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1 ilburg University Management's information needs and the definition of costs, with special regard to the cost of interest Bannink, R. Document version: Publisher's PDF, also known as Version of record Publication date: 1989 Link to publication Citation for published version (APA): Bannink, R. (1989). Management's information needs and the definition of costs, with special regard to the cost of interest. (Research Memorandum FEW). Faculteit der Economische Wetenschappen. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. - Users may download and print one copy of any publication from the public portal for the purpose of private study or research - You may not further distribute the material or use it for any profit-making activity or commercial gain - You may freely distribute the URL identifying the publication in the public portal ake down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 30. jun. 2020

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4 MANAGEMEN'S INFORMAION NEEDS AND HE DEFINIION OF COSS with special regard to the cost of interest Prof. Dr. Robert Bannink FEw 380 r

5 MANAGEMEN'S INFORMAION NEEDS AND HE DEFINIION OF COSS, with special regard to the cost of interest PAPER PRESENED A HE 12-H ANNUAL CONGRESS OF HE EUROPEAN ACCOUNING ASSOCIAION SUGAR, WES-GERMANY, APRIL 1989 BY PROF.DR. ROBER BANNINK ILBURG UNIVERSIY ILBURG, HE NEHERLANDS.

6 I l. MANAGEMEN'S NEEDS FOR ACCOUNING [NFORMAION It does not need a high level of abstraction to describe an organization as a bundle of projects, each in its own phase of development, tied together by a whole of organizational activities. he primordial decision in organizations, whether oriented at profit making or aiming at other goals, is decided with the investment decision. At that occasion is which processes and up to which capacity the organization enables itself to participate in the activities of the environmental system. Investment decisions will be made to benefit the organization's goals, taking into regard the perceived, ( self-)imposed restrictions. One of these restrictions is the need for continuity of the organization itself. Among the various aspects of this concept there is the financial aspect, which in case of the investment decision can be operationalised by the nonnegativity restriction on the present value of the cashflow, generated by this project: (1. I) PV - E{ CR(t) - CO(t) }~( I tr)t t-0 where CR(t) and CO(t) denote the cash receipts and cash outlays in period t, r the discoun[ing rate and the lifetime of the project under decision. At the moment of the decision these magnitudes are represented by their expected values, evaluated under a lot of conditions. Hence the management is highly interested to be informed, period by period, about the actual performance of each project, and that in respect of two questions: a. Does the historical decision to invest threaten now or in the (near) future the organization's financial continuity? b. Is the project still a viable one under present conditions? Apart from these project-oriented questions there is an organization-oriented one: c. Are the organizational activities adequately designed for interlacing the actual bundte of projects? [t is the management accounting system that has to provide the answers on these questions. he method of cashflow accounting reports directly about the actual values of the variables figuring in (l.l) and their variances in respect of their estimates [Lee, 1980]. Notwithstanding the proven power of this method on the level of the organization as a whole, in analyzing its profitability over years [Lawson, 1980], it implies serious difficulties in interpreting its results on a low level of aggregation and shorter periodicity. his mainly by lack of a comprehensive distinction between timing differences and errors in estimation of quantities, leading to the question: Did we spend

