• Title/Summary/Keyword: profit maximizing

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A Study on the Problem and Improvement of CRM in Financial Institutions (금융기관의 CRM문제점과 개선방안에 관한연구)

  • Lee, Sang-Youn;Oh, Sung-Taek;Kim, Moon-Jung
    • The Journal of Industrial Distribution & Business
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    • v.1 no.1
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    • pp.33-41
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    • 2010
  • In the age of globalization, effective and efficient corporate management is becoming more important as domestic and international business circumstances changes. In the middle of endless changes in business circumstances, fast reaction to customers and market, and offering customized goods and service became essential. In this respect, CRM designed to utilize customer information scientifically and systematically, has become an essential system and marketing strategy to enhance corporate competitiveness. CRM has placed the importance of customers in the front of marketing and has focused every process and business minds on customers. Recent change in the market and the trend of establishing and introducing CRM system has lead us to concentrate on the introduction of CRM in the financial institutions. This study searched for several views about CRM in academic and industrial papers. Through theoretical approach on CRM, the background of the introduction of CRM, the purpose of CRM, the characteristic and application of CRM, and the expected effect of CRM will be discussed. This study is focused on financial institutions where CRM is widely used. And through documents about examples of the introduction of CRM, the status of the establishment of domestic CRM and the necessity and trend of CRM will be discussed. Also the problem of CRM in the financial institutions and the improvement of CRM in domestic banks will be analyzed. When discussing CRM in the financial area, customers are the main source of corporate profit and through relationship management with the customers enhancing loyalty and maximizing profit can be obtained. Especially in CRM in financial institutions, maintaining existing customers makes higher profit ratio, so repurchasing and cross selling becomes important for obtaining lifetime value of existing customers who contribute to most of the profit of corporations. As a result, CRM should be completely customer oriented. CRM in financial institutions is not merely marketing work, but organizational competence which is made up of standardized work process through total process integration inside the corporation. Corporations which plan to introduce CRM should analyze the characteristics and conditions of corporations and establish purpose and strategy of CRM. And they need long term view to find out the factors which best fit for the introduction of CRM. To enable this, strategy composed of daily marketing activity and CRM concept is necessary. Also continued improvement through drill and training for operating organization should be followed to maintain CRM well. And corporate culture must settle customer as the center of corporate value. The race for introducing and improving CRM has already begun. CRM should not be regarded as a choice. It should be accepted as something essential. In this reality financial institutions should solve subdivision problem of customers and necessity of customers with the mind of 'customer's profit is my profit'. Customer focused management should not be emphasized only by words. Efforts like viewing from the customer's point must be nurtured to provide methods to help customers. That is, we should not just follow what is done in foreign countries. We should solve the problem of our customers according to the situation of our country, our industry, our corporation. Then we can gain the trust of customers, and the value derived from the customers will become the background of CRM which will lead the corporation to success.

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An Empirical Study on Statistical Optimization Model for the Portfolio Construction of Sponsored Search Advertising(SSA) (키워드검색광고 포트폴리오 구성을 위한 통계적 최적화 모델에 대한 실증분석)

