Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
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Engineering Valuation Based on Small Samples

  • Cho, Jin-Hyung (Dept. of Industrial & Systems Engineering, Kumoh National Institute of Technology) ;
  • Lee, Sae-Jae (Dept. of Industrial & Systems Engineering, Kumoh National Institute of Technology) ;
  • Seo, Bo-Chul (Dept. of Industrial & Systems Engineering, Kumoh National Institute of Technology)
  • Published : 2006.03.31
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Abstract

Box-Cox model and T-factor method have been widely used to measure economic depreciations for industrial property. The Box-Cox model which combines economic efficiency with depreciation pattern is here extended to the reliability function. To do so a Rayleigh distribution which has been used to estimate the reliability of current assets was chosen as an efficiency curve of marginal productivity. Such an approach provides the possibility to classify the efficiency curves into four categories. It is also possible to analyze the types of depreciation curves. Therefore, the power family of a non-linear Box-Cox model could be set at certain constant values, then the model can be transformed into a linear model to estimate the economic depreciation rates by utilizing the reliability function. Estimating the resultant linear regression equation requires minimal number of observations, while at the same time facilitating the test of hypothesis on depreciation rates.

Keywords

References

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