An optimal operational policy for an integrated production-delivery system under continuous price decrease

In today’s competitive world, the unit cost of a high-tech product declines significantly over its life cycle. An integrated inventory model for products experiencing continuous decrease in unit cost is studied in this research. In this integrated model a manufacturing facility purchases raw material from outside supplier at a fixed size and supplies a fixed quantity of finished products to a buyer periodically after using its production processes. Moreover, buyers demand frequent deliveries of small lots of finished products since the price is continuously decreasing, and this emphasizes the significance of just-in-time (JIT) inventory management for successful companies in technology-related industries. The goal in this study is to minimize the total cost of the supply chain in JIT environment while the price of the high-tech product is linearly decreasing over its life cycle. A cost model composed of manufacturer’s raw materials and finished goods and buyer’s incoming goods inventory costs is developed here. An efficient algorithm is employed to determine the optimal or near-optimal lot sizes for raw material procurement, manufacturing batch and buyer’s ordering policies. It is also shown in the implemented model that the integrated total cost over the planning horizon considers the changing prices at each replenishment for both manufacturer’s and buyer’ s inventory costs. Consequently, in this article, the traditional integrated inventory model is relaxed by removing the restriction of constant unit cost. Finally, the solution technique for the developed model is illustrated with numerical examples, and compared with the previously developed integrated inventory models to test its accuracy. It is proven that the model is accurate and effective for the inventory systems with decreasing unit cost

How criminalizing minor offenses can mean there is less of a deterrent for people to commit more serious crimes.

Those convicted of a crime are often punished twice; once via the legal system’s formal sanction, and again through the stigma of having a criminal record. Murat C. Mungan argues that the criminalization of many small offenses – such as drug possession – means that this stigma is becoming diluted for more serious criminal offenses. If a large percentage of the population is branded as criminals, he writes, this means that having a criminal record becomes less of marker of a person’s character, no matter if that crime is minor or severe

The Law and Economics of Fluctuating Criminal Tendencies and Incapacitation

Economic analyses of criminal law are frequently and heavily criticized for being unable to explain many criminal law rules and doctrines people find intuitively just. Existing economic models cannot properly explain, for instance, why criminal law distinguishes between (1) repeat offenders and first-time offenders, (2) murder and voluntary manslaughter, and (3) remorseful and non-remorseful offenders. This Article proposes a richer economic theory of crime that captures the rationales behind these practices and potentially behind many other important criminal law principles and doctrines. Unlike an overwhelming majority of previous economic analyses, my theory accounts not only for the deterrent effect of criminal punishment, but also for its incapacitative effect. Moreover, and perhaps more importantly, it acknowledges the fact that people have fluctuating, rather than constant, criminal tendencies. That is, it recognizes that some people who ordinarily would not consider committing a wrongful act can, in rare circumstances, lapse into committing a crime. Surprisingly, these two simple but critical concepts have never to my knowledge been jointly considered in an economic analysis of crime, even though their inclusion appears to be an obvious extension of the standard crime and deterrence model formalized almost half a century ago by Gary Becker. The threat of imprisonment deters crime, but even when deterrence fails and a crime is committed, imprisonment benefits society by preventing the criminal from committing further wrongs outside prison for the duration of the sentence. The more dangerous the criminal, the stronger the rationale for imprisonment because these incapacitative benefits exist only if the offender would commit more crimes if left at large. Since people have fluctuating criminal tendencies, however, the mere fact that a person committed a crime reveals imperfect information regarding his likelihood of recidivating. As such, the offender’s criminal history and the circumstances surrounding the crime reveal important pieces of information that can be used to update our beliefs concerning the offender’s expected dangerousness— that is, to distinguish those who have made an uncharacteristic mistake from the dangerous and reckless criminals. Capturing the interaction between the incapacitation function of imprisonment and potential offenders’ fluctuating criminal tendencies allows the model to supply specific, consequentialist justifications for repeat offender laws, voluntary manslaughter laws, and the treatment of remorse in criminal law. Going forward, this more nuanced approach will provide a clearer lens through which to view other pervasive elements of criminal law, such as the mens rea requirement, and to revisit the normative prescriptions of the previous generation of economic analyses

Gateway Crimes

Many who argue against the legalization of marijuana suggest that while its consumption may not be very harmful, marijuana indirectly causes significant social harm by acting as a “gateway drug,” a drug whose consumption facilitates the use of other, more harmful drugs. This Article presents a theory of “gateway crimes,” which, perhaps counterintuitively, implies that there are social gains to decriminalizing offenses that cause minor harms, including marijuana-related offenses. A typical gateway crime is an act which is punished lightly, but because it is designated as a crime, being convicted for committing it leads one to be severely stigmatized. People who are stigmatized have less to lose by committing more serious crimes, and therefore the criminalization of these acts increases recidivism. Thus, punishing gateway crimes may generate greater costs than benefits, and this possibility must be kept in mind when discussing potential criminal justice reforms. This “gateway effect” does not require that, but is strongest when, people underestimate or ignore either the likelihood or magnitude of the consequences associated with being convicted for a minor crime. Therefore—if potential offenders in fact underestimate expected conviction costs—this theory not only implies previously unidentified benefits associated with decriminalizing acts that cause questionable or minor harms but also benefits associated with making the costs associated with convictions more transparent

Don\u27t Say You\u27re Sorry Unless You Mean It: Pricing Apologies to Achieve Credibility

Remorse and apologies by offenders have not been rigorously analyzed in the law and economics literature. This is perhaps because apologies are regarded as ’cheap talk’ and are deemed to be non-informative of an individual’s conscious state. In this paper, I develop a formal framework in which one can analyze remorse and apologies. I argue that legal procedures can be designed to price apologies, such that only truly remorseful individuals apologize. Hence, apologies would not be mere ’cheap talk’ and could send correct signals regarding an offender’s true conscious state, making them credible. This will lead victims, upon receiving apologies, to forgive offenders more frequently. Moreover, pricing apologies does not negatively impact the possibility of achieving optimal deterrence. An (arguably negative) effect of pricing apologies is its elimination of insincere apologies. If it is assumed that apologies, even if insincere, carry rehabilitative and/or palliative benefits, then the optimality of pricing apologies depends on a trade-off between achieving credibility and increasing such rehabilitative and palliative benefits

Repeat Offenders: If They Learn, We Punish Them More Severely

Many legal systems are designed to punish repeat offenders more severely than first time offenders. However, existing economic literature generally offers either mixed or qualified results regarding optimal punishment of repeat offenders. This paper analyzes optimal punishment schemes in a two period model, where the social planner announces possibly-different sanctions for offenders based on their detection history. When offenders learn how to evade the detection mechanism employed by the government, escalating punishments can be optimal. The contributions of this paper can be listed as follows: First, it identifies and formalizes a source which may produce a marginal effect in the direction of punishing repeat offenders more severely, namely learning. Next, it identifies conditions under which the tendency in legal systems to punish repeat offenders more severely is justified. Overall, the findings suggest that the traditional variables identified so far in the literature are not the only relevant ones in deciding how repeat offenders should be punished, and that learning dynamics should also be taken into account

Welfare Enhancing Regulation Exemptions

Sanctions for regulation violations are used to deter conduct which could potentially result in great social harms. This practice over-deters talented entities and under-deters untalented entities, which leads to social losses. This paper analyzes whether and how such social losses can be mitigated. I show that this can be achieved by allowing regulatees to purchase passes exempting them from regulations at appropriate prices