Optimal Paths and Costs of Adjustment in Dynamic DEA Models: With Application to Chilean Department Stores

In this paper we propose a range of dynamic data envelopment analysis (DEA) models which allow information on costs of adjustment to be incorporated into the DEA framework. We first specify a basic dynamic DEA model predicated on a number or simplifying assumptions. We then outline a number of extensions to this model to accommodate asymmetric adjustment costs, non-static output quantities, non-static input prices, and non-static costs of adjustment, technological change, quasi-fixed inputs and investment budget constraints. The new dynamic DEA models provide valuable extra information relative to the standard static DEA models-they identify an optimal path of adjustment for the input quantities, and provide a measure of the potential cost savings that result from recognising the costs of adjusting input quantities towards the optimal point. The new models are illustrated using data relating to a chain of 35 retail department stores in Chile. The empirical results illustrate the wealth of information that can be derived from these models, and clearly show that static models overstate potential cost savings when adjustment costs are non-zero.

Cost of tobacco-related diseases, including passive smoking, in Hong Kong

Background: Costs of tobacco-related disease can be useful evidence to support tobacco control. In Hong Kong we now have locally derived data on the risks of smoking, including passive smoking. Aim: To estimate the health-related costs of tobacco from both active and passive smoking. Methods: Using local data, we estimated active and passive smoking-attributable mortality, hospital admissions, outpatient, emergency and general practitioner visits for adults and children, use of nursing homes and domestic help, time lost from work due to illness and premature mortality in the productive years. Morbidity risk data were used where possible but otherwise estimates based on mortality risks were used. Utilisation was valued at unit costs or from survey data. Work time lost was valued at the median wage and an additional costing included a value of US$1.3 million for a life lost. Results: In the Hong Kong population of 6.5 million in 1998, the annual value of direct medical costs, long term care and productivity loss was US$532 million for active smoking and US$156 million for passive smoking; passive smoking accounted for 23% of the total costs. Adding the value of attributable lives lost brought the annual cost to US$9.4 billion. Conclusion: The health costs of tobacco use are high and represent a net loss to society. Passive smoking increases these costs by at least a quarter. This quantification of the costs of tobacco provides strong motivation for legislative action on smoke-free areas in the Asia Pacific Region and elsewhere.

Toposequential effects on water balance and productivity in rainfed lowland rice ecosystem in Southern Laos

In the Mekong region, most paddies in rainfed lowland rice (Oryza sativa L.) lie in a sequence on gentle sloping land, and grain yield (GY) often depends on the toposequence position. There is, however, lack of information on toposequential effects on field water supply in rainfed lowland rice and how that influences GY. A total of eight field experiments were carried out on sandy, coarse-textured soils in Southern Laos (Champassak Province and Savannakhet Province) over three wet seasons (2000-2002). Components of the water balance, including downward and lateral water movement (D and L, respectively), were quantified at three different positions along toposequences (top, middle and bottom). GY, days-to-flower (DTF) and rainfall were measured, and the water productivity (WP) was determined. In most experiments, standing water disappeared first in the top position and gradually in lower positions. This was associated with the observation that when there was standing water in the field, the higher position had larger D in both the provinces and also larger L in Champassak Province. However, in one experiment, water loss appeared later in the higher position, as the result of lower L, apparently due to some water inputs other than rainfall occurring at this position. Despite larger D plus L at the top position, seasonal sum of D and L were not much affected by the toposequence position, as the daily rate of D plus L became minimal when the standing water was lost earlier in the top position. Lower GY was associated with earlier disappearance of standing water from the field. Relatively low GY was expected in the top toposequence position. This was clearly shown in the toposequence of Phonthong, Champassak Province, as the timing of standing water disappearance relative to flowering was earlier in the top position. Variation in GY across the toposequence positions was coupled with the WP variation, and both GY and WP tended to decline with increased DTF. Therefore, variation in productivity of rainfed lowland rice across toposequence positions depends mainly on the field water status around flowering time. (c) 2005 Elsevier B.V. All rights reserved.