  • Yang, Hognkyu;Hong, Juneseok;Kim, Wooju
    • Journal of Intelligence and Information Systems
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    • v.25 no.2
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    • pp.167-194
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    • 2019
  • This research starts from the four basic concepts of incentive incompatibility, limited information, myopia and decision variable which are confronted when making decisions in keyword bidding. In order to make these concept concrete, four framework approaches are designed as follows; Strategic approach for the incentive incompatibility, Statistical approach for the limited information, Alternative optimization for myopia, and New model approach for decision variable. The purpose of this research is to propose the statistical optimization model in constructing the portfolio of Sponsored Search Advertising (SSA) in the Sponsor's perspective through empirical tests which can be used in portfolio decision making. Previous research up to date formulates the CTR estimation model using CPC, Rank, Impression, CVR, etc., individually or collectively as the independent variables. However, many of the variables are not controllable in keyword bidding. Only CPC and Rank can be used as decision variables in the bidding system. Classical SSA model is designed on the basic assumption that the CPC is the decision variable and CTR is the response variable. However, this classical model has so many huddles in the estimation of CTR. The main problem is the uncertainty between CPC and Rank. In keyword bid, CPC is continuously fluctuating even at the same Rank. This uncertainty usually raises questions about the credibility of CTR, along with the practical management problems. Sponsors make decisions in keyword bids under the limited information, and the strategic portfolio approach based on statistical models is necessary. In order to solve the problem in Classical SSA model, the New SSA model frame is designed on the basic assumption that Rank is the decision variable. Rank is proposed as the best decision variable in predicting the CTR in many papers. Further, most of the search engine platforms provide the options and algorithms to make it possible to bid with Rank. Sponsors can participate in the keyword bidding with Rank. Therefore, this paper tries to test the validity of this new SSA model and the applicability to construct the optimal portfolio in keyword bidding. Research process is as follows; In order to perform the optimization analysis in constructing the keyword portfolio under the New SSA model, this study proposes the criteria for categorizing the keywords, selects the representing keywords for each category, shows the non-linearity relationship, screens the scenarios for CTR and CPC estimation, selects the best fit model through Goodness-of-Fit (GOF) test, formulates the optimization models, confirms the Spillover effects, and suggests the modified optimization model reflecting Spillover and some strategic recommendations. Tests of Optimization models using these CTR/CPC estimation models are empirically performed with the objective functions of (1) maximizing CTR (CTR optimization model) and of (2) maximizing expected profit reflecting CVR (namely, CVR optimization model). Both of the CTR and CVR optimization test result show that the suggested SSA model confirms the significant improvements and this model is valid in constructing the keyword portfolio using the CTR/CPC estimation models suggested in this study. However, one critical problem is found in the CVR optimization model. Important keywords are excluded from the keyword portfolio due to the myopia of the immediate low profit at present. In order to solve this problem, Markov Chain analysis is carried out and the concept of Core Transit Keyword (CTK) and Expected Opportunity Profit (EOP) are introduced. The Revised CVR Optimization model is proposed and is tested and shows validity in constructing the portfolio. Strategic guidelines and insights are as follows; Brand keywords are usually dominant in almost every aspects of CTR, CVR, the expected profit, etc. Now, it is found that the Generic keywords are the CTK and have the spillover potentials which might increase consumers awareness and lead them to Brand keyword. That's why the Generic keyword should be focused in the keyword bidding. The contribution of the thesis is to propose the novel SSA model based on Rank as decision variable, to propose to manage the keyword portfolio by categories according to the characteristics of keywords, to propose the statistical modelling and managing based on the Rank in constructing the keyword portfolio, and to perform empirical tests and propose a new strategic guidelines to focus on the CTK and to propose the modified CVR optimization objective function reflecting the spillover effect in stead of the previous expected profit models.

Dynamic Limit and Predatory Pricing Under Uncertainty (불확실성하(不確實性下)의 동태적(動態的) 진입제한(進入制限) 및 약탈가격(掠奪價格) 책정(策定))

