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New Logistics Model Improves Forecast Accuracy of Retail and Packaged-Goods Orders
Matt Waller
Matt Waller, University of Arkansas

Whether it’s dog food or iPods, tires or televisions, virtually every consumer has endured a frustrating out-of-stock experience. Retailers hate it as much as customers, perhaps more, because they lose money and credibility. Examining this problem at a specific link – suppliers and distribution centers – in the retail and consumer-packaged goods supply chain, a logistics researcher at the University of Arkansas and his colleague discovered that application of a common error-correction model improves the accuracy of forecasting orders.

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Federal Coordinator Douglas O'Dell Emphasizes the Importance of Businesses Developing Continuity of Operations Plans

New Orleans, La. – General Douglas O'Dell, President George W. Bush's federal coordinator for Gulf Coast rebuilding, today strongly emphasized the importance of businesses developing continuity of operations plans, or COOP plans, now before a disaster. In keynote remarks at the Louisiana Technology Council "Business Continuity: Planning Your Survival Kit" event, O'Dell noted the importance of technology specialists in developing and carrying out such plans.

"Technology specialists play a significant part in the everyday ongoing operations of companies today. Often technology specialists are heroes in preparations for future disruptions of business," O'Dell said. "During a disaster of any kind, they are the most sought after people in a company. Organization leaders turn to them first. They rely on the talents and creative thinking of technology specialists to keep services, information and communications available because that's what it takes to keep a business operational in this age of technology and communication."

O'Dell then outlined critical elements of a COOP plan, which included: Ensuring the company have detailed contact information for every employee; defining employee roles during an emergency; making preparations for backup equipment, records, databases, programs and ensuring their portability; and reaching across the lines of commerce to form partnerships and cooperative agreements with other organizations to share equipment or access services.

The Federal Coordinator, a retired military general, also emphasized the importance of conducting emergency tests, executing the plan, evaluating it, making necessary changes and keeping all employees informed.

The Office of the Federal Coordinator for Gulf Coast Rebuilding has been engaged in facilitating and streamlining the recovery effort, providing key federal support and resources to state and local leaders, as well as reinforcing the federal government's commitment to the people of the Gulf Coast.

 
Study Reveals Effects of Unconscious Exposure to Advertisements

 
Research conducted by Rensselaer
cognitive scientist Mark Changizi could
help marketers optimize advertising
for the human mind
Rensselaer/Don Moore
December 9, 2008 - Newswise — Fads have been a staple of American pop culture for decades, from spandex in the 1980s to skinny jeans today. But while going from fad to flop may seem like the result of fickle consumers, a new study suggests that this is exactly what should be expected for a highly efficient, rationally evolved animal.

The new research, led by cognitive scientist Mark Changizi of Rensselaer Polytechnic Institute, shows why direct exposure to repeated ads initially increases a consumer’s preference for promoted products, and why the most effective advertisements are the ones consumers don’t even realize they have seen.

It has long been known that repeated visual exposure to an object can affect an observer’s preference for it, initially rapidly increasing preference, and then eventually lowering preference again. This can give way to short-lived fads. But while this may seem illogical, Changizi argues that it makes perfect cognitive sense.

“A rational animal ought to prefer something in proportion to the probable payoff of acting to obtain it,” said Changizi, assistant professor of cognitive science at Rensselaer and lead author of the study, which appears in the online version of the journal Perception. “The frequency at which one is visually exposed to an object can provide evidence about this expected payoff, and our brains have evolved mechanisms that exploit this information, rationally modulating our preferences.”

A small number of visual exposures to an object typically raises the probability of acquiring the object, which enhances preference, according to Changizi.

On the other hand, Changizi says overexposure to an object provides the brain with evidence that the object is overabundant, and is likely not valuable, thereby lowering the individual’s preference for it.

“An individual’s preference for an object based on a large number of visual exposures will almost always take the shape of an inverted ‘U’, with an initial rapid rise in preference based on the enhanced probability that an object can be obtained, followed by a plateau and a gradual decrease in preference as the evidence begins to suggest that the object is overly common and thus not valuable,” Changizi said.

One of the most surprising aspects of visual exposure effects, according to Changizi, is that they are enhanced when visual exposure occurs without conscious recognition.

“This non-conscious mechanism exists because visual exposure information alone, without conscious judgment, has implications for the expected payoff of one’s actions,” Changizi said. “In many natural situations, observers potentially have both exposure schedule information and consciously accessible information about the object, in which case the predicted degree of preference modulations from visual exposure will be dampened, as the visual information is competing with the information from conscious recognition of the object and any subsequent judgment.”

These non-conscious mechanisms for rationally modulating preference are the kind animals without much of a cognitive life can engage in, and Changizi speculates that they are much more ancient.

Advertising that takes the form of apparel branded with company’s names, and products strategically placed in movies and television shows, often go unnoticed by consumers, capitalizing on our brain’s mechanisms to modulate preference based on non-conscious exposure.

