Table of Content

25 December 2017, Volume 26 Issue 12

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Theory Analysis and Methodology Study

Impacts of Government Subsidies on Investment and Operation Decisions in Public-private Partnerships

CAO Qi-longa, ZHOU Jing, SHENG Zhao-han

2017, 26(12):  1-8.  DOI: 10.12005/orms.2017.0279

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This paper analyzes the impact of government subsidies on the investor’s investment and operation decisions in public-private partnership projects from the view of the private investor. By dividing the government subsidies into three classes and by employing the real option theory to build models, the investment threshold and exit threshold are obtained. The case study demonstrates that the exit threshold is lower than the project’s cost under operation period and the investment threshold is higher than the exit threshold under investment threshold when subsidies are taken into account. Moreover, as government subsidies increase, so the threshold of investment and exit would decrease strictly.

Analysis for Enhancing Supply Chain Resilience with Government Reward and Punishment Based on Evolutionary Game

WANG Hai-jun, TAN Jie, JI Xiao-wei

2017, 26(12):  9-16.  DOI: 10.12005/orms.2017.0280

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Normal operation is the premise of supply chain, especially for agricultural supply chain and green supply chain. Government reward and punishment is one of the important measures to ensure the normal operation of supply chain. This paper uses evolutionary game theory to study the investment decisions of supply chain members. With the increasing contribution of the investment, five evolutionary stable strategies appear. We also propose that the government should use reward and punishment mechanisms to coordinate the investment behaviors. Then the necessary and sufficient conditions to encourage all the supply chain members invest for supply chain resilience are obtained. Finally, we prove both the effectiveness of the evolution model and the rationality of the coordination mechanisms, by using numerical simulation.

Evolutionary Game Analysis of Multiple Enterprises Cooperative Reducing Emissions with Collective Risk

WANG Xian-jia, HE Qi-long, QUAN Ji

2017, 26(12):  17-22.  DOI: 10.12005/orms.2017.0281

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Environmental pollution has significant cross-regional characteristics, and environmental resources have the characteristics of public goods. It is difficult to achieve effective results in the treatment of pollutants by single pollution-producing enterprises. Multi-enterprise cooperation within the same jurisdiction is the only way for environmental protection. This paper researches on the evolutionary process of decision among multiple enterprises from the perspective of evolutionary game theory. The evolutionary game model between multi-enterprises governments is established. Considering environmental degradation risk brought by total emissions more than the capacity threshold, we focus on the effect of risk on the emergence of cooperation to reduce emissions among enterprises. The results show that higher governance cost strongly constraints the behavior choice of profit-seeking enterprises to governance pollution, causing social dilemma-the tragedy of the commons. Based on higher governance cost, we find that the dilemma is relieved in high-risk situations where cooperation is likely to persist and dominate defection. Large initial endowment and emissions charges to enterprises can effectively promote the enterprise to control the pollutant discharging, in order to protect their private endowment. Finally, some policy suggestions for the implementation of environmental regulation are proposed.

Competitive Analysis of Time-Locked Free Trial Strategy of Duopoly

WANG Hai-ping, LIU Shu-lin, LIN Jun

2017, 26(12):  23-30.  DOI: 10.12005/orms.2017.0282

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At present, offering time-locked free trial has been a common practice of software manufactures to reduce consumers’ uncertainty about product quality and to promote the diffusion of new products. Related research is mostly confined to monopoly situation, but rarely analyzes the common oligopolistic situation in reality. Considering consumer learning heterogeneity after trial, we build a Hotelling model to examine the equilibrium to the trial-offering game between duopoly firms, and possible influencing factors. The results show that: (1)If the expected consumer experience of both firms is very good, both should offer; if poor, neither offers. (2)Otherwise, the equilibrium further depends on consumers’ sensitivity to the horizontal differentiation between firms. If consumers are trivially sensitive to horizontal differentiation, firms must take opposite trial-offering strategies, and moreover, only when the gap between firms in expected consumer experience is very large, the superior offers while the inferior does not; otherwise, they just need to keep contrary in trial-offering strategies. If consumers are very sensitive to horizontal differentiation, firms just need to take the same trial-offering strategy. (3)As the required time for consumers to completely learn the software becomes longer, regions “Just keep the same” and “Neither offers” expand, while regions “Must be contrary” and “Both offer” shrink. This is the first exploration of free trial strategy competition problem, and the results can complement and promote relevant theoretical research, and also can provide scientific guidance for relevant practice.

