Exploring the trade-off between liquidity, risk and return under sectoral diversification across distinct economic settings

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carla Henriques ◽  
Elisabete Neves
Keyword(s):  
Economic Crisis ◽  
Liquidity Risk ◽  
Investment Strategies ◽  
Objective Functions ◽  
Cardinality Constraints ◽  
Risk And Return ◽  
Trade Off ◽  
Content Type ◽  
Risk Increase ◽  
Trade Offs

PurposeThis paper aims to explore the trade-off between liquidity, risk and return under sectoral diversification across distinct economic settings and investment strategies.Design/methodology/approachA novel multi-objective portfolio model is proposed to assess investment decisions under sectoral diversification, where the objective functions and constraints are interval-valued. The objective functions used are risk minimization (through the semi-absolute deviation measure of risk), maximization of liquidity (using turnover as a proxy) and the maximization of logarithmic return. Besides coherence constraints (imposing that the sum of the percentages of investment assigned to each stock should be equal to 100%), constraints regarding the maximum proportion of capital that can be invested (ensuring a minimum level of diversification) and cardinality constraints (to account for transaction costs) are also imposed.FindingsBesides the trade-off between return and risk, the study findings highlight a trade-off between liquidity and return and a positive relationship between risk and liquidity. Under an economic crisis scenario, the trade-off between return and liquidity is reduced. With the economic recovery, the levels of risk increase when contrasted with the setting of the economic crisis. The highest liquidity levels are reached with the economic boom, whereas the highest returns are obtained with the economic recession.Originality/valueThis paper suggests a new modeling approach for assessing the trade-offs between liquidity, risk and return under different scenarios and investment strategies. A new interactive procedure inspired on the reference point approach is also proposed to obtain possibly efficient portfolios according to the investor's preferences. Regarding previous approaches suggested in the literature, this new procedure allows obtaining both supported and unsupported efficient solutions when cardinality constraints are included.

A new framework for time-cost trade-off considering float loss impact

2017 ◽  
Vol 22 (1) ◽  
pp. 20-36 ◽  
Author(s):  
Sameh Monir El-Sayegh ◽  
Rana Al-Haj
Keyword(s):  
Optimization Technique ◽  
Time Cost ◽  
Trade Off ◽  
Deterministic Optimization ◽  
Content Type ◽  
Project Duration ◽  
Trade Offs ◽  
Project Objectives ◽  
The Impact ◽  
New Framework

Purpose The purpose of this paper is to propose a new framework for time–cost trade-off. The new framework provides the optimum time–cost value taking into account the float loss impact. Design/methodology/approach The stochastic framework uses Monte Carlo Simulation to calculate the effect of float loss on risk. This is later translated into an added cost to the trade-off problem. Five examples, from literature, are solved using the proposed framework to test the applicability of the developed framework. Findings The results confirmed the research hypothesis that the new optimum solution will be at a higher duration and cost but at a lower risk compared to traditional methods. The probabilities of finishing the project on time using the developed framework in all five cases were better than those using the classical deterministic optimization technique. Originality/value The objective of time–cost trade-off is to determine the optimum project duration corresponding to the minimum total cost. Time–cost trade-off techniques result in reducing the available float for noncritical activities and thus increasing the schedule risks. Existing deterministic optimization technique does not consider the impact of the float loss within the noncritical activities when the project duration is being crashed. The new framework allows project managers to exercise new trade-offs between time, cost and risk which will ultimately improve the chances of achieving project objectives.

scholarly journals The transformative service paradox: the dilemma of wellbeing trade-offs

2020 ◽  
Vol 31 (4) ◽  
pp. 637-663
Author(s):  
Rebekah Russell–Bennett ◽  
Rory Mulcahy ◽  
Kate Letheren ◽  
Ryan McAndrew ◽  
Uwe Dulleck
Keyword(s):  
Laboratory Experiment ◽  
Qualitative Interviews ◽  
Implicit Assumption ◽  
Trade Off ◽  
Content Type ◽  
Individual Level ◽  
Trade Offs ◽  
Physical Wellbeing ◽  
The Individual ◽  
Future Implication