  • Yoo, Yoon-ha
    • KDI Journal of Economic Policy
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    • v.13 no.1
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    • pp.151-166
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    • 1991
  • In this paper, a simple game-theoretic entry deterrence model is developed that integrates both limit pricing and predatory pricing. While there have been extensive studies which have dealt with predation and limit pricing separately, no study so far has analyzed these closely related practices in a unified framework. Treating each practice as if it were an independent phenomenon is, of course, an analytical necessity to abstract from complex realities. However, welfare analysis based on such a model may give misleading policy implications. By analyzing limit and predatory pricing within a single framework, this paper attempts to shed some light on the effects of interactions between these two frequently cited tactics of entry deterrence. Another distinctive feature of the paper is that limit and predatory pricing emerge, in equilibrium, as rational, profit maximizing strategies in the model. Until recently, the only conclusion from formal analyses of predatory pricing was that predation is unlikely to take place if every economic agent is assumed to be rational. This conclusion rests upon the argument that predation is costly; that is, it inflicts more losses upon the predator than upon the rival producer, and, therefore, is unlikely to succeed in driving out the rival, who understands that the price cutting, if it ever takes place, must be temporary. Recently several attempts have been made to overcome this modelling difficulty by Kreps and Wilson, Milgram and Roberts, Benoit, Fudenberg and Tirole, and Roberts. With the exception of Roberts, however, these studies, though successful in preserving the rationality of players, still share one serious weakness in that they resort to ad hoc, external constraints in order to generate profit maximizing predation. The present paper uses a highly stylized model of Cournot duopoly and derives the equilibrium predatory strategy without invoking external constraints except the assumption of asymmetrically distributed information. The underlying intuition behind the model can be summarized as follows. Imagine a firm that is considering entry into a monopolist's market but is uncertain about the incumbent firm's cost structure. If the monopolist has low cost, the rival would rather not enter because it would be difficult to compete with an efficient, low-cost firm. If the monopolist has high costs, however, the rival will definitely enter the market because it can make positive profits. In this situation, if the incumbent firm unwittingly produces its monopoly output, the entrant can infer the nature of the monopolist's cost by observing the monopolist's price. Knowing this, the high cost monopolist increases its output level up to what would have been produced by a low cost firm in an effort to conceal its cost condition. This constitutes limit pricing. The same logic applies when there is a rival competitor in the market. Producing a high cost duopoly output is self-revealing and thus to be avoided. Therefore, the firm chooses to produce the low cost duopoly output, consequently inflicting losses to the entrant or rival producer, thus acting in a predatory manner. The policy implications of the analysis are rather mixed. Contrary to the widely accepted hypothesis that predation is, at best, a negative sum game, and thus, a strategy that is unlikely to be played from the outset, this paper concludes that predation can be real occurence by showing that it can arise as an effective profit maximizing strategy. This conclusion alone may imply that the government can play a role in increasing the consumer welfare, say, by banning predation or limit pricing. However, the problem is that it is rather difficult to ascribe any welfare losses to these kinds of entry deterring practices. This difficulty arises from the fact that if the same practices have been adopted by a low cost firm, they could not be called entry-deterring. Moreover, the high cost incumbent in the model is doing exactly what the low cost firm would have done to keep the market to itself. All in all, this paper suggests that a government injunction of limit and predatory pricing should be applied with great care, evaluating each case on its own basis. Hasty generalization may work to the detriment, rather than the enhancement of consumer welfare.

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Land Use Optimization using Genetic Algorithms - Focused on Yangpyeong-eup - (유전 알고리즘을 적용한 토지이용 최적화 배분 연구 - 양평군 양평읍 일대를 대상으로 -)

  • Park, Yoonsun;Lee, Dongkun;Yoon, Eunjoo;Mo, Yongwon;Leem, Jihun
    • Journal of Environmental Impact Assessment
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    • v.26 no.1
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    • pp.44-56
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    • 2017
  • Sustainable development is important because the ultimate objective is efficient development combining the economic, social, and environmental aspects of urban conservation. Despite Korea's rapid urbanization and economic development, the distribution of resources is inefficient, and land-use is not an exception. Land use distribution is difficult, as it requires considering a variety of purposes, whose solutions lie in a multipurpose optimization process. In this study, Yangpyeong-eup, Yangpyeong, Gyeonggi-do, is selected, as the site has ecological balance, is well-preserved, and has the potential to support population increases. Further, we have used the genetic algorithm method, as it helps to evolve solutions for complex spatial problems such as planning and distribution of land use. This study applies change to the way of mutation. With four goals and restrictions of area, spatial objectives, minimizing land use conversion, ecological conservation, maximizing economic profit, restricting area to a specific land use, and setting a fixed area, we developed an optimal planning map. No urban areas at the site needed preservation and the high urban area growth rate coincided with the optimization of purpose and maximization of economic profit. When the minimum point of the fitness score is the convergence point, we found optimization occurred approximately at 1500 generations. The results of this study can support planning at Yangpyeong-eup.ausative relationship between the perception of improving odor regulation and odor acceptance.