Investment Projects Decision Model and Numerical Simulation Analysis Based on Sequential Reciprocity Equilibrium

ZHONG Mei-rui, LIU Qing, HUANG Jian-bai

2017, 26(12):  31-39.  DOI: 10.12005/orms.2017.0283

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This paper attempts to describe the capital allocation decision making behavior and the incentive contracts design theoretically under the conditions of symmetric and asymmetric information, based on the evidence and the characteristics of the reciprocity of individuals. During the theoretical model construction and equilibrium analysis, the results show that managers’ concern over reciprocity can improve their effort level in the implementation of the project, accompanied by the similar effect which explicit incentive contract produces, that is, reciprocity considerations lead to “crowding-in effect”. The results also show that managers would like to report the truthful project quality when they are motivated by reciprocity. It optimizes the capital allocation plan and avoids the moral hazard problems under the condition of asymmetric information specific performance in the setting of sharing coefficient. Namely, the reciprocal motivation produces the role of “signal display mechanism”. Due to the “crowding-in effect”, the critical point of capital allocation to specific project is unlikely to be very low. The seriousness of underinvestment is restrained as well. The research results of this paper provide different contract options for project managers with heterogeneity, and expand the framework of the Principal-Agent Framework Decision under the assumption of “self-interest” to “non self-interest” behavior of agency decisions.

Two Stages of The New Industries Option Programming Decision Model

ZHAO Hui, GU Bao-yan

2017, 26(12):  40-45.  DOI: 10.12005/orms.2017.0284

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In order to compete for the same market resources, start-ups in emerging industry will show the gradual change or the abrupt change in the process of the industry evolution. There is a high degree of uncertainty involved in the change of startup value. For the purpose of reducing the uncertainty risk of the investment decision and obtaining the stable investment income, firstly we use the method of the option portfolio to carry out the estimated variables decision at the first stage. Secondly, according to the different returns of the options, we combine the linear programming technology to make a compensatory optimization decision at the second stage. Through Baba, JD, Apple and Nokia sample companies’ data, we test the actual effect of the two stages option programming decision model in this paper. The conclusion shows that the method can reduce the uncertainty interference effectively in emerging industries investment. The application of this decision model can obtain stable income, make the risk in a controllable state, and achieve the goal of optimizing investment decision.

Disruption Management Model for Location Change in Express Delivery

DING Qiu-lei, HU Xiang-pei, JIANG Yang, RUAN Junhu

2017, 26(12):  46-52.  DOI: 10.12005/orms.2017.0285

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It is difficult to generate a new plan when the location changes in express delivery. In such cases, continuing with the original plan may not be optimal or feasible. First of all, based on the approach of consumption behavior, the customers are divided into sensitive customers, tolerant customers, and complaining customers. Secondly, the problem of location change is divided into two stages by taking the customer characteristics into consideration. Then, the sub-model of disruption management is formed at each stage and the solution approach is demonstrated by using the method of disruption management and operations research. Finally, the computational result proves that our approach is more effective than existing rescheduling.

Repurchase Strategy Optimization Considering Consumers’ Bounded Rational Return Policy in the Two-stage C2B E-commerce Supply Chain

LI Jian, LI Lin-lin, SHI Hao

2017, 26(12):  53-60.  DOI: 10.12005/orms.2017.0286

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Based on the bounded rational behavior of consumers in e-commerce transactions, this paper studies two stage C2B e-commerce transactions, focusing on the impact of consumer's return behavior on supply chain members, and further researches the impact of the return of the previous stage of the sales on the latter stage. The results show that the two stages of return compensation is different, based on which the coordinated research of two stage sales is carried out. Studies have shown that manufacturers can adjust the repurchase price to reconcile two stage phase sales. Finally, numerical examples are used to verify the relevant conclusions.

