A service provided by the WU Library and the WU IT-Services

On stabilizing volatile product returns

Nowak, Thomas and Hofer, Vera (2014) On stabilizing volatile product returns. European Journal of Operational Research, 234 (3). pp. 701-708. ISSN 0377-2217

[img]
Preview
PDF
Download (374Kb) | Preview

Abstract

As input ows of secondary raw materials show high volatility and tend to behave in a chaotic way, the identification of the main drivers of the dynamic behavior of returns plays a crucial role. Based on a stylized productionrecycling system consisting of a set of nonlinear difference equations, we explicitly derive parameter constellations where the system will or will not converge to its equilibrium. Using a constant elasticity of substitution production function, the model is then extended to enable coverage of real world situations. Using waste paper as a reference raw material, we empirically estimate the parameters of the system. By using these regression results, we are able to show that the equilibrium solution is a Lyapunov unstable saddle point. This implies that the system is sensitive on initial conditions that will hence impede the predictability of product returns. Small variations of production input proportions could however stabilize the whole system. (authors' abstract)

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website. Access to the published version may require a subscription. The original publication is available at www.elsevier.com.
Keywords: OR in natural resources / Discrete dynamical systems / Production
Divisions: Departments > Welthandel > Transportwirtschaft und Logistik
Version of the Document: Submitted
Depositing User: ePub Administrator
Date Deposited: 22 Apr 2014 11:47
Last Modified: 02 Aug 2015 20:47
Related URLs:
URI: http://epub.wu.ac.at/id/eprint/4127

Actions

View Item