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2016 International Conference on Industrial Engineering, Management Science and
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Welcome Message from our General Chairs
Welcome to the International Conference on Industrial Engineering, Management Science and
Applications 2016 in Jeju on behalf of the conference committee, we would like to convey our
appreciation to all authors for participating and contributing their valuable works to make this conference
great. It is our great honor to welcome you and wish you both, professional success at ICIMSA, and a
great time in the beautiful city of Jeju

ICIMSA 2016 aimed to discover a new progressive technology by enhancing the previous technologies
and to solve the technical problems that may have occurred in the process of merging technology in
various fields of industry.

At ICIMSA 2016, IT experts, researchers and practitioners from each field have been invited to share
ideas and research technologies. Moreover they will be encouraged to cooperate with each other to
overcome the confronted technical problems. As a result, this conference will become a place of
knowledge with a variety of effects created on every field related to industrial engineering, management
science and applications.

The conference seeks contributions presenting novel research results in all aspects of industrial
engineering, management science and applications. Submitted papers have been reviewed by our Program
Committee Members and Reviewers The accepted papers will be published by IEEE and will be
submitted to be indexed by EI, ISI and Scopus. We would like to thank all organizers, supporters, and
organizing committee members who are listed in the following pages. Each reviewers has reviewed at
least four papers, while each paper has been reviewed by at least three international reviewers. Our
success would not have been possible without their support and contribution, as we strongly believe their
collaboration and support was invaluable to making this International Conference fruitful and insightful.
Lastly, we would be greatly honored and pleasured to have your continued contributions in future
ICIMSA.

With warm regards,

Sangmin Park, Inchon National University

Xiaoxia Huang, University of Science and Technology Beijing, China
Nikolai Joukov, New York University and modelizeIT Inc , USA

iii
iv
Organizing Committee

General Chairs
Sangmin Park, Inchon National University
Xiaoxia Huang, University of Science and Technology Beijing, China
Nikolai Joukov, New York University and modelizeIT Inc , USA
Steering Committee
Nikolai Joukov, New York University and modelizeIT Inc , USA
Borko Furht, Florida Atlantic University, USA
Bezalel Gavish, Southern Methodist University, USA
Kin Fun Li, University of Victoria, Canada
Kuinam J. Kim, Kyonggi University, Republic of Korea
Naruemon Wattanapongsakorn, King Mongkut’s University of Technology Thonburi, Thailand
Xiaoxia Huang, University of Science and Technology Beijing, China
Dato’ Ahmad Mujahid Ahmad Zaidi, National Defence University of Malaysia, Malaysia
Publicity Chairs
Dan (Dong-Seong) Kim, University of Canterbury, New Zealand
Changchao Gu, Sinopec Management Institute, China
Suresh Thanakodi, National Defence University of Malaysia, Malaysia
Workshop Chairs
Donghwi Lee, University of Colorado, USA
Financial Chairs
Kyoungho Choi, Institute of Creative Advanced Technologies, Science and Engineering , Republic of Korea
Program Chairs
Kuinam J. Kim, Kyonggi University, Korea

Organizers & Supporters

The Korean Federation of Science and Technology Societies(KOFST)
Institute of Creative Advanced Technologies, Science and Engineering (iCatse)
Chinese Management Science Society (CMSS)
Korean Industry Security Forum (KISF)
Korea Information Assurance Society (KIAS)
Kyonggi University, Republic of Korea
Chonnam National University, Republic of Korea
University of Science and Technology Beijing, China
King Mongkut’s University of Technology Thonburi, Thailand
River Publishers, netherlands
IEEE Changwon Section

v
vi
Program Committee
Ana Paula Ferreira Barroso, UNIDEMI, Portugal
Andreas Dewald, University of Erlangen, Germany
Andrew Kusiak, Department of Mechanical and Industrial Engineering, USA
Ankur Gupta, Model Institute of Engineering and Technology, India
António Carlos da Silva Abelha, University of Minho, Portugal
António Grilo, UNIDEMI, Portugal
Baghdadi, Youcef, Sultan Qaboos University, Oman
Camacho, Sonia, McMaster University, Canada
Carlos Alberto Lourenço dos Santos, University of Aveiro, Portugal
Catalina Lucía Alberto, UNIVERSIDAD NACIONAL DE CÓRDOBA, ARGENTINA
Chin-Yuan, Fan National Applied Research Laboratories Science&Technology Policy Research and
Information Center, Taiwan
Cláudio Alves, Universidade de Minho, Portugal
Cruz-Benito, Juan, Instituto Universitario de Ciencias de la Educación, España
DANG Thanh Tin, Ho Chi Minh city University of Technology, Viet Nam
El-Houssaine AGHEZZAF Ghent University, Belgium
Elias, Micheline, Ecole Centrale Paris, SAP Academic Chair on Business Intelligence New York, USA
Fatemeh Almasi, Amirkabir University of Technology, Iran
Haeil Ahn, Seokyeong University, Republic of Korea
Hailiang YANG, The University of Hong Kong, Hong Kong
HAO Gang, University of Hong Kong, Hong Kong
Hardeep Singh, FEROZEPUR COLLEGE OF ENGINEERING TECHNOLOGY (FCET) / PUNJAB
TECHNICAL UNIVERSITY INDIA, India
Hefu Liu, University of Science and Technology of China, China
HEMA ZULAIKA HASHIM, Universiti Teknologi MARA, Malaysia
Ilias Santouridis, Technological Educational Institute (TEI) of Thessaly, Greece
Isabel Maria Correia Cruz, Universidade de Coimbra, Portugal
Jae Kyung (JK) Woo, University of Hong Kong, Hong Kong
José Machado, University of Minho, Portugal
Justin Varghese, King Khalid University Abha, KSA
Kaba, Abdoulaye, Al Ain University of Science and Technology, UAE
kadry, seifedine, American University of the Middle East, KUWAIT
Kamran Behdinan, University of Toronto, Canada
Leszek A. Maciaszek, Wroclaw University of Economics, Poland and Macquarie University, Sydney
Australia
M. Nasiruddin Munshi, University of Dhaka, Bangladesh
Manuel Filipe Vieira Torres dos Santos, Algoritmi Research Centre / University of Minh,o Portugal
Marco Aiello, University of Groningen, The Netherlands
Marco Anisetti, Università degli Studi di Milano, Italy
Meng-Shan Tsai, National Kaohsiung Normal University, Taiwan
Mikhail M. Komarov, National Research University Higher School of Economics, Russia
MOHD. SHOKI MD. ARIFF, UNIVERSITI TEKNOLOGI MALAYSIA, Malaysia
Mohsen Abdelnaein Hassan Mohamed, Assiut University, Egypt

vii
Paweł Błaszczyk, University of Silesia, Poland
Ramayah Thurasamy, Universiti Sains Malaysia, Malaysia
Reggie Davidrajuh, University of Stavanger, Norway
Rika Ampuh Hadiguna, Andalas University, Indonesia
Rionel Belen Caldo, Lyceum of the Philippines University – Laguna (LPU-L)/De La Salle University
(DLSU)
Rui Kang, Beihang University, China
Rui Pedro Figueiredo Marques, University of Aveiro, Portugal
Rusmadiah Bin Anwar, Universiti Teknologi Malaysia, MALAYSIA
S.Sarifah Radiah Shariff, Universiti Teknologi MARA, Shah Alam Selangor, Malaysia
Sabin-Corneliu Buraga, Alexandru Ioan Cuza’ University of Iasi, Romania
Sandeep Grover, YMCA University of Science and Technology, India
Seren OZMEHMET TASAN, Dokuz Eylul University,Turkey
Seyedmohsen Hosseini, University of Oklahoma, USA
Sharul Kamal Abdul Rahim, universiti teknologi malaysia, malaysia
Sheroz Khan, International Islamic University Malaysia, Malaysia
Shimpei Matsumoto, Hiroshima Institute of Technology, Japan
Siana Halim, Petra Christian University Surabaya, Indonesia
Sidi WU, Waseda University, Japan
Sim-Hui Tee, Multimedia University, Malaysia
Simon Collart-Dutilleul, Ifsttar, France
SITI NOOR HAJJAR MD LATIP, Universiti Teknologi MARA, Malaysia
Siti Zulaiha Ahmad, MARA University of Technology Perlis, Malaysia
Supachart Iamratanakul, Kasetsart University, Thailand
Suprakash Gupta, Indian Institute of Technology (BHU), India
Svetlana Maltseva, National Research University, Russia
T. Błaszczyk, University of Economics, Katowice, Poland
Tahira Awan, International Islamic University, Pakistan
Tantikorn Pichpibul, Panyapiwat Institute of Management, Thailand
Xianda Kong, Tokyo Metropolitan University, Japan
Yoshinobu Tamura, Yamaguchi University, Japan
Zety Sharizat Bt Hamidi, Universiti Teknologi MARA, Malaysia

viii
Table of Contents

A Hybrid Fuzzy Multi-Criteria Decision-Making Approach for Mitigating Air Traffic Congestion .................. 1
Miriam F. Bongo and Lanndon A. Ocampo

Constrained Maximization of Social Welfare with Fiscal Transfer Scheme .......................................................... 6

Shinji Suzuki and Takehiro Inohara

Modelling Commercial Framework of the Strategic Elementary Design Concept.............................................. 11

Mohd Shaleh Mujir, Norashikin Hasan and Oskar Hasdinor Hassan

A Service-Oriented Cloud Application for a Collaborative Tool Management System ...................................... 15

Marcus Röschinger, Orthodoxos Kipouridis and Willibald A. Günthner

Automated Documentation for Rapid Prototyping ................................................................................................ 20

Napajorn Wattanagul and Yachai Limpiyakorn

Generation of Images of WND Equivalent from HTML Prototypes .................................................................... 24

Ekarat Prompila and Yachai Limpiyakorn

Voice Recognition Using k Nearest Neighbor and Double Distance Method ....................................................... 29
Ranny

Intelligent Robot's Behavior Based on Fuzzy Control System .............................................................................. 34

Eva Volna, Martin Kotyrba and Michal Jaluvka

Effects of Required Coefficient of Friction for Female in Different Gait ............................................................. 39

Yu Ting Chen, Kai Way Li and Yi Yang Chen

An Application of Statistical Modeling for Classification of Human Motor Skill Level ..................................... 43
Wenqi Ma and David B. Kaber

Analysis of Vehicle Crash Injury-Severity in a Superhighway: A Markovian Approach .................................. 48

John Carlo F. Marquez, Darwin Joseph B. Ronquillo, Noime B. Fernandez and Venusmar C. Quevedo

Assessing Participation in Decision-Making among Employees in the Manufacturing Industry....................... 53

Shiau Wei Chan, Abdul Razak Omar, R. Ramlan, Izzuddin Zaman, Siti Sarah Omar and Khan Horng Lim

Estimation of Response Surface Based on Central Composite Design Using Spatial Prediction ....................... 58
Haeil Ahn

Reducing Operational Downtime in Service Processes: A Six Sigma Case Study ............................................... 63
Raid Al-Aomar, Saeed Aljeneibi and Shereen Almazroui

Ownership Structure, Internal Control and Real Activity Earnings Management............................................. 68

Xiao Wang, Jie Gao, Chunling Shang and Qiang Lu

Sustained Quality Award Status in Developing Country: A Study on the Dubai Quality Award Recipients ... 72
M. Doulatabadi and S. M. Yusof

ix
Software Reliability Model Selection Based on Deep Learning............................................................................. 77
Yoshinobu Tamura, Mitsuho Matsumoto and Shigeru Yamada

A Comprehensive Analysis Method for System Resilience Considering Plasticity.............................................. 82

Yanbo Zhang, Rui Kang, Ruiying Li and Chenxuan Yang

Reliability and Failure Behavior Model of Optoelectronic Devices ...................................................................... 86

Ning Tang, Ying Chen and ZengHui Yuan

Optimal Replacement Policy Based on Cumulative Damage for a Two-Unit System ......................................... 91
Shey-Huei Sheu, Zhe-George Zhang, Tzu-Hsin Liu and Hsin-Nan Tsai

Method Construction for Risk Factors Identification of Public Hospital Operation .......................................... 94
Shirui Peng, Guofeng Su, Jianguo Chen and Zhiru Wang

A Study on Device Security in IoT Convergence .................................................................................................... 99

Hyun-Jin Kim, Hyun-Soo Chang, Jeong-Jun Suh and Tae-shik Shon

Design of Arc Fault Pressure and Temperature Detectors in Low Voltage Switchboard ................................. 103
Lee Choo Kuan and Ahmad Azri Sa’adon

Performance Evaluation of Discrete-Time Hedging Strategies for European Contingent Claims .................. 107
Easwar Subramanian, Vijaysekhar Chellaboina and Arihant Jain

Explicit Solutions of Discrete-Time Hedging Strategies for Multi-Asset Options ............................................. 112
Easwar Subramanian, Vijaysekhar Chellaboina and Arihant Jain

Optimal Static Hedging of Uncertain Future Foreign Currency Cash Flows Using FX Forwards ................. 117
Anil Bhatia and Sanjay P. Bhat

A Neural Network Approach to the Operational Strategic Determinants of market Value in

High-Tech Oriented SMEs...................................................................................................................................... 122
Jooh Lee and He-Boong Kwon

Green Banking: A Proposed Model for Green Housing Loan............................................................................. 126

Alexander V. Gutierrez

A Feasibility Study and Design of Biogas Plant via Improvement of Waste Management and
Treatment in Ateneo de Manila University ........................................................................................................... 130
S. Granada, R. Preto, T. Perez, C. Oppus, G. Tangonan and P. M. Cabacungan

Effective Data Collection and Analysis of Solar Radio Burst Type II Event Using Automated
CALLISTO Network System.................................................................................................................................. 133
N. H. Zainol, S. N. U. Sabri, Z. S. Hamidi, M. O. Ali, N. N. M. Shariff, Nurulhazwani Husien,
C. Monstein and M. S. Faid

The Dependence of Log Periodic Dipole Antenna (LPDA) and e-CALLISTO Software to
Determine the Type of Solar Radio Burst (I -V) ................................................................................................... 138
S. N. U. Sabri, N. H. Zainol, M. O. Ali, N. N. M. Shariff, NurulHazwani Hussien, M. S. Faid, Z. S. Hamidi and
C. Monstein

x
Monitoring the Level of Light Pollution and Its Impact on Astronomical Bodies Naked-Eye Visibility
Range in Selected Areas in Malaysia Using the Sky Quality Meter .................................................................... 143
M. S. Faid, Nurulhazwani Husien, N. N. M. Shariff, M. O. Ali, Z. S. Hamidi, N. H. Zainol and S. N. U. Sabri

Solar Radio Bursts Detected by CALLISTO System and Their Related Events ............................................... 148
Nurulhazwani Husien, N. H. Zainol, Z. S. Hamidi, S. N. U. Sabri, N. N. M. Shariff, M. S. Faid, M. O. Ali and
C. Monstein

Simulation Modeling of Sewing Process for Evaluation of Production Schedule in Smart Factory ................ 153
Sooyoung Moon, Sungjoo Kang, Jaeho Jeon and Ingeol Chun

A Knowledge Management Framework for Studying the Child Obesity ........................................................... 156
Raslapat Suteeca and Prompong Sugunnasil

Hybrid Clustering System Applied in Patent Quality Management - Take Intelligent Car
Industry for Example .............................................................................................................................................. 160
Chin-Yuan Fan and Shu-Hao Chang

An Integrated QFD and Kano's Model to Determine the Optimal Target Specification .................................. 165
Dian Retno Sari Dewi and Dini Endah Setyo Rahaju

A Simultaneous Integrated Model with Multiobjective for Continuous Berth Allocation and
Quay Crane Scheduling Problem ........................................................................................................................... 170
Nurhidayu Idris and Zaitul Marlizawati Zainuddin

A Multi Objective Mixed Integer Programming Approach for Sustainable Production System..................... 175
Ma. Teodora E. Gutierrez

The Determining Factors in Prescribing Anti-Hypertensive Drugs to First-Ever Ischemic Stroke Patients .. 178
Rasvini Rajendran and Zaitul Marlizawati Zainuddin

Location Routing Inventory Problem with Transshipment Points Using p-Center .......................................... 183
S. Sarifah Radiah Shariff, Mohd Omar and Noor Hasnah Moin

Optimal Worker Assignment under Limited-Cycled Model with Multiple Periods - Consecutive
Delay Times is Limited ............................................................................................................................................ 188
Xianda Kong, Hisashi Yamamoto and Shiro Masuda

Method for an Energy-Cost-Oriented Manufacturing Control to Reduce Energy Costs: Energy Cost
Reduction by Using a New Sequencing Method.................................................................................................... 193
Stefan Willeke, Georg Ullmann and Peter Nyhuis

Economic Production Quantity with Imperfect Quality, Imperfect Inspections, Sales Return, and
Allowable Shortages ................................................................................................................................................ 198
Muhammad Al-Salamah

Analysis and Prediction Cost of Manufacturing Process Based on Process Mining.......................................... 206
Thi Bich Hong Tu and Minseok Song

Application of TPM in Production Process of Aluminium Stranded Conductors ............................................. 211

Orapadee Joochim and Jumnong Meekaew

xi
'Creating Awareness on Light Pollution' (CALP) Project: Essential Requirement for
School-University Collaboration ............................................................................................................................ 216
N. N. M. Shariff, M. R. Osman, M. S. Faid, Z. S. Hamidi, S. Sabri, N. H. Zainol, M. O. Ali and N. Husien

Signal Detection of the Solar Radio Burst Type III Based on the CALLISTO System
Project Management ............................................................................................................................................... 220
Z. S. Hamidi, N. H. Zainol, M. O. Ali, S. N. U. Sabri, N. N. M. Shariff, M. S. Faid, Nurulhazwani Husien and
C. Monstein

A Risk Management Approach for Collaborative NPD Project ......................................................................... 224

Ioana Filipas Deniaud, François Marmier, Didier Gourc and Sophie Bougaret

e-CALLISTO Network System and the Observation of Structure of Solar Radio Burst Type III .................. 229
M. O. Ali, S. N. U. Sabri, Z. S. Hamidi, Nurulhazwani Husien, N. N. M. Shariff, N. H. Zainol, M. S. Faid and
C. Monstein

Use of Earned Value Management in the UAE Construction Industry .............................................................. 234
Mohamed Morad and Sameh M. El-Sayegh

Significant Factors Affecting the Size and Structure of Project Organizations ................................................. 238
Sameh M. El-Sayegh, Mustafa Kashif, Mohammed Al Sharqawi, Nilli Nikoula and Mei Alhimairee

Real-World Software Projects as Tools for the Improvement of Student Motivation and
University-Industry Collaboration......................................................................................................................... 243
Zsolt Csaba Johanyák

The Impact of Information Technology and the Alignment between Business and Service
Innovation Strategy on Service Innovation Performance .................................................................................... 247
Fotis Kitsios and Maria Kamariotou

Optimal Strategies for Escaping from the Middle Income Trap: Automotive Supply Chain in Thailand...... 252
Kanda Boonsothonsatit and Orapadee Joochim

The Design of Models for Coconut Oil Supply Chain System Performance Measurement .............................. 256
Meilizar, Lisa Nesti and Putranesia Thaha

Application of Conjoint Analysis in Establishing Aviation Fuel Attributes for Air Travel Industries ............ 262
Karla Ishra S. Bassig and Hazeline A. Silverio

Internet of Things-Enabled Supply Chain Performance Measurement Model ................................................. 270

Abdallah Jamal Dweekat and Jinwoo Park

Forecasting Method under the Introduction of a Day of the Week Index to the Daily Shipping Data
of Sanitary Materials ............................................................................................................................................... 273
Koumei Suzuki, Kazuhiro Takeyasu and Hirotake Yamashita

Text Mining Analysis on the Questionnaire Investigation for High School Teachers' Work Load ................. 278
Kazuhiro Takeyasu, Tatsuya Oyanagi, Yasuo Ishii and Daisuke Takeyasu

The Analysis to the Questionnaire Investigation on the Rare Sugars ................................................................. 283
Yuki Higuchi, Kazuhiro Takeyasu and Hiromasa Takeyasu

xii
Predicting Customer Lifetime Value through Data Mining Technique in a Direct Selling Company............. 288
Arsie P. Mauricio, John Michael M. Payawal, Maida A. Dela Cueva and Venusmar C. Quevedo

Knowledge Sharing and the Innovation Capability of Chinese Firms: The Role of Guanxi ............................ 293
Oswaldo Jose Jimenez Torres and Dapeng Liang

Two-Level Hierarchical Routing Based on Road Connectivity in VANETs ...................................................... 298

Zubair Amjad, Wang-Cheol Song and Khi-Jung Ahn

An Overview of Wax Crystallization, Deposition Mechanism and Effect of Temperature & Shear ............... 303
Azwan Harun, Nik Khairul Irfan Nik Ab Lah, Zulkafli Hassan and Hazlina Hussin