PurposeA transformative service aims to improve wellbeing; however, current approaches have an implicit assumption that all wellbeing dimensions are equal and more dimensions led to higher wellbeing. The purpose of this paper is to present evidence for a new framework that identifies the paradox of competing wellbeing dimensions for both the individual and others in society – the transformative service paradox (TSP).Design/methodology/approachData is drawn from a mixed-method approach using qualitative (interviews) and quantitative data (lab experiment) in an electricity service context. The first study involves 45 household interviews (n = 118) and deals with the nature of trade-offs at the individual level to establish the concept of the TSP. The second study uses a behavioral economics laboratory experiment (n = 110) to test the self vs. other nature of the trade-off in day-to-day use of electricity.FindingsThe interviews and experiment identified that temporal (now vs. future) and beneficiary-level factors explain why individuals make wellbeing trade-offs for the transformative service of electricity. The laboratory experiment showed that when the future implication of the trade-off is made salient, consumers are more willing to forego physical wellbeing for environmental wellbeing, whereas when the “now” implication is more salient consumers forego financial wellbeing for physical wellbeing.Originality/valueThis research introduces the term “Transformative Service Paradox” and identifies two factors that explain why consumers make wellbeing trade-offs at the individual level and at the societal level; temporal (now vs. future) and wellbeing beneficiary.

scholarly journals Prophages in Lactobacillus reuteri Are Associated with Fitness Trade-Offs but Can Increase Competitiveness in the Gut Ecosystem

2019 ◽  
Vol 86 (1) ◽  
Author(s):  
Jee-Hwan Oh ◽  
Xiaoxi B. Lin ◽  
Shenwei Zhang ◽  
Stephanie L. Tollenaar ◽  
Mustafa Özçam ◽  
...  
Keyword(s):  
Competitive Advantage ◽  
Intestinal Tract ◽  
Lactobacillus Reuteri ◽  
Distal Colon ◽  
Biologically Active ◽  
Trade Off ◽  
Content Type ◽  
Trade Offs ◽  
Phage Production

ABSTRACT The gut microbiota harbors a diverse phage population that is largely derived from lysogens, which are bacteria that contain dormant phages in their genome. While the diversity of phages in gut ecosystems is getting increasingly well characterized, knowledge is limited on how phages contribute to the evolution and ecology of their host bacteria. Here, we show that biologically active prophages are widely distributed in phylogenetically diverse strains of the gut symbiont Lactobacillus reuteri. Nearly all human- and rodent-derived strains, but less than half of the tested strains of porcine origin, contain active prophages, suggesting different roles of phages in the evolution of host-specific lineages. To gain insight into the ecological role of L. reuteri phages, we developed L. reuteri strain 6475 as a model to study its phages. After administration to mice, L. reuteri 6475 produces active phages throughout the intestinal tract, with the highest number detected in the distal colon. Inactivation of recA abolished in vivo phage production, which suggests that activation of the SOS response drives phage production in the gut. In conventional mice, phage production reduces bacterial fitness as fewer wild-type bacteria survive gut transit compared to the mutant lacking prophages. However, in gnotobiotic mice, phage production provides L. reuteri with a competitive advantage over a sensitive host. Collectively, we uncovered that the presence of prophages, although associated with a fitness trade-off, can be advantageous for a gut symbiont by killing a competitor strain in its intestinal niche. IMPORTANCE Bacteriophages derived from lysogens are abundant in gut microbiomes. Currently, mechanistic knowledge is lacking on the ecological ramifications of prophage carriage yet is essential to explain the abundance of lysogens in the gut. An extensive screen of the bacterial gut symbiont Lactobacillus reuteri revealed that biologically active prophages are widely distributed in this species. L. reuteri 6475 produces phages throughout the mouse intestinal tract, but phage production is associated with reduced fitness of the lysogen. However, phage production provides a competitive advantage in direct competition with a nonlysogenic strain of L. reuteri that is sensitive to these phages. This combination of increased competition with a fitness trade-off provides a potential explanation for the domination of lysogens in gut ecosystem and how lysogens can coexist with sensitive hosts.