Improving Operational Efficiency of Double-queuing System in Large Supermarket

LI Sen-biao, XING Wen-jie

2017, 26(12):  61-67.  DOI: 10.12005/orms.2017.0287

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Based on the M / M / 1 queuing model and the customer waiting time as the objective function, first, the “fast tracks” of supermarket are studied and a mode of optimizing on operational efficiency of queuing system is given. It is proved that the Double-queuing System of the supermarket with “fast tracks” is superior to the Single-queuing System, and the Double-queuing System has the optimal number of cashers. Then, the solution that leads to the optimal cut-off number of commodities under Double-queuing System is obtained. Finally, by using the empirical data, this paper verifies that this optimizing model of the Double-queuing System is feasible and improves operational efficiency in large supermarket. The study result could be widely applied to banks, toll stations, hospitals and so on.

Quick Tips Technology of Unconventional Emergency Based on Ontology Network Analysis

LI Hui-Jia, JIA Chuan-liang, SHE Lian

2017, 26(12):  68-76.  DOI: 10.12005/orms.2017.0288

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Due to the rarity and urgency of unconventional emergency, we need to make a decision very quickly by infrequent methods and procedures to minimize the risks of the events. In order to find the most relevant cases and corresponding guidance quickly, in this paper, we first analyze the relationships and the degree of association between events and further develop the ontology-based unconventional emergency network. Then, based on the analysis of network topology, we propose a fast search algorithm using CTD (Commute Time Distance), which employs the spectral analysis and complex network theory. The proposed method can be used to find the most relevant cases quickly with new occurred emergency (the newly added node), and thus performs timely guidance and cautions. Finally, we verify the validity of the proposed method using the Qingdao “11.22” pipeline bombings, and the results demonstrate that the proposed method is very efficient and can be easily applied to a variety of practical situations.

Research on Location-routing Problem in Emergency Resource Delivery Based on the Road Repair

WANG Jing, QU Chong-chong, YI Xian-qiang

2017, 26(12):  77-82.  DOI: 10.12005/orms.2017.0289

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Road damage, bridge collapse and the high risk of road network are the typical characters of emergency supplies distribution in the disaster. In this paper, distribution center location, road damage and traffic reliability are introduced to describe the effects on the distribution of emergency resource. Emergency resource distribution reliability path optimization model is established to minimize the rescue time. Then a Particle Swarm Optimization algorithm has been used to solve the model. With the help of empirical analysis in combination with an example, the model is proved suitable, which has a practical significance according to the distribution of emergency supplies under uncertain road network.

Application Research

Monetary Policy, the Non-state Enterprise Investment and the Expected Value of Sharing-type Compound Real Options in R&D Projects

WANG Chao-fa, SUN Jing-chun

2017, 26(12):  83-91.  DOI: 10.12005/orms.2017.0290

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How to reasonably evaluate the effect of monetary policy on the value of sharing-type compound real options in R&D projects has become the important problem of non-state enterprises. According to the cognitive biases of the non-state enterprise decision-makers and molecular dynamics theory, this research builds a value forecast model of sharing-type compound real options on the basis of analyzing real options characteristics and interaction value in the R&D projects. It shows that when the monetary expansion degree increases, project expected value will enlarge, and when the degree is less, the value will decrease. In addition, the different intensity of monetary policy has a nonlinear effect on the option value of upper and lower, and its changing range also makes the explanation for the expected value difference; monetary expansion coefficient is proportional to the upper or lower of the option value, but its proportion to the expected value of the option value is not complete. Finally, we examine the impact of changes in the mechanism and effect by simulation experiments, thereby providing an experience reference for the non-state enterprises decision makers.