Countercyclical Buffer of Basel III and Cyclical Behavior of Palestinian Banks' Capital Resource ............... 308
Ahmed N. K. Alfarra, Xiaofeng Hui, Ehsan Chitsaz and Jaleel Ahmed

Author Index ............................................................................................................................................................ 313

xiii
xiv

A Hybrid Fuzzy Multi-Criteria Decision-Making
Approach for Mitigating Air Traffic Congestion
1
Miriam F. Bongo
Department of Industrial Engineering
School of Engineering
University of San Carlos
Cebu City, Philippines
miriam.bongo@yahoo.com
Abstract — This paper presents a novel hybrid MCDM
approach based on concepts of fuzzy DEMATEL, ANP, and fuzzy
TOPSIS to address air traffic congestion in the Philippines. The
proposed approach enables the decision-makers under the Air
Traffic Services (ATS) to elicit judgment on which ATFM action
(i.e., ground holding, airborne holding, rerouting, and speed
controlling) is most suitable to be applied in the occurrence of air
traffic congestion. A case study at Mactan Cebu International
Airport (MCIA) is conducted to illustrate the application of the
proposed framework based on pairwise comparison among
criteria and evaluation of ATFM actions with respect to the
previously given set of criteria. The results revealed that the
decision-makers are most concerned with the criterion on safety.
Correspondingly, ground holding is perceived to be the most
suitable ATFM action to be applied during air traffic congestion
as its degree of safety once implemented is highest.
Keywords — air traffic congestion, ANP, fuzzy DEMATEL,
fuzzy TOPSIS, MCDM
I. INTRODUCTION
Flight delays have become the most prominent issue
affecting not only the on-time schedule reliability of airlines but
also the operational reputation of an airport and the quality of
customer service experienced by air passengers. As a
consequence, the order and flow of scheduled flights is seriously
disrupted and a significant impact on the aviation safety is at
stake. In the same way, airport and airlines are confronted with
huge losses and low credit [1]. In the Philippines, demand for air
travel is continuously growing by an average of 11% annually
which prompted its major airports to constantly address it given
the limited airport and airspace resources. With the growth of air
passengers, come the consequence of delays even under normal
weather conditions. According to an official record disclosed by
Air Traffic Services (ATS) which functions directly under the
Civil Aviation Authority of the Philippines (CAAP), on an
average daily basis, 14% of flights are delayed. These statistics
further revealed that indeed flight delays are considered as a
major threat to the airlines management, airport management,
and even the ATS providers, as its effects ripple and accumulate
from one flight leg to other succeeding flight legs. In reality, the
major decision-makers in the commercial aviation industry
include the airlines management, airport management, and ATS
providers. Furthermore, it is imperative to understand that under
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
1
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2*
Lanndon A. Ocampo
Department of Mechanical and Manufacturing Engineering
School of Engineering
University of San Carlos
Cebu City, Philippines
don_leafriser@yahoo.com
*corresponding author
the umbrella of ATS, there are four major divisions that function
as one and elicit judgment regarding the most suitable air traffic
flow management (ATFM) action to be applied in case of air
traffic congestion. Also working under the principle that ATS,
unlike airlines management and airport management, is an
independent entity with no biases on profit and reputation, thus,
makes it as significant for this paper to look into how a final
judgment is made in this entity alone.
The causes of delays mainly point to both adverse weather
and air traffic congestion [2]. Adverse weather is considered
uncontrollable since its evidence cannot be further manipulated
or even predicted. In the Philippines, the leading cause of delays
is air traffic congestion with 40% of total delays accounted for
it. When air traffic congestion is eradicated, or at least held to
minimum, related delays and resource congestion can be
potentially minimized. Due to the fact that physical resources
defining air traffic congestion are limited, such as airports [3], it
further warrants a need to minimize accumulated delays by
implementing any of the available ATFM actions such as
ground holding, airborne holding, rerouting, and speed
controlling.
In order to deal with air traffic congestion, prior outstanding
studies engaged in optimization models and learning algorithms
are framed within the context of implementing directly one or a
combination ATFM actions based on a single criterion alone
(e.g., cost minimization). However, such techniques are not
inclusive and fail to integrate the multi-criteria characteristic of
the problem which involves relationships inherent in the
decision structure. With multi-criteria decision-making
(MCDM) approach, it can illustrate a decision problem and
present solutions according to a given set of interrelated or even
conflicting criteria.
In literature, MCDM is widely applied in relation to air
transportation system such as selecting the preferred
alternative/candidate airport for ‘building a new runway’ [4],
evaluating airline service quality [5] and further improving such
[6], evaluating airports service quality [7], and assessment for
potential multi-airport systems [8]. Further, results from the
application of MCDM revealed promising, significant impact to
the full generality of the issues in air transportation system.

Despite the viability of solving decision management
problems in the context of air transportation system using
MCDM, no paper has yet investigated which ATFM action is
most suitable to be applied in the case of air traffic congestion.
This is a significant problem to be solved as its impact is
widespread relative to the entire air transportation system
specially in a developing country like the Philippines.
The aim of this paper is to develop a multi-criteria decision
support system that will guide the major decision-makers under
ATS in selecting an ATFM action to be implemented during air
traffic congestion. To achieve this objective, an integrated
decision-making trial and evaluation laboratory (DEMATEL),
analytical network process (ANP), and technique for order of
preference by similarity to ideal solution (TOPSIS) is employed
along with the concepts of fuzzy set theory. Such MCDM
methods have the property of extracting the relationship of each
criterion and ultimately arriving at an order of preference [4].
Therefore, the gap that is advanced in this paper is the
application of MCDM approach in the context of mitigating air
traffic congestion. Finally, the contribution of this paper is
twofold: (1) this is a novel paper that attempts to address air
traffic congestion using hybrid MCDM methods; and (2) this
paper takes into account the preferences of the decision-makers
under the umbrella of ATS when it comes to deciding which
ATFM action should be applied during air traffic congestion.
II. MCDM APPROACH BASED ON FUZZY DEMATEL, ANP,
AND FUZZY TOPSIS
The proposed hybrid MCDM methodology resembles
closely with the hybrid methods developed in literature that
address decision problems in air transportation systems.
However, with the knowledge that the issue on air traffic
congestion is not yet addressed using this approach, the
application of specific MCDM methods in the context of this
paper is justified in the succeeding sub-sections.
Since a number of criteria are significant in the selection of
different ATFM actions under different resource congestion
conditions and these criteria have inherent interrelationships,
DEMATEL is used. With this method, the interrelationships
present in the criteria set are determined and this provides
insights on what specific criterion must be prioritized. It is also
believed to be an effective procedure for analyzing structure and
relationships among criteria [9]. That is, criteria with higher
impact to another are given higher priority, and for criteria with
lower impact are considered to have lower priority. Once the
relationship among criteria is known in terms of its impact, ANP
can be integrated to compute for the weights of each criterion.
Saaty [10] proposed ANP to deal with the dependence and the
feedback decision-making. This method is widely applied to
various decision management problems. Finally, for the
prioritization of alternatives (i.e., ATFM actions), TOPSIS is
used as it identifies ranking based on positive ideal solutions and
negative ideal solutions simultaneously. Since the decision-
makers are more comfortable in eliciting judgment using
linguistic variables which can be represented by fuzzy numbers,
fuzzy set theory is thus used. With fuzzy set theory, the
uncertainty of human decision-making processes can be well-
handled. Further, it is emphasized by Kou [6] that fuzzy
numbers are best used when assessing qualitative data because
2
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it incorporates the vagueness, or technically the fuzziness, of
human perception in decision-making. In consideration to the
fact that there may be qualitative data and criteria involved in
the selection of the best alternative of this paper, the use of fuzzy
numbers is deemed appropriate for such area.
A. Evaluation criteria for mitigating air traffic congestion
This section aims to highlight a few of the criteria that may
be associated with the mitigation of air traffic congestion. Since
the application of MCDM in air traffic management is a new
approach and has not yet been widely defined, the authors
attempted to extract variables that can be taken as criteria in the
context of this paper. These criteria are denoted as C1 through
C12 and are described as follows:
x C1: Cost of using the flight routes
x C2: Landing/Take-off fee
x C3: Fuel cost
x C4: Crew cost
x C5: Passenger cost
x C6: Customer goodwill
x C7: Safety
x C8: Equitable treatment of competing air carriers
x C9: Utilization of runway and terminal
x C10: Environmental value
x C11: Economic value
x C12: Social value
B. Alternatives involved
One general approach applied in the case of resource
congestion is ATFM. Cavca et al. [11] comprehensively
described ATFM as a service reached by balancing demand and
capacity on the elements of airspaces by means of ground
holding, airborne holding, rerouting, and speed controlling.
ATFM further supports tactical interventions on the flow of
aircraft at a given airport or in a network of airports [12]. These
ATFM actions are denoted as A1 through A4 and are further
defined below:
x A1: Ground holding
x A2: Airborne holding
x A3: Rerouting
x A4: Speed controlling
III. IMPLEMENTATION OF MCDM METHODS
A. The Case of Mactan Cebu International Airport (MCIA)
In the event of air traffic congestion in MCIA, major
decision-makers communicate with one another and arrive at an
ATFM action to be imposed to mitigate the condition. The
decision is expected to be made in a short amount of time
considering the impact it brings with respect to various criteria.
For this paper, there are 12 criteria and 4 alternatives taken into
account as summarized in Section II-A and Section II-B,
respectively. MCDM methods based on fuzzy DEMATEL,
ANP, and fuzzy TOPSIS are used in this case, as described in
the following section.
B. A step-by-step methodology of the hybrid approach
The initial step involves the participation of four decision-
makers (i.e., area control center head, ATFM assistant,
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TABLE 1. DESCRIPTION OF THE LINGUISTIC EXPRESSIONS FOR EVALUATING THE CRITERIA

Linguistic expression
No influence (NI)
Very low influence (VLI)
Low influence (LI)
High influence (HI)
Very high influence (VHI)
Description Triangular fuzzy number
Base criterion has no influence to the other criterion (0.0, 0.1, 0.3)
Base criterion has very low influence compared to the other criterion (0.1, 0.3, 0.5)
Base criterion has low influence compared to the other criterion (0.3, 0.5, 0.7)
Base criterion has high influence compared to the other criterion (0.5, 0.7, 0.9)
Base criterion has very high influence compared to the other criterion (0.7, 0.9, 1.0)

TABLE 2. DESCRIPTION OF THE LINGUISTIC EXPRESSIONS FOR EVALUATING ALTERNATIVES WITH RESPECT TO THE CRITERIA
Linguistic expression Description Triangular fuzzy number
Very good (VG) Performance of such alternative has very huge impact to the criterion (7, 9, 10)
Good (G) Performance of such alternative has huge impact to the criterion (5, 7, 9)
Fair (F) Performance of such alternative has fair impact to the criterion (3, 5, 7)
Poor (P) Performance of such alternative has slight impact to the criterion (1, 3, 5)
Very poor (VP) Performance of such alternative has no impact at all to the criterion (0, 1, 3)

aerodrome controller, and terminal radar approach controller) influence on criterion ݆, they should indicate this by݃௜௝ . Thus,
where pairwise comparisons in terms of influence among the matrix ‫ ܩ‬ൌ ሾ݃௜௝ ሿ௡ൈ௡ of direct relationships can be obtained.
criteria is made using a survey questionnaire. These decision-
makers’ expertise is considered essential in eliciting judgment Step 4: Normalize the direct-influence matrix ‫ܩ‬. The
in order to mitigate air traffic congestion. A set of linguistic normalized matrix ܺ is acquired by using (5). Its diagonal is
expressions used in making pairwise comparisons among zero, and the maximum sum of rows or columns is one.
criteria along with its corresponding triangular fuzzy number is ܺ ൌ ‫ܩݒ‬ (5)
shown in Table 1. The fuzzy DEMATEL and ANP methods are
described below: where
Step 1: Aggregate linguistic values from the decision-makers’ ͳ ͳ
evaluation. This step is done in order to get the aggregated fuzzy ‫ ݒ‬ൌ ݉݅݊௜ǡ௝ ቐ ǡ ቑ ݅ǡ ݆ǡ ‫ א‬ሼͳǡʹǡ ǥ ǡ ݊ሽ
௜௝ ௜௝
linguistic values of the pairwise comparison among criteria ‫ܥ‬௝ Ǥ ƒš σ௡௝ୀଵ ݃௖ ƒš σ௡௜ୀଵ ݃௖
௜ ௝
Aggregation of decisions can be computed as in (1) through (3):
భ
Step 5: Attain a total-influential matrix ܶ௖ . When the
௟
ܽ௜௝ ൌ ௞
‹൛ς௞ୀଵ ௟
ܽ௜௝௞ ൟೖ (1) normalized direct-influential matrix ܺ is obtained, the total-
భ influential matrix ܶ௖ can be generated from (6), in which ‫ܫ‬
௠
ܽ௜௝ ൌ ௞
൛ς௞ୀଵ ௠ ೖ
ܽ௜௝௞ ൟ (2) denotes the identity matrix,
భ
௨
ܽ௜௝ ௞
ൌ ݉ܽ‫ݔ‬൛ς௞ୀଵ ௨
ܽ௜௝௞ ൟ ೖ (3) ܶ௖  ൌ ܺሺ‫ ܫ‬െ ܺሻିଵ ǡ ™Š‡ Ž‹ ܺ κ ൌ ሾͲሿ௡ൈ௡ (6)
κ՜ஶ

Step 6: Analyze the results. The matrix components are

Step 2: Defuzzify corresponding linguistic values by means of
signed distance method. Based from the results of the survey,
the triangular fuzzy set numbers need to be defuzzified first in
order to get the crisp value of each decision-maker’s preference.
For this paper, the signed distance of a triangular fuzzy number
is employed as defuzzification method as shown in (4). Based
from maximum membership grade principle, this approach is
proven better than using the most common centroid
defuzzification method [13]. Once defuzzified, these values
will then serve as an input to the succeeding steps.
௟ାଶ௠ା௨
݀ሺ‫ܣ‬ሚǡ Ͳሻ ൌ
ସ
Step 3: Apply DEMATEL and ANP methods according to Tzeng
et al. [14] by calculating the direct-influence matrix by scores.
An assessment of the relationship between each mutual
influence criterion is made according to the opinions of
decision-makers, using a linguistic scale rating shown in Table
1, with scores represented by natural language: ‘no influence’
(NI), ‘very low influence’ (VLI), ‘low influence’ (LI), ‘high
influence’ (HI), and ‘very high influence’ (VHI). The decision-
makers are required to indicate the direct influence by a pairwise
comparison, and if they believe that criterion ݅has an effect and
separately expressed as vectors ‫ ݎ‬and ‫ݏ‬, respectively, using (7)
and (8). When ሺ‫ݎ‬௜ െ ‫ݏ‬௜ ሻ is positive, the criterion is part of the
net cause cluster, otherwise, it is part of the net effect cluster.
An influential network relations map can be created by
mapping the data set of ሺ‫ݎ‬௜ ൅ ‫ݏ‬௜ ǡ ‫ݎ‬௜ െ ‫ݏ‬௜ ሻ.
௜௝
ܶ௖ ൌ ൣ‫ݐ‬௖ ൧௡ൈ௡ ǡ݅ǡ ݆߳ሼͳǡʹǡ ǥ ǡ ݊ሽ
௜௝
‫ ݎ‬ൌ ൣσ௡௝ୀଵ ‫ݐ‬௖ ൧ ൌ ሾ‫ݐ‬௖௜ ሿ௡ൈଵ ൌ ሺ‫ݎ‬ଵ ǡ ǥ ǡ ‫ݎ‬௜ ǡ ǥ ǡ ‫ݎ‬௡ ሻԢ (7)
௡ൈଵ
௜௝ ᇱ ௝
‫ݏ‬ൌ ൣσ௡௜ୀଵ ‫ݐ‬௖ ൧ ଵൈ௡ ൌ ൣ‫ݐ‬௖ ൧௡ൈଵ ൌ ሺ‫ݏ‬ଵ ǡ ǥ ǡ ‫ݏ‬௜ ǡ ǥ ǡ ‫ݏ‬௡ ሻԢ (8)
(4) where vector ‫ ݎ‬and vector ‫ ݏ‬express the sum of the rows and the
sum of the columns from the total-influential matrix ܶ௖ ൌ
௜௝
ൣ‫ݐ‬௖ ൧௡ൈ௡ , respectively, and the superscript Ԣ denotes the
transpose.
Step 7: Find the normalized total-influential matrix ܶ௖௡௢௥ . The
total-influential matrix can be normalized and presented as
௜௝
ܹ ൌ ൣ‫ݓ‬௜௝ ൧௡௫௡ where ‫ݓ‬௜௝ ൌ ‫ ݐ‬ൗ ௝ ,‫ ݐ‬௝ ൌ σ௡௜ୀଵ ‫ ݐ‬௜௝ . For the case
‫ݐ‬
of this paper, the normalized total-influential matrix ܶ௖௡௢௥ also
represents the weighted supermatrix ܹ஼‫ כ‬.