Australian customer willingness to pay and wait for mass-customised products

2018 ◽  
Vol 30 (1) ◽  
pp. 106-120 ◽  
Author(s):  
Hassan Daronkola Kalantari ◽  
Lester Johnson
Keyword(s):  
Cluster Analysis ◽  
Design Methodology ◽  
Additional Time ◽  
Market Segments ◽  
Trade Off ◽  
Content Type ◽  
Mass Customisation ◽  
Product Categories ◽  
Trade Offs ◽  
To Receive

Purpose The purpose of this paper is to find out how consumers constantly trade off the potential extra cost of mass customisation with the additional time they have to wait to receive their customised products. Design/methodology/approach The authors examine this issue by using conjoint analysis to estimate the trade-offs using a sample of Australian consumers. The authors use cluster analysis to form market segments in the three product categories examined. Findings The segments demonstrate that there are groups of customers who are quite willing to trade-off price with waiting time. The results have significant implications for Australian manufacturers who are contemplating moving into mass customisation. Originality/value Many researchers have investigated the issue of a customer’s readiness to buy a customised product. In particular, they have examined whether customers are willing to pay extra for a mass-customised product, whether they would spend some time to design it, as well as wait to receive it. There has been no study that has examined all three factors simultaneously. The results of this study can help manufacturers form a better understanding of customer willingness for purchasing mass-customised products.

scholarly journals Optimal maintenance scheduling for local public purpose buildings

2016 ◽  
Vol 34 (2) ◽  
pp. 120-135 ◽  
Author(s):  
Arnt O. Hopland ◽  
Sturla F. Kvamsdal
Keyword(s):  
Local Governments ◽  
Formal Model ◽  
Maintenance Scheduling ◽  
Trade Off ◽  
Content Type ◽  
Maintenance Schedule ◽  
Public Purpose ◽  
Trade Offs ◽  
Optimal Maintenance ◽  
The Cost

Purpose – The purpose of this paper is to set up and analyze a formal model for maintenance scheduling for local government purpose buildings. Design/methodology/approach – The authors formulate the maintenance scheduling decision as a dynamic optimization problem, subject to an accelerating decay. This approach offers a formal, yet intuitive, weighting of an important trade-off when deciding a maintenance schedule. Findings – The optimal maintenance schedule reflects a trade-off between the interest rate and the rate at which the decay accelerates. The prior reflects the alternative cost, since the money spent on maintenance could be saved and earn interests, while the latter reflects the cost of postponing maintenance. Importantly, it turns out that it is sub-optimal to have a cyclical maintenance schedule where the building is allowed to decay and then be intensively maintained before decaying again. Rather, local governments should focus the maintenance either early in the building’s life-span and eventually let it decay toward replacement/abandonment or first let it decay to a target level and then keep it there until replacement/abandonment. Which of the two is optimal depends on the trade-off between the alternative cost and the cost of postponing maintenance. Originality/value – The paper provides a first formal inquiry into important trade-offs that are important for maintenance scheduling of local public purpose buildings.

Optimizing decisions using knowledge risk strategy

2016 ◽  
Vol 20 (5) ◽  
pp. 936-958 ◽  
Author(s):  
Les Coleman ◽  
R. Mitch Casselman
Keyword(s):  
Organizational Performance ◽  
Firm Risk ◽  
Knowledge Gaps ◽  
Trade Off ◽  
Content Type ◽  
Knowledge Based ◽  
Trade Offs ◽  
Strategic Approach ◽  
Knowledge Intensive ◽  
Practical Implications