Information Disclosure System, Corporate Venture Capital Information Disclosure and Corporate Value

WANG Su-sheng, KANG Yong-bo

2017, 26(12):  92-103.  DOI: 10.12005/orms.2017.0291

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Information disclosure system, information disclosure and corporate value are always hot topics in academia. This article first establishes reliable information disclosure index based on information disclosure system. We find information disclosure system has a significant positive relationship with information disclosure. Based on quasi-natural experiment and DID method, we find that information disclosure is significantly positive to corporate value. We further find that uncertainty and market competition have a moderating effect on the relationship between CVC information disclosure and corporate value. These results provide the evidence for the effect information disclosure system, and also we hope the study will provide evidence of experience for perfecting the design of information disclosure system.

Research on Stability Boundary of Two Cartel Collusion Mechanism in Repeated Procurement Auction

LIN Han-mi, SUN Shao-rong

2017, 26(12):  104-111.  DOI: 10.12005/orms.2017.0292

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We further study critical discount and reserve price’s effects on the stability of two cartel collusion mechanisms(strong cartel and weak cartel)in repeated procurement auctions . We draw two conclusions: (1)when collusive member's discount is larger than critical discount, no members will betray the collusion agreement, or else collusion will collapse; (2)compared with simple reserve price and Nash reserve price, the minimal deterrent reserve price is the most effective reserve price to deter collusion and earn certain profit. The research results help to enhance the understanding of two kinds of operation mechanism of the cartel collusion mechanism in repeated purchase auction, and enrich the theory research of supervision mechanism and strategies of collusion in repeated purchasing environment.

An Empirical Study of Historical Simulation Method of VaR with Changes in Volatility

LIU Hui, YAO Hai-xiang, MA Qing-hua

2017, 26(12):  112-118.  DOI: 10.12005/orms.2017.0293

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VaR(value at risk)method is the most popular tool in risk measure of financial market now. Historical simulation method is one of the main methods that calculate VaR, and its effectiveness needs to be tested by actual data from financial market. This paper selects the historical data of daily yield rate of the Shanghai Composite Index, and empirically tests the effectiveness of historical simulation method under three kinds of volatility changing conditions. The empirical result shows that VaR calculated by historical simulation method will measure market risk effectively when the volatility of market does not change. However, the method will underestimate the risk when the volatility of market climbs, and overestimate the risk when the volatility of market declines. By analyzing its calculation principles, we find the hysteresis of historical data. This characteristic is the reason why the method is ineffective when volatility of market changes. So, investors who use it to measure market risk must consider changes of volatility in the future.

Research on Financial Distress Prediction Based on Self-Organizing Map and Fuzzy Membership

WANG Lu, WU Chong

2017, 26(12):  119-125.  DOI: 10.12005/orms.2017.0294

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The good financial distress prediction model can effectively monitor the enterprise situation, which can avoid the tragedy for enterprises, such as business failures, restructuring and so on. The purpose in this paper is to construct the fuzzy self-organizing map model(FSOM), which integrates self-organizing map(SOM)with fuzzy C-Means(FCM), and apply it to financial distress prediction. This new model introduces the fuzzy membership to the learning rate function and automatically updates the neighborhood of the winner node in the process of the calculation. The batch algorithm is adopted in this paper in the process of iterative calculation. Therefore, FSOM model can enhance prediction accuracy and acquire the stable outcomes. In the empirical study, we research financial indicators of listed companies which are from the Shanghai Stock Exchange and the Shenzhen Stock Exchange in China. FSOM model has a better prediction performance in terms of financial distress prediction by comparing other traditional prediction models.

A Study of Internal Fraud Risk Measurement of Commercial Banks Based on the Bayesian Extreme Value Estimations

OUYANG Zi-sheng, HUANG Ying

2017, 26(12):  126-134.  DOI: 10.12005/orms.2017.0295

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Internal fraud risk is a significant risk source for the banking industry in China. Using the loss data of internal fraud of Chinese commercial banks, we present a segmented distribution model through the choice of exact threshold. We use the Box-Cox change for the data less than the threshold, and a full Paretian distribution for the data greater than the threshold. Then we use the Bayesian methods to estimate the parameters of the full Paretian distribution. The object of this work is to present a full Paretian model for measuring the operational risk of a bank. The model is used to estimate the value-at-risk, economic capital and probable maximum loss. At last, proposals for Chinese commercial banks are given to avoid operational risks.