3

Step 8: Obtain the DEMATEL-ANP supermatrix. Limit the
weighted supermatrix by raising it to a sufficiently large power
߮ until it converges and becomes a long-term stable
supermatrix to obtain global priority vector, which defines the
influential weights ‫ ݓ‬ൌ ሺ‫ݓ‬ଵ ǡ ǥ ǡ ‫ݓ‬௝ ǡ ǥ ǡ ‫ݓ‬௡ ሻ from Ž‹ఝ՜ ሺܹ஼‫ כ‬ሻఝ
for the criteria.
Before we proceed with the next step, it is important to
generate the evaluation from the same roster of decision-makers
using another set of survey questionnaire. The performance of
each alternative with respect to each criterion is rated using
linguistic expressions ‘very good’ (VG), ‘good’ (G), ‘fair’ (F),
‘poor’ (P), and ‘very poor’ (VP). Table 2 provides the
description of these linguistic expressions and its corresponding
triangular fuzzy number.
The method of fuzzy TOPSIS is presented in the following
steps in continuation to the previously accomplished fuzzy
DEMATEL and ANP methods:
Step 9: Find the aggregated fuzzy weight [9]. Aggregate the
weights of criteria to get the aggregated fuzzy weight ‫ݓ‬ ෥௝ of
criterion ‫ܥ‬௝ , and pool the decision-makers’ opinions to get the
aggregated fuzzy rating ‫ݔ‬෤௜௝ of alternative ‫ܣ‬௜ under criterion ‫ܥ‬௝ .
Recall that the weights of criteria are obtained as a scalar
quantity from the application of fuzzy DEMATEL and ANP.
The equation used in aggregating the decisions is shown in (1)
through (3):
Step 10: Construct the fuzzy decision matrix and the normalized
fuzzy decision matrix. Normalizing fuzzy numbers is
accomplished by using linear scale transformation represented
by (9) and (10) to convert the different units into a comparable
unit.
௟೔ೕ ௠೔ೕ ௨೔ೕ
‫ݎ‬ǁ௜௝ ൌ ൬ ǡ ǡ ൰ Ǣ‫ݑ‬௝ା ൌ ƒš ‫ݑ‬௜௝
ା
Ǣ‫ ݆׊‬ା
௨ೕశ ௨ೕశ ௨ೕశ ௜
௟ೕష ௟ೕష ௟ೕష
‫ݎ‬ǁ௜௝ ൌ ൬ ǡ ǡ ൰ Ǣ݈௝ି ା
ൌ ‹ ݈௜௝ Ǣ‫ି ݆׊‬
௨೔ೕ ௠೔ೕ ௟೔ೕ ௜
As mentioned ݈, ݉, and ‫ ݑ‬are the smallest possible value,
the most promising value, and the largest possible value,
respectively. For benefit criteria, the larger ‫ݎ‬ǁ௜௝ has the greater
preference; while for the cost criteria, the smaller ‫ݎ‬ǁ௜௝ has the
greater preference.
To continue, we calculate for the normalized fuzzy decision
matrix by using (11):
ܴ෨ ൌ ൣ‫ݎ‬ǁ௜௝ ൧௡ൈ௠
where, ‫ݎ‬ǁ௜௝ is the normalized value of ‫ݔ‬෤௜௝ ൌ ൫݈௜௝ ǡ ݉௜௝ ǡ ‫ݑ‬௜௝ ൯.
Step 11: Construct the weighted normalized fuzzy decision
matrix. Calculate the weighted normalized value ‫ݒ‬෤௜௝ by
multiplying the weights ൫‫ݓ‬௝ ൯ of criteria with the normalized
fuzzy decision matrix ‫ݎ‬ǁ௜௝ . The weighted normalized decision
matrix ܸ෨ for each criterion is calculated through the following
relation:
ܸ෨ ൌ ൣ‫ݓ‬௝ ‫ݎ‬ǁ௜௝ ൧ ൌ ൣ‫ݒ‬෤௜௝ ൧ ݅ ൌ ͳǡʹǡ ǥ ǡ ݆݉ ൌ ͳǡʹǡ ǥ ǡ ݊
௡ൈ௝
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In this matrix, each element ‫ݒ‬෤௜௝ is a fuzzy normalized
number which ranges within the closed interval [0, 1].
Step 12: Determine fuzzy positive ideal solution and fuzzy
negative ideal solution. Obtain the fuzzy positive ideal solution
ሺ‫ܣ‬ା ሻ and fuzzy negative ideal solution ሺ‫ ିܣ‬ሻ as in:
‫ܣ‬ା ൌ ሺ‫ݒ‬෤ଵା ǡ ‫ݒ‬෤ଶା ǡ ‫ݒ‬෤ଷା ǡ ǥ ǡ ‫ݒ‬෤௡ା ሻ ൌ ቄƒš ‫ݒ‬௜௝ ȁሺ݅ ൌ ͳǡʹǡ ǥ ǡ ݉Ǣ ݆ ൌ ͳǡʹǡ ǥ ǡ ݊ሻቅ (13)
௜
ି
‫ ܣ‬ൌ ሺ‫ݒ‬෤ଵି ǡ ‫ݒ‬෤ଶି ǡ ‫ݒ‬෤ଷି ǡ ǥ ǡ ‫ݒ‬෤௡ି ሻ ൌ ቄ‹ ‫ݒ‬௜௝ ȁሺ݅ ൌ ͳǡʹǡ ǥ ǡ ݉Ǣ ݆ ൌ ͳǡʹǡ ǥ ǡ ݊ሻቅ (14)
௜
Step 13: Calculate the distance of each alternative from fuzzy
positive ideal solution and fuzzy negative ideal solution,
respectively. Acquire the distance of each alternative from ‫ܣ‬ା
and ‫ ିܣ‬by using (15) and (16),
݀௜ା ൌ σ௡௝ୀଵ൫‫ݒ‬෤௜௝ ǡ ‫ݒ‬෤௝ା ൯ (15)
݀௜ି ൌ σ௡௝ୀଵ൫‫ݒ‬෤௜௝ ǡ ‫ݒ‬෤௝ି ൯ (16)
where, ݀௜ା and ݀௜ି are the primary and secondary distant
measures, respectively. The distance measurement between
two triangular fuzzy numbers of ሺ݈ଵ ǡ ݉ଵ ǡ ‫ݑ‬ଵ ሻ and ሺ݈ଶ ǡ ݉ଶ ǡ ‫ݑ‬ଶ ሻ,
can be calculated by the vertex method as follows:
ଵ
෥ǡ ݊෤ሻ ൌ ට ሾሺ݈ଵ െ ݈ଶ ሻଶ ൅ ሺ݉ଵ െ ݉ଶ ሻଶ ൅ ሺ‫ݑ‬ଵ െ ‫ݑ‬ଶ ሻଶ ሿ (17)
݀௩ ሺ݉
ଷ
Step 14: Calculate the closeness coefficient ሺ‫ܥ‬௖ ሻ of each
alternative and rank order of alternatives. The ‫ܥ‬௖ takes into
account the ݀௜ା and ݀௜ି simultaneously. The relative ‫ܥ‬௖ index of
each alternative with respect to the fuzzy positive ideal solution
is obtained as:
ௗ೔ష
‫ܥ‬௖ ൌ (18)
൫ௗ೔శ ାௗ೔ష ൯
Rank the alternatives using ‫ܥ‬௖ index in decreasing order.
(9) The larger the index value, the better the performance of the
alternatives with respect to each criterion.
(10)
IV. RESULTS AND DISCUSSIONS
In the application of the MCDM approach based on fuzzy
DEMATEL, ANP, and fuzzy TOPSIS, the following key
results are obtained using Microsoft Excel© 2016. For the first
part of the methodology involving fuzzy DEMATEL and ANP,
Table 3 presents the matrix components expressed as vectors ‫ݎ‬
and ‫ݏ‬, respectively. Further evaluation of the vector sums,
shows that C7 through C12 (i.e., safety, equitable treatment of
competing air carriers, utilization of runway and terminal,
(11) environmental value, economic value, social value,
respectively) are part of the net cause cluster; this implies that
these criteria influence the priorities given to all other criteria.
While the remaining criteria, C1 through C6 (i.e., cost of using
the flight routes, landing/take-off fee, fuel cost, crew cost,
passenger cost, customer goodwill, respectively), belong to the
net effect cluster. Note that the criteria that fall under this
cluster are dominantly pertaining to tangible and intangible
costs associated with air traffic congestion, and remarkably of
the main interest of the airlines management and not of ATS’.
In principle, the results impeccably create sense relative to the
(12)
low influence perceived by the ATS providers to these criteria.
4
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TABLE 3. CHARACTERISTICS OF CRITERIA AND ITS CORRESPONDING WEIGHT aspect of air transportation, thus, listing ground holding on the
Vector ࢘ Vector ࢙ topmost preferred ATFM action to be implemented during air
Criteria ሺ࢘࢏ െ ࢙࢏ ሻ Weight
(sum) (sum) traffic congestion. As an extension to this paper, the authors
C1 3.41 3.95 -0.53 0.073 suggest to broaden the generality of the scope. While the output
C2 4.21 4.70 -0.49 0.090 is sensitive only to the judgment made by ATS, other decision-
C3 3.19 3.46 -0.27 0.068 makers consist of airlines management and airport
C4 3.21 3.72 -0.51 0.068 management, who may also influence the elicited decision
C5 3.11 4.03 -0.92 0.066 during air traffic congestion, may be included in the roster of
C6 3.87 4.29 -0.42 0.081 entities involved. Through this, a collaborative decision-
C7 4.78 3.93 0.85 0.101 making approach can be achieved as it is practically applied in
C8 4.41 3.34 1.07 0.093
reality.
C9 4.46 4.04 0.42 0.094
C10 3.76 3.08 0.68 0.079 ACKNOWLEDGMENT
C11 4.50 4.44 0.07 0.095
C12 4.36 4.30 0.06 0.092 The first author wishes to thank the Engineering Research
and Development for Technology (ERDT) of the Philippine
In the integration of the results from fuzzy DEMATEL and Department of Science and Technology (DOST) for the
ANP, a final set of weights for each criterion is obtained as financial support provided through the author’s full graduate
shown in the rightmost column of Table 3. The results revealed scholarship grant.
that ATS providers are most concerned with the aspect on
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5

Constrained Maximization of Social Welfare with
Fiscal Transfer Scheme
Shinji Suzuki
Graduate school of Decision Science and Technology
Tokyo Institute of Technology
2-12-1 Ookayama, Meguro-ku, Tokyo, Japan.
suzuki.s.cd@m.titech.ac.jp.
Abstract—This study present a fiscal transfer scheme in two-
tiers governmental system in a nation consisting of a national
government and municipalities. A benevolent national govern-
ment tries to maximize Benthamitie social welfare considering
voluntary reorganization of municipalities. For achieving the
purpose, the national government offers a different amount of
fiscal transfer to each combination of municipal merger. We show
that Pareto optimality is achievable through the reorganization
of municipalities.
Index Terms—Fiscal Transfer; Public Goods; Municipal
Merger; Coalition formation
I. I NTRODUCTION
Social welfare is not easily maximized when public good
provision is decided by majority voting. As most countries
have a number of local government besides its national gov-
ernment, maximized social welfare is hardly achieved in a
whole nation. In this study, we explore an incentive scheme
of fiscal transfer from a national government to local govern-
ments which achieves social welfare maximization and Pareto
optimality. We model fiscal relationship in two-tiers govern-
mental system in a nation consisting of a national government
and municipalities. We consider a game in which benevolent
national government tries to maximize social welfare by con-
trolling both municipal taxations and municipal mergers. More
concretely, the national government announces national tax rate
and offers fiscal transfers to all the possible combinations of
municipal merger, simultaneously. That is, each combination
of merger (and a municipality which does not participate any
municipal merger) is given a different amount of fiscal transfer
from others by the national government.
Considering municipal merger besides taxation and fiscal
transfer has realistic validity because promotion of municipal
mergers (or reorganization of local governments) has been
conducted in the Scandinavian countries, Japan and so on, as
a method of promoting administrative efficiency. A number of
precedent studies in public economics including [5] analyze
fiscal transfer between upper-tier and lower tier government(s)
. Nevertheless, most of them does not consider the possibilities
of voluntary integrations among lower-tier governments. [7]
and [10] are exceptions that consider the effect of transfer
considering the possibility of integration (or disintegration) of
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
6
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Takehiro Inohara
Graduate school of Decision Science and Technology
Tokyo Institute of Technology
2-12-1 Ookayama, Meguro-ku, Tokyo, Japan.
inohara.t.aa@m.titech.ac.jp.
local government. [7] show a political economy model of a
country whose citizens have heterogeneous preferences over
national policy and some regions considers secession from the
country. They demonstrate that there is a critical degree of
polarization, above which a breakup of an efficient country
cannot be prevented without transfers, but can be avoided
using them. [10] considered an optimal incentive scheme for
municipal merger between two municipalities, in which the
national government offers transfers to municipalities whose
amount depends on whether they chose merger or not. His
model implies that the national government rationally desires
to offer an incentive to a municipality when it will make a
change of its decision resulting in an achievement of merger.
On the other hand, our study offers an incentive scheme in
a generalized situation where the number of local government
is 𝑛 and municipal decisions regarding public good provision
and choice of merger combination are conducted by voting.
Therefore, our study considers the possibility of municipal
mergers through real political process; approvals of the related
municipalities are necessary for achieving merger. We present
“a politically achievable optimal solution” of policy vector
consisting of national tax rate, local tax rates, partition of
municipalities, and fiscal transfers.
The structure of this paper is as follows. In Section 2, we
present the fundamental structure of the model. In Section 3,
we show the game of municipal reorganization and analyze the
result of the game. In Section 4, concluding remark is given.
II. F UNDAMENTAL S TRUCTURE
In this section, we explain the fundamental structure of the
model. Firstly, we define individual utility function consisting
of private consumption, national public good, and local public
good. Then, we explain the ordinary fiscal process in which
the national government does not consider the promotion for
municipal merger.
A. Individual Utility
We assume two-tiers administrative system in a nation; the
national government (hereafter we call it NG) and municipality.
There is 𝑛 number of municipalities in a nation and the set
of municipalities is denoted by 𝑁 . The objective of NG is to
maximize social welfare. On the other hand, at municipal level,
we assume that the provision of local public good is decided

by majority voting and the median incomer is the decisive
voter regarding public good provision. Thus, hereafter we call
the median incomer in 𝑖 “the median voter in municipality 𝑖”.
Regarding the validity of applying the median voter theorem
formalized by [4], see [9]. With respect to the social welfare
function, we adopt Benthamitie social welfare function. Thus,
we define individual utility in advance of the explanation of
the game, because the national government’s utility consists of
the sum of individuals living in the nation and each municipal
utility coincides that of median voter.
An individual 𝑗 in a municipality 𝑖 is denoted by 𝑗𝑖 and she
has the following utility
𝑈𝑖𝑗 (𝑐𝑖𝑗 , 𝐺, 𝑔𝑖 ) ≡ 𝛼1 𝑐𝛽𝑖𝑗 𝛽
+ 𝛼2 𝐺 + 𝛼3 𝑔𝑖𝛽 (1)
where (i) 𝛼1 , 𝛼2 , 𝛼3 ∈ (0, 1) with 𝛼1 + 𝛼2 + 𝛼3 = 1 are
parameters which signify weighted preference between private
good, public good 1 and public good 2, (ii) 𝛽 ∈ (0, 1) is a
parameter which signifies that marginal utility is declining, (iii)
𝑐𝑖𝑗 denotes private consumption, (iv) 𝐺 denotes consumption
of public good 1, (v) 𝑔𝑖 denotes consumption of public good
2.
Provided public good 1 and public good 2 are consumed
completely, respectively. Public good 1 can benefit the whole
area of the nation. Thus, the production and provision are
conducted by NG. On the other hand, public good 2 is
produced by each municipality and it is provided only to the
individuals living in the municipality. The revenue source of
public good 1 is financed by taxing every individual in the
whole nation income proportional tax rate 𝑇 . Public good 2 is
produced by using 𝑖’s self revenue source and fiscal transfer
offered by NG. Regarding 𝑖’s self revenue source, it is financed
by taxing every inhabitant in 𝑖 income proportional tax rate 𝑡𝑖 .
Here, we explain the derivation of 𝐺. First of all, let 𝑄
be the production of public good 1. 𝑄 can be written as
a production function which signifies the relation between a
monetary input 𝐼 and a fixed cost for producing a unit of public
good 𝛾1 . That is, 𝑄 ≡ 𝐼/𝛾1 . We assume that an additional cost
𝑃 𝛿 is generated when providing a public good equally to all
the inhabitants in the nation, where 𝑃 is the population of the
nation and 𝛿 ∈ (0, 1) is a parameter. We use 𝑃 𝛿 as a proxy
variable of the size of the land area of a government because
the size of land area of a government generally increases as the
population of the government increases. The expansion of the
area generally increases per unit cost of public good provision.
However, introducing the size of area as a variable makes the
analysis more complicated.
Let 𝑦 be the national average personal income. Fiscal
transfer to municipalities by NG is financed by using a part of
the national revenue source. Let 𝐹 ({𝑖}) ≥ 0 be the quantity
∑ to municipality 𝑖. Then, we have rationally
of fiscal transfer
𝐼 = 𝑇 𝑃 𝑦 − 𝑖∈𝑁 𝐹 ({𝑖}). As a consequence, we can express
𝐺 as follows;
∑
𝑄 𝑇 𝑃 𝑦 − 𝑖∈𝑁 𝐹 ({𝑖})
𝐺= 𝛿 = (2)
𝑃 𝛾1 𝑃 𝛿
Similarly, let us explain the derivation of 𝑔𝑖 . First of all, let
𝑞𝑖 be the production of public good 2 in municipality 𝑖. Let 𝐼𝑖
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be the monetary input for producing public good 2 and let 𝛾2
with 0 < 𝛾2 < 𝛾1 , 𝛾1 be the fixed cost for producing a unit of
public good 2. Then, 𝑞𝑖 can be written as a production function
𝑞𝑖 ≡ 𝐼𝑖 /𝛾2 . Similarly as public good 1, we assume that an
additional cost 𝑝𝛿𝑖 is generated when providing a public good
equally to all the inhabitants in the municipality, where 𝑝𝑖 is the
population of 𝑖 and 𝛿 ∈ (0, 1) such that 𝛿 > 𝛿 is a parameter.
Let 𝑦𝑖 be the average personal income in 𝑖. Then, as each 𝑖 is
given fiscal transfer 𝐹 ({𝑖}) from the national government, we
can express 𝑔𝑖 as
𝑞𝑖 𝑡𝑖 𝑝𝑖 𝑦𝑖 + 𝐹 ({𝑖})
𝑔𝑖 = = . (3)
𝑝𝛿𝑖 𝛾2 𝑝𝛿𝑖
B. Ordinary Political Process
If we consider the political process of for the provision of
public good 1 and 2, it will be adequate for us to express it
as follows if we do not consider municipal mergers.
1) NG decides national tax rate 𝑇 .
2) Each municipality decides its own local tax rate 𝑡𝑖 .
3) NG decides the amount of fiscal transfer to each munic-
ipality 𝐹 ({𝑖}).
After the third stage has finished, 𝐺 is provided to all
individuals in the nation and 𝑔𝑖 is provided to all individuals
in 𝑖. It is adequate for us to set that the amount of 𝐹 ({𝑖}) is
decided in the third stage because it prevents moral hazard of
municipalities such that setting 𝑡𝑖 = 0 is optimal for all 𝑖 ∈ 𝑁 .
Let Λ𝑖 be the set of individuals living in municipality 𝑖. For
all 𝑖 ∈ 𝑁 and for all 𝑗 ∈ Λ𝑖 , 𝑗𝑖 ’s private budget constraint is
expressed by 𝑐𝑖𝑗 ≤ (1 − 𝑇 − 𝑡𝑖 )𝑦𝑖𝑗 . As every individual tries to
maximize their utilities, 𝑐𝑖𝑗 = (1 − 𝑇 − 𝑡𝑖 )𝑦𝑖𝑗 obviously holds.
Let 𝑚𝑖 denote the median voter in 𝑖. Let 𝑡𝑖𝑚∗ be the tax rate
preferred by 𝑚𝑖 . Then, 𝑡𝑖𝑚∗ coincides the municipal tax rate
in 𝑖. [ ]
Let 𝑈𝑖𝑗 , 𝑖, 𝑡𝑖𝑚∗ , 𝐹 ({𝑖}) denotes the utility of 𝑗𝑖 when 𝑇 ,
𝑡∗𝑖𝑚 and 𝐹 ({𝑖}) are all achieved in pre-merger situation. We
have
[ ]
𝑈𝑖𝑗 𝑇, 𝑖, 𝑡𝑖𝑚∗ , 𝐹 ({𝑖}) (4)
[ ∑ ]𝛽
[ ]𝛽 𝑇 𝑃 𝑦 − 𝑖∈Λ𝑖 𝐹 ({𝑖})
= 𝛼1 (1 − 𝑇 − 𝑡𝑖𝑚∗ )𝑦𝑖𝑗 + 𝛼2
𝛾1 𝑃 𝛿
[ ]𝛽
𝑡𝑖𝑚∗ 𝑝𝑖 𝑦𝑖 + 𝐹 ({𝑖})
+𝛼3 .
𝛾2 𝑝𝛿𝑖
III. T HE GAME
In this section, we firstly explain the structure of the game in
which municipal reorganization is induced by a fiscal transfer
scheme offered by NG. Then, we analyze the result of the
game.
A. Set Up of the Game
Firstly, we explain the individual utility after municipal re-
organization is realized. 𝑆 ⊆ 𝑁 can be regarded as a municipal
coalition. 𝑆 can be a newly-established municipality by merger

