I. Introduction, 20. — II. A linear decision rule, 22; decision rule for static uncertainty, 23; decision rule for dynamic uncertainty, 25; plans, 28. — III. Simulation tests of the dynamic decision rule under uncertainty, 29; the policy of inaction, 30; decision rule stabilization with poor forecasts, 32; decision rule stabilization with perfect forecasts, 33; performance comparisons, 34; errors in estimating the economic relations and the welfare function, 38. — IV. Economic growth, 39. — V. Stabilization of an inherently unstable economy, 42. — VI. In conclusion, 43.

In this note we study dynamic inventory problem for a follow-on provisioning in which program length is subject to uncertainty with a known distribution. It is shown that under rather general cost conditions, optimal policy is of (S, s) type. This is true whether or not there exists a time lag in delivery provided that excess demand is always backlogged. The case of an infinite program horizon is also briefly discussed. MODERN INVENTORY theory has been a relatively recent development, but its brief existence has proceeded at least along two fronts: theory and applications. The earliest work falling under this theory is that by Masse [6], followed by those of Arrow, Harris, and Marschak [1], Dvoretzky, Kiefer and Wolfowitz [5], Bellman, Glicksberg and Gross [4], and Modigliani and Hohn [7]. An excellent account of historical back ground of this theory was given by Arrow [2], and its applications to a great variety of economic and business may be found in many journals in such fields as operations research, management science, and production control. A detailed discussion of the nature and structure of inventory problems was given by Arrow, Karlin, and Scarf [2, Chap. 2], and a simple mathematical exposition of theory may also be found in Bellman [3, Chap. 5]. Briefly, problem involves determination of (optimal) stock levels for inventories which extend over a sequence of time periods and are subject to fluctuating demand in each such period. Such may arise in a number of ways, e.g., in scheduling production or determining distribution of commodities over certain markets, in finding replacement policy for aged equipment, or in combinations of some or all of these features. The treatment of demand in modern inventory theory is usually handled in two ways: (1) time periods are regularly spaced, and demand in each period is a random variable with a known probability distribution; or (2) size of each demand is fixed but times at which successive demands occur are random variables. We study here an inventory problem which is in some sense a hybrid between two and which occurs frequently in involving follow-on provisioning. (Follow-on provisioning is a subsequent provisioning of same item from same supply source.) Here, time periods are equally spaced (corresponding to budget cycles) and demand in each period is a random variable subject to a known

A multi-sector buffer-stock inventory model is developed in an attempt to resolve the problem of aggregation involved in deriving implications for the stability of the economy from a consideration of inventory practices of individual firms. It is demonstrated that stability depends upon a multitude of parameters, some of which are suppressed in aggregative model construction. The economy is necessarily unstable when perfect, if myopic expectations are assumed. With naive expectations stability becomes a definite possibility, particularly if firms attempt only a delayed adjustment of inventories to the equilibrium level. Although the empirical evidence marshaled in order to illustrate the application of the theorems does not prove sufficiently accurate to permit precise conclusions, it is apparent that the conditions for stability may well be satisfied for reasonable values of the system's parameters. Tax schemes which have been suggested as means of stabilizing fluctuations in inventory investment are appraised in the concluding section.

Reviews the book "Decision Models for Inventory Management," by Robert B. Feiter and Winston C. Dalleck.

Abstract When treasury shares are acquired, the transaction results in the reduction of contributed capital, legal capital remains the same, and the restriction of retained earnings. If legal aspects are to be demphasized, it appears that the "direct adjustment to capital stock" is the best solution. But even though legal requirements are not ranked first in importance, they should not be forgotten. In this case, perhaps the "indirect adjustment to capital stock" is a better alternative. Accounting recognition must also include balance sheet classification as to Stockholders' equity. Differences in state laws would require a different arrangement. However, in both cases total invested capital remains the same. If a temporary restriction of retained earnings is needed, it can be shown in a footnote or as an appropriation of retained earnings. In a state which requires a permanent reduction of retained earnings, the nature of the transaction is a dividend rather than a "retirement." And so it must be recorded as a dividend. The nature of the transaction must be given first priority in recording treasury stock. Then, any legal aspects may also be satisfied in statement presentation.

Abstract In an examination of the 1959 published corporate financial reports of 600 companies in 1960' it was found that 421 or more than 70% referred to an employee stock option plan. It has been asserted in fact that well over 50% of the companies whose stock is listed on the New York Stock Exchange have adopted some form of stock distribution plan for their employees. The courts have permitted stock option plans to be upset by litigation on the part of minority stockholders. One particularly sensitive matter involves developing, recommending, and adopting of stock option plans by parties directly benefiting even if later ratified by the stockholders. Stockholders have some basis at least to judge the adequacy of the consideration given by executives to the corporation. Certainly accountants can do no less than clearly indicate the total consideration given by the corporation and its relative significance. According to the author, no real effort is made to inform the stockholders fully as to the real cost of their managerial services.

Abstract The discount system of capital expenditure evaluation, as the measure of a project's inherent desirability, provides rates of return which can be compared with those of other projects and with another measure, representative of the outside community's charge for the use of savings, called the cost of capital. The author classifies projects into two classes, independent and dependent, in order to discuss the effect of the two capital evaluation methods on each of the two classes of projects. By reviewing the capital expenditures evaluation problem in a number of areas, he finds that the method of direct discounting always provides superior results to those of the rate of return system. Direct discounting more quickly evaluates single-answer independent projects. It solves single-answer dependent projects without analysis of difference projects and without providing misleadingly higher answers on inferior projects. This research paper thus shows that it is simpler and more useful to discount all projects at the cost of capital than to solve for rates of return.