Changizi’s research suggests that such advertising tactics work because they tap into our non-conscious mechanisms for optimal preferences, hijacking them for selling a company’s products. The research could hold potential for marketers interested in optimizing their advertising for the human mind, Changizi says.

Changizi conducted his research with Shinsuke Shimojo, professor of biology at the California Institute of Technology. The project was funded by a grant from the National Institutes of Health.

 
Federal Biomass Board Releases Biofuel Feedstocks Report

WASHINGTON, Dec. 4, 2008-- The interagency Biomass Research and Development Board today released a report on the economic feasibility of developing both farm- and forest-derived biofuel feedstocks to meet national targets for biofuels to reduce gasoline consumption.

Among the report's overall conclusions is that new technologies resulting from research and development are the linchpin to developing a sustainable biofuel industry that meets national targets. Last year's energy bill set out a Renewable Fuels Standard that calls for production of 36 billion gallons of biofuels annually by 2022.

"Our national security, our economy, and the future of the planet require that we explore the development of biofuels in a cost-effective, environmentally sound manner and that we move beyond food crops to include a diverse base of feedstocks," said Dr. Gale Buchanan, USDA Chief Scientist and Under Secretary for Research, Education, and Economics, who co-chairs the Biomass Research and Development Board. "This report addresses the constraints and implications of meeting our biofuel production goals and provides invaluable guidance for further research."

"In commissioning this report we tapped the talents of professionals across the Federal government to address the economic feasibility and environmental implications of enhanced feedstock production," Board Co-Chair and Acting Assistant Secretary, Energy Efficiency and Renewable Energy John Mizroch said. "We will continue promoting interagency cooperation in addressing constraints in developing biomass feedstocks to diversify our alternative fuels and cut greenhouse gas emissions."

The feedstocks report is one in a series of initiatives detailed in the interagency Action Plan unveiled by the Biomass Research and Development Board in October. The Board, co-chaired by officials from the U.S. Department of Agriculture (USDA) and the Department of Energy (DOE), coordinates the efforts of nine Federal agencies and two Executive-branch offices in advancing research and development of biobased products and bioenergy.

This report addresses the uncertainty surrounding the use of additional feedstocks to meet the Nation's biofuels goals—namely, what types of feedstocks and at what prices, grown where, and with what implications for greenhouse gases and sustainability. The investigation is conducted through an analysis of scenarios for specific biofuel targets, and with alternative assumptions about key variables like crop productivity and input prices.

The report, Increasing Feedstock Production for Biofuels: Economic Drivers, Environmental Implications, and the Role of Research, is available on the web site of the Biomass Research & Development Initiative (BRDi), at www.brdisolutions.com . It was prepared by the Biomass Research and Development Board Feedstock Inter-Agency Working Group. The working group includes participants from several USDA agencies, DOE, Department of Interior, Environmental Protection Agency, Department of Transportation, and Office of Science and Technology Policy, among others.

 
Payday Loan Problem: Financial ‘Quick Fix’ Leads to Personal Bankruptcy

 
Paige Marta Skiba Vanderbilt
Law School Assistant Professor
and author of payday loan research
December 5, 2008 - Newswise — Some 10 million American households borrow money through payday loans each year, and payday lenders now have more storefronts than McDonald’s and Starbucks combined. New research by Vanderbilt Law School Assistant Professor Paige Marta Skiba found that payday loan applicants who received the quick cash after their first application were significantly more likely to file for Chapter 13 bankruptcy than those whose initial application was denied.

The researchers found that first-time applicants who received a payday loan were almost twice as likely to file for bankruptcy within two years as those denied the first time. The interest from payday and pawn loans amounted to about 11 percent of the total liquid debt interest burden at the time of the bankruptcy filing.
“Our research finds that payday loans and their interest payments may be sufficient to tip the balance into bankruptcy for a population that is already severely financially stressed,” said Skiba.

Skiba and her co-author, Jeremy Tobacman, looked at four years of data for the state of Texas from a prominent payday loan company. From 2000 to 2004, the company received more than a million applications. The average loan request was around $300. The median annual income on the applications was $20,000 with a median checking account balance of $66.

“Payday loans seem to be the straw that breaks the borrower’s back because the loans are normally due every week or every other week, so other debts, like credit cards or mortgages tend to be ignored,” said Skiba.

First-time borrowers tended to continue borrowing. The researchers found that first-time applicants who were approved applied for about five more loans within a year than rejected first-time applicants. “Access to payday loan credit predicts roughly $2,300 of additional payday borrowing within two years,” said Skiba. As for those who were denied their initial payday loan request, the researchers said their probability of taking out a pawn loan doubled.

The full study, titled “Do Payday Loans Cause Bankruptcy?” can be found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1266215.

 
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