or a municipality which remains independent because it did
not participate any merger. The transfer that NG offers to
each 𝑆 is denoted by 𝐹 (𝑆). We regard each 𝐹 (𝑆) is non
negative because introducing a negative fiscal transfer will not
be supported by municipalities. Moreover, for all 𝑆 ⊆ 𝑁 ,
𝐹 (𝑆) ≤ 𝑇 𝑃 must hold. If 𝑆 = {𝑖}, 𝐹 (𝑆) = 𝐹 ({𝑖}). Thus, we
can regard 𝐹 (𝑆) as a function 2𝑁 → ℜ+ . Next, let Θ𝑘 be a
partition of 𝑁 indexed 𝑘 and let Θ be the set of Θ𝑘 . Moreover,
let us define Θ𝑘 ≡ {𝑆𝑘𝑙 }𝑙∈𝐿 where 𝐿 denotes the index set
of 𝑙 and let 𝐾 be the index set∑of 𝑘. NG’s budget constraint
requires that for all 𝑘 ∈ 𝐾, 𝑙∈𝐿 𝐹 (𝑆𝑘𝑙 ) ∈ [0, 𝑇 𝑃 𝑦] must
hold. The provision (consumption) of public good 1 when the
reorganization of municipalities which results in Θ𝑘 is realized
can be denoted by
∑ participate in any merger. If a coalition 𝑆ˆ is chosen by
𝑇 𝑃 𝑦 − 𝑙∈𝐿 𝐹 (𝑆𝑘𝑙 )
𝐺= .
𝛾1 𝑃 𝛿
Finally, let us consider the municipal public good consumption
after the reorganization of municipalities. Let 𝑡𝑘𝑙 be the post-
reorganization tax rate, 𝑝𝑘𝑙 be the post-reorganization pop-
ulation, and 𝑦𝑘𝑙 be the post-reorganization average income
in some 𝑆𝑘𝑙 . For each 𝑖 ∈ 𝑆𝑘𝑙 , if ∣𝑆𝑘𝑙 ∣ ≥ 2, the post-
reorganization values mean the post-merger values. On the
other hand, if 𝑆𝑘𝑙 = {𝑖}, 𝑝𝑘𝑙 = 𝑝𝑖 and 𝑦𝑘𝑙 = 𝑦𝑖 because
these values are not influenced by fiscal transfer scheme and
municipal reorganization.
Then, the provision (consumption) of public good 2 when
𝑆𝑘𝑙 is realized can be denoted by
𝑡𝑘𝑙 𝑝𝑘𝑙 𝑦𝑘𝑙 + 𝐹 (𝑆𝑘𝑙 )
𝑔𝑘𝑙 = . such that 𝑖 ∈ 𝑆ˆ and ∣𝑆∣ ˆ ≥ 2, or choose {𝑖} which signifies
𝛾2 𝑝𝛿𝑆
As a consequence, the indirect utility of 𝑗𝑖 such that 𝑖 ∈ 𝑆𝑘𝑙
when 𝑆𝑘𝑙 ∈ Θ𝑘 is realized can be written as
[ ]
𝑈𝑖𝑗 𝑇, 𝑆𝑘𝑙 , 𝑡𝑘𝑙 , 𝐹 (𝑆𝑘𝑙 ) (5)
[ ∑ ]𝛽
[ ]𝛽 𝑇 𝑃 𝑦 − 𝑙∈𝐿 𝐹 (𝑆𝑘𝑙 )
= 𝛼1 (1 − 𝑇 − 𝑡𝑘𝑙 )𝑦𝑖𝑗 + 𝛼2
𝛾1 𝑃 𝛿
[ ]𝛽
+𝛼3
𝑡𝑘𝑙 𝑝𝑘𝑙 𝑦𝑘𝑙 + 𝐹 (𝑆𝑘𝑙 )
. [ profile of players]is denoted by 𝜔 ∈ Ω. In the
𝛾2 𝑝𝛿𝑘𝑙
B. The Structure of Game
Next, let us explain the game of the political process for
municipal reorganization. Here, we think that the amount of
fiscal transfer to each 𝑆 ⊆ 𝑁 is decided in the first stage
simultaneously with national tax rate, because this set up offers
incentive for municipal merger to municipalities. This is the
difference from ordinary budgetary process.
We regard each 𝑚𝑖 as the decisive voter in 𝑖 regarding the
proposals for 𝑔𝑖 , 𝑡𝑖 and municipal merger and separation, as
well as the decision regarding local public good provision.
With respect to the validity of this setting, see [6] and [8].
Let 𝑆ˆ denote a coalition such that 𝑆ˆ ⊆ 𝑁 and ∣𝑆∣ ˆ ≥ 2.
ˆ
Thus, 𝑆 expresses a combination of merger or an newly-
established government. Each 𝑚𝑖 with 𝑖 ∈ 𝑁 seeks the best
merger combination for her from which there is no incentive to
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deviate. It is adequate for us to assume that the administrative
plan of the newly-established municipality 𝑆ˆ is devised in
advance in the meetings among the related municipalities.
We regard these meetings are organized by an inter-municipal
committee for merger among the municipalities included in 𝑆ˆ
(hereafter COM𝑆ˆ ). Thus, let 𝑂 be the set of players. 𝑂 consists
of NG, all 𝑚𝑖 s with 𝑖 ∈ 𝑁 and all possible COM𝑆ˆ .
As a consequence, the political process can be written as
the following four stage dynamic game.
1) NG decides the national( tax) rate 𝑇 and offers a fiscal
transfer scheme Υ = 𝐹 (𝑆) 𝑆⊆𝑁 .
2) Each 𝑚𝑖 with 𝑖 ∈ 𝑁 chooses a combination of municipal
merger such that 𝑖 can participate, or decides not to
ˆ COM ˆ is established.
all the 𝑖𝑚 s with 𝑖 ∈ 𝑆, 𝑆
3) Each established COM𝑆ˆ proposes the post-merger tax rate
𝑡𝑆ˆ . Regarding the COM𝑆ˆ s which are not established, they
have only one action “do nothing”.
4) Regarding 𝑆ˆ such that COM𝑆ˆ is established, each 𝑚𝑖 with
𝑖 ∈ 𝑆ˆ decides whether to approve the merger or not. If
all 𝑖𝑚 s with 𝑖 ∈ 𝑆ˆ approve it, the merger 𝑆ˆ is achieved.
However, if one of them disapproves, the merger 𝑆ˆ fails.
After the reorganization of municipalities are completed,
𝐹 (𝑆) is automatically distributed to each existing 𝑆 ⊆ 𝑁 .
From the above, the national government can choose the
combination of (𝑇, Υ) ∑ in the first stage such that 𝑇 ∈ [0, 1]
and for all 𝑘 ∈ 𝐾, 𝑙∈𝐿 𝐹 (𝑆𝑘𝑙 ) ∈ [0, 𝑇 𝑃 𝑦]. Each 𝑚𝑖 can
choose in the second stage a combination of merger 𝑆ˆ ⊆ 𝑁
that 𝑖 does not participate in any merger. For example, assume
that 𝑁 = {𝐴, 𝐵, 𝐶}. Then 𝑚𝐴 can choose an action among
{𝐴, 𝐵, 𝐶}, {𝐴, 𝐵}, {𝐴, 𝐶} and {𝐴}. Moreover, each 𝑚𝑖 can
choose an action between 𝑌 𝑒𝑠 or 𝑁 𝑜 in the fourth stage if
COM𝑆ˆ such that 𝑖 ∈ 𝑆ˆ is established, with respect to the
ˆ 𝑡 ˆ ) proposed by the established COM ˆ in
policy vector (𝑆, 𝑆 𝑆
the third stage. Each COM𝑆ˆ can choose 𝑡𝑆ˆ ∈ [0, 1 − 𝑇 ] if it
is established, otherwise it has only one action 𝑑𝑜 𝑛𝑜𝑡ℎ𝑖𝑛𝑔.
A strategy
game 𝐺 ≡ {Ω𝑜 }𝑜∈𝑂 , {𝑈𝑜 }𝑜∈𝑂 , 𝑈𝑜 in a strategy profile 𝜔 ∈
Ω is defined as follows:
Let Γ𝑘(≡ (𝑡𝑘𝑙))𝑙∈𝐿 be the vector of municipal tax rates in
Θ𝑘 , Υ = 𝐹 (𝑆) 𝑆⊆𝑁 be a vector showing transfers offered to
each 𝑆 ⊆ 𝑁 by NG. The]utility of NG when a strategy profile
[
𝜔 realizes 𝑇, Θ𝑘 , Γ𝑘 , Υ is
∑ ∑ [ ]
𝑈NG (𝜔) = 𝑈𝑘𝑙𝑗 𝑇, 𝑆𝑘𝑙 , 𝑡𝑘𝑙 , 𝐹 (𝑆𝑘𝑙 ) . (6)
𝑙∈𝐿 𝑗∈Λ𝑘𝑙
where Λ𝑘𝑙 denotes the set of individuals living in municipality
𝑆𝑘𝑙 , 𝑈𝑘𝑙𝑗 denotes the utility of arbitrary individual 𝑗 in
municipality 𝑆𝑘𝑙 .
Note that for each 𝑖 ∈ 𝑁 which does not participate in any
merger, 𝑆𝑘𝑙 = {𝑖}. Then,
[ ] [ ]
𝑈𝑘𝑙𝑗 𝑇, 𝑆𝑘𝑙 , 𝑡𝑘𝑙 , 𝐹 (𝑆𝑘𝑙 ) = 𝑈𝑖𝑗 𝑇, 𝑖, 𝑡∗𝑖𝑚 , 𝐹 ({𝑖}) .
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The payoff of each 𝑚𝑖 is 𝑡 ∈ [0, 1], and 𝑡 + 𝑇 ∗ ∈ [0, 1]

{ [ ]
ˆ 𝑡 ˆ , 𝐹 (𝑆)
𝑈𝑖𝑚[ 𝑇, 𝑆, ˆ if the case occurs holds, where 𝑈∗𝑙𝑚 is the utility of the median in-
𝑈𝑖𝑚 (𝜔) = 𝑆 ]
𝑈𝑖𝑚 𝑇, 𝑖, 𝑡∗𝑖𝑚 , 𝐹 ({𝑖}) otherwise. comer in 𝑆𝑙∗ , 𝑡𝑖𝑚∗ is the tax rate preferred by 𝑚𝑖
where the case signifies a situation in which 𝜔 achieves a with 𝑖 ∈ 𝑆𝑙∗ and 𝐹 ∗ ({𝑖}) is the transfer offered to
merger 𝑆ˆ ∈ Θ𝑘 such that 𝑖 ∈ 𝑆. ˆ each 𝑖 ∈ 𝑆𝑙∗ in the first stage of this game.
The payoff of each COM𝑆ˆ is Condition 2
{ [ ] Next, let us consider the second stage. Let
𝑈𝑆𝑚ˆ
ˆ 𝑡 ˆ , 𝐹 (𝑆)
𝑇, 𝑆, ˆ if the case occurs [ ]
𝑈COM𝑆ˆ (𝜔) = 𝑆
𝜔 𝑇, 𝑆, 𝑡, 𝐹 (𝑆) denote a strategy profile in which
0 otherwise.
[ ] all of 𝑇, 𝑆, 𝑡 and 𝐹 (𝑆) is realized. Then, 𝑆𝑙∗ must
where 𝑈𝑆𝑚 ˆ
ˆ 𝑡 ˆ , 𝐹 (𝑆)
𝑇, 𝑆, ˆ denotes the utility of median in- satisfy the following condition besides Condition 1.
𝑆
comer (voter) in 𝑆ˆ when all of 𝑇, 𝑆, ˆ 𝑡 ˆ and 𝐹 (𝑆)
ˆ are achieved, [ ]
𝑆 There is no 𝑆 ′ ⊆ 𝑁 and no 𝜔 𝑇 ∗ , 𝑆 ′ , 𝑡′ , 𝐹 ∗ (𝑆 ′ ) ∈ Ω
and the case signifies a situation in which 𝜔 achieves a merger
𝑆ˆ ∈ Θ𝑘 such that 𝑖 ∈ 𝑆. ˆ We assumed that COM ˆ tries to
𝑆 such that for all 𝑖 ∈ 𝑆 ′ ,
maximize the utility of post-merger median incomer. This is [ [ ]]
because such an assumption assures the stability of coalition 𝑈𝑖𝑚 𝜔 𝑇 ∗ , 𝑆 ′ , 𝑡′ , 𝐹 ∗ (𝑆 ′ ) (9)
ˆ [9] explains the validity in detail.
𝑆. [ [ ]]
> 𝑈𝑖𝑚 𝜔 𝑇 ∗ , 𝑆𝑖∗ , 𝑡∗𝑖 , 𝐹 ∗ (𝑆𝑖∗ )
C. Solution of the Game
In this section, we investigate the solution of the game. We where
′ ′ ′
define the policy vector of the solution of the game as ∙ 𝑡 is the tax rate realized in 𝑆 . That is, 𝑡 is the

[ ] solution to the following maximization problem

Φ∗ ≡ 𝑇 ∗ , Θ∗ , Γ∗ , Υ∗ . [ ]
max 𝑈′𝑚 𝑇 ∗ , 𝑆 ′ , 𝑡, 𝐹 ∗ (𝑆 ′ ) (10)
𝑡
where Θ∗ ≡ {𝑆𝑙∗ }𝑙∈𝐿 is the realized partition of 𝑁 , Γ∗ ≡
(𝑡 ∗ ∗ ∗ subject to for all 𝑖 ∈ 𝑆 ′
( 𝑙 )∗𝑙∈𝐿 )be the vector of realized tax rates in Θ , Υ =
𝐹 (𝑆) 𝑆⊆𝑁 is the vector of transfers offered to each 𝑆 ⊆ 𝑁 . [ ]
𝑈𝑖𝑚 𝑇 ∗ , 𝑆 ′ , 𝑡, 𝐹 ∗ (𝑆 ′ ) (11)
Φ∗ should be realized in an SPNE (sub-game perfect Nash [ ]
Equilibrium) strategy profile. Therefore, it is adequate for us ≥ 𝑈𝑖𝑚 𝑇 ∗ , 𝑖, 𝑡𝑖𝑚∗ , 𝐹 ∗ ({𝑖}) ,
to analyze the condition where Φ∗ is achieved in an SPNE 𝑡 ∈ [0, 1], and 𝑡 + 𝑇 ∗ ∈ [0, 1].
using backward induction. However, regarding the second
stage, each municipal median voter simultaneously chooses the where
combination of merger. As a result, plural patterns of municipal – 𝑈′𝑚 is the utility of each median incomer in
partition can be rationally selected if we use simple Nash 𝑆′.
equilibrium as solution concept in the second stage. Therefore, – 𝑡𝑖𝑚∗ is the tax rate preferred by each 𝑚𝑖 such
equilibrium refinement is necessary regarding the second stage. that 𝑖 ∈ 𝑆 ′ .
We adopt the solution concept shown in [9] in which the – 𝐹 ∗ ({𝑖}) is the transfer offered to 𝑖 ∈ 𝑆 ′ in
stability of coalition regarding the combination of mergers the first stage of the game.
[ ∗ ′ ′ ∗ ′ ]
are satisfied. This solution has similarity with strong Nash ∙ 𝜔 𝑇 , 𝑆 , 𝑡 , 𝐹 (𝑆 ) is a strategy profile in
equilibrium (SNE) due to [2], although it is not identical with which all of 𝑇 ∗ , 𝑆 ′ , 𝑡∗𝑖 and 𝐹 ∗ (𝑆 ′ ) are realized.
SNE itself.1 As a consequence, we regard that Φ∗ is realized in ∗ ′ ′
∙ 𝐹 (𝑆 ) is the transfer offered to 𝑆 in the first
a refined SPNE considering the stability of coalition formation stage of the game.
∗ ∗ ∗
in the second stage. The following shows the conditions, ∙ 𝑆𝑖 is an 𝑆𝑙 such that 𝑖 is an element of 𝑆𝑙 .
∗ ∗
Condition 1 ∙ 𝑡𝑖 is the tax rate realized in 𝑆𝑖 .
∗ ∗ ∗
Let us consider the third and fourth stages of the ∙ 𝐹 (𝑆𝑖 ) is the transfer offered to 𝑆𝑖 in the first

game. Regarding each 𝑆𝑙∗ , 𝑡∗𝑙 must be the solution to stage of the
[ ∗ ∗ ∗ ∗ ∗ ] game.
∙ 𝜔 𝑇 , 𝑆𝑖 , 𝑡𝑖 , 𝐹 (𝑆𝑖 ) is a strategy profile in
the following maximization problem
[ ] which all of 𝑇 ∗ , 𝑆𝑖∗ , 𝑡∗𝑖 and 𝐹 ∗ (𝑆𝑖∗ ) are realized.
max 𝑈∗𝑙𝑚 𝑇 ∗ , 𝑆𝑙∗ , 𝑡, 𝐹 ∗ (𝑆𝑙∗ ) (7) Condition 3
𝑡
Finally, let us consider the first stage. NG maximizes
subject to for all 𝑖 ∈ 𝑆𝑙∗
social welfare choosing the national tax rate 𝑇 and
[ ] choosing the amount of transfer to each 𝑆 ⊆ 𝑁 ,
𝑈𝑖𝑚 𝑇 ∗ , 𝑆𝑙∗ , 𝑡, 𝐹 ∗ (𝑆𝑙∗ ) (8)
[ ] 𝐹 (𝑆).
≥ 𝑈𝑖𝑚 𝑇 ∗ , 𝑖, 𝑡𝑖𝑚∗ , 𝐹 ∗ ({𝑖}) , ( ∗ ∗)
𝑇 ,Υ (12)
1 Of course, we can define a condition based on coalition-proof Nash ∑∑ [ ]
equilibrium (CPNE) which is a weaker stability concept defined by [3]. [1] = argmax 𝑈𝑖𝑗 𝑇, 𝑆, 𝑡𝑆 , 𝐹 (𝑆)
used CPNE as a solution concept to their game. 𝑇,𝐹 (𝑆) 𝑖∈𝑁 𝑗∈Λ𝑖

9

subject to
∑
1) for all 𝑘 ∈ 𝐾, 𝑙∈𝐿 𝐹 (𝑆𝑘𝑙 ) ∈ [0, 𝑇 𝑃 𝑦]
2) 𝑇 ∈ [0, 1] and for all 𝑡𝑘𝑙 , 𝑡𝑘𝑙 + 𝑇 ∈ [0, 1].
3) for all 𝑖 ∈ 𝑁 , 𝑆𝑖∗ ∈ Θ∗ satisfies Condition 1 and
Condition 2.
Condition 2 needs additional explanation. Note that
regarding municipal median [voter’s utility in] Inequalities
[ ]
(9) and (11), we use 𝑈𝑖𝑚 𝜔 𝑇, 𝑆, 𝑡, 𝐹 (𝑆) instead of
[ ]
𝑈𝑖𝑚 𝑇, 𝑆, 𝑡, 𝐹 (𝑆) which denotes the utility of 𝑚𝑖 with 𝑖 ∈ 𝑆
when all of 𝑇, 𝑆, 𝑡𝑆 and 𝐹 (𝑆) are achieved: for 𝑚𝑖 such that
𝑖∈/ 𝑆, achievement of 𝑆 itself does not determine
[ the value] of
𝑈𝑖𝑚 . It is determined in a strategy profile 𝜔 𝑇, 𝑆, 𝑡, 𝐹 (𝑆) .
Now, we have the following proposition;
Proposition
Φ∗ achieves Pareto optimality among the citizens in the nation.
Proof
If Φ∗ is not Pareto optimal, there exists another policy vector
Φ which achieves Pareto improvement. Assume that Φ′ is
′ at national and municipal levels, which is our future task.
realized in a different partition Θ′ . Then, by Inequality (9), there
exist an median voter who is worse off in Θ′ compared with in
Θ∗ . This contradicts that Φ′ achieves Pareto improvement.
Next, assume that Φ′ is realized in the same partition Θ∗
∗ ′
(as ′in Φ) . Then, assume that′ another transfer scheme Υ =
𝐹 (𝑆) 𝑆⊆𝑁 is realized in Φ whereas the national tax rate and
all municipal tax rates are equal to those in Φ∗ .Then, every
individual should have equal or higher utility in Υ′ compared
with in Υ∗ and there exists an individual who is better off in
Υ′ . Thus, let Λ∗𝑙 be the set of inhabitants in 𝑆𝑙∗ and 𝑈∗𝑙𝑗 be the
utility of an arbitrary inhabitant 𝑗 ∈ Λ∗𝑙 . We have
∑ ∑ [ ]
𝑈∗𝑙𝑗 𝑇 ∗ , 𝑆𝑙∗ , 𝑡∗𝑙 , 𝐹 ′ (𝑆𝑙∗ ) (13)
𝑙∈𝐿 𝑗∈Λ∗𝑙
∑ ∑ [ ]
> 𝑈∗𝑙𝑗 𝑇 ∗ , 𝑆𝑙∗ , 𝑡∗𝑙 , 𝐹 ∗ (𝑆𝑙∗ ) .
𝑙∈𝐿 𝑗∈Λ∗𝑙
However, it contradicts that Φ∗ maximizes Benthamite social
welfare. It is a contradiction. Applying this inference to all
combinations of partition of governments, national tax rate,
municipal tax rates and transfers, we can prove that Φ∗ achieves
Pareto optimality. Q.E.D.
As Φ∗ satisfies the incentive compatibility of each munic-
ipal median voter regarding the choice of municipal coalition
and the post-reorganization tax rate, we call Φ∗ the optimal
policy vector satisfying incentive compatibility (OPVIC).
IV. C ONCLUDING REMARK
In this study, we presented a fiscal transfer scheme of the na-
tional government whose objective is to maximize Benthamite
social welfare by inducing reorganization of municipalities. We
showed that OPVIC as a result of the game achieves Pareto
optimality among individuals.
As we considered the decisions of municipalities not re-
stricting the number of municipalities, our model can be re-
garded as a generalized modeling of vertical intergovernmental
10
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relations, which is a theoretical contribution. However, as our
model has a complicated structure, it is not easy to show
the property of OPVIC without restricting the number of
municipalities. It will be adequate for us to start the analysis
of the property when 𝑛 = 3, which is an extension of [10].
It should be mentioned here with respect to the validity of
our assumption that the national government and municipalities
have different objectives; the national government’s objective
is to maximize social welfare whereas each municipality tries
to maximize the utility of its median voter. This assumption
is due to the impossibility of application of the median voter
theorem regarding policy choice at national level in our model.
It would be better that the median voter theorem is applicable
at both national and local level, which enables us to derive a
solution in a game where both national and local governments
tries to maximize the utilities of their own median voters. Then,
we can compare it with the solution in a game where the
national government is benevolent. It is worth investigating
the model where the median voter theorem is applicable both
However, note that there are some situations where it is
rational for the national government to maximize social welfare
even though its objective is to accomplish the policy decided
under majority voting. Suppose that the national government
has to address fiscal reconstruction due to financial deficit,
caused by “soft budget program” which induces excessive
fiscal transfer to local governments. Then, a Pareto optimal
fiscal transfer scheme will be supported by majority in the
whole nation and it might maximize social welfare.
R EFERENCES
[1] A. Alesina and E. Spolare, “War, peace, and the size of countries,” Journal
of Public Economics, vol.89, 2005, pp.1333-1354.
[2] J. P. Aumann, “Acceptable points in general cooperative n-person games,”
In: A.W. Tucker and R.D. Luce (eds.) Contributions to the Theory of
Games IV. Princeton: Princeton University Press, 1959, pp.287-324.
[3] B. Bernheim, B. Peleg and M. Whinston, “Coalition-proof equilibria I.
concepts,” Journal of Economic Theory, vol.42, 1987, pp.1-12.
[4] D. Black, “On the rationale of group decision-making.” Journal of
Political Economy, vol.56, 1948, pp.23-34.
[5] R.Boadway, P.Pestieau and D.Wildasin, “Tax transfer policies and the
voluntary provision of public goods”, Journal of Public Economics,
vol.39, 1989, pp.157-176.
[6] P. Bolton and G. Roland, “The Breakup of nations: a political economy
analysis,” Quarterly Journal of Economics , vol.112, 1997, pp.1057-1090.
[7] O. Haimanko, M. Le Breton and S. Weber, “Transfers in a polarized
country: bridging the gap between efficiency and stability,” Journal of
Public Economics,vol.89, 2005, pp.1277-1303.
[8] S. Suzuki, “Consolidation of local municipalities and income distribution,”
Hogaku Seijigaku Ronkyu, vol.63, 2004, pp.425-452.
[9] S. Suzuki and T. Inohara, “Political integration and the number of
governments”, IEEE International Conference on Systems, Man, and
Cybernetics (IEEE SMC 2015), pp. 586-591, Oct. 2015.
[10] E. Weese, “Political mergers as coalition formation: an analysis of the
Heisei municipal amalgamations,” Quantitative Economics, Vol.6, 2015,
pp.257-307.
 Back to Contents

