than 35 other states. The report identifies over $2 billion in state and federal resources, administered by at least nine state agencies, that directly and indirectly support workforce development in Ohio. Although important steps have been taken to reorganize, coordinate, and put a greater focus on workforce development, a leadership gap remains. The report recommends that Ohio name a lead state workforce official and that a primary goal of this official should be filling "middle skill" jobs: those that require more than a high school diploma, but less than a four-year degree. This should be done by (1) meeting the current and future needs of employers, (2) supporting success for adults in education and training, and (3) establishing state policy and a national presence. The report includes detailed recommendations in each of these areas. Included in the report are examples of how several other states have aligned roles, programs, and resources to elevate workforce development and examples of successful local and regional workforce development initiatives in southwest, central, and northeast Ohio. Funding for the report was provided by The Joyce Foundation as part of the national Working Poor Families Project