Mathematical Modelling of the Price Range in the Procurement of Ferrous Scrap by Metallurgical Enterprises
DOI:
https://doi.org/10.17059/2018-1-11Keywords:
prices, maximal price, export parity, mathematical modeling, competition, demand, supply, metallurgical enterprises, regional purchasing structureAbstract
For metallurgical enterprises, it is important to understand the limits of the most probable values of prices and geographical area for procurement of ferrous scrap in the regions. In order to define the maximal scrap prices in the regions, the authors have developed a mathematical model of “auction purchases”. This model equally assesses price competition between scrap consumers. When setting the price, we consider the territorial imbalances between scrap supply and demand in the regions; costs for scrap transportation from supplier to consumer; price level for scrap in the “windows for exports”. We calculate the lowest price according to the “export parity”. Пє results of the calculations allow evaluating a range of regional prices and interregional flows of scrap. Wis approach is unnown in the published works of Russian and foreign researchers. For calculations, we have developed a special software. We following initial data were used: data on railroad transportation of ferrous scrap in the Russian Federation provided by JSC Russian Railways; handbooks of railway tariffs 10-01 between railway stations of the Russian Federation; statistical data on prices of 3A metal scrap in the “windows for exports”. We article presents the formal structure of the model of “auction procurement”, the algorithm of its implementation and the results of calculations. We price level calculated according to the model of “auction procurement” can be used in management practice as potentially highest level of price, which can be reached in the conditions of competition between consumers of scrap in a situation when the negotiations are impossible. We proposed mathematical model allows a metallurgical enterprise to prove and implement a differentiated approach to the formation of regional prices of scrap, and to define regions for scrap purchasing.References
Gribovskiy, S. V. (2012). Sposoby otsenki diapazona rynochnoy stoimosti kak naiboleye veroyatnoy tseny sdelki [Methods for assessing the range of market value as the most probable price of transaction]. Izvestia Sankt-Peterburgskogo gosudarstvennogo ekonomicheskogo universiteta [News of the St. Petersburg state economic], 4, 27–30. (In Russ.)
Akhmetov, O. A. & Volnova, V. A. (2009). Standarty i metody otsenki. Neobkhodimyye trebovaniya k ikh obosnovannosti [Standards and methods of valuation (the necessary requirements for their validity)]. Imushchestvennyye otnosheniya v RF [Property Relations in the Russian Federation], 1, 49–58. (In Russ.)
Valeeva, A. V. (2010). Praktika nalogovogo kontrolya za transfertnym tsenoobrazovaniem v Rossii [The Practice of Tax Control over Transfer Pricing in Russia]. Rossiyskoye predprinimatelstvo [The Russian journal of entrepreneurship], 12, 178–184. (In Russ.)
Hu, R., Xia, H. & Jiang, Y. (2013). Complex dynamics for airlines price competition with differentiation strategy. Journal of Transportation Systems Engineering and Information Technology, 13, 11–16. doi: 10.1016/S1570–6672(13)60091–4.
Debdeep, P., Zhong, W. & Bose, S. (2016). Energy efficient cloud service pricing: A two-timescale optimization approach. Journal of Network and Computer Applications, 64, 98–112. doi: 10.1016/j.jnca.2015.10.016.
Zhang, J., Ge, B. & Xu, H. (2013). An equivalent marginal cost-pricing model for the district heating market. Energy Policy, 63, 1224–1232. doi: 10.1016/j.enpol.2013.09.017.
Chen, X., Zhu, Z. & Zhang, L. (2015). Simulation-based optimization of mixed road pricing policies in a large real-world network. Transportation Research Procedia, 8, 215–226. doi: 10.1016/j.trpro.2015.06.056.
Kruzhkova, G. V. & Kostyukhin, Yu. Yu. (2012). Teoriya igr i strategiya tsenoobrazovaniya na vtorichnoye syrye [Game theory and strategy of pricing for recycled materials]. Tsvetnyye metally [Non-ferrous metals], 8, 6–9. (In Russ.)
Gruver, G. & Giarratani, F. (2005). Modeling geographic ferrous scrap markets: regional prices and interregional transactions in the United States. Journal of Regional Science, 45(2), 313–341. doi: 10.1111/j.0022–4146.2005.00373.x.
Giarratani, F., Gruver, G. & Richmond, C. (2002). The US regional ferrous scrap model trade. Trade, Networks and Hierarchies. New York: Springer-Verlag, 159–175. doi: 10.1007/978–3-662–04786–6_9.
Simon, A. & De Palma, A. (1992). The logit as a model of product differentiation. Oxford Economic Papers, 44, 51–67. doi: 10.1093/oxfordjournals.oep.a042036.
Simon, A. & De Palma, A. (1992). Discrete Choice Theory of Product Differentiation. Cambridge, MA: MIT Press, 448.
De Palma, A., Ginsburgh, V., Papagiorgiou, Y. Y. & Thisse, J. (1985). The Principle of Minimum Differentiation Holds under Sufficient Heterogeneity. Econometrica, 53, 767–781. doi: 10.2307/1912653.
De Palma, A., Lindsey, R., Hohenbalken, B. & West, D. S. (1994). Spatial Price and Variety Competition in an Urban Retail Market: A Nested Logit Analysis. International Journal of Industrial Organization, 12, 331–357. doi: 10.1016/0167–7187(94)90037-X.
Sheppard, E., Haining, R. & Plummer, P. (1992). Spatial Pricing in Interdependent Markets. Journal of Regional Science, 32, 55–75. doi: 10.1111/j.1467–9787.1992.tb00168.x.
Hotelling, H. (1929). Stability in Competition. Economic Journal, 39, 41–57. doi: 10.2307/2224214.
D’Aspremont, C., Gabszewicz, J. & Thisse, J.-F. (1979). On Hotelling’s “Stability in Competition”. Econometrica, 47, 1145–1150. doi: 10.2307/1911955.
Sheppard, E., Haining, R. & Plummer, P. (2006). Spatial Pricing in Interdependent Markets. Journal of Regional Science, 32, 55–75. doi: 10.1111/j.1467–9787.1992.tb00168.x.
Ivanova, T. A. & Trofimova, V. Sh. (2015). Ekonomiko-matematicheskoye modelirovanie rynka metalloloma RF. Zadachi i metody ikh resheniya [Mathematical modeling of the Russian market for ferrous scrap: problem and methods for their solution]. Prilozhenie matematiki v ekonomicheskikh i tekhnicheskikh issledovaniyakh [The application of mathematics to economic and technical studies], 1(5), 48–52. (In Russ.)
Ivanova, T. A., Trofimova, V. Sh. & Kalitaev, A. N. (2016). Avtomatizatsiya protsessa rascheta optimalnykh potokov i formirovaniya tsenovogo diapazona zakupa loma chernykh metallov v RF [Automating the process of calculating the optimal flow and the formation of the price range of procurement of ferrous scrap in the Russian Federation]. Aktualnyye problemy sovremennoy nauki, tekhniki i obrazovaniya [Сontemporary issues of modern science, technology and education], 2(1), 121–124. (In Russ.)
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2018 T.A. Ivanova, V.S. Trofimova, A.N. Kalitaev, D.G. Stepanov
This work is licensed under a Creative Commons Attribution 4.0 International License.