MODELLING COMMERCIAL FRAMEWORK OF THE

STRATEGIC ELEMENTARY DESIGN CONCEPT
Mohd Shaleh Mujir1, Norashikin Hasan 2 and Oskar Hasdinor Hasan3
1
Industrial Design Department, FSSR, UiTM, Melaka, Malaysia / 2 Business Studies & Management
Department, Faculty Of Bussines Management, UiTM, Malaysia /
3 Industrial Ceramic Design Department, FSSR, UiTM, Selangor, Malaysia

iideshaleh@yahoo.co.uk

ABSTRACT basis towards form and shape development of an

This paper discussed the Strategic Elementary design
development framework and process through an
integrated industrial design approach for commercial
Bus and Coach fabrication and production. The
research applies visual inconsistencies analysis to
identify significance features as design comparative
studies between bus manufacturers with
international design benchmark. This research
explores the important of elementary design
approach as industrial design fundamental design
characteristics formation practice by Malaysian Small
Medium Enterprise company, Art and Design school
'ideation design process' teaching and how it
formulate and contribute towards commercial design
and manufacturing strategy. In Malaysian design
scenario, aesthetics and subject matter styling led
design direction theory interpretes as significant
Malaysian design identity.
Keywords: Industrial Design Element, Visual
Analysis, Commercial Production
INTRODUCTION
This research explores the important of elementary
design approach as fundamental three dimensional
(3D) design characteristic formation in industrial
design development process. In Malaysian design
scenario, aesthetics and subject matter styling led
design direction theory radically explore mostly by
design schools and design firms interpretes as
significant Malaysian design identity. Aesthetics and
Subject Matter design base is strongly associated with
the Malays culture Symbolic, believe and methaphor
meaning or 'Perlambangan' which also become the
object or products.
However, these approach is very subjective towards
the succesfullnes of the final products and
sistematically different with the design approach
among International Art and design School in United
Kingdom, European Country, United State or few
University in Japan and South Korea and which
continually adopted in established design firm and
leading to succesfull design development of certain
brand and products champions. This research
investigate these theoritical relation and how the
influence could change the design perception and
value in Malaysian product design which currently in
reality is not competetive globally
RESEARCH BACKGROUND
Designer is generally considered as creative experts
in developing the idea, shape and 3D form. Designers
produce important conceptual design for new
products and the backbone of R&D for some
industries. The creativity understanding limited to
only established production and corporate leader
team where design success should continue with
commercial success and profitable value.
Malaysian Industrial Designer recruited from
established institution is commonly familiar with
Malay design philosophical believe and practice. The
primary market analysis suggest that only few local
design R&D output with Malaysian origin become a
global product champion for the company altough it
was develop with advanced and niche technology.
Malaysian made design products only contribute to

978-1-5090-1671-6/16/$31.00 ©2016 IEEE

11

mimimum commercial impact and failed to be
competetive in global market.
The research investigates the local design factor on
the influence of ignoring design trend, new material
exploration, manufacturing technologies and
capabilities towards corporate branding contribute
to low commercialization value and sustainability.
The main question of the research directed to how
far existing designer creativity led to succes in
developing innovative commercial products concept.
The focus studies also investigate how 3D design
form exploration and direction practice being
develop without ignoring commercial, corporate
value and succeeding competetive products.
PROBLEM STATEMENT
Malaysian Industrial Designer recruited and
graduated from established local higher institution is
commonly familiar with Malay design philosophical
believe and subject matter aesthetic simplification
practice while developing the 3D shape, form,
appearance of the new product and ignore the
important of industrial design best practice priority.
However, there are only a few new product and
industrial design firm succeeding the global product
champion from these practice while Malaysian made
design products only contribute to minimum
commercial impact and failed to be competetive in
global market. Thus, how do these design teaching
and philosophical design believe practice and their
influence in the industry continually contribute
innovatively to produce competetive products and
create profitable long term investment ?
The ambiguous creativity of aesthetics design styling
base on subject matter among designers during
design ideation processes ignoring the design
element associated with industrial design
consideration and prority lead to a subjective 3D
form output and scientifically difficult to be
measured, justify and failed to convinced the
importance of function, practicality and open to
argument by marketing, technical experts and
production engineers. This phenomenon practices of
design teaching at local design school influence
graduate designers with local philosophical design
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believe create negative impact towards product
performance, quality and commercial value where
the new integration formula which qualify to
innovative matrixs, structured design element and
systematic creative direction with the importance of
design economy on industrial design best practice
should be formulate to model with the advance of
design and technology.
RESEARCH KEY QUESTION
The ambiguous creativity of design styling among
designers during design sketching processes of
Malaysian design practice lead to a subjective 3D
form output. This phenomenon practiceas becomes
an important creativity feeder for design and
manufacturing. Thus, how do designers qualify and
assess innovative design direction through their
design and sketching assignments with respect to
monetize commercial manufacturing and corporate
value?
RQ2.
Designers develop design elements of styling subject
matter to sketch and 3D rather than transforming
corporate branding and manufacturing consideration
uniformly. We refer to this phenomenon as
“expertise creativity.” Thus, we are interested in
understanding what types of design innovative
direction elements, which could also be value and
measure by production teams and corporate
branding. What are the characteristics of these
elements?
RQ3.
Designers may sketch and develop through their
creative intuative and understanding 3D design
consideration in developing new products. How,
then, are these elements integrate with overall
corporate styling and design value strategy?
The research also aim towards improvisation of the
design education policy, theory, process, method
and practice in Malaysian Higher Institution should be
improved, monitor, advised, guide, integrate
strategically to aligned and relevance with the
Industrial Development especially the new National
Economic Model and NKRA direction.

LITERATURE REVIEW
Design is often seen to be central to competitiveness
and delivering value to customers in the ‘new
economy’. It is understood as including a range of
activities that firms perform in the development,
branding and marketing of new and improved
products, services and processes. Thus design, in its
broadest sense, is where the intellectual content for
value-added in production processes is created.
Designing a product requires thought, at least in
most cases. The thought is a thinking process of
transforming idea to reality and thinking while
designing is a heterogeneous process, composed of
very different elements. The success of design often
involves the integration of many different
complementary intellectual assets. Design is
understood as a ‘knowledge agent’ that can
contribute to innovation processes. Bertola and
Teixeira (2003) stated that design contributes to
innovation, both in product and/or process, acting as
a knowledge agent by collecting, analyzing, and
synthesizing the knowledge contained in the domains
of Users’ community knowledge ,Organizational
knowledge and Network knowledge.
There are three stages of thinking process;
divergence, transformation and convergence and
each of this stages comprise of methods that make
designing more manageable. Methods appropriate at
this stage involve both rational and intuitive actions
and common errors of newcomers to design
methodology is to be far too speculative at this stage
and fail to see the point of fact-finding before they
take any critical decisions and before they discover
what is it they are looking for.
Exploration analysis to investigate design innovation
as suggested by Andrea (2013) acknowledge the
importance of qualified human resources in design
field where universities and education systems
should aware the increasing importance design in
coming years as a source of competitivenes for the
firms.
While Jamaludin (2013) found that it is important to
understand the relationship between basic form and
the product charecter so that designer can achive
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the goals of design and target their user by focusing
on semantic element and syntactic analysis.
This research will be the new thinking platform for
local design expertise of Malaysian product design
who play an important factor elevating performance
and contribution in Malaysian Industries and provide
new direction for the Design Education policy in
Malaysian Higher Institution which could be improved
strategically to aligned with the Industrial
Development especially the New Economic Model and
NKRA direction.
METHODS
The role of local designer play an important factor
elevating impresive performance and contribution in
Malaysian Industries. Therefore, the focus studies
investigate the 'creativity ' factor and design
development theory and philosophical practice
among local designer in selected industries. Thus,
the objectives of this study are ; (i) to investigate
designer styling ideation and direction lead approach
based on common Malaysian design practice, (ii) to
assess the designers' integration value of form
development design process that qualifies to
advanced design value strategy, (iii) to investigate
the influence of design innovative integration and
commercial design direction, and (iv) to make
recommendation based on the characteristics
analysis of innovative form and styling framework in
the context of syntactics that can be strategize for
valuable commercialization formula for Malaysian
design.
Various design institution and firms will be targeted
as focus respondent group studies where design
workshop with video ethnography observation will be
conduct to fullfill the research data projection.
Design elementary analsyis will also utilise the 3D
Digital modeling for form and shape formulation and
evaluation.
Mixed methods through qualitative inquiry and
quantitative inquiry will be employed to uncover the
theory. A video observation based on protocol
analysis of designer skecthing and form development
activities at several design academies and
practitioners in Malaysia will be conducted and

strengthened by semi-structured interview on
experts on evaluation of selected sketches in the
analysis of representation in relation to the design
innovation of 3D form and shape formation syntactics
in design.
Figures 2 show the research activites process from Literarure
review stage to the Final Report writing process.
CONCLUSION
The new formula will challenge and improve existing
and conventional method and mindset on developing
design especially in Design Schools and Industry.
The finding will justify the need to new and positive
systematic critical thinking solution among design
academician and designer, benefited industry
towards profitable commercial products which in
long term will increase design economic value,
stragtegically championing the new Malaysian design
identity globally
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ACKNOWLEDGEMENT
Authors would like to acknowledge the Universiti
Teknologi MARA (UiTM) for the financial support
under the Excellent Fund Scheme and Ministry of
Education under Knowledge Transfer Programme
Grant Scheme. Authors also like to thanks Masdef (M)
Sdn Bhd for their technical assistance.
REFERENCES
Abidin, S.Z., Warell, A., & Liem, A. (2011). The significance of
form elements: A study of representational content in design
sketches. Proceedings of DESIRE’11, 2nd International Conference
on Creativity and Innovation in Design, Eindhoven, ACM
Eindhoven, 21-30.
Liem, A., Abidin, S.Z., & Warell, A. (2009). Designers’ perceptions
of typical characteristics of form treatment in automobile styling.
Proceedings of Design and Semantics of Form and Movement, 5th
International workshop Design & Semantics of Form & Movement
(DeSForM 2009), Taipei, 144-155.
Abidin, S.Z., Bjelland, H.V., & Øritsland, T.A. (2008). The
embodied mind in relation to thinking about form development.
Proceedings of NordDesign 2008 Conference, Tallin, DS50, 265-
274.
The characteristic of form in relation to product emotion
Jamaludin ZA Shariman, UiTM Malaysia, E& PDE,(2013), page 716
-721, ISBN 9781904670421
M. S. Mujir, O. H. Hassan, M. Y. Shaharudin, M.A.H. Al Balkhis and
W.Z. Yusuf, (2012) “Design Research and Development Process of
Single Deck Bus for Commercial Production”, Proceeding of 2012
IEEE International Symposium on Business, Engineering and
Industrial Applications. (ISI/Scopus)
M. Y. Shaharudin, M. A.H. Al Balkhis, M. S. Mujir and O.H. Hassan,
(2012) “Conceptual Framework of Design Study on Façade of Hi-
deck Bus Using FRP Composite”, Proceeding 2012 IEEE Business,
Engineering & Industrial Applications Colloquium. ISI/Scopus)
Ontology Understanding in Enhancing Car Styling Ideation. 227
Wan Mohd Yusof; M. Shaleh Mujir (2012)(Universiti Teknologi
MARA, Malaysia) SHUSER 2012. IEEE Symposium On Humanities,
Science & Engineering. Renaissance K. Lumpur. 24 - 27 Jun 2012
Macmillan, J. Steele, S. Austin, etall. (2001). Development and
verification of a generic framework for conceptual design. Design
Studies, Volume 22, Issue 2, March 2001, Pages 169-191
H.H. Tang, Y.Y. Lee, J.S. Gero (2010). Comparing collaborative
co-located and distributed design processes in digital and
traditional sketching environments: A protocol study using the
function– behaviour–structure coding scheme. Design Studies,
Design Studies Journal
Michael Tovey, John Owen. (2000). Sketching and direct CAD
modelling in automotive design. Design Studies, Volume 21, Issue
6, November 2000, Pages 569-588
Jami J. Shah, Steve M. Smith, Noe Vargas-Hernandez, (2003)
Metrics for measuring ideation effectiveness, Design Studies,
Volume 24, Issue 2, March 2003, Pages 111-134

A service-oriented cloud application for a
collaborative tool management system
Marcus Röschinger, Orthodoxos Kipouridis, Willibald A. Günthner
Institute for Materials Handling, Material Flow, Logistics
Technical University of Munich
Munich, Germany
kontakt@fml.mw.tum.de
Current efforts in manufacturing and logistics research focus
on developing innovative systems that enable enterprises to
respond faster and more effective to changing market conditions,
thus, paving the way for the fourth industrial revolution.
Amongst others, an intensified collaboration within supply chains
on the basis of virtualized processes is agreed to be a promising
approach. Especially also in the area of industrial tool
management there are numerous challenges regarding a
horizontal integration. In this paper, a service-oriented and cloud
based concept is presented that focuses on providing
manufacturing oriented services, based on commonly accessible
tool related data. It is illustrated how companies within a
machining tool supply chain can benefit from highly available
tool data and deployed services along a tool´s life cycle.
tool management; service orientation; cloud application;
collaboration; information systems; industry 4.0; supply chain
management; life cycle management; process automation
I. INTRODUCTION
Nowadays, increasingly shorter product life cycles, a
growing number of variants as well as the coordination of
complex international value and supply chains pose significant
challenges for manufacturing companies. Current industry and
research efforts towards more flexible and adaptive
manufacturing concepts are often grouped under the key
phrases, industrial internet and industry 4.0. Following the
advances in telecommunications and computer science that
allow for much larger connectivity and computing power, great
potentials are attributed to the use of web-based services within
manufacturing and logistics processes in order to increase their
transparency, efficiency and flexibility. Moreover, another field
of research focus is to intensify the collaboration between
companies within supply chains. In this context, integrated and
digital information flows are an essential premise. For this
purpose, several information and communication technologies
are available for which the cloud computing paradigm is held
to be predestinated [1, 2].
Although a positive effect of intensive collaboration is
widely agreed upon and examined [3], there is often a lack of
use cases and applicability studies based on concrete scenarios.
Furthermore, in the area of product life cycle management,
various information systems are being used, which causes not
only interface problems and interrupted information flows but
The presented results originated from the research and development
project “ToolCloud”, founded by the German Federal Ministry of Education
and Research (BMBF) within the Framework Concept “Research for
Tomorrow´s Production” (fund number 02PJ2731) and managed by the
Project Management Agency Forschungszentrum Karlruhe, Production and
Manufacturing Technologies Division (PTKA-PFT).
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
15
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also complicates the realization of collaborative services [4].
These conclusions also apply to the field of industrial tool
management (TM). However, TM systems are essential for
stable and efficient production processes and require significant
monetary, time and human resources [5]. Against this
background, in this paper a concept of a cloud based TM
system that provides services with regard to a machining tool´s
life cycle is presented. For this, a service-oriented approach is
employed as it enables the integration of multiple stakeholders
within and among an organization.
II. RELEVANT ASPECTS OF TOOL MANAGEMENT
In this chapter initially the fundamental processes in TM
with regard to the developed concept are introduced.
Afterwards, related approaches for TM systems are presented
in order to illustrate the demand for a collaborative and service-
oriented TM system.
A. Fundamental processes in tool management
The tasks of TM can be classified into two activity
categories, planning and logistics. On one hand, the tools that
are required for a manufacturing process as well as their
operational use must be planned. On the other hand, the tool
inventory and demand must be managed after which, if
applicable, procurement actions need to be initiated so that it is
assured that a tool is available at a certain machine on time [6].
However, apart from the physical tool flow, the assigned
information flow must also be coordinated as each task along a
tool´s life cycle depends on specific data and hereof deduced
information. In the following paragraphs, this aspect shall be
described in detail on the basis of a case study carried out in a
machining tool supply chain.
As shown in Fig. 1, a tool´s life cycle begins with its
construction and production, whereby it is either custom-made
on per order basis, or it is “generic” and destined for general
distribution. Especially in the first case, the tool manufacturer
must intensively exchange several data with the user company
to make sure the complex and costly product serves its
purpose. Hence, the tool manufacturer has to determine,
respectively measure, a lot of data for each tool containing
geometrical (nominal and actual values), operational (e.g.
maximum rotation speed), organizational (e.g. customer and
payment) as well as logistical (e.g. storage and shipping) data.

Engineering &
Production
Tool Logistics
Tool
Management
Tool Planning
Utilization &
Monitoring
Tool Machine Maintenance
Tool User
Manufacturer Manufacturer Service
Fig. 1. Machining tool´s lifecycle and assigned supply chain.
In the tool´s utilization phase, the user company primarily
requires the operational and geometrical data for the set-up of
machines. In most cases, however, it is necessary to first
assemble the tool into a holder, whereby the geometry changes
and a new measurement is required. Furthermore, additional
data is generated and updated by the user, e.g. condition,
location and inventory, as well as correction data according to
the utilization on specific machines. After a certain time of
utilization, the tool needs to be maintained, whereby the
corresponding processes of re-sharpening and measuring can
take place within the user company or at appropriate service
providers. When a tool´s limited number of possible
maintenance cycles is reached, its life cycle ends and it must be
substituted.
The supply chain of machining tools, where only the tool
manufacturer, the end-user and the maintenance service
provider are involved, ought to be extended in order to include
companies that act as providers of manufacturing, grinding and
measuring equipment. These companies also need to take tool
data into consideration, e.g. when constructing and putting new
machines into operation. As each of the companies applies
several methods, quite often even paper documents, to store
and exchange tool data, the information flow in and between
the companies as well as within each of them is often
problematic and hardly automated. Due to the above, there is a
need to address the challenges that arise in TM by making
transparent tool data available across companies as well as
utilizing a tool without manual data transfer.
B. Related approaches for tool management systems
During the past years, various approaches for implementing
effective TM systems were proposed, however, most
approaches target specific areas and tasks in TM, which has led
to several individual solutions that, amongst others, fuel
incompatibility issues [7]. Whereas older approaches focus on
the automated tool supply and data exchange with machines [6,
8] and are widely used today, more current projections also
concentrate on the automation of the information flow.
Regarding this, the usage of RFID in TM is an often pursued
tactic [9, 10]. The benefit of the RFID technology is that it
allows for making the tool data locally available on objects and
16
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offers an automated readout, which is why there are numerous
industrial applications. However it comes with a price, as the
tool data must be transferred between RFID transponders and
information systems to make it available for higher level
planning and control activities independently from the tool´s
location. In this data transfer, risks of inconsistent and wrongly
assigned data arise. Furthermore, RFID transponders can
hardly be integrated into every tool without a negative impact
on its utilization as the tool product spectrum is too
heterogeneous with respect to geometry and size. Nevertheless,
not only tools but also related processes in TM lack
standardization. In this context, [5] proposes a basic model for
life cycle oriented TM focusing on the optimization of a tool´s
utilization and for this purpose claiming broader
standardization. Further approaches target the area of
production scheduling and therefore concentrate on the
efficient and cost effective assignment of tools to machines and
work orders [11-14].
In conclusion, even though diverse approaches and
solutions address specific issues in TM, there is a lack of an
integrated concept for uninterrupted information flows with
regard to a tool´s whole life cycle, which also engages all
parties involved. A promising approach in this area are cloud
based services that can individually be adapted to processes
and requirements. Moreover, as the services fall back on an
always up-to-date cloud database, they are not only available
time- and location-independently but also provide updated and
consistent data at all times. The potential of the system is
presented in the following chapter where the service-oriented
application for TM is introduced.
III. SERVICE-ORIENTATION IN TOOL MANAGEMENT
As highlighted in the previous paragraphs, TM is an
essential part of modern manufacturing systems. The growing
demand for information sharing among applications in TM has
brought forward the need to ensure an effective collaboration
between the parties involved. From a technological
perspective, modern advances in the area of communication
networks and computing enable the storage of large amounts of
data as well as a high-speed reliable transfer. Based on such
business and technological drivers, a new paradigm has been
brought forward that focuses on offering the means to
enterprises to achieve a higher level of flexibility to
manufacturing processes by providing shared services at
enterprise and shop-floor level. In the following, a brief
description of the service-oriented enterprise system approach
is given before it is adopted to present the developed concept
for a service-oriented cloud based TM system.
A. Service-oriented enterprise system approach
Service-orientation often refers to service-oriented software
engineering as a design paradigm using services as
fundamental elements for developing new applications [15]. In
the context of enterprise information systems, services are
reusable logical objects that offer a specific functionality,
individually or in combination with other services. They are
offered from a service provider to a service consumer, by
means of clearly defined interfaces. These interfaces are an
agreed upon way of exchanging information and specify how