Exploring Fractional Ownership in Korean Art Market: Based on Business Model Canvas (분할소유 미술시장의 현황과 과제 - 비즈니스 모델 캔버스를 중심으로 -)

  • Lee, Yunjin;Koo, Jajoon
    • Korean Association of Arts Management
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    • no.58
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    • pp.179-204
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    • 2021
  • Not only the consumption trend after the COVID-19 pandemic but also low financial interest rates have stimulated people to invest artworks. With the recent noticeable growth, art investments that mainly conducted by younger generation through online platform can be characterized by a fractional ownership in art market which means several people share one piece of artwork. This study explores 4 fractional ownership platforms in the domestic art market including Art Together, Art & Guide, Tessa, and Pica projects, using a business model canvas that describes nine key elements: Customer Segments, Value Proposition, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partners and Cost Structure. The four cases have similar business models, but the details of revenue streams are different. The key sources of revenue are the profit and commission of the work. Thus, maximizing the profit margin of artworks is the core of revenue streams, so selecting and purchasing highly profitable artworks are significant. Based on the analysis, there are 3 suggestions to continue fractional ownership platform businesses in art market successfully. First, it is required to have a long-term perspective on art investments, as a way to diverse asset portfolio. Second, business confidence should be increased to maintain customer loyalty. Third, the role of platforms as competent experts is important.

Optimal pricing under uncertain product lifetime conditions and simulation study

  • 이훈영;주기인;이시환
    • Proceedings of the Korean Operations and Management Science Society Conference
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    • 1996.10a
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    • pp.103-112
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    • 1996
  • Optimal pricing research in general has been focused on profit maximizing strategy under the given product life-time T. Here we have tried to study the effect of uncertain product life-time on dynamic optimal pricing strategy. In reality, the life-time of product is more likely to be uncertain and not known as well. In terms of approximating the model to the concerned reality, so-called model validity, it seems to be more desirable to consider the uncertainty of product life-time into the optimal pricing strategy model, For this purpose, we tried two different approaches. One is to consider diverse product life-time probability functions under fixed life-time T. In this case, we might have the same product life-time as the previous study, but the process could be different in the expectation of product's discontinuity. The other is that life-time itself is not determined and thus it is the situation in which we can only decide optimal price on incremental basis. The former is the situation in which although we got some strong guess on life-time of a certain product, the pattern of expected life-time probability could be different. The question is what could be optimal pricing strategies on such different product life-time situations. But since in the latter, we don't assume any idea on the life-time of product. proper optimal pricing could be derived only from the past prices and diffusion information. While the latter seems to be safer in the aspect of model assumption, the former could be more realistic because we might have more or less a prior knowledge on the product life-time itself.

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A Study on the Relationship between Environment Technology and Labor Demand (환경기술과 노동수요)

  • Hwang, Seok-Joon
    • Environmental and Resource Economics Review
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    • v.22 no.2
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    • pp.309-328
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    • 2013
  • In this research, we try to find the conditions under which profit maximizing labor demand increases with pollution abatement activities under the environmental protection policy. Especially, we focus only on the technological advances in traditional production process caused by the spillover effect of pollution abatement technology. Even if Porter's hypothesis(1995) are given, we argue that it is not enough for the society to enjoy the benefits from the innovation with the strengthen of firms' competitiveness. To spread the benefits over economic agents in a society, especially including labor-owner, the current level of pollution abatement technology is important. When the level of pollution abatement technology is appropriate, both the environment protection and the job creation can be achieved through the government policy for environment protection.

Optimal Design Of Batch-Storage Network with Financial Transactions and Cash Flows (현금흐름을 포함하는 회분식 공정-저장조 망구조의 최적설계)

  • ;Lee, Euy-Soo;Lee, In-Beom;Yi, Gyeong-Beom
    • Journal of Institute of Control, Robotics and Systems
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    • v.11 no.11
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    • pp.956-962
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    • 2005
  • This paper presents an integrated analysis of production and financing decisions. We assume that a cash storage unit is installed to manage the cash flows related with production activities such as raw material procurement, process operating setup, Inventory holding cost and finished product sales. Temporarily financial investments are allowed for more profit. The production plant is modeled by the Batch-Storage Network with Recycle Streams in Yi and Reklaitis (2003). The objective function of the optimization is minimizing the opportunity costs of annualized capital investment and cash/material inventory while maximizing stockholder's benefit. No depletion of all the material and cash storage units is major constraints of the optimization. A novel production and inventory analysis formulation, the PSW(Periodic Square Wave) model, provides useful expressions for the upper/lower bounds and average level of the cash and material inventory holdups. The expressions for the Kuhn-Tucker conditions of the optimization problem can be reduced to two subproblems and analytical lot sizing equations under a mild assumption about the cash flow pattern of stockholder's dividend. The first subproblem is a separable concave minimization network flow problem whose solution yields the average material flow rates through the networks. The second subproblem determines the decisions about financial Investment. Finally, production and financial transaction lot sizes and startup times can be determined by analytical expressions as far as the average flow rates are calculated. The optimal production lot and storage sizes considering financial factors are smaller than those without such consideration. An illustrative example is presented to demonstrate the results obtainable using this approach.

