Optimal preventive maintenance of leased equipment with corrective minimal repairs

For leased equipment, the lessor carries out the maintenance of the equipment. Usually, the contract of lease specifies the penalty for equipment failures and for repairs not being carried out within specified time limits. This implies that optimal preventive maintenance policies must take these penalty costs into account and properly traded against the cost of preventive maintenance actions. The costs associated with failures are high as unplanned corrective maintenance actions are costly and the resulting penalties due to lease contract terms being violated. The paper develops a model to determine the optimal parameters of a preventive maintenance policy that takes into account all these costs to minimize the total expected cost to the lessor for new item lease. The parameters of the policy are (i) the number of preventive maintenance actions to be carried out over the lease period, (ii) the time instants for such actions, and (iii) the level of action. (c) 2005 Elsevier B.V. All rights reserved.

Using extreme value theory to measure value-at-risk for daily electricity spot prices

The recent deregulation in electricity markets worldwide has heightened the importance of risk management in energy markets. Assessing Value-at-Risk (VaR) in electricity markets is arguably more difficult than in traditional financial markets because the distinctive features of the former result in a highly unusual distribution of returns-electricity returns are highly volatile, display seasonalities in both their mean and volatility, exhibit leverage effects and clustering in volatility, and feature extreme levels of skewness and kurtosis. With electricity applications in mind, this paper proposes a model that accommodates autoregression and weekly seasonals in both the conditional mean and conditional volatility of returns, as well as leverage effects via an EGARCH specification. In addition, extreme value theory (EVT) is adopted to explicitly model the tails of the return distribution. Compared to a number of other parametric models and simple historical simulation based approaches, the proposed EVT-based model performs well in forecasting out-of-sample VaR. In addition, statistical tests show that the proposed model provides appropriate interval coverage in both unconditional and, more importantly, conditional contexts. Overall, the results are encouraging in suggesting that the proposed EVT-based model is a useful technique in forecasting VaR in electricity markets. (c) 2005 International Institute of Forecasters. Published by Elsevier B.V. All rights reserved.

Ovulation and risk of epithelial ovarian cancer

Incessant ovulation is thought to be one of the primary causes of epithelial ovarian cancer. However, the effects of ovulation at different ages and of the various exposures or events that suppress ovulation have not been established. We used data from an Australian case-control study of 791 ovarian cancer cases and 853 controls to examine the effect of ovulation on ovarian cancer risk. The total number of lifetime ovulations was calculated using information provided in a monthly contraceptive/reproductive calendar, as well as incorporating other information such as average menstrual cycle length. An increase of I year's worth of ovulation was associated with a 6% increase in risk of ovarian cancer (95% confidence interval [CI] = 4-8%). Ovulations in the 20-29-year age group were associated with the greatest risk, with a 20% increase in risk associated with each year of ovulation during this age period (95% Cl = 13-26%). When the effects of different exposures that suppress ovulation were compared, there was an indication that some factors may have a greater effect than others. These findings support the theory that incessant ovulation is a major contributor to the occurrence of ovarian cancer and suggest that ovulations during the 20s may be those most associated with disease risk. (C) 2003 Wiley-Liss, Inc.

Jointly radial and translation homothetic preferences: generalized constant risk aversion

The paper identifies the structural restrictions on preferences required for them to exhibit both translation homotheticity in particular direction and radial homotheticity. The results are illustrated by an application to an asset allocation problem in the absence of riskless asset.

Invariant risk attitudes

Concepts of constant absolute risk aversion and constant relative risk aversion have proved useful in the analysis of choice under uncertainty, but are quite restrictive, particularly when they are imposed jointly. A generalization of constant risk aversion, referred to as invariant risk aversion is developed. Invariant risk aversion is closely related to the possibility of representing preferences over state-contingent income vectors in terms of two parameters, the mean and a linearly homogeneous, translation-invariant index of riskiness. The best-known index with such properties is the standard deviation. The properties of the capital asset pricing model, usually expressed in terms of the mean and standard deviation, may be extended to the case of general invariant preferences. (C) 2003 Elsevier Inc. All rights reserved.

Theory for designing nature reserves for single species

We examine the question of the optimal number of reserves that should be established to maximize the persistence of a species. We assume that the mean time to extinction of a single population increases as a power of the habitat area, that there is a certain amount of habitat to be reserved, and that the aim is to determine how this habitat is most efficiently divided. The optimal configuration depends on whether the management objective is to maximize the mean time to extinction or minimize the risk of extinction. When maximizing the mean time to extinction, the optimal number of independent reserves does not depend on the amount of available habitat for the reserve system. In contrast, the risk of extinction is minimized when individual reserves are equal to the optimal patch size, making the optimal number of reserves linearly proportional to the amount of available habitat. A model that includes dispersal and correlation in the incidence of extinction demonstrates the importance of considering the relative rate at which these two factors decrease with distance between reserves. A small number of reserves is optimal when the mean time to extinction increases rapidly with habitat area or when risks of extinction are high.

