Returns to Scale and Economies of Scale: Further Observations

Gelles, Gregory M.; Mitchell, Douglas W.

doi:10.1080/00220485.1996.10844915

Cited by 27 publications

(8 citation statements)

References 5 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…2007, Gaur and Kesavan 2009, Rumyantsev and Netessine 2007b). In a nutshell, our findings for retailer size/scale and the decreasing returns‐to‐scale ( γ + δ < 1) jointly verify the theoretical argument that large firms in a non‐perfectly competitive market could have scale inefficiency in production, while benefitting from economies of scale (Gelles and Mitchell 1996).…”

Section: Discussionsupporting

confidence: 79%

“…Moreover, large firms benefit from economies of scale in inventory management since they may pool demands from many store locations, resulting in relatively lower inventory-ordering and -holding costs and higher efficiencies (Chen et al 2007, Gaur and Kesavan 2009, Rumyantsev and Netessine 2007b. In a nutshell, our findings for retailer size/scale and the decreasing returns-to-scale (c + d < 1) jointly verify the theoretical argument that large firms in a nonperfectly competitive market could have scale inefficiency in production, while benefitting from economies of scale (Gelles and Mitchell 1996).…”

Section: Discussionsupporting

confidence: 77%

“…Technically, economies of scale refer to "returns-to-size that has more to do with a proportional change in output as input factors are expanded in least-cost fashion" (Beattie et al 1985). In particular, firms having lower input prices can attain economies of scale even when they experience decreasing returns-to-scale (Cohn 1992, Gelles andMitchell 1996). Also, since our model imposes no prior assumptions on returns-to-scale, the estimated frontier function exhibits variable returnsto-scale (VRS).…”

Section: A Stochastic Production Function Modelmentioning

confidence: 99%

See 2 more Smart Citations

Examining the Link between Retailer Inventory Leanness and Operational Efficiency: Moderating Roles of Firm Size and Demand Uncertainty

Chuang

Oliva

Heim

2019

Production and Operations Management

View full text Add to dashboard Cite

R etail inventories have been consistently dropping, relative to sales, since the 1990s. Whether these lean inventory developments translate to better retailer operational performance is still an open question. We empirically examine associations between inventory leanness and operational efficiency for a sample of public US retailers from 2000 to 2013. Via a stochastic frontier analysis that accounts for retailer heterogeneity and time parameters, we find support for the hypothesis that operational efficiency has an inverted U-shape relationship with inventory leanness, suggesting an optimal inventory leanness level beyond which retailer operational efficiency degrades. This relationship, however, is heavily moderated by firm size and demand uncertainty. The former reflects a retailer's abilities to exploit economies of scale and scope, whereas the latter reflects the unpredictability in a firm's operating environment. Our evidence suggests that when increasing inventory leanness, small retailers exhibit efficiency degradation, whereas larger retailers are likely to exhibit efficiency improvement, with diminishing returns. We also find that under high demand uncertainty, being less lean is associated with higher operational efficiency, regardless of firm size. The findings show that depending on firm size and demand uncertainty, retail managers should take special care when pursuing inventory leanness. As part of post hoc robustness tests, we assess how different retail categories vary in their operational efficiency scores and conduct interviews with retail executives who further ground our econometric investigation and point to more nuanced moderators for future studies. We conclude by discussing the implications of our industry model estimation for managers and researchers.

show abstract

Section: Discussionsupporting

confidence: 79%

Section: Discussionsupporting

confidence: 77%

Section: A Stochastic Production Function Modelmentioning

confidence: 99%

See 1 more Smart Citation

Examining the Link between Retailer Inventory Leanness and Operational Efficiency: Moderating Roles of Firm Size and Demand Uncertainty

Chuang

Oliva

Heim

2019

Production and Operations Management

View full text Add to dashboard Cite

show abstract

“…To further deepen the understanding of the scaling process of smart city solutions, the connected solutions and benefits model was suggested by Alanus von Radecki and first used in the Triangulum project [20]. The basic principle behind the replication of smart city solutions lies within economies of scale [21] meaning that the cost advantage for a company increases with the increased output of goods or services. However, the conventional business models of scaling would not work with smart city solutions.…”

Section: Connected Solutions and Benefits Model (Alanus Von Radecki)mentioning

confidence: 99%

Challenges and Barriers for Net‐Zero/Positive Energy Buildings and Districts—Empirical Evidence from the Smart City Project SPARCS

et al. 2021

View full text Add to dashboard Cite

Without decarbonizing cities energy and climate objectives cannot be achieved as cities account for approximately two thirds of energy consumption and emissions. This goal of decarbonizing cities has to be facilitated by promoting net-zero/positive energy buildings and districts and replicating them, driving cities towards sustainability goals. Many projects in smart cities demonstrate novel and groundbreaking low-carbon solutions in demonstration and lighthouse projects. However, as the historical, geographic, political, social and economic context of urban areas vary greatly, it is not always easy to repeat the solution in another city or even district. It is therefore important to look for the opportunities to scale up or repeat successful pilots. The purpose of this paper is to explore common trends in technologies and replication strategies for positive energy buildings or districts in smart city projects, based on the practical experience from a case study in Leipzig—one of the lighthouse cities in the project SPARCS. One of the key findings the paper has proven is the necessity of a profound replication modelling to deepen the understanding of upscaling processes. Three models analyzed in this article are able to provide a multidimensional representation of the solution to be replicated.

show abstract

“…Homogeneous production function satisfies the condition of the degree of homogeneity by Euler's theorem ε1 + ε2 = k. The increasing return to scale (IRS) shows the economies of scale with high economic power (Gelles and Mitchell, 1996).…”

Section: Independent Journal Of Management and Production (Ijmandp)mentioning

confidence: 99%

A review input factors elasticity and return to scale of cooperative: a survey on Indonesian savings-loan cooperatives

Situmorang¹

2018

Ind. Jour. Manag. & Prod.

View full text Add to dashboard Cite

This study aims to reveal the production function, return to scale, and production factors elasticity of cooperative by using Indonesia financial service cooperative (IFSC) which has a single business in the field of financial service as a sample of research. Using panel data, this study results both labour and capital factors have a significant influence IFSC production. The IFSC industry condition is increasing return to scale (IRS). Production elasticity of capital is higher than labour force so that IFSC business expansion is faster with increasing IFSC capital. The cooperative financial services industry condition is increasing return to scale that enables IFSC business expansion. Given the availability of IFSC resources and its operating environment, IFSC's business expansion strategy should be more labour-intensive than capital-intensive, employing more labour than capital. The government should provide support for improving human resource capacity

show abstract

Returns to Scale and Economies of Scale: Further Observations

Cited by 27 publications

References 5 publications

Examining the Link between Retailer Inventory Leanness and Operational Efficiency: Moderating Roles of Firm Size and Demand Uncertainty

Examining the Link between Retailer Inventory Leanness and Operational Efficiency: Moderating Roles of Firm Size and Demand Uncertainty

Challenges and Barriers for Net‐Zero/Positive Energy Buildings and Districts—Empirical Evidence from the Smart City Project SPARCS

A review input factors elasticity and return to scale of cooperative: a survey on Indonesian savings-loan cooperatives

Contact Info

Product

Resources

About