Quality risk in outsourcing: Noncontractible product quality and private quality cost information

This article addresses the concept of quality risk in outsourcing. Recent trends in outsourcing extend a contract manufacturer's (CM's) responsibility to several functional areas, such as research and development and design in addition to manufacturing. This trend enables an original equipment manufacturer (OEM) to focus on sales and pricing of its product. However, increasing CM responsibilities also suggest that the OEM's product quality is mainly determined by its CM. We identify two factors that cause quality risk in this outsourcing relationship. First, the CM and the OEM may not be able to contract on quality; second, the OEM may not know the cost of quality to the CM. We characterize the effects of these two quality risk factors on the firms' profits and on the resulting product quality. We determine how the OEM's pricing strategy affects quality risk. We show, for example, that the effect of noncontractible quality is higher than the effect of private quality cost information when the OEM sets the sales price after observing the product's quality. We also show that committing to a sales price mitigates the adverse effect of quality risk. To obtain these results, we develop and analyze a three‐stage decision model. This model is also used to understand the impact of recent information technologies on profits and product quality. For example, we provide a decision tree that an OEM can use in deciding whether to invest in an enterprise‐wide quality management system that enables accounting of quality‐related activities across the supply chain. © 2009 Wiley Periodicals, Inc. Naval Research Logistics 2009     

Collaborative procurement among competing buyers

Collaborative procurement emerged as one of the many initiatives for achieving improved inter‐firm coordination and collaboration. In this article, we adopt a game‐theoretical approach to study the interaction between two firms who procure jointly, but produce independently and remain competitors in a product market characterized by price‐sensitive demand. We study the underlying economics behind collaborative procurement, examine the effects of collaboration on buyer and supplier profitability, and derive conditions under which collaboration is beneficial to each participant. We find that a necessary and sufficient condition for a buyer to collaborate is to increase its sales. We identify the conditions that lead equal size buyers (i.e., consortia consisting of only large buyers or only small buyers) versus different size buyers to collaborate. We also determine the conditions that make collaboration profitable for the supplier, and show that rather than selling a large quantity to a single buyer, the supplier prefers to sell to multiple buyers in smaller quantities. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008     

CRISIS RESPONSE CAPABILITY

As the leading economic and political power in the region, South Africa cannot afford to neglect its responsibility toward its regional neighbours. If South Africa does not accept the role, an outside power may step in to fill the vacuum. The creation of peace, security and stability will not be created without action and it will not be maintained by goodwill. Developing a crisis response force is clearly required of South Africa. The force should be able to work co-operatively or autonomously in a range of missions n land and on rivers and lakes. Air-and sea-landed operations and air-support for ground operations should also be planned for. The SANDF does not have this ability at the moment but it should modify its structure and equipment to perform this important role in the region.     

Panel Causality Analysis Between Defence Expenditure and Economic Growth in Developed Countries

There is much controversy in the literature over whether military expenditures have a positive, negative or no relation impact on economic growth. The aim of this paper is to determine the relationship between GDP and defence expenditure. The study analyses GDP and defence expenditures of the developed countries with cross-sectional ADF and SURADF unit root tests using annual data for the years 1980–2007. We conclude that in the long term, according to the Pedroni cointegration test, there exists a relationship between defence expenditure and economic growth. Furthermore, by utilizing the Granger causality test, we find that defence expenditure is a factor in economic growth. In other words, our study validates the hypothesis that defence spending by economically developed countries positively contributes to their economics.     

Bicriteria multiresource generalized assignment problem

In this study, we consider a bicriteria multiresource generalized assignment problem. Our criteria are the total assignment load and maximum assignment load over all agents. We aim to generate all nondominated objective vectors and the corresponding efficient solutions. We propose several lower and upper bounds and use them in our optimization and heuristic algorithms. The computational results have shown the satisfactory behaviors of our approaches. © 2014 Wiley Periodicals, Inc. Naval Research Logistics, 61: 621–636, 2014     

Dissolution of an Empire: Insights from the İstanbul Bourse and the Ottoman War Bond

During the transformation period of the Ottoman Empire leading to the Republic of Turkey, many conflicts took place between 1918 and 1923. These conflicts interrupted the servicing of the Ottoman war bond. The reimbursement likelihood of this bond was related to the outcomes of First World War and the hostilities. This paper analyses the impacts of First World War and hostilities on the risk assessments regarding the Ottoman war debt, using manually collected data on the price of the Ottoman war bond traded at the ?stanbul bourse between 1918 and 1925. The empirical results imply that the defeat of the Bulgarian army and the peace offer of Austria-Hungary were associated with the increasing premium demanded by investors of the bond. The victories of the Turkish National Movement and the peace offer of the Allies to end the hostilities by 1922 positively affected the likelihood of the servicing of the debt.     

MILITARY EXPENDITURE AND ECONOMIC GROWTH IN MIDDLE EASTERN COUNTRIES: A DYNAMIC PANEL DATA ANALYSIS

Defence expenditures have both costs and benefits to the economy. The costs of defence expenditures are mainly emphasized as opportunity costs. On the other hand, defence spending may have growth‐promoting potential benefits: a rise in defence spending may result in a higher aggregate demand, production and employment. This paper examines empirically the effects of military expenditures on economic growth for Middle Eastern countries and Turkey, for the time‐period 1989–1999. The relationship between military expenditure and economic growth is investigated by using cross‐section and dynamic panel estimation techniques. Empirical analysis indicates that military expenditure enhances economic growth in the Middle Eastern countries and Turkey as a whole.     

AFRICA'S NEW SECURITY THREAT

HIV/AIDS is not a traditional security threat but the consequences are just as serious. That it is non-violent serves only to disguise its devastation. HIV/AIDS overwhelms health services, shortens lives, destabilises governments and disrupts societies; sometimes to the extent that major conflict ensues. The extent of the virus is far more serious than initially anticipated. Infection rates in Southern Africa indicate that huge numbers of people will die over the next 10 years, affecting the basic functioning of society. The ability to produce and distribute food will be reduced. The skills and human resources needed for effective government will become even more scarce. Political instability may result in complex humanitarian emergencies and crime; neither of which can be addressed without effective government. While the populations of Southern Africa have proved resilient in the past, it is certain that the virus will extract a huge cost from the people of the region in the future.     

ANALYSING THE DETERMINANTS OF TERRORISM IN TURKEY USING GEOGRAPHICALLY WEIGHTED REGRESSION

This paper investigates the determinants of provincial terrorism in Turkey taking spatial dimension into account for the time period 1990–2006. Following a traditional global regression analysis, spatial variations in the relationships are examined with geographically weighted regression (GWR) to obtain locally different parameter estimates. Empirical results indicate that increases in income and schooling ratio tend to reduce the provincial average level of terrorism, whereas an increase in unemployment enhances it. Moreover, GWR results indicate that the provincial effects of per capita income and education are more pronounced for the Eastern and South Eastern provinces compared to the Western provinces.     

URBAN FORTRESSES

One of the consequences of the state's inability to protect the life and property of all its citizens—especially in developing countries—is the formation of private alternatives to crime prevention and control. Gated communities, or enclosed neighbourhoods, are one such popular alternative. This article compares the phenomenon of gated communities in two developing countries: South Africa and Brazil. Both countries are plagued by violent crime and share key human development indicators. The article also explores key issues that have been raised around gated communities in both countries. Gated communities can contribute to spatial fragmentation in urban areas, and reflect increased polarisation, fragmentation and diminished solidarity within society. By excluding other urban residents and people from surrounding neighbourhoods, gated communities can contribute to social exclusion, inhibiting the construction of social networks that form the basis of social and economic activities.