Medication management at home: medication-related risk factors associated with poor health outcomes

Background: some patients may have medication-related risk factors only identified by home visits, but the extent to which those risk factors are associated with poor health outcomes remains unclear. Objective: to determine the association between medication-related risk factors and poor patient health outcomes from observations in the patients' homes. Design: cross-sectional study. Setting: patients' homes. Subjects: 204 general practice patients living in their own homes and at risk of medication-related poor health outcomes. Methods: medications and medication-related risk factors were identified in the patients' homes by community pharmacists and general practitioners (GPs). The medication-related risk factors were examined as determinants of patients' self-reported health related quality of life (SF-36) and their medication use, as well as physicians' impression of patient adverse drug events and health status. Results: key medication-related risk factors associated with poor health outcomes included: Lack of any medication administration routine, therapeutic duplication, hoarding, confusion between generic and trade names, multiple prescribers, discontinued medication repeats retained and multiple storage locations. Older age and female gender were associated with some poorer health outcomes. In addition, expired medication and poor adherence were also associated with poor health outcomes, however, not independently. Conclusion: the findings support the theory that polypharmacy and medication-related risk factors as a result of polypharmacy are correlated to poor health outcomes.

Opposite effects of androgen receptor CAG repeat length on increased risk of left-handedness in males and females

Prenatal exposure to testosterone has been hypothesised to effect lateralization by influencing cell death in the foetal brain. Testosterone binds to the X chromosome linked androgen receptor, which contains a polymorphic polyglutamine CAG repeat, the length of which is positively correlated with testosterone levels in males, and negatively correlated in females. To determine whether the length of the androgen receptor mediates the effects of testosterone on laterality, we examined the association between the number of CAG repeats in the androgen receptor gene and handedness for writing. Association was tested by adding regression terms for the length of the androgen receptor alleles to a multi-factorial-threshold model of liability to left-handedness. In females we found the risk of left-handedness was greater in those with a greater number of repeats (p=0.04), this finding was replicated in a second independent sample of female twins (p=0.014). The length of the androgen receptor explained 6% of the total variance and 24% of the genetic variance in females. In males the risk of left-handedness was greater in those with fewer repeats (p=0.02), with variation in receptor length explaining 10% of the total variance and 24% of the genetic variance. Thus, consistent with Witelson's theory of testosterone action, in all three samples the likelihood of left handedness increased in those individuals with variants of the androgen receptor associated with lower testosterone levels.

Science-policy in environmental and health risk assessment: if we cannot do without, can we do better?

How can empirical evidence of adverse effects from exposure to noxious agents, which is often incomplete and uncertain, be used most appropriately to protect human health? We examine several important questions on the best uses of empirical evidence in regulatory risk management decision-making raised by the US Environmental Protection Agency (EPA)'s science-policy concerning uncertainty and variability in human health risk assessment. In our view, the US EPA (and other agencies that have adopted similar views of risk management) can often improve decision-making by decreasing reliance on default values and assumptions, particularly when causation is uncertain. This can be achieved by more fully exploiting decision-theoretic methods and criteria that explicitly account for uncertain, possibly conflicting scientific beliefs and that can be fully studied by advocates and adversaries of a policy choice, in administrative decision-making involving risk assessment. The substitution of decision-theoretic frameworks for default assumption-driven policies also allows stakeholder attitudes toward risk to be incorporated into policy debates, so that the public and risk managers can more explicitly identify the roles of risk-aversion or other attitudes toward risk and uncertainty in policy recommendations. Decision theory provides a sound scientific way explicitly to account for new knowledge and its effects on eventual policy choices. Although these improvements can complicate regulatory analyses, simplifying default assumptions can create substantial costs to society and can prematurely cut off consideration of new scientific insights (e.g., possible beneficial health effects from exposure to sufficiently low 'hormetic' doses of some agents). In many cases, the administrative burden of applying decision-analytic methods is likely to be more than offset by improved effectiveness of regulations in achieving desired goals. Because many foreign jurisdictions adopt US EPA reasoning and methods of risk analysis, it may be especially valuable to incorporate decision-theoretic principles that transcend local differences among jurisdictions.