An Economic Analysis of the Enforcement of illegal Fishing in Traditional Fisheries Management (전통적 어업관리의 불법어업 감시·감독에 대한 경제학적 분석)

  • LEE, Sang-Go
    • Journal of Fisheries and Marine Sciences Education
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    • v.14 no.1
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    • pp.57-73
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    • 2002
  • Illegal fishing is often cited as a principal cause of the failure of fisheries management, expecially fishing efforts regulations in traditional fisheries management. Usually, illegal fishing problems are perceived to be equivalent to inadequate enforcement, and policy prescription then follow to strengthen enforcement programs. The purpose of this paper is to analyze the illegal fishing behavior relatively recent emphasis on fishing efforts regulations in traditional fisheries management. The analysis focuses on measuring, explaining and developing the effectiveness way of enforcement strategies responding to imperfectly managed fishing efforts regulations through illegal fishing behavior and avoid enforcement fishing efforts measures. A model of fishermen fishing behavior and profit-maximizing decision making is analyzed to determine optimal fishing at individual fisherman level in response to fishing efforts regulation. The results of economic analysis of the enforcement of illegal fishing in traditional fisheries management results are as follows: First, illegal fishing will occur only if enforcement effort is not so high as to remove the incentive to do so, and if the effectiveness of avoidance is not too great, nor its cost too low. Second, avoidance effort will occur at a level jointly proportional to the extent of illegal activity and of enforcement; for given levels of the latter, the desired avoidance effort increase with its effectiveness and decrease with its cost Third, to improve the effectiveness of enforcement, understanding avoidance behavior appears to be crucial to any efforts. Forth, enforcement and fishermen behavior interact depends strongly on characteristics of avoidance, specifically its cost and effectiveness. When avoidance is neither too cheap nor too effective, the interaction is regular. Fifth, in this case, at low levels of enforcement, fishers respond to increases in enforcement by increasing avoidance, but at higher enforcement levels, it becomes uneconomical to continue to do so, and avoidance decreases with enforcement. Sixth, illegal fishing activity decreases steadily with enforcement, so the fishery manager is able, in theory, to reduce illegal fishing toward zero by increasing enforcement. If, however, avoidance is very inexpensive and/or very efficient/ then the optimal level of avoidance will increase indefinitely with increasing enforcement. Finally, less fishery enforcement is required if fishermen have less incentive to overfish, and fishermen have less incentive to avoid fishery enforcement measures.

Spatial Decision Support System for Development and Conservation of Unexecuted Urban Park using ACO - Ant Colony Optimization - (장기 미집행 도시계획시설 중 도시공원을 위한 보전/개발 공간의사결정 시스템 - 개미군집알고리즘(ACO)를 이용하여-)

  • Yoon, Eun-Joo;Song, Eun-Jo;Jeung, Yoon-Hee;Kim, Eun-Young;Lee, Dong-Kun
    • Journal of the Korean Society of Environmental Restoration Technology
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    • v.21 no.2
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    • pp.39-51
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    • 2018
  • Long-term unexecuted urban parks will be released from urban planning facilities after 2020, this may result in development of those parks. However, little research have been focused on how to develop those parks considering conservation, development, spatial pattern, and so on. Therefore, in this study, we suggested an optimization planning model that minimizes the fragmentation while maximizing the conservation and development profit using ACO (Ant Colony Optimization). Our study area is Suwon Yeongheung Park, which is long-term unexecuted urban parks and have actual plan for private development in 2019. Using our optimization planning model, we obtained four alternatives(A, B, C, D), all of which showed continuous land use patterns and satisfied the objectives related to conservation and development. Each alternative are optimized based on different weight combinations of conservation, development, and fragmentation, and we can also generated other alternatives immediately by adjusting the weights. This is possible because the planning process in our model is very fast and quantitative. Therefore, we expected our optimization planning model can support "spatial decision making" of various issue and sites.