the provider and the consumer interact with each other. The
usage of services for providing technological resources that
support business operations is a main feature of the Service-
Oriented Enterprise (SOE) concept that has emerged as a
promising way to empower enterprises to be more responsive
to customer needs by loosely coupling their systems [16].
An important concept that offers the foundations for
realizing SOE is the Service-Oriented Architecture (SOA).
SOA is an architectural style that enables an on-demand
provision of resources and for this purpose describes a model
of interaction between three parties: the service provider, the
service consumer and the service broker. The first two were
introduced in the previous paragraph, the latter is responsible
for exposing and maintaining a list of available services, which
is called the service registry, and provides the means to
publish, remove and discover a service. A major characteristic
of SOA is that it features loosely coupled components that can
be accessed through technology-independent interfaces, as the
service registry enables a decoupling of services from the
systems on the consumer side. Further characteristics of SOA
include standards based interfaces and a modular structure [17].
Though SOA should not be confused with Service-Oriented
Computing (SOC), which refers to the technical
implementation on the operational level. Thus, it defines how
the service-orientation should be applied to the system
architecture, as well as which technologies come into play.
Such technologies can be web-services and cloud computing,
which is a programming model for enabling an ubiquitous, on-
demand network access to a shared pool of computing
resources such as networks, storage, applications and services
[18].
B. Concept for a service-oriented tool management system
Based on the described mechanics that SOA offers, a
concept of a cloud based service-oriented TM was developed.
It is centered around capturing and storing all relevant tool data
in remote storage locations utilizing cloud computing. Thereby,
stored data can be both, the static data, which persists
throughout a tool´s life cycle, as well as dynamic data, which
changes over time. For this, a data model was developed based
on existing standards for categorizing tools and their data,
which is why the management of a broad spectrum of current
and prospective tools is possible. On the basis of the cloud
database, the goal of supporting an efficient collaboration
between all parties involved is realized through the deployment
of services. These operate on the data and provide the means to
access, update, aggregate and visualize it in a way that is
meaningful for respective processes in a manufacturing system.
In order to achieve a reliable mapping of every object to its
stored data, a unique and standardized identification scheme is
required (see Fig. 2). Against this background, to every tool,
holder and machine, unique serialized numbers, showing a
homogeneous structure, are assigned. However, for generic
tools, for which no individual but only tool class data is
available, class level identification is sufficient. Regarding the
labelling of tools, the developed concept does not depend on a
specific technology and therefore allows high flexibility as well
as the use of already applied identification methods.
Nevertheless, the use of optical identification technologies, e.g.
17
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Fig. 2. Automated tool identification to address digital data sets.
Data Matrix Codes engraved by laser, was examined and
amongst others offers the advantages of very little required
space and robustness in the manufacturing environment.
Besides objects, locations also need to be clearly identified to
realize the service-oriented TM. For this purpose the use of
unique and standardized numbers, either implemented in fix
installed identification equipment or encoded in optical codes
for the utilization of movable identification equipment, is
proposed.
On the basis of identifiable objects and locations, various
services, which can be modularized, adapted and therefore
applied according to particular use cases, were developed. For
the provision of these services, a layered architecture, shown in
Fig. 3, is proposed. It follows the template presented in [19]
and is modified to adapt to the needs of a modern
manufacturing enterprise. On the left side, required
components for the service provider are shown. Based on cloud
technology, resources, such as data storage and application
hosting, can be virtualized and outsourced to one or more
providers that offer persistent storage of the tool data.
The overlying service layer has access to the stored data
and exposes the functionality realized for the TM system. In
this connection, two basic kinds of services, namely core
business and value added ones, can be distinguished. Core
business services focus on generating, calling and updating tool
relevant data, as well as on its visualization on various end
devices. Another essential core business service is the
automatic set-up of machines by loading respective set-up
parameters based on the identified tool. Whereas core business
services center the shop-floor level, value added services
address more strategic enterprise levels and comprise
additional and more complex functionality. In this case, data is
not only transferred but also processed and aggregated in order
to provide reliable and projectable information. In other words,
value added services leverage the access of third-party
applications on tool data to provide integrated functionality like
tracking and tracing, inventory, condition and maintenance
management as well as the communication with other
information and control systems. In addition, the proposed
concept provides the option to apply analytic methods that
operate on the tool data to realize services like tool usage
prognosis, fault prediction and service planning.

Access Web SOAP REST
Security, Quality of Service (QoS) Business Process Choreography
Services Setup of Machines
Track & Trace
Monitoring
Virtual Resources
Servers Storage
Fig. 3. System architecture of the developed tool management system.
The specific business processes and use cases that arise in a
tool supply chain are supported through the choreography
layer. It provides orchestration functions that group services
and enable them to perform as unified applications. In order to
make use of the services, interfaces are exported as service
descriptors as well as indexed and advertised by a service
broker. It is important to note that due to the flexibility of SOA,
separating the interface implementations from the binding
protocols, the choice of a service provider can be deferred
offering greater business agility. The top layer, namely the
access layer, specifies these interfaces and defines the means to
interact with services. A very important role in the concept
(that also has led to the wide adoption of SOA) is the
leveraging of web services, as web service technologies offer
an intersystem communication standard. Moreover, they are
based on simple, text based, and open standard technologies,
such as XML and HTTP, as well as supported by most of the
IT industry.
In order to intergrade with the proposed TM system, the IT
systems of the service consumers (right part in Fig. 3), should
comply with some basic SOA requirements. So, starting on the
lower layer, objects are identified using an appropriate
identification technology. Manufacturing equipment is also
assigned to this level as it can be seen as a consumer of
services, above all since machines are already connected in
networks for remote monitoring and maintenance. The layer
above contains the enterprise scale components that implement
main business functions, as well as operational systems such as
ERP, PLM and CAM systems. Finally, regarding B2B
interaction, one of the benefits of the concept is that it enables
the same communication mechanisms using services within a
single application, between applications as well as between
business partners.
To accomplish a seamless integration in a heterogeneous
environment of manufacturing, the layer of Enterprise System
Bus (ESB) comes into play. ESB is a logical architectural
component that provides an integration consistent with the
principles of SOA [20]. Services interact via the ESB, which
facilitates mediated interactions. Furthermore, system aspects
like security, availability, reliability and data integrity are
major parts of the system and are realized in the Quality-of-
Service layer through existing technologies like VPN and
HTTPS. A detailed description of the technologies used is not
in the scope of this work. However, it should be noted that
issues regarding accountability arise when using distributed
tool data that can be accessed and edited by more than one user
Back to Contents
B2B
in safety-critical manufacturing operations. This aspect is being
... Company
taken into account by the design of the TM system through
Company
Company
user management, monitoring and discrete role definition.
Service Integration (ESB)
Enterprise Components C. Application and potentials of services in tool management
Service
Directory
ERP PLM SCM CAM With a view to illustrate the use and potentials of the above
… introduced service-oriented TM system, the impact on
Assets processes along a tool´s life cycle, as introduced in chapter II,
Sensors
(RFID,
Machines
ID is described and exemplarily shown in Fig. 4. Hence, the tool
Processing
Optical) Tool
ID
Holder
ID
manufacturer generates the dataset for a new tool and assigns a
unique identifier as well as access rights to it. Similarly, other
relevant data, e.g. for machines or tool holders, can be
generated by other companies. Once a new tool´s dataset is
captured in the cloud, it can be queried within the supply chain
to support different processes at an early stage. Additional
useful services for the tool manufacturer contain stock and
distribution management functionalities, such as updating the
location and status of an order at which these are
comprehensible also for the assigned customer. Consequently,
a collaborative transparency can be achieved within the whole
tool supply chain as services allow a reliable tracking and
tracing of tools, machines and related machining equipment.
Considering the tool user, an important task within TM is
the handling of tool related aggregations, e.g. between tools,
holders and machines. This aspect is reflected in a deployed
services recording of which tool was assembled into which
holder at which place and time and for which duration. The
same principle applies to the utilization of tools and holders in
machines at which a service can also identify if a specific
combination of tool and machine is permitted. Furthermore, the
deployment of the proposed TM system can contribute to an
increase of the quality of end products. This is possible through
provision of valuable information regarding the quality of end
products that were manufactured using specific tools. By
capturing and analyzing the correlation between utilized tools,
materials and the quality of the end product it is possible to
identify which tools performed better in a specific task.
As previously mentioned, one of the benefits of the TM
system is the direct involvement of machines in a tool’s life
cycle. The machine’s control software communicates through
interfaces with the respected service and accesses the stored
data allowing for an automatic set-up. In doing so, the correct
assignment of a tool, its data and its position in the machining
system is ensured due to automatic identification, avoiding
errors and increasing the speed of the process. Afterwards,
during its utilization, a tool´s condition can be monitored by
deploying another cloud service which captures the tool´s
running meter. These state how much material a specific tool
has already machined and enable predictions regarding its
replacement and maintenance. Hereof, not only several parties
within the user company, such as operations scheduling and
procurement, can benefit but also external maintenance service
providers.
So, service providers can predict future arriving tools early
and schedule required capacities for sharpening and measuring.
In this connection the TM offers additional benefits by
reducing manual efforts for the set-up of grinding and
measuring machines as tool specific machining programs can
18

• transparent, up-to-date and consistent data
• time- and location-independent accessible
• seamless integration and connection of new users
web-interfaces for capture and query
analysis of generation or
tool utilization correction of
tool data location: tool user
status: received
status: shipped
26,80
Ø7,43
5,00
Tool Manufacturer
Fig. 4. Exemplary services for the tool manufacturer and the tool user.
be stored in the cloud database too. Moreover, the tool data is
updated automatically and directly from the measuring
machine, which reduces paper documents and avoids incorrect
data communication to the tool user all at once.
According to the above described exemplary services, the
developed TM system addresses requirements of the total tool
supply chain and increases the transparency and efficiency of
the underlying processes, while at the same time enabling a
modular implementation according to specific use case
requirements. As an example, craft producers and smaller
companies might, in contrast to larger industrial enterprises,
not need tracking and tracing functionalities but are highly
interested in digitalizing the machine set-up. Furthermore, a
developed mobile application is a promising compromise if
there is no available internet connection on machine level. In
this fashion, a tool can be identified by means of optical codes
using a smartphone, whereupon its data can be queried,
visualized and updated. Hence, the processes in TM are indeed
not fully automated but paper documents become unnecessary
and up-to-date, transparent as well as consistent data can be
guaranteed where needed, especially also on the shop-floor.
IV. CONCLUSIONS
Currently, the processes in the area of TM are often less
automated, which can be explained by a lack of uninterrupted
and digital information flows. Consequently, a tool´s up-to-
date data is hardly comprehensible and accessible, especially
when considering its whole life cycle and the associated tool
supply chain. In this context, a service-oriented approach for a
cloud based TM was proposed in this paper. It aims to integrate
all relevant data along a tool´s life cycle into a central and
consistent system in order to provide up-to-date data in the
right place, respective process step, at the right time. Through
this, the collaboration within the tool supply chain can be
intensified and all parties involved can benefit from more
transparent and efficient processes. For this, the paper also
illustrates how one of the main challenges regarding the
deployment of a TM system across enterprises, namely the
problematic horizontal integration of heterogeneous IT
infrastructures, can be countered by using principles of SOA
Back to Contents
and cloud computing. In the context of this work the need for a
new, suitable business model for similar service-oriented cloud
based systems was identified. This is necessary as current
business models often focus neither an intensive collaboration
between the parties involved nor the provision and utilization
aggregation tool
of cloud based services. Therefore, the development of such
and machine business models is essential and subject of further research.
tool data for
machine set-up REFERENCES
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[11] A. Matta, T. Tolio, F. Tontini, “Tool management in flexible
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[12] M. S. Akturk, S. Onen, “Dynamic lot sizing and tool management in
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[13] P. Udhayakumar, S. Kumanan, “Sequencing and scheduling of job and
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[15] H. Breivold and M. Larsson, “Component-Based and Service-Oriented
Software Engineering: Key Concepts and Principles”, Euromicro
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(SEAA), Germany, August 2007.
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[17] Centric Operations Industry Forum (NCOIF), “Industry Best Practices in
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[18] P.Mell and T. Grance, “The NIST Definition of Cloud Computing,”
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[19] A. Arsanjani, “Service-oriented modeling and architecture. How to
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19

Automated Documentation for Rapid Prototyping
Napajorn Wattanagul
Department of Computer Engineering
Chulalongkorn University
Bangkok 10330, Thailand
Napajorn.w@gmail.com
Abstract— Prototyping is used as a technique during the
evolutionary development process to understand the customer's
requirements and reduce the risk of poorly defined
requirements. Making changes early in the development
lifecycle is extremely cost effective. The document accompanied
with the final prototype will serve as the basis for further
development. However, documentation is tedious and resource
consuming. This paper thus presents the methodology to
automate documenting the Rapid prototype of which the
strength is its ability to quickly construct interfaces the users
can test their expectations. The implementation of the proposed
approach would contribute to software process improvement.
Keywords—rapid prototyping; markup language; information
processing, documentation; process improvement
I. INTRODUCTION
Prototyping is used as a technique during the evolutionary
development process to understand the customer's
requirements, and hence, develop a better requirements
definition for the system. The technique is commonly used to
clarify the user requirements so that they could be refined at a
very early stage of the development. This, in turn, leads to the
accurate specification of requirements, and the subsequent
construction of a valid and usable system.
There are two major types of prototyping: Throwaway
Prototyping and Evolutionary Prototyping. An Evolutionary
prototype is continually refined and rebuilt into the final
functional system. Evolutionary prototypes form the heart of
the new system and they may be used on an interim basis until
the final system is delivered. On the other hand, a Throwaway
prototype is quickly created to get feedback on user
requirements. This simple working model will eventually be
discarded rather than becoming part of the final delivered
software system which will be formally developed based on
the identified requirements.
The focus of this paper is on Throwaway prototyping, also
called Rapid prototyping, of which the strength is its ability to
rapidly construct interfaces the users can test. A GUI Builder
is usually used to create a click dummy system that looks like
the goal system, but does not provide any functionality.
Several commercial and open source software tools exist to
facilitate the construction of Rapid prototypes.
Among a variety of commercial software, Microsoft Visio
[1] is one of the widely-used tools that offers a broader
graphics palette and finer control of layouts. Visio provides
several libraries of shape templates, several of which include
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
20
Back to Contents
Yachai Limpiyakorn
Department of Computer Engineering
Chulalongkorn University
Bangkok 10330, Thailand
Yachai.L@chula.ac.th
user interface controls for different presentation models such
as Windows and HTML. These greatly facilitate the creation
of image of desired forms and web pages [2]. Another
strength of Microsoft Visio is its easier integration with
Microsoft Office software.
In general, the process of Rapid prototyping involves: 1)
gathering user requirements, 2) analyzing collected
requirements, 3) developing initial prototype, 4) examining
the prototype and providing feedback on additions or changes,
and 4) improving the prototype with the user feedback.
Iterations on steps 3 and 4 will be conducted if changes are
introduced. Once the final prototype has been achieved, the
specification is delivered to the development team serving as
the basis for further development. However, the
documentation of Rapid prototypes is resource consuming.
This paper thus presents an approach to generating the
documents associated with Rapid prototypes created by
Microsoft Visio. The prototype description document is useful
for software design, software pricing, and communication
among development team.
The remainder of this paper is organized as follows.
Section II presents the concept of data exchange via markup
language, XML, and the technology used for the
implementation. Section III describes the proposed
methodology. Finally, section IV concludes the paper.
II. BACKGROUND
A. XML (eXtensible Markup Language)
XML describes a class of data objects called XML
documents, and partially describes the behavior of computer
programs which process them. XML is an application profile
or restricted form of the Standard Generalized Markup
Language (SGML; ISO 8879: 1986) [3]. By construction,
XML documents are conforming SGML documents. XML
documents are made up of storage units called entities, which
contain either parsed or unparsed data. Parsed data are made
up of characters, some of which form character data, and some
of which form markup. Markup encodes a description of the
document's storage layout and logical structure. XML
provides a mechanism to impose constraints on the storage
layout and logical structure [4].
B. Node.js
Node.js is open source software. It can run on Linux, Mac
and Windows. Node.js uses an event-driven, non-blocking I/O
model that makes it lightweight and efficient [5]. It is one of
 Back to Contents

the more interesting developments recently gaining popularity TABLE I. EXAMPLE SKETCH GUI SHAPES OF STENCIL TOOL
in the server-side JavaScript space [6]. It helps developing fast
Sketch GUI Shape Description
web application because there are lots of packages available
for free.
Textbox uses to receive requirement
from user
C. AngularJS
AngularJS is considered as one of popular JavaScript Button uses to response to user e.g.
framework in front-end development developed by Google. confirm
AngularJS is a toolset for building the framework most suited
to individual application development [7]. Many companies
use AngularJS as a front-end web application. Combo Box shows the list menu

III. METHODOLOGY
Image demonstrates illustrator
Throwaway or Rapid prototyping can be fast constructed
and this is the most obvious reason for using it to get quick
feedback on user requirements, so that they would be refined Link uses to connect to next page(s)
early in the development process. It is assumed that Microsoft
Visio is used for developing the prototypes in this work. Once
the final prototype has been committed, it is exported in two Menu shows system menu
file formats: XML and PNG. The output PNG file contains
screen layouts, while the XML file provides the information
of screen elements such as textbox, table, label, button, image,
and hyperlink. Since the details of these screen elements are
not sufficient, the web application is developed to support data http://www.noname.com

preparation for automating documentation. Developers are

also allowed to input additional attributes with reference from Demo Application

the final prototype. Fig. 1 illustrates the overview of described

Menu item No. Name Create Date Enter Text Enter Text

Menu item

procedure. Menu item

Menu item

In this work, the prototypes are constructed with Microsoft Menu item

Menu item

Visio using the Stencil tool named “Sketch GUI Shapes”.

Table I shows some examples of GUI elements provided by
Stencil tool. Example of the Rapid prototype created for a web Lorem ipsum onsectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt
ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis

application is shown in Fig. 2. Image

nostrud exerci tation ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo
consequat.

Add Cancel

Lorem ipsum onsectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt
ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis
Export Image
nostrud exerci tation ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo
consequat.

Rapid Prototype Add Cancel

Fig. 2. Example interface created with Visio Stencil tool.

A. Export Rapid Prototype

Rapid prototypes are iteratively developed based on the
Upload to process described earlier. After iteratively having gathered
Web Application user requirements, analyzed, created an interim prototype, the
final prototype is obtained. And two output files are then
exported to create the prototype description document. The
Extract and screen images are stored in the screen.png file. The structured
Configure rules
information of screen elements is contained in data.xml file as
shown in Fig. 3. For example, <Pages> refers to individual
Prototype Prototype
Generate
screens and in <Pages> consists of different <Shape> that uses
Description Description
Template Prototype Description Document in one screen.
Based on the proposed method, there is a constraint
imposed on the type of stencils selected that is limited to
Sketch GUI. The tool implemented in this work merely
Fig. 1. Procedure to automate documenting Rapid prototypes.
supports the generation of prototype description document

21
 Back to Contents

using the specific syntax of the configuration file in data.xml. According to the Standard of HTML input attributes,
The reason why Sketch GUI is selected is that it provides a developers are required to add some important attributes
variety of shapes sufficient for developing web application reference from w3school [8] as shown in Table II. Fig. 5
and wireframe. shows the screen shot with textbox attributes associated with
Sketch GUI Shape: Text field, as shown in Table III.
<?xml version="1.0" encoding="utf-8"?>
<VisioDocument> TABLE II. EXAMPLE HTML STANDARD INPUT ATTRIBUTES
<DocumentProperties>
<Title></Title> Attribute Description
<HyperlinkBase href=""></HyperlinkBase>
</DocumentProperties> The value attribute specifies the initial value for
value
<Pages> an input field
<Page ID="0" Name="Page-1" NameU="Page-1">
<PageProps> The readonly attribute specifies that the input
<PageScale Unit="IN_F"> readonly
field is read only (cannot be changed):
1.000000000000000
</PageScale> The disabled attribute specifies that the input
<DrawingScale Unit="IN_F">
field is disabled.
1.000000000000000
</DrawingScale> disabled A disabled element is un-usable and un-
</PageProps>
<Shape ID="33" UniqueID="{FABF30B5-77DB-4EB0-B557-055070B15FD6}" clickable.
Name="Menu item" NameU="Menu item" Master="5">
<Text>Menu item</Text>
Disabled elements will not be submitted.
<XForm>
The maxlength attribute specifies the maximum
<PinX Unit="IN_F"> maxlength
1.047736220472441 allowed length for the input field
</PinX>
<PinY Unit="IN_F"> The size attribute specifies the size (in
size
9.375000000000000 characters) for the input field
</PinY>
</XForm> This attribute specifies that the user must fill in a
required
</Shape> value before submitting a form
</Page>
</Pages> The hint is displayed in the input field before the
</VisioDocument> placeholder
user enters a value.