Purpose The paper aims to focus on a strategic approach for making trade-offs between knowledge and risk. Design/methodology/approach Knowledge and risk are viewed as organizational resources that have an inherent trade-off between them, so that optimal firm performance does not necessarily arise through greater accumulation of knowledge nor from reduced risk. This trade-off is represented as an efficient knowledge-risk frontier. The paper examines the dynamics of this frontier on organizational performance. Findings The concept of knowledge-risk strategy is presented which contends that non-probabilistic risk or uncertainty originates from gaps in knowledge. Research limitations implications The paper proposes a new line of research to understand decision-making in organizations, particularly those which focus on knowledge intensive products and services. Practical implications The paper proposes managerial approaches to improve organizational positioning relative to the efficient knowledge-risk frontier through greater awareness of contributors to knowledge gaps and risk in decision situations, as well as traditional strategic tools such as outsourcing. Originality/value The postulated link between risk and knowledge gaps establishes a knowledge-based view of firm risk and recognizes trade-offs for decisions regarding knowledge accumulation.

Sustainability and energy efficiency

2010 ◽  
Vol 40 (1/2) ◽  
pp. 148-158 ◽  
Author(s):  
Remko van Hoek ◽  
Mark Johnson
Keyword(s):  
Public Relations ◽  
Equilibrium Points ◽  
Point Of View ◽  
Special Issue ◽  
Trade Off ◽  
Content Type ◽  
Case Examples ◽  
Fuel Prices ◽  
Trade Offs ◽  
Sustainability Initiatives

PurposeThe purpose of this paper is to attempt to answer the questions posed by the special issue editors using insights from leading academics in the field and case examples drawn from two renowned global companies. It also aims to define potential avenues for further research in the thematic areas covered.Design/methodology/approachThe paper uses a roundtable discussion with the Council for Supply Chain Management Professionals's Education Strategy Committee and case materials and presentations from Cisco Systems and Walmart to generate the insights.FindingsThe existing cost/lead‐time trade‐off model still applies yet changes in fuel prices and the importance of sustainability initiatives (also from a marketing point of view) lead to different equilibrium points.Research limitations/implicationsBased on insight from leading academics and case examples, the paper suggests that the trade‐offs are made more intricate and require the more accurate addition of new factors such as social costs as today most of the decision making tends to be traditional economic and not yet include social and environmental as much. Nuances need to be added to avoid marketing skewing the trade‐off away from sustainability over time if it turns out that sustainability is a marketing/public relations fad that might go away. And the length of time for sustainable initiatives to have an impact needs to be considered, if it turns out the marketing advantage does not have staying power as long as investment write off periods. These suggest potentially fruitful avenues for further research. The cases also offer practical guidance as to how leading companies green their supply chains.Originality/valueThis paper specifically addresses the call for papers questions of the special issue editors through the synthesis of insights from leading academics and companies.

scholarly journals Modelling trade-offs in students’ choice set when determining universities

2019 ◽  
Vol 33 (5) ◽  
pp. 979-989 ◽  
Author(s):  
Andriani Kusumawati ◽  
Nelson Perera ◽  
Venkata Yanamandram
Keyword(s):  
Higher Education ◽  
Conjoint Analysis ◽  
Consumer Choice ◽  
Public University ◽  
Marketing Strategies ◽  
Potential Contribution ◽  
Prospective Students ◽  
Trade Off ◽  
Content Type ◽  
Trade Offs

Purpose The purpose of this paper is to identify the factors influencing Indonesian students’ choice of university by estimating the trade-off students make in selecting a university. Design/methodology/approach Conjoint analysis was used to examine the relative importance and the part-worth scores of the attributes that influence students’ public university preferences in Indonesia. Findings High-school leavers in Indonesia trade off university preferences and view advice from family, friends, and/or teachers, reputation, and job prospects as important factors for selecting a public university. Two different preference-based segments of prospective students were identified from cluster analysis, and classified as either a “social networks-based decision” or a “rational decision” segment. A choice simulator was employed with three propositions, and the segments were found to have dissimilar preferences. Research limitations/implications While this paper provides insights on higher-education consumer choice, more research is needed that includes samples from different types of higher-education institutions and fields of study. Practical implications A greater understanding of student choice can help to inform marketing practices and customize marketing strategies for each segment by providing important information to principal parties involved in making university choice decisions. Originality/value This paper demonstrates the relevance and value of conjoint analysis as an effective analytical tool for the identification of important choice criteria and its potential contribution to the development of more effective marketing strategies.