7 z too much or too early? he traditional method of accrual accounting uses the concept of realized prof'it as a central element in its reporting system. In the next section of this paper we will describe the relation between the decision criterion ( I. I) and this concept of realized profit. It is quite amazing that the congruence between realized profit, being the central issue of reporting, and the present value criterion, being the central issue in decision making, is lacking in the regular handbooks of accounting. Section 3 presents a digression on the cost of interest which in the present author's opinion is misunderstood, especially in the Anglo-american litterature and regulations. How tempting it may be to consider the consequences for the concept of book value as well as the aspects of [he valuation base, these subjects relating to question b should be postponed to another time. Section 4 will be devoted to the problems arising in question c, widening our scope from project profitability to the profitability of the organization. o what extent these accounting concepts are relevant for management, as the motto of this congress states, can be answered solely by comparing the effectiveness and efficiency of management decisions using different accounting systems in comparable circumstances. In the author's opinion consistency in accounting concepts is a first condition for this relevance aimed at. [n this paper an effort is made to promote this consistency on several points.?. PROFI AND HE PRESEN-V.ALUE CRIERION When we imagined the organization as a bundle of projects, tied together by organizational activities, we stated implicitly that an organization is more than the bundle of projects itself. Postponing the consequences of this for a while, we consíder first the project-related concept of profit. [n formula (I.1) we defined the present value of a project's cashflow. In order to derive a magnitude which informs management period by period about the realizations of this present value, it is an administrative custom to centre the attention to revenues instead of the cash receipts mentioned in ( I. I) and on costs instead of cash outlays. his implies a reformulation of ( I. I) in the following steps: (2.1) PV - E ( R(t) - E(t) }~(ltr)t t E ((CR(tl-Rlt)) - (CO(t)-E(t))~l(Itr)t t-0 t-0 his first step of this reformulation uses R(t), the revenues of period t, and E(t), the expenditures of period t, measured at their 'critical moment' which is generally defined

8 3 by the invoicedates. he differences between these variables and their cash counterparts, mentioned in the second summation of (2.1), are the changes in debtors' and creditors' balances, taken together by OW(t) - W(t) - W(t-1), where W(t) represents the balance value of claims on 'Debtors' minus the balance value of liabilities to 'Creditors' at moment t, under the conditions that W(- I)- W() - 0. his leads to (2.1') PV - E{R(t) - E(t))~(Itr)t - E OW([)~(ltr)t [-0 t-0 he second step of the reformulation of ( l.l ) consists of a confrontation of the revenues of each period -which ex post are measurable- with a magnitude which, in respect of its profile over time, is comparable with these revenues: we define the costs of those periods. hat means, we allocate the expenditures E(t) to different periods by allocation coefficients a(t,t') which are subject to the restriction (2.2) E a(t,t') - I t'-0 for all t Verbally stated these coefficients describe the fraction of expenditures of period t which has to be allocated to the costs of period t'. Restriction ( 2.21 states that this allocation has to be complete. his allocation can be described by the following derivatiore E E(t).(Itr)-t t-0 - E E(t').(Itr)-t' t'-0 - E E a(t'.t).e(t').(ltr)-t' t'-0 t-0 - E E a(t',t).e(t').(ltr)t-t' ( Itr)-t t-0 t'-0 which, apart from the discounting factors, can be seen as the interchange of adding row totals of a table by adding column totals of the same table to get the general total. Substituting this result into the first summation of (2.1') leads to (~.3) E {R(t) - E(t)).(Itr)-t - ~ ( R(t) - E a(t',t).e(t').(ltr)t-t'}.(itr)-t t-0 t-0 t'-0 he terms defined by the second summation in the righthand side of (2.3) are exactly what we define as the costs, allocated to period r. that part of the expenditure of period t' that has to be matched with the revenues of period t, summed over all t'. Generally a(t',t) takes zero-values for t' ~ t, except in case where we have to make provisions for future expenditures.

9 4 Since we have only one restriction (2.2) for each t' on the values of a(t',t), it is clear that homas [ 1969, 1974 ] stated that each allocation method is arbitrary. However, we cannot circumvent this arbitrarity in defining costs matched with revenues. Hence we need supplementary conditions to absorb the.( i-1 I degrees of freedom. hese conditions are given by additional assumptions for the timeprofile of costs or categories of cos[s, viz. variable costs follow the time profile of production, fixed costs have a constant time profile. Alternative assumptions are: the internal rate of return for the project is the same for each period, or. cost of production of a unit quantity of product is independent of the moment in time this unit is produced etc.. Costs are not real, in the sense that they cannot be observed; they are just the image which the manager gets presented of the expenditures when he looks to them through the spectacles, provided by the accrual accounting system. Spectacles which he needs in order to see these expenditures in a timeshape comparable with that of the revenues, enabling him to compare both of them at the same moment in time, over the same period of time. It is the need of the spectator ~shich defines the focus of his lenses. In the same way it is the need of the user which defines the allocation procedure. But at which way we are looking to the cost image, we need a consistent one. We also see in the righthand-side of (2.3) that the cost terms include an interest factor (ltr)t-t~, called by a Dutch author [Van der Schroeff, 1980] the time dimension of costs, which is caused by the timeshift of the allocation process from the expenditure t' to the moment of cost recognition t. In the next section we moment of go further into the character of interest costs, here we return to the reformulation of (2.1') and the profit concept as such. For we reformulated only the first term in the righthand side of (2.1'), we now have to reformulate the second term as well: - E OW(t).(Itr)-t -- [ E W(t).(ltr)-t - E W(t-l).(ltr)-t ]t-0 t-0 t-0 -I - - E r.w([).(itr)-(ttl) - - E r.w(t-i).(ltr)-t t-0 t-0 he first step in this reformulation follows from the substitution of the definition for ~W(t), the second step holds by using the conditions that W(-1) - W() - 0, and the third step by using again that W(-I) - 0. Substituting (2.3) and the result from the reformulation above into (2.1') gives (2.4) PV- E[R(t) - E a([',t).e(t').(itr)t-t~ - r.w(t-i)].(itr)-t t-0 t'-0 or in words: he present value of a project equals the sum over all periods of the project's lifetime of the discounted value of each period's difference between revenues and their matched costs, subtracted with the interest over the net Debtors-Creditors balance at the beginning of that period. here are evidently two major kinds of costs in the formula (2.4): the costs of goods

10 5 sold, defined by (2.5) C(t) - E a(t',t).e(t').(itr)t-t' t'-0 and the costs originating from the delay between sales~expenditures and their cash counterparts, r.w(t-i). Amongst the infinite number of possibilities in which the present value defined by (2.4) will be :u least zero there is one which is very comprehensible, viz. the one for which each term is to non-negative. hus the answer on question a, does the historical decision invest threaten now or in the (near) future the organization's financial continuity, can be answered in the negative for each project, period by period, when the period's profit for that project, as well as the most recent expectations for the near future values of that variable, are nonnegative. his yardstick of period protït is absorbing smoothly every adaptation of plans and projects. We may note that (2.4) is defined in historical cost terms. he need for current cost information comes from question b, is the project still a viable one under present conditions, but this question is beyond the scope of this paper. 3. HE COS OF INERES. Recently litterature is reflecting a renewed discussion of the role of cost of interest in accounting. See for instance Anthony [ 1975 ], Amey [ 1980 ] and Bartley [ 1982 ]. In the late twenties Dutch writers ( e.g Limperg, re-edited by Groeneveld [ 1968 ]) reached the conclusion that costs of interest are not an independent kind of costs, but ought to be seen as a dimension of the costs; costs having three dimensions, viz. quantity, price and time. ime refers to the duration that financial means have been absorbed by the source of the cost ( labor, inventory, capital goods etc.). Evaluation of this time dimension is independent of the source of capital, equity or lenders, as well ~s it is with regard to the ratio of equity in total capital. In the opinion of these writers the rate of interest which ought to be applied in the evaluation of the time dimension is the riskfree rate of interest. W'ell, as can be seen in the derivation of costs, leading to (2.5), the interest dimension in costs of goods sold originates from the timeshift between expenditures and cos[s. ~ Besides these cost of interest, there are the interest costs originating from the timeshift between revenues~expenditures and their cash counterparts. hese interest costs do not have the character of a dimension of other kinds of costs, but are tied up directly to balance sheet items. Up till now not mentioned, but comparable with the

11 6 latter interest costs, there are the interest costs on cashbalances needed for the transactions. lt is worthwile to realize that interest costs are a result of accrual accounting, that under the system of cashflow accounting there's only mention of revenues, to be divided between the providers of equity and those of lenders' capital. But when the managemen['s need for information refers to a concept of profit as defined by the accrual accounting system it has to be a profit after the proper deduction of interest. By that derivation the sources of funds were not mentioned, so proved to be irrelevant for the character of interest costs. his is the same conclusion as the one reached by Anthony. he interest rate at which these costs, resp. cost dimension will be evaluated, is evidently the same as the one used in the present value computations evaluating investment projects, ultimately defined by the Capital Asset Pricing Model for the risk class of the project under consideration. o what extent that rate is depending on the equity ratio of the organization is a subject that belongs to the theory of finance. here are writers who -neglecting influences of taxation- deny such a dependence. Commonly raised arguments concerning the difficulties to calculate the proper value of this interest rate are valid, but will never allow for the conclusion that the proper interest rate in cost calculations is the risk-free rate or some fancy rate at which a company is provided for capital by the holding to which it belongs. Educated guesses, consistently in nature, do serve the information need of management much better than evidently wrong values do. 4. HE ORGANIZA[ON AS A WHOLE o complete our view on costs we have to look at the organizational activities which interlace all the projects. hese activities cause cash outlays in the same way as projects do and this negative cash flow can be transformed into 'costs' by arithmetic quite analogous to that used for the projects' cash outlays. In accounting theory there is a tendency to carry over all costs of the organization upon the cost bearing products sold by the organization. his reflects the assumption that the organization is just an asset to provide the market with these products. But the opposite view might deserve attention means to maintain the organization's continuity. too: the projects are hat implies that "Organization costs" is in the management's view a destination which absorbs costs in nearly the same way as products do. Instead of full cost accounting, which forces the accounting system to make pseudo-causal arithmetic, we can imagine a kind of restricted full cost accounting, where the restrictions are given by the extent

12 to which causality in product-cost relations could be defended. Using the organizational terms of Mintzberg [ 1983 ] the restricted full cost system carries the primary costs of the Core to the products, as well as costs of non-core departments in so far these costs are related to traceable services of these departments to the Core. he remaining costs of non-core departments are transferred to 'Organizational Costs'. he margin between product revenues and cost of goods sold has to be large enough to permit the organization to make these organizational costs, without bothering which product carries to what extent these "overheads". his can be illustrated by the following scheme: Revenues of project i during period t Costs of project i during period t Operating margin of project i during period t Aggregation over projects ---~ Operating margin period t Organizational costs period t Organization profit period t When needed this scheme could be extended by grouping of projects into divisions and a corresponding split up of organizational costs into divisional costs and -on the next higher level- general overhead. It is the management's responsibility to keep the overhead costs at the level needed b~ the organization in the way they want the organization to operate, taking into regard the earning capacity of the market activities for recovering these costs. Hence the accounting system has to present as explicitly as possible these costs specified to causes. his could be performed by an activity-allocation procedure, illustrated in table I : able 1: Costallocation to activities M MM C SS Core Org.C Products Primary Costs C 1 C2 C3 C4 C~ - C7 opmanagment Middle manag ~ 26 - echnocracy 7~ ~ 36 - Supp.Services d Core otal X I X2 X3 X4 XS OC PC

13 8 Given the Ci-values and the relative t(i.j)-values, specifying the proportion of its total costs Xi which departmentl) i has to transfer to department j, j- I,...5, or costabsorption j, for j- 6 or 7, the Xi-values are defined by 4 (3.1) Xi - Ci t E t(i,j).xj for i- 1,...,4 j-1 which enables us to solve these Xi-values. he value of XS can be easily found by adding together CS and the t(i,5).xi-values for i- 1,...,4. he t(i,j)-values have, for j- 1,...,5, to correspond with definable services, wanted by department j. In that way the i6-values are the organizationcosts, allocated to source of organizational activities. Concerning the X4-value can be remarked that this could be transformed into a kind of 'price' by dividing it by the amount of services rendered, thus enabling a comparison with external prices (not on short term!) to get a slight idea about cost effectiveness of the supporting service department. But the amount of services itself, the volume component of [hese costs, can only be justified by the topmanagement. his brings us back to the concept of' profit on projects. Either all the organizational costs are allocated to projects, or the present value of a project has to be definitely positive in order to keep the organization going. Some writers, e.g. Meyboom [ 1987 ], propose an increase in the discounting rate in order to take into account the margin needed for recovering the organizational costs. his may be acceptable in the decion making procedure, but in the present author's opinion it is not advisable in cost accounting when the allocation of costs has to point to the activities causing these costs. References: Anthony, Rober[ N. (1975): Accounting for the cost of interest; Lexington (Mass), D.C.Heath. Amey, Lloyd R. (1980): "Interes[ on equity capi[al as an ex pos[ cost", Journal of Business Finance and Accounting 7, no.3, p Bartley, John W. (1982): "Accounting for the cost of interest: an empirical examination", Journal of Business Finance and Accounting,9, no.2, p.239-2~4. 1) Where in table I and the subsequent formulas'departments' are mentioned, it is clear that these denote a whole sector of the organization. In reality the accounting system has to describe the corresponding costflows in much greater detail.

14 Groeneveld, G.L. (1968): Verzameld werk van prof. dr. h.~ Limperg Jr., dl.ll Leer van de kostprijs; Deventer, Kluwer. Lawson, G.H. (1980): "he measurement of corporate profitability on a he International Journal of Accounting, I980~'81, p.l I-46. cash-flow basis", Lee, homas A. (1980): Income and value measurement: theory and practice (2nd ed~; Wokingham, Van Nostrand Reinhold.!vteyboom, Bert R. (1987): Planning in decentralized firms, a contribution to the theory of multilevel decisions; Heidelberg, Springer Verlag (Lecture notes in economics and mathematical systems, no. 289). Mintzberg, Henry (1983): Structure in fives, designing effective organizations; Englewood Cliffs (N.J.), Prentice Hall. Schroeff, H.J.van der (1980): Kosten en kostprijs (IOe druk, herzien door J.G. Groene~~eld); Amsterdam, Kosmos. homas, Arthur L. (1969): he allocation problem in financial accounting theory; Sarasoto (Fl.), American Accounting Association (Studies in no. 3 ). accounting research, homas, Arthur L. (1974): he allocation problem, part [wo; Sarasoto (FI.), Ameri~an Accounting Association (Studies in accounting research, no. 9).

15 1 IN 1988 REEDS VERSCHENEN 29~ Bert Bettonvil Factor screening by sequential bifurcation 298 Robert P. Gilles On perfect competition in an economy with a coalitional structure 299 Willem Selen, Ruud M. Heuts Capacitated Lot-Size Production Planning in Process Industry 300 J. Kriens, J.h. van Lieshout Notes on the Markowitz portfolio selection method 301 Bert Bettonvil, Jack P.C. Kleijnen Measurement scales and resolution IV designs: a note 302 heo Nijman, Marno Verbeek Estimatíon of time dependent parameters in lineair models using cross sections, panels or both 303 Raymond H.J.M. Gradus A differential game between government and firms: a non-cooperative approach 304 Leo W.G. Strijbosch, Ronald J.M.M. Does Comparison of bias-reducing methods for estimating the parameter in dilution series 305 Drs. W.J. Reijnders, Drs. W.F. Verstappen Strategische bespiegelingen betreffende het Nederlandse kwaliteitsconcept 306 J.P.C. Kleijnen, J. Kriens, H. immermans and H. Van den Wildenberg Regression sampling in statistical auditing 30~ Isolde Woittiez, Arie Kapteyn A Model of Job Choice, Labour Supply and Wages 308 Jack P.C. Kleijnen Simulation and optimization in production planning: A case study 309 Robert P. Gilles and Pieter H.M. Ruys Relational constraints in coalition formation 310 Drs. fí. Leo heuns Determinanten van de vraag naar vakantiereizen: een verkenning van materiële en immateriéle factoren 311 Peter M. Kort Dynamic Firm Behaviour within an Uncertain Environment 312 J.P.C. Blanc A numerical approach to cyclic-service queueing models

16 Drs. N.J. de Beer, Drs. A.M. van Nunen, Drs. M.O. Níjkamp Does Morkmon Matter? ' 314 h. van de Klundert Wage differentials and employment in a two-sector model with a dual labour market 315 Aart de Zeeuw, Fons Groot, Cees Withagen On Credible Optimal ax Rate Policies 316 Christian B. Mulder Wage moderating effects of corporatism Decentralized versus centralized wage setting in a union, firm, government context 31~ Járg Glombowski, Michael Kruger A short-period Goodwin growth cycle 318 heo Nijman, Marno Verbeek, Arthur van Soest he optimal design of rotating panels in a simple analysis of variance model 319 Drs. S.V. Hannema, Drs. P.A.M. Versteijne De toepassing en toekomst van public private partnership's bij de grote en middelgrote Nederlandse gemeenten 320 h. van de Klundert Wage Rigidity, Capital Accumulation and Unemployment in a Small Open Economy 321 M.H.C. Paardekooper An upper and a lower bound for the distance of a manifold to a nearby point 322 h. ten Raa, F. van der Ploeg A statistical approach to the problem of negatives in input-output analysis 323 P. Kooreman Household Labor Force Participation as a Cooperative Game; an Empirical Model 324 A.B..M. vati Schaik Persistent Unemployment and Long Run Growth 325 Dr. F.W.M. Boekema, Drs. L..A.G. Oerlemans De lokale produktiestructuur doorgelicht. Bedrijfstakverkenningen ten behoeve van regionaal-economisch onderzoek 326 J.P.C. Kleijnen, J. Kriens, M.C.H.M. Lafleur, J.H.F. Pardoel Sampling for quality inspection and correction: AOQL performance criteria

17 heo E. Nijman, Mark F.J. Steel Exclusion restrictions in instrumental variables equations 328 B.B. van der Genugten Estimation in linear regression under the presence of heteroskedasticity of a completely unknown form 329 Raymond H.J.M. Gradus he employment policy of government: to create jobs or to let them create? 330 Hans Kremers, Dolf alman Solving the nonlinear complementarity problem with lower and upper bounds 331 Antoon van den Elzen Interpretation and generalization of the Lemke-Howson algorithm 332 Jack P.C. Kleijnen Analyzing simulation experiments with common random numbers, part II: Rao's approach Jacek Osiewalski Posterior and Predictive Densities for Nonlinear Regression. A Partly Linear Model Case 33l1 A.H. van den Elzen, A.J.J. alman A procedure for finding Nash equilibria in bi-matrix games 335 Arthur van Soest Minimum wage rates and unemployment in he Netherlands 336 Arthur van Soest, Peter Kooreman, Arie Kapteyn Coherent specification of demand systems with corner solutions and endogenous regimes 337 Dr. F.W.M. Boekema, Drs. L.A.G. Oerlemans De lokale produktiestruktuur doorgelicht II. Bedrijfstakverkenningen ten behoeve van regionaal-economisch onderzoek. De zeescheepsnieuwbouwindustrie 338 Gerard J. van den Berg Search behaviour, transitions to nonparticipation and the duration of unemployment 339 W.J.H. Groenendaal and J.W.A. Vingerhoets he new cocoa-agreement analysed 340 Drs. F.G. van den Heuvel, Drs. M.P.H. de Vor Kwantificering van ombuigen en bezuinigen op collectieve uitgaven Pieter J.F.G. Meulendijks An exercise in welfare economics (III)

18 1V 342 W.J. Selen and R.M. Heuts A modified priority index for Gunther's lot-sizing heuristic under capacitated single stage production 343 Linda J. Mittermaier, Willem J. Selen, Jeri B. Waggoner, Wallace R. Wood Accounting estimates as cost inputs to logistics models 344 Remy L. de Jong, Rashid I. A1 Layla, Willem J. Selen Alternative water management scenarios for Saudi Arabia 345 W.J. Selen and R.M. Heuts Capacitated Single Stage Production Planning with Storage and Sequence-Dependent Setup imes Constraints 346 Peter Kort he Flexible Accelerator Mechanism in a Financial Adjustment Cost Model 347 W.J. Reijnders en W.F. Verstappen De toenemende importantie van het verticale marketing systeem 348 P.C. van Batenburg en J. Kriens E.O.Q.L. - A revised and improved version of A.O.Q.L. 349 Drs. W.P.C. van den Nieuwenhof Multinationalisatie en cobrdinatie De internationale strategie van Nederlandse ondernemingen nader beschouwd 350 K.A. Bubshait, W.J. Selen Estimation of the relationship between project attributes and the implementation of engineering management tools 351 M.P. ummers, I. Woittiez A simultaneous wage and labour supply model with hours restrictions 352 Marco Versteijne Measuríng the effectiveness of advertising in a positioning context with multi dimensional scaling techniques 353 Dr. F. Boekema, Drs. L. Oerlemans Innovatie en stedelijke economische ontwikkeling 354 J.M. Schumacher Discrete events: perspectives from system theory 355 F.C. Bussemaker, W.H. Haemers, R. Mathon and H.A. Wilbrink A(49,16,3,6) strongly regular graph does not exist 356 Drs. J.C. Caanen ien jaar inflatieneutrale belastingheffing door middel van vermogensaftrek en voorraadaftrek: een kwantitatieve benadering

19 v 357 R.M. Heuts, M. Bronckers A modified coordinated reorder procedure under aggregate investment and service constraints using optimal policy surfaces 358 B.B. van der Genugten Linear time-invariant filters of infinite order for non-stationary processes 359 J.C. Engwerda LQ-problem: the discrete-time time-varying case 360 Shan-Hwei Nienhuys-Cheng Constraints in binary semantical networks 361 A.B..M. van Schaik Interregional Propagation of Inflationary Shocks 362 F.c. Drost How to define UMW 363 Rommert J. Casimir Infogame users manual Rev 1.2 December M.H.C. Paardekooper A quadratically convergent parallel Jacobi-process for diagonal dominant matrices with nondistinct eigenvalues 365 Robert P. Gilles, Pieter H.M. Ruys Characterization of Economic Agents in Arbitrary Communication Structures 366 Harry H. igelaar Informative sampling in a multivariate linear system disturbed by moving average noise 36~ Jbrg Glombowski Cyclical interactions of politics and economics in an abstract capitalist economy

20 IN 1989 REEDS VERSCHENEN 368 Ed Nijssen, Will Reijnders "Macht als strategisch en tactisch marketinginstrument binnen de distributieketen" 369 Raymond Gradus Optimal dynamic taxation with respect to fiz~ms 370 heo Nijman he optimal choice of controls and pre-experimental observations 371 Robert P. Gilles, Pieter H.M. Ruys Relational constraints in coalition formation 372 F.A. van der Duyn Schouten, S.G. Vanneste Analysis and computation of (n,n)-strategies for maintenance of a two-component system 373 Drs. R. Hamers, Drs. P. Verstappen Het coropany ranking model: a means for evaluating the competition 374 Rommert J. Casimir Infogame Final Report 375 Christian B. Mulder Efficient and inefficient institutional arrangements between governments and trade unions; an explanation of high unemployment, corporatism and union bashing 376 Marno Verbeek On the estimation of a fixed effects model with selective nonresponse 377 J. Engwerda Admissible target paths in economic models 378 Jack P.C. Kleijnen and Nabil Adams Pseudorandom number generation on supercomputers 379 J.F'.C. Blanc he power-series algorithm applied to the shortest-queue model

21 ~ I ~IN~NM~b IIIVI ~ R Ytl~ II N IIVIIVIIUP I

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