Ontology Knowledge Modeling of Complex Quality Compliance Evaluation System and Automatic Evaluation Support

GU Tie-jun, LI Yi

2017, 26(12):  135-141.  DOI: 10.12005/orms.2017.0296

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Facing the refinement and scientific needs of quality management and evaluation, the paper discusses the common knowledge connotation on complex quality compliance evaluation system, proposes a generic knowledge modeling method of the compliance evaluation knowledge system with multi-level ontology architecture, and designs the evaluation knowledge meta-model under two different levels of granularity. Furthermore, an empirical study on firewall quality evaluation system knowledge ontology and automatic evaluation decision applications based on rule reasoning is also provided.

Characteristics of China’s Lease Financial Product Pricing and Its Effect Assessment

LU Zhen-yu, SUN Chao-ping, DONG Dong

2017, 26(12):  142-148.  DOI: 10.12005/orms.2017.0297

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Financial lease, as a kind of financial innovation product, is characterized by the following 3 transaction behaviors like trade, leasing, and finance. Its package pricing generally takes account of such elements as subject of financial lease, lease, rental rate, margin, fee, purchasing price and so on. This paper makes an empirical research into the effect of financial lease pricing on different industry, and the flexibility of the rent payment by using all the pricing schemes of a certain Financial Leasing Co., LTD. for five consecutive years. Results show that the financial lease pricing fails to fully take account of differences in industry, and the rent payment is rigid. Therefore, it is of great necessity to standardize and perfect China’s current financial lease industry pricing mechanism.

Dynamic Pricing Model of Software Products with Considering Piracy Tolerance

JIANG Zi-yan, TIAN Peng

2017, 26(12):  149-156.  DOI: 10.12005/orms.2017.0298

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Based on the theory of revenue management, and expanding the model of transient diffusion, this paper selects piracy tolerance, price and improvement innovation as decision variables, and chooses diffuse rate and innovation level as the state variables. In accordance with the optimal control theory, the dynamic pricing model is established to maximize revenue, as well as the Hamilton Equation to discuss the joint optimization strategy and correlation properties of three control variables. By simulation calculation, the conclusion is further verified. The conclusion shows that skimming-pricing is the optimization strategy. When the increasing value of marginal revenue is equal to the loss of value caused by piracy, piracy tolerance can be optimal. Compared to the mature stage of product-life-cycle, in the growth stage, gradually increasing the piracy tolerance, and slowing down the innovation speed-improved are the best choices. With reducing the loss structure, it should improve the piracy tolerance, and adopt the mutual complementary strategies of innovation mechanism and protection. Dynamic modeling can expand the concept of network externality in static model, and analyze the variables in continuous state, it is consistent with the adaptive learning mechanism, and has a better reference for practice.

Dynamic Pricing for Risk-averse Flights with Competition

HU Yu-sheng, LI Jin-lin, RAN Lun, ZHAO Tian

2017, 26(12):  157-164.  DOI: 10.12005/orms.2017.0299

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Starting with multiple competitive flights on the same line, based on the assumption that perfect information is known for each competitive flight, this paper develops dynamic pricing models for risk-averse competitive flights by Markov decision process and game theory, and the existence of Nash equilibrium prices is proved. Furthermore, we discuss the risk-averse dynamic pricing problem for the competitive flights in the case of incomplete information. The numerical experiment shows that equilibrium price of each risk-averse competitive flight is decreasing with its own remaining seat level and risk aversion coefficient, but increasing with other competitive flights’ remaining seat levels and risk aversion coefficients.