Fig. 3. Example of data.xml structure.

TABLE III. EXAMPLE OF TEXTBOX ATTRIBUTES REQUIRED FOR USER

B. Generate Prototype Description FILL IN

In this work, the tool is implemented as a web application Sketch GUI Shape Attributes
to facilitate the document generation. The system architecture
value, readonly, disabled, maxleangh,
is shown in Fig. 4.
size, required, placeholder
The prototype description generator is implemented with
AngularJS and Node.js for the development of front-end and
back-end, respectively.
AngularJS works with the browser to upload data.xml and
screen.png file from the user. Next, the contents are
transferred through Node.js which works as web server.
Node.js will then use XML parser to locate and extract data http://www.noname.com

from data.xml, and insert into the database as well as send the Textbox Configure attributes to txtUsername
extracted data back to the user as a response. txtUsername Value Size Max Lenght Source Event

Read Only Disabled Required

Browser Server Yes / No Yes / No Yes / No

Description Requirements
AngularJS Node.js
Request DB
Request
HTML / CSS Web Server
User Response Response
Server-Side Save Cancel
JSON / XML
JavaScript
JavaScript
Other Services
AngularJS Template

Fig. 4. Architecture of prototype description generator. Fig. 5. Screen shot for fillig in required attributes of text box.

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 Back to Contents

Prototype Description Document {DATE / TIME}

Once all the information has been collected, the system
then prepares the data and sends back to Node.js to generate
{SCREEN NAME} the description document associated with the input prototype.
Fig. 6 illustrates the prototype description template which
defines the position and content of each screen elements as
marked up by braces {…}. The templates will be instantiated
with the details extracted from the final prototype contained in
{Screen Image} data.xml and screen.png, combined with those filled in by
developers as shown in Fig. 5.
The file format of prototype description document is
.docx. It is a part of the committed Software Requirements
{ELEMENT NAME}
Specification (SRS), meaning the user requirements have been
{ELEMENT ID} {TYPE} {VALUE} {SIZE} {MAXLENGHT} {REQUIRED}
validated and agreed upon. The prototype description
{SOURCE} {EVENT}
document can be used to illustrate the events occurring in each
screen, the input, and any referencing if exists. Additionally,
List of Attributes the document can be used for software pricing based on the
{ATTRIBUTE} {ATTRIBUTE} {ATTRIBUTE} {ATTRIBUTE}
number of screens, input, output, and its complexity. The
{ATTRIBUTE} {ATTRIBUTE} {ATTRIBUTE} {ATTRIBUTE} document can also be used for communications among the
development team members, sometimes called story.

{DESCRIPTION REQUIREMENTS}
IV. CONCLUSION
The Rapid prototyping concentrates on experimenting with
the customer requirements that are poorly understood [9].
With the feedback from users, iteratively refinement yields
Approval Design Date the final prototype serving as the basis for further
development. However, the documentation chore of rapid
Fig. 6. Prototype description template. prototypes is resource consuming. This paper thus presents an
approach to automating the creation of prototype description
document by managing data exchange via XML. A web
application is also implemented using AngularJS and Node.js
TABLE IV. DESCRIPTION OF COMPONENTS IN PROTOTYPE DESCRIPTION working with the browser and server, respectively. The
TEMPLATE
system is designed to support the prototypes created with
Element Description Microsoft Visio providing Sketch GUI. The presented
approach of automated documentation would increase
Screen name Describe screen’s name for communication productivity of the project and contribute to process
improvement.
Screen Image Describe overall screen consists of lots of
elements REFERENCES
[1] Microsoft Visio Website. [Online]. 2016. Available:
Element Name Define element for clearly understanding https://products.office.com/en/Visio. [2016, January 28]
[2] Prototyping. [online]. 2016. Available: www.teach-
Element ID Unique ID for reference and developers use it to ict.com/as_a2_ict_new/ocr/A2_G063/331_systems_cycle/prototyping_
access the element RAD/miniweb/pg4.htm. [2016, January 16]
[3] ISO 8879:1986 Information processing -- Text and office systems --
Standard Generalized Markup Language (SGML). [Online]. 2016.
Type Type of element Available: https://www.iso.org/obp/ui/#iso:std:iso:8879:ed-1:v1:en
[4] T. Bray et al. Extensible Markup Language (XML) 1.1 (Second
Value Define default value Edition). W3C Recommendation 16 August 2006 : 1-45.
[5] Node.js. [Online]. 2016. Available: https://nodejs.org/. [2016, January
Size Define size of element 22]
[6] Tilkov, Stefan, and Steve Vinoski. "Node. js: Using JavaScript to build
Source Define source of data high-performance network programs." IEEE Internet Computing 6
(2010): 80-83.
Event Type of event [7] AngularJS [Online]. 2016. Available: https://angularjs.org/. [2016,
January 22]
Description Describe details about requirements, step to [8] W3School HTML Reference. [Online]. 2016. Available:
http://www.w3schools.com/ [2016, January 28]
Requirements produce of action or event, source
[9] Sommerville. Software Engineering 8. England : Pearson Educational
Limited. 2007.

23

Generation of Images of WND Equivalent from
HTML Prototypes
Ekarat Prompila
Department of Computer Engineering
Chulalongkorn University
Bangkok 10330, Thailand
Ekarat.P@student.chula.ac.th
Abstract—HTML prototypes are regarded as a kind of
Evolutionary prototypes. During the evolutionary
development, the prototype is refined and rebuilt. The creation
of prototype description document is also required as the
supplementary. Windows Navigation Diagram (WND) is
usually part of the prototype description document, serving as
the design model of user interfaces. Since the document
preparation demands extra project resources, this paper
presents an approach to generating images of windows
navigation equivalent diagrams from the HTML prototype
that would contribute to process improvement. The graph
description language, DOT, is selected to aid the construction.
It is expected that the implementation of the proposed method
would help reduce resources in document preparation,
improve integrity of deliverables, and increase project
productivity.
Keywords—evolutionary prototype; windows navigation
diagram; markup language; information processing
I. INTRODUCTION
Prototyping is a common technique suggested for
requirements validation during the early phase of software
project. In general, prototypes are mainly classified into two
categories: 1) Throwaway prototypes, and 2) Evolutionary
prototypes. Throwaway or Rapid prototypes are created to
understand the user requirements. They are speedily
constructed, usually with a GUI Builder, and sometimes they
are called Paper prototyping. Throwaway prototypes can be
regarded as a simple working model to visually show the
users what their requirements may look like. The users can
examine their expectations and feedback to the developers
for refinement. The process is iteratively carried out until the
clarified requirements are achieved. The prototype model is
thrown away, then. Contrary to Throwaway prototypes,
Evolutionary prototypes are functional systems constructed
during evolutionary development. They are continually
refined and rebuilt into the final operable systems.
The prototype description document, if exists, is usually
part of the committed Software Requirements Specification
(SRS) that serves as the basis for further development. In
general, the document contains WND (Windows Navigation
Diagram), which is one of the UML diagrams. It represents a
design model for the user interfaces. The purpose of a
windows navigation diagram is to show how the users may
traverse from one window to another along major,
application-meaningful paths [1].
Documentation chores are tedious and resource
consuming. This paper thus presents a method to generate
images of windows navigation equivalent diagrams from
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
24
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Yachai Limpiyakorn
Department of Computer Engineering
Chulalongkorn University
Bangkok 10330, Thailand
Yachai.L@chula.ac.th
HTML prototypes. The method is a supplement to the
approach presented in the former work [2]. GraphViz [3]
accompanied with its graph description language, DOT [4],
are selected as the development aids in this work.
The remainder of this paper is organized as follows.
Section II presents the background knowledge and
technology applied in this research. Section III describes the
proposed methodology. Finally, section IV concludes the
paper.
II. BACKGROUND
A. HTML Prototype
The approaches of prototyping can be generally
categorized into two types:
1) Throwaway prototyping approach. see the
prototype’s value solely in the testing. After a prototype was
tested, and the lessons-learned are noted, the prototype
itself looses its value and can be throw away [5]
2) Evolutionary prototyping approach. can reuse the
prototype itself after the testing. Here , the new prototype is
created from an altered verson of the old one [5]
HTML prototypes are regarded as Evolutionary
prototypes. The events or screen linkages are usually added
using HTML tags. Sometime, Java scripts can be attached
for practical usages.
The HTML prototype is the HTML document that
contains three main parts: 1) HTML version information, 2)
a declarative header section, and 3) a body which contains
the contents. The body part of the HTML document is the
focus of this work as the sources of details extracted for
output generation.
B. Windows Navigation Diagram (WND)
WND provides the high level abstraction of how all the
screens, forms, and reports are related. In the diagram, each
state of the user interface is represented as a box. A box
typically corresponds to a user interface component, such as
a window, form, button, or report [6]. It can explain the
system relation in two levels:
1) Overall Level: High level abstraction of how all the
screens, forms, and reports are related, and which event is
the triggle for these relations. The events without form
linkage will be not shown in this level because it may be
chaotic and hard to understand.
 Back to Contents

2) Form Level: High level Abstraction of interested selected as a tool to facilitate the creation of WND in this
screen, form, or report is related with the others that work. DOT embraces three kinds of items: graphs, nodes,
interested one is called “Main Form”. All events on main and edges. A main graph contains a subgraph which defines
form will be shown although there is no form linkage. a subset of nodes and edges. The main (outermost) graph
can be a graph (undirected) or a digraph (directed) [4].
C. DOT WND is a directed graph. The image of windows navigation
DOT is text file format of the suite GraphViz. It has a equivalent diagram for each HTML screen will be created as
human-readable syntax that describes network data, the final output from the implemented system. The scope of
including subgraphs and elements appearances, i.e. color, this work includes the generation of WND-like images from
width, label [7]. Drawing graphs with DOT can set many the HTML pages which contain the events or screen
attributes such as shape (shape type, shape color), label (font linkages implemented with Java script.
color, font name, font size, alignment) etc.
DOT is a plain text graph description language. It START
contains all passes for the graph drawing algorithm. These
contributions are [8]:
Loop
1) rank: an efficient way of ranking the nodes using a 1. Extract XML File
network simplex algorithm. The nodes are placed in discrete HTML Associated Contents
Prototypes
ranks.
2) ordering: improved heuristics to reduce edge
crossings by setting the order of nodes within ranks to avoid Loop
edge crossings. 2. Write WND
3) position: a method for computing the node DOT File with DOT
coordinates as a rank assignment problem; or it sets the
actual layout coordinates of nodes.
4) make splines: a method for setting spline control WND
3. Execute DOT
points for edges. to Image File
(Image File)

Fig. 1 shows the four passes composing the graph

drawing procedure of DOT.
END

Fig. 2. Method of generation of WND from HTML screen.

A. Extract Contents from HTML Prototypes

Fig. 1. Graph drawing algorithm of DOT [8].
D. GraphViz Java API
Graphviz is open source graph visualization software.
Graph visualization is a means of representing structural
information as diagrams of abstract graphs and networks. It
has been widely used for applications in networking,
bioinformatics, software engineering, database and web
design, machine learning, and in visual interfaces for other
technical domains [3].
API (Application Programming Interface) is the
collection of all the public methods and fields that belong to
a set of classes, including its interface types. The API
defined the way that developers can use the classes in their
own java program [9].
GraphViz Java API uses the Java class that can simply
call DOT from Java programs. This facilitates the usage of
GraphViz in Java programs [10].
All HTML Prototypes will be put together within the same
folder which may contain other file types such as style sheet
file (.css) etc. Starting with reading an individual HTML
Prototype and filtering only the HTML file, the required
contents will then be extracted.
The required contents for creating a windows navigation
diagram can be located from the tag “<a href>” that defines a
hyperlink, and “Event Attribute of HTML” listed in Table I.
The scope of work also includes java script after an event is
operated where “window.location” is the source code for
linkage. An example of links script on HTML event attribute
is shown in Fig. 3. All the extracted contents will be saved in
the structural document as XML format. An example is
shown in Fig. 4.
TABLE I. EVENT ATTRIBUTE OF HTML [11]
Attribute Value Description
Onload Script Fires after the page has finished loading
Onresize Script Fires when the browser window is resized

Onunload Script Fires once a page has unloaded (or the

III. RESEARCH METHODOLOGY browser window has been closed)
Onblur Script Fires the moment that the element loses
The generation of windows navigation diagram from a focus
HTML prototype consists of three main processes as Onchange Script Fires the moment when the value of the
illustrated in Fig. 2. DOT, graph description language, is element is changed

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Attribute Value Description <?xml version="1.0" encoding="UTF-8" standalone="no"?>

Onfocus Script Fires the moment when the element gets <RADS>
focus <Screen ID="1">
<Code>TT-CHU-01</Code>
Onreset Script Fires when the Reset button in a form is <Name>Login</Name>
clicked <WND stereoType="window">
Onsearch Script Fires when the user writes something in a <Event ID="1">
search field (for <input="search">) <EventLabel>Forget Password</EventLabel>
Onselect Script Fires after some text has been selected in <EventType>hyperlink</EventType>
an element <EventNextTo>forgot_password.html
</EventNextTo>
Onsubmit Script Fires when a form is submitted
</Event>
<Event ID="2">
Onkeydown Script Fires when a user is pressing a key
<EventLabel>Help</EventLabel>
<EventType>button</EventType>
Onkeypress Script Fires when a user presses a key <EventNextTo>Help.html</EventNextTo>
</Event>
Onkeyup Script Fires when a user releases a key <Event ID="3">
<EventLabel>Login</EventLabel>
Onclick Script Fires on a mouse click on the element <EventType>button</EventType>
<EventNextTo>Change_Role.html</EventNextTo>
Ondblclick Script Fires on a mouse double-click on the </Event>
element </WND>
onmousedown Script Fires when a mouse button is pressed down </Screen>
on an element <Screen ID="2">
onmousemove Script Fires when the mouse pointer is moving <Code>TT-CHU-02</Code>
while it is over an element <Name>Forget Password</Name>
<WND stereoType="window">
onmouseout Script Fires when the mouse pointer moves out of <Event ID="1">
an element <EventLabel>confirm</EventLabel>
onmouseover Script Fires when the mouse pointer moves over <EventType>button</EventType>
an element <EventNextTo>Login.html</EventNextTo>
onmouseup Script Fires when a mouse button is released over </Event>
an element </WND>
</Screen>
onwheel Script Fires when the mouse wheel rolls up or
</RADS>
down over an element
oncopy Script Fires when the user copies the content of Fig. 4. Example XML file contains extracted data from HTML prototype.
an element
oncut Script Fires when the user cuts the content of an
element B. Write WND with DOT
onpaste Script Fires when the user pastes some content in
an element
WND created by DOT can set shapes, graphics styles,
drawing size, spacing, node/edge placement, cluster (or
subgraph), and concentrators. In this work, each form or
screen is represented by a cluster, and a linkage between
each form is represented by an edge that directly connects
one cluster to another.
The first step to describe WND of each form is to create
all related screens represented by clusters or subgraphs. All
labels and events are defined within each screen. The
stereotype associated with an event is also concurrently
defined. A stereotype is one of the three types of extensibility
mechanisms in the Unified Modeling Language (UML)
which define new types of modeling elements extending the
semantics of existing types or classes in the UML meta-
model. Notation consists of the name of the stereotype
written on double angle brackets << >>, attached to the
extended model element [12]. The only one stereotype used
in this work is “<<window>>”.
The second step is to create events, each of which is
<p class="login button">
represented by a node with style-filled. In this work, events
<input name="login" type="button" are classified into three types as described below:
onClick="window.location.href='login.html'" value="Login"/>
<input name="help" type="button" 1) Button: Events for type “button”that are usually
onClick="goToHelp()" value="Help"/>
</p> applied with onClick and onDblClick.
<p class="change_link"> 2) Hyperlink: Events for linkage that are usually used
<a href="forgetpassword.html">forget password</a>
</p>
with tag <a href>.
</form> 3) OnEvent: The other events such as “OnChange” that
<script type="text/javascript">
function goToHelp() {
are usually used with event attribute of HTML as listed in
window.location = 'help.html' Table I.
};
</script> The final step is to build a connection between an event
Fig. 3. Example of links script on HTML event attribute. and the related form. A connection is represented by edge
attribute. The syntax or notation of edge is “->” which

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requires the identification of the source event and the target 5) Input Path: Path and filename for input file that to
screen. For example, X -> Y denotes the source node X is be execeted or converted such as “c:\\input\\graph.dot”.
connected with the destination node Y, or Event X links to 6) -o: is command line options for setting the output file.
screen Y. Fig. 5 shows example DOT source code for 7) Output Path: Path and filename for output file such
creating WND equivalent.
as “c:\\output\\graph.gif”
digraph G {
graph [fontsize=10 fontname="Verdana" compound=true]; Example of the generated output WND-like image is
node [shape=record fontsize=9 fontname="Verdana"];
subgraph cluster_0 { // Main Form shown in Fig. 6.
node [style=filled];
"<<hyperlink>>\n Forgot Password" "<<button>>\n Help"
"<<button>>\n Login";
label = "<<window>>\n login";
color=blue;
}
subgraph cluster_1 { // Forgot Password Form
node [style=filled];
"<<button>>\n Confirm"
label = "<<window>>\n Forgot Password";
}
subgraph cluster_2 { // Help Form
node [style=filled];
"<<button>>\n back" ;
label = "<<window>>\n Help";
}
subgraph cluster_3 { // Change Role Form
node [style=filled];
"<<button>>\n Driver" "<<button>>\n Passenger"; Fig. 6. Example of image of windows navigation diagram equivalent.
label = "<<window>>\n Chang Role";
}
// Edges that directly connect one cluster to another
"<<hyperlink>>\n Forgot Password" -> "<<button>>\n Confirm"
IV. CONCLUSION
[lhead=cluster_1][label = "Click"]; This paper presents a method to automate the generation
"<<button>>\n Help" -> "<<button>>\n back"
[lhead=cluster_2][label = "Click"]; of WND-like images from HTML prototypes. The required
"<<button>>\n Login" -> "<<button>>\n Driver" contents are extracted from the target HTML markup tags
[lhead=cluster_3][label = "Click"];
}
and then stored in the XML format file. Next, the graph
description file is created from the contents in XML format
Fig. 5. Example DOT source code for creating WND equivalent.
using DOT. The GraphViz Java API is then applied for
converting the dot file into the image file.

C. Execute DOT to Image File
The GraphViz Java API is applied for executing DOT
files to obtain the image files. The API applied in this work
refers to the program structure described in [10]. The
command line used for execution is shown below.
Dot.exe -Toutput format -Kinput format -Gdpi[=value]
Inputpath -o Outputpath
To execute the command line, the GraphViz Java API
calls “Runtime.exec(arguments[])” which requires passing in
the values of seven arguments as described below:
1) Dot Executable file Path: Executable file that
contains a program for compile dot file [3] such as
"c:/Program Files (x86)/Graphviz 2.38/bin/dot.exe"
2) Output format: Using command Line Options -T and
follow by output format such as "-Tgif" that -T is setting
output language to one of the supported formats [3]. The
supported formats are gif, dot, fig, pdf, ps, svg, png, plain.
3) Input format: Using command Line Options -K and
follow by input format such as “-Kdot”that -K is
specification which default layout algorithm to use [3]. The
supported formats is dot format only for this research.
4) Scale Image: Using command Line Options -G and
follow by “dpi=” and dpi value such as “-Gdpi=106”. -G
command line option is setting a graph attribute which is
scale image as DPI (Dots per Inch) for this research.
The proposed method does not support the new tags of
HTML5, and it may not support some java scripts of screen
linkages.
The generated output images of WND equivalent can be
documented as part of the Software Requirements
Specification, serving as the basis for further development.
The implemented system is expected to help reduce the cost
of documentation task and increase the integrity and
consistency of project deliverables.
REFERENCES
[1] M. Page-Jones and L. L. Constantine, "The window-navigation
diagram", in Fundamentals of Object-oriented Design in UML,
Boston: AWL, 2000, pp.198.
[2] E. Prompila, Y. Limpiyakorn, "Automating Documentation of HTML
Prototype", in ICITCS, Kuala Lumpur, 2015, pp. 1-5.
[3] Gephi. (2008-2016). Graphviz - Graph Visualization Software
[Online]. Available: http://www.graphviz.org/
[4] E. Koutsofios and S. North, “Drawing graphs with dot”, AT&T Bell
Laboratories, Murray Hill, NJ ,January 5, 2015.
[5] C.Gengnagel, E. Nagy and R. Stark, "Evolutionary Versus
Throwaway Approaches", in Rethink! Prototyping, vol. 1, 2016,
pp.131.
[6] A. Dennis, B. H. Wixom, and D. Tegarden, “Human-Computer
Interaction Layer Design,” in Systems Analysis and Design: An
Object Oriented Approach with UML, 5th ed., Hoboken: WILEY,
2015, pp. 375- 376.
[7] Gephi. (2008-2016). GraphViz DOT Format [Online]. Available:
http://www.gephi.org
[8] E.R. Gansner, E. Koutsofios, S. C. North and K. Vo. “A Technique
for Drawing Directed Graphs”. IEEE Trans. Sofware Eng., 19(3):214-
230, May 1993.