SEC issues final rule on investment company liquidity risk management

2017 ◽  
Vol 18 (1) ◽  
pp. 43-52 ◽  
Author(s):  
Rachael Leah Schwartz ◽  
Domenick Pugliese ◽  
Marguerite Bateman ◽  
Kimberly Vargo
Keyword(s):  
Risk Management ◽  
Liquidity Risk ◽  
Investment Strategies ◽  
Investment Company ◽  
Content Type ◽  
Investment Companies ◽  
The Us ◽  
Final Rule ◽  
General Compliance ◽  
Insight Into

Purpose To provide an overview of the US Securities and Exchange Commission’s (SEC) recently adopted rule 22e-4 (Rule 22e-4) under the Investment Company Act of 1940, as amended (1940 Act) regarding investment company liquidity risk management programs. Design/methodology/approach Reviews and summarizes the specific requirements of Rule 22e-4 to better enable investment companies and their boards to comply by the general compliance date of December 1, 2018 (smaller complexes have until June 1, 2019). Findings The SEC clarifies that each fund should tailor its particular Program to ensure that it is adequately assessing and managing its specific liquidity risk based on its investment strategies and risks; however, it is not expected that a fund would eliminate all adverse impacts of liquidity risk. In addition, under the final rule, while the board does have certain duties and responsibilities with respect to certain aspects of a fund’s Program, the SEC pared back much of what had been in the Proposing Release to ensure that the board’s role remains one of oversight and not management. Practical implications Although the compliance date does not occur for almost two years, funds and their boards should begin reviewing the Rule 22e-4 requirements now and developing their Program. Originality/value Practical guidance from experienced investment management attorneys that provides insight into expectations for compliance with Rule 22e-4.

scholarly journals Reinterpreting Fisher’s coordinated strategies: a longitudinal case study

2018 ◽  
Vol 38 (5) ◽  
pp. 1166-1187 ◽  
Author(s):  
Roy Stratton
Keyword(s):  
Supply Chain ◽  
Operations Management ◽  
Causal Reasoning ◽  
Single Case ◽  
Effective Means ◽  
Theoretical Models ◽  
Longitudinal Case Study ◽  
Trade Off ◽  
Content Type ◽  
Trade Offs

Purpose Much has been written about the need to align the supply chain with the product/market but it has proved, elusive especially in response to a supply change transitions. The purpose of this paper is to review the established theoretical models before considering how the realignment process can be better supported in the light of a longitudinal study. Design/methodology/approach This paper uses a single apparel case where data were gathered over a five-year period involving multiple site visits, management interviews and archival data across three echelons of the supply chain. Repeated visits enabled the collection of contemporary evidence and the development and testing of the causal relationships. This case was part of a multi-case research project that explored the causal relationship between variation, uncertainty, performance trade-offs and buffering mechanisms (time, capacity and inventory). Findings The case analysis demonstrates how established theory and causal reasoning can be used to explain the trade-off oscillations that characterised this case. As with earlier studies, local cost considerations predominated, interspersed with strategic countermeasures. Fisher’s (1997) concept of coordinated strategies is shown to provide an effective means of clarifying the trade-off implications of the transition in support of proactive realignment. This concept is discussed in relation to other cases and literature before proposing how this could be developed and used as a basis for further research. Research limitations/implications This research was limited to a single case and although this involving several transitions the findings require further testing. Practical implications Supply chain redesign is of growing importance and with it the need to more effectively manage such transitions. This paper clarifies the need for supply chain orientation and offers means of clarifying the implications of such transitions to management. Originality/value This paper provides case evidence of the underlying operations management issues and the associated analysis.

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