E-Retails’ Advertising Strategies Under Different Patterns of In-Store Referral

LI Zeng-lu, GUO Qiang, NIE Jia-jia

2017, 26(12):  165-172.  DOI: 10.12005/orms.2017.0300

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An advertising strategy problem of the e-retail is studied under different In-Store Referral patterns. We derive the equilibrium retail price, the rate of advertising effort and profit under without referral, one-way referral and two-way referral by Nash static game method. The results show that both e-retails take part in advertising without referral. In the case of one-way referral, when the ratio of profit share is small, two e-retails take part in the advertisement, but when the ratio of profit share is large, the equilibrium advertising strategy from just the recommended e-retail which takes part in advertising to both e-retails which take part in advertising with the increase of advertising cost coefficient. In the case of two-way referral, if the coefficient of advertising cost is small, no e-retails take part in advertising; if the coefficient of advertising cost is large, both e-retails participate in the advertisement. In addition, we study the driving force of the e-retail to recommend his competitor.

Management Science

Regional Resource Endowment、Cost constraints and Measure of Agriculture Productivity Efficiency

WANG Hong-yu, LIU kan , FAN De-cheng

2017, 26(12):  173-182.  DOI: 10.12005/orms.2017.0301

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Agriculture is the basic industries in our country, also is the basic safeguard for food security and economic development .According to the requirement of economic development strategy, developing effective regional agriculture, increasing efficiency of agricultural output, improving efficiency of resource use, promoting transferring of agriculture and resource between regions, forming efficient development of agricultural areas and optimal allocation of resource, is the important content of the regional economic development strategy. On the basis of Cobb-Douglas production function ,using cutting-edge Technical efficiency measurement, industrial input-output analysis, shift-share analysis, construct the efficient measure of agricultural production, according to industry production cost function measure rationality of industrial structure in different regions, and explore the goal and direction of industrial structure optimization. Results show that, the most regional resource endowment and level of agricultural development has not formed the best match. Improving efficient use of resources for agricultural capital resources within the region, government services and labor, at the same time, encouraging surplus resources transferring between industries and regions moderate ,transfer of industry from the use of low efficiency to high efficiency, elasticity of the elastic region from low output to high output.

An Information Push Algorithm based on User Identification Feature Model for Health Care of Traditional Chinese Medicine

TAI Lei-lei, TAO Shi-qi

2017, 26(12):  183-188.  DOI: 10.12005/orms.2017.0302

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The strengths and weaknesses of the traditional collaborative filtering algorithm are analyzed to design and construct the user identification feature model. Then, the collaborative filtering algorithm based on the user identification feature model is proposed. The classical collaborative filtering algorithm and the algorithm based on the user identification feature model are experimented to be compared, the advantages of the collaborative filtering algorithm based on the user identification feature model over the classical one could be found, thus proving that the collaborative filtering algorithm based on the user identification feature model could improve its efficiency in the process of the information push for health care of the traditional Chinese medicine.

The Effect of Institutional Gap on Chinese Overseas Subsidiaries’ Choice of International Entry Modes

LI Kang-hong, LIN Run-hui, SONG Jing-li, XIE Zong-xiao

2017, 26(12):  189-199.  DOI: 10.12005/orms.2017.0303

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One of the significant factors for an enterprise to gain access to overseas investment is institutional distance. The author attempts to make unique insights into this aspect. Based on the concept of institutional distance, the paper suggests a new concept: institutional gap. Then, this paper addresses the relationship between institutional gap and Chinese enterprises’ overseas market entry mode. In particular, the influences of institutional gap on the decision making of enterprises’ overseas market entry are under investigation in terms of positive and negative balances. To begin with, the paper proposes three relevant premises from theoretical perspectives. Then, Stata software is used to perform regression on corresponding variables in accordance with four models to verify the above three premises. The findings of regression research reveal that in case of positive formal institutional balance, foreign enterprises tend to build a joint-venture subsidiary, as the formal institutional differences between the host country and the mother country increase. In case of negative formal institutional balance, foreign enterprises tend to set up a fully-owned subsidiary, as the institutional difference between the host country and the mother country increase. However, informal institutions do not affect market entry modes, regardless of positive or negative institutional balance. In other words, as the informal institutional distance between the mother country and the host country increases, foreign enterprises tend to establish a fully-owned subsidiary.