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[9] P. Shaw, " What's the difference between an interface add an API? ", [11] The company Refsnes Data. (1999-2016). HTML <html> Tag
in Java interface design FAQ, 1.0 Mobi format edition, 2010. [Online]. Available: http://www.w3schools.com
[10] L. Szathmary. (2003-2015). GraphViz Java API [Online]. Available: [12] J. Jürjens, "UML Extension Mechanisms", in Secure Systems
http://www.github.com Development with UML, 2005, pp. 32.

28

Voice Recognition using k Nearest Neighbor and
Double Distance Method
Ranny
Department of Computer Science
University of Multimedia Nusantara
Indonesia
ranny@umn.ac.id
Abstract— Voice recognition process is started with voice
feature extraction using Mel Frequency Cepstrum Coefficient
(MFCC). The purpose of the MFCC method is to get the signal
feature that correlate to the human voice. The converted signal
from analog to digital is needed in the MFCC method. The digital
signal has a time domain and it make the analysis harder. So, the
domain time is converted to time domain for make the analysis
more accurate. Furthermore, after get the feature, the
recognition step is using k Nearest Neighbor (kNN) method with
k number is one. Euclidean Distance is used to get the similarity
of the data training and data testing. The previous research
shows that kNN has a high accuracy if use normal data, but it has
lower accurate when using outlier data. Base on this problem,
this research develop a new method to handle the outlier data
using kNN and double distance measurement. The double
distance method is note each distance of each data to the center of
the kNN data. The calculation of the distance is used on
recognition step. The accuracy of the method is tested on
experiment. The experiment is using 11 subjects as data training
and data testing. Each voice of subject is recorded three times.
The result of the experiment with kNN method with one data
center is 84.85% and the experiment result using double distance
measurement is 96.97%. The result shows that the double
distance method increase the accuracy of voice recognition.
Keywords—voice recognition; Mel Frequency Cepstrum
Coefficients, k Nearest Neighbor; Euclidean Distance
I. INTRODUCTION
The voice recognition is one of the systems that developed
based on pattern recognition. The process of voice recognition
on computer science is develop using many kind of method, for
example is Dynamic Time Wrapping (DTW), Linear Vector
Quantization (LVQ), Artificial Neural Network (ANN) and
etc.[3][4][7]. Each method has advantages and disadvantages
based on the time process and accuracy rate of recognition.
This research discuss is about voice recognition using kNN and
double distance measurement. This method is compared using
data training and data testing to get the accuracy.
The frame work of the voice recognition consists of two
steps are training step and testing step. The training step is
voice extraction feature using Mel Frequency Cepstrum
Coefficients (MFCC). The MFCC method is convert the
domain of signal from time domain to frequency domain. The
time domain signal is more difficult to processed and analyzed
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due to the number of data and the complexity of the data. The
frequency domain signal is simple to be analyzed because the
pattern of the signal is get from the data. Besides, the MFCC
method also can extract the feature from the whole data voice
and it represents the voice of each subject. There are many kind
of MFCC based on the number of the filter that use to get the
human signal pattern [2]. The MFCC also has different type
based on the number of the coefficient result [2]. This research
using the 24 number of triangle filter and the number of the
coefficients is 13 for each frame on voice data.
The next step is testing process. The testing step based on
the previous research that using kNN method as the recognition
method. The determination number of k and method of
measuring distance is common topics research. The topic is
concern on the method but cannot handle for outlier data. The
purpose of the research is to develop a new method that can
increase the accuracy using outlier data. The develop method is
note the distance for each training data to the center of the
center of the data.
The expansion method with record the distance can keep
the correlation between data on each class, especially for
outlier data. The developing method in this research is called
double distance method. The purpose of testing step is to do the
recognition process using kNN method, with k=1 that
represented the center of class using the average of the data.
The kNN method is combined by the doubles distance method.
The using of simple algorithm is to get the accuracy of the
method
The accuracy of two methods is compared using the
training data and non-training data. The framework of the
research is showed on Figure 1. The diagram shows that the
system is started with recording the audio input. The next step
is training step, the training step do the extraction feature. The
method of the extraction feature is using MFCC. The feature of
audio input is saved as database and used on testing step. The
testing is divided into two parts, the first part using kNN
method, the second using double distance method.
The experiment of the research is using voice data that
recorded by 11 subjects, each subject pronounce a word of
‘computer’ in Bahasa. The voice data is recorded three times
by each subject. The condition of the recorded process is on
minimum noise. The data is divided into two groups, the first

group is used for training step and the second group is used for
testing step. The result of the experiment is used for analyze
the accuracy of the method.
Fig 1. Framework of Voice Recognition
II. METHODOLOGY
A. Mel Frequency Cepstrum Coefficients
Human voice is captured as analog signal, to process the
analog signal is needed to convert the digital signal with
various level of sampling rate, 14400Hz, 16000Hz, and
8000Hz [2][7]. The level of the sampling rate is influence the
shape of the digital signal. The digital signal is saved on
various formats as wav, mp3, mp4, etc. The difference of the
format is on the compressing format data. If the format has
higher compressing data it makes quality of the voice is lower.
The MFCC method is one of the extraction voice feature
aims to get the voice feature based on the discrete signal
[2][3][6]. The signal discrete based on the time was changed to
be the frequency domain is aim to make the analyses process
easier. The MFCC method is develop based on the
psychophysical study which states that human voice is on
linearly [2]. This state is used for do the filtering with scale of
mel. Mel scale is linear on frequency with the number is less
than 1000 Hz and logarithmic on more than 1000 Hz [2][4].
The next step is reconvert the log mel spectrum to time
spectrum using discrete cosine transform (DCT) and the result
is called as mel frequency cepstrum coefficients. The result of
the MFCC method is voice feature which became the input on
next process. Figure 2 show the step on MFCC process.
Fig 2 Step of MFCC
The purpose of frame blocking process is to do the
segmentation of voice signal [2][4]. The pronunciation of each
subject has difference speed, so the segmentation process
makes the long of voice data is more consistent. The result of
the segmentation process is an overlapping data. The
overlapping data is to make the data on each frame is to keep
the continuity data.
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Fig 3 Frame blocking
The Fig 3 showing the process of overlapping data on
frame blocking step. The size of each frame is M and the long
of overlapping data is N. The purpose of windowing step is to
keep the data on each frame in the same range of sampling
number. The common method of windowing is Hamming
window [2][6]. The next step on MFCC is Fast Fourier
Transform (FFT); this step is to change the time domain to the
frequency domain. The changing domain make the data easier
to be analyzed [2][4][6].
The sampling data is still on random range of frequency.
The mel frequency wrapping is to get the frequency of human
voice, so it make the data clear or no noise. The mel frequency
wrapping is also to get the feature of sampling data [2][4]. The
last step of MFCC is cepstrum. The domain of sampling data is
changed back to the time domain on cepstrum step. The result
of cesptrum is used to be the MFCC coefficients and declare as
voice feature extraction.
The size of feature extraction data is n x m, which n is a
number of desired data (that is inputted on cepstrum step),
while m is the size of data that got from frame blocking when
data changed from analog to digital. The result of MFCC
became the input on the training and recognition step.
B. k Nearest Neighbor
The kNN method is a method based on supervised learning.
The measurement of similarity distance between the data is the
based method of kNN on data classification.
Here is the algorithm of kNN [5][10]:
1-NN Algorithm:
1. Calculate the distance between testing data to each training
data.
2. Determine one data label that has the most minimum
distance.
3. Classified the testing data to the label data (based on the
number 2 step).
k-NN Algorithm:
1. Determine k value
2. Calculate the distance of each training data to the data label.
3. Determine the data label that has the most minimum distance
4. Classified the training data to the data label on 3.
 Back to Contents

5. Repeat the step 2 to 4 until the number of each class is k. Training data and set
Based on the both algorithm, the research use 1-NN
Algorithm due to this algorithm suitable for the research , , }
problem that need only one single input data to be recognized.
The Euclidean Distance [9] is used in the algorithm. , , }

III. IMPROVEMENT AND EXPERIMENT , , ,

A. Purposed Method is the average of the training data Y

The voice recognition system needs a large number of
training data to improve the accuracy level. Commonly, the 1- ⋯
NN Algorithm calculates the average of data training and use
the average value to represent the class or the label. The result
of recognition is got from the shortest distance between the Calculate the value of p for each training data, so we get:
testing and the average value of the class. This make the
process of recognition spend more time hence it need a method and
with high speed and good accuracy.
So, if we have testing data Z with voice features:
The voice recognition system also needs a method that can
handle the outlier data testing to increase the accuracy. The 1- , , , }
NN is not strong enough to handle it. Here is the simulation of
the outlier data. The simulation is using two data series as the
training data on database. As can be seen on the Fig 4, one of Then here is the formula to calculate the similarity distance:
the members of Series1 is an outlier and the outlier value is
close to the Series2 area. This phenomena makes the system ̅ ⋯ ̅
has a lower accuracy. The purpose of this research is to handle
the outlier data by makes the distance of the outlier data is
getting closer to the correct class. and
150
111.333 120 ⋯
100 110 109 115
3333
Series1
So, the result of the recognition is ,
50 Series2
38.75
11.6666 B. Experiment
12 14 9
0 6667
0 2 4 6 8 The purpose of the experiment is to get the accuracy of the
kNN and double distance method. The data of the experiment
Fig 4 Simulation of outlier data is got from 11 (eleven) voice recording subject. Each subject
voice is recorded three times by saying “computer”. The
The main idea of the method is modify the calculation of process of the recording is on quite condition and free from
Euclidean distance. The variable that notes the average of the noise. The speed of pronunciation is constant for each subject
distance value between each data on the class is added to the and consistent without intonation variation. The sampling rate
Euclidean distance. This innovation is explained on the
that used in the experiment is 8000Hz. The Audacity Program
simulation below:
is used to record the voice data and saved on .wav format. The
Fig 5 shows the frame rate that been used is 8000Hz with
Training data and set mono condition.
, , }

, , }

̅ , ̅ , ̅ , ̅
is the average of the training data X.
Fig 5 Experiment data file on .wav format
̅ ⋯ ̅
The experiment consist of two parts; the first part is
experiment using kNN method with k = 1. The testing voice
data is compared to the average of each subject’s voice

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feature. The minimum distance is known as the recognition No Subject Total of Minimum
result. positive result Euclidean
The double distance method is used on the second distance
experiment. The first experiment data is also used on the 8 H 3 21.8908
second experiment. The recognition result is got by the 9 I 3 11.1467
minimum distance.
10 J 3 11.7415
The total number of positive result of recognition is
divided by the total number of experiment and multiplied by 11 K 3 16.2913
the 100 is used as the accuracy percentage. The both of the
experiment are compared to get the conclusion of the research. After the text edit has been completed, the paper is ready
for the template. Duplicate the template file by using the Save
IV. RESULT AND DISCUSSION As command, and use the naming convention prescribed by
The experiment that using the kNN method with k = 1 is your conference for the name of your paper. In this newly
calculate the similarity between the testing data to the center of created file, highlight all of the contents and import your
each label data. The center data is the average of each subject’ prepared text file. You are now ready to style your paper; use
feature voice. The testing is compiled three times for each the scroll down window on the left of the MS Word Formatting
subject. So, we got 33 numbers of experiment result. The result toolbar.
of testing is showed on the Table 1. Based on testing result we
got 28 positive recognitions. The A, B, and K subject are the V. CONCLUSION AND FUTURE WORKS
successfully recognized by the system; otherwise the G subject This paper has described the improvement of kNN method
only once can be recognized. The C, D, E, F, G, I and J are to handle the outlier data by using the double distance method.
three times successfully recognized for each subject. Based on The testing experiment show that the double distance method is
the testing, the accuracy level is 84.85% that get from 28 divide improved the recognize accuracy. The accuracy of the double
to 33 and multiplied by 100%. distance is higher than the average kNN method, especially for
Table 1 Testing result with kNN average method outlier data. The difference type of data can be the future work.
Total of Minimum The data can be on image or other format. Besides, the
No Subject positive Euclidean comparison of the double distance method and other machine
result distance learning method such as Hidden Markov Model, Neural
Network, Linear Predictive Code, etc. can be the next research
1 A 2 15.9144
topic.
2 B 2 28.9086
3 C 3 20.5702 ACKNOWLEDGMENT
4 D 3 20.7815 This research is supported by the University of Multimedia
5 E 3 33.5138 Nusantara (www.umn.ac.id). The publication of this paper is
6 F 3 15.3762 supported by Ministry of Research, Technology and Higher
7 G 1 21.863 Education of Indonesia. The writer would like to say thank you
8 H 3 37.4621 to Pattern Recognition Laboratory of University of
9 I 3 22.7772 Tarumanagara that support the data collection process. Thanks
10 J 3 22.7772 to the colleague of Machine Learning 2011 class in Computer
11 K 2 31.685 Science, University of Indonesia that also support the idea and
experiment.
The testing of double distance method is on the second
experiment using the data on the first experiment. The result of REFERENCES
the second testing is showed on the Table 2. The total of
[1] Fomby, T. "K-Nearest Neighbors Algorithm: Prediction and
positive result is 32 voices. Only the B subject has been Classification." (2008).
recognized less than three times, it is only two times. So, the
[2] Ganchev, T.D. Speaker Recognition. Patras, 2005.
accuracy of the second experiment is 96.97%.
[3] Gilke, Mandar, Rohit Kothalikar and Varum Pius Rodrigues. "MFCC-
Table 2 Testing result with double distance method based Vocal Emotion Recognition Using ANN." Singapore: IACSIT
No Subject Total of Minimum Press, 2012.
positive result Euclidean [4] H. Hermansky and N. Morgan. “RASTA Processing of Speech.” IEEE
Trans. on Speech and Audio Processing. 2(1994): 578-589.
distance [5] Kaghyan, Sahak and Hakob Sarukhanyan. "Activity Recognition Using
1 A 3 8.265 K-Nearest Neighbor Algorithm On Smartphone With Tri-Axial
2 B 2 0 Accelerometer." 1 (2012).
[6] Md. Rashidul Hasan, Mustafa Jamil, Md. Golam Rabbani Md. Saifur
3 C 3 11.0303 Rahman, “Speaker identification using mel frequency cepstral
4 D 3 14.3835 coefficients” ICECE 2004, 28-30 December 2004, Dhaka, Bangladesh.
5 E 3 19.2088 [7] Muda, Lindasalwa, Mumtaj Begam and I Elamvazuthi. "Voice
6 F 3 9.0439 Recognition Algorithms using Mel Frequency Cepstral Coefficient
(MFCC) and Dynamic Time Warping (DTW) Techniques." JOURNAL
7 G 3 8.2326 OF COMPUTING (2010): 138.

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[8] Shrawankar, Urmila and Vilas Thakare. "A Hybrid Method For [9] Thakur, Akanksha Singh and Namrata Sahayam. "Speech Recognition
Automatic Speech Recognition Performance Improvement In Real Using Euclidean Distance." 3.3 (2013).
World Noisy Environment." Journal of Computer Science, (2013): 94- [10] Tenkomo,K. “K-Nearest Neighbor Tutorial.”
104. http://people.revoledu.com/kardi/tutorial/KNN/index.html. (2006).

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 Back to Contents

Intelligent Robot’s Behavior Based on Fuzzy Control

System

Eva Volna, Martin Kotyrba, Michal Jalůvka

Department of Informatics and Computers
University of Ostrava
Ostrava, Czech Republic
{eva.volna, martin.kotyrba}@osu.cz, Jaluvka1@seznam.cz

Abstract— The article presents a design of behavior logic for
an autonomous robot at 2D mapping of the area. The robot
decision is based on the fuzzy set theory and fuzzy logic to enable
to deduce conclusions based on imprecise description of the given
situation using linguistically formulated fuzzy IF-THEN rules.
These rules are integrated to the robot’s programmable device.
The robot construction was based on the robotic construction set
LEGO MINDSTORMS EV3. The robot functionality contains
EV3 components controlling, area mapping, saving of gained
data, and map creation of the given area. The article presents the
developed program which realizes these robot functionalities. In
the conclusion, mapping results are evaluated and compared with
the real situation.
Keywords— Linguistic Fuzzy Logic Controller (LFLC);
intelligent system; robot behavior
I. FUZZY LOGIC CONTROLLER
Linguistic Fuzzy Logic Controller (LFLC) 2000 is a
complex tool to design linguistic descriptions and fuzzy control
based on these descriptions. The methodology and theoretical
results upon which LFLC 2000 is based are described in [2].
The theory provides elaboration of that part of the semantics
which consists of the so-called evaluating and conditional
linguistic expressions. The former are expressions such as
‘small, roughly medium, very big’, etc. The latter are the well-
known fuzzy IF–THEN rules. These are usually gathered into
sets called linguistic descriptions which take the form [7].
ℜ ∶= IF is THEN is ℬ
⋮ (1)
ℜ ∶= IF is THEN is ℬ
where , ℬ are the mentioned evaluating linguistic
expressions. They characterize the property of some features of
objects, e.g. size, volume, force, strength, etc. Since we are not
usually interested in concrete objects and their features, we
replace them with real numbers which are then represented by
variables X and Y. Thus, values of X and Y represent, e.g.
values of temperature, pressure, price, etc. The linguistic
expression of the form ‘X is ’ is called the evaluating
linguistic predication. Fuzzy IF–THEN rules serve as a basis
for approximate reasoning, which is a method for finding a
conclusion on the basis of the imprecise initial information
concentrated in the form of linguistic description and some
new information. There are two fundamental approximate
reasoning methods:
• Linguistically based fuzzy logical deduction, i.e.
finding a formal conclusion when fuzzy IF–THEN
rules are treated as linguistically characterized logical
implications.
• Fuzzy approximation of a function, i.e. finding a
function which approximates some only imprecisely
known function, whose course is estimated using the
linguistic description.
The interpretation of the linguistic description significantly
depends on the above-selected method. The most specific
feature of LFLC is the possibility to realize a fuzzy logical
deduction when the rules are interpreted as linguistically
characterized logical implications. In the concept of LFLC, we
deal with the evaluating linguistic expressions (possibly with
signs) which have the general form [2].
〈linguistic modifier〉〈atomic term〉 (2)
where (atomic term) is one of the words ‘small, medium,
big’, or ‘zero’ (possibly also arbitrary symmetric fuzzy
number) and (linguistic modifier) is an intensifying adverb,
such as ‘very’, ‘roughly’, etc.
The meaning of each linguistic expression has two
constituents: the intension Int and extension Ext in
some model (this is often called the possible world). Intension
of the linguistic expression is a formal characterization of the
property denoted by it on the level of formal syntax. It can be
interpreted as a fuzzy set of special formulas [5]. However, it is
a rather abstract concept, which in concrete situation (context)
determines a fuzzy set of elements. Mathematically, this means
that a model w is given whose support is some set U (taken
usually as a closed interval of real numbers). Then the
extension of is a fuzzy set of elements Ext ⊂ U, which
is determined by its intension Int . Note that for each
concrete situation, a different model should be considered.
However, intension is still the same. Unlike fuzzy
approximation, where we deal with fuzzy sets in a model (i.e.
on the level of semantics), logical deduction must proceed on
syntax. Let us consider a linguistic description consisting of
two rules:

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34

ℜ ∶= IF is AND is THEN is The input variable distance of obstacle is expressed in mm,
(3)
ℜ ∶= IF is AND is THEN is ranges 0 - 1000 mm, and comprises a set of terms which
These rules are assigned intensions ℜ , ℜ ,
which can schematically be written as
ℜ = ∧ ⟹
(4)
ℜ = ∧ ⟹
Furthermore, let X, Y, Z be interpreted in a model which
will consist of three sets U = V = W = [0, 1]. Then small
values are values around 0.3 (and smaller) and big ones
around 0.7 (and bigger). The value 0.3 is represented in the
formal system by a certain intension Sm’x and similarly, the
value 0.25 