Letter from the editor

Abstract

This issue of The Engineering Economist covers several contemporary areas of engineering economic research, including portfolio optimization, supply chain management, and risk assessment. I would like to thank the reviewers who contributed to the peer-review process as well as area editors David Enke, Roy Kwon, and Chin Hon Tan for their contributions to this issue. The issue begins with an article entitled “Modeling Index Tracking Portfolio Based on Stochastic Dominance for Stock Selection” by Wu and Wang. The authors develop a portfolio construction model using the stochastic dominance approach on stock filtering. Their findings have implications for managers who are responsible for either bringing greater outcomes from tracking an index under the non-expected utility function or satisfying the investor’s preference for the different object. In “On a Holistic View of Supply Chain Financial Performance and Strategic Position” by Tsai, the research introduces an analytical approach relies on three popular machine learning models, forecasting, clustering, and classification, to provide a holistic view of target companies’ financial performance patterns to study their underlying supply chain strategies. Their approach is consistent and robust as it considers noise reduction, outlier detection, and feature selection functions. The technical note “Modified Variance Incorporating High-Order Moments in Risk Measure with Gram-Charlier Returns” by Le on, Mora, and Perote introduces a new risk measure for portfolio choice and compares its performance with two related metrics, behavioral variance and modified variance, by using a Taylor’s expansion. Their work considering minimum variance and Sharpe ratio criteria by employing random portfolio optimization technique for eleven sets of stocks. In the last article, Rosner, Yang, Rao, and Scott coauthor “Decisions on CapitalConstrained Supply Chains with Credit Guarantees and Bankruptcy Costs.” Their article contributes a supply chain financing model where the core supplier provides credit guarantee for the capital-constrained retailer to bank loans. The model takes the credit guarantee, bankruptcy costs, and salvage value of products into account and analyzes the decision-making behaviors of supply chain participants, including the bank. Their results show that the supplier can adjust the credit guarantee coefficient to increase its profit and lower the profit of the retailer, which may cause instability in the supply chain. The Engineering Economist journal publishes articles, case studies, surveys, and book and software reviews that represent original research, current practice, and teaching involving problems of capital investment. For questions or inquiries, please contact me at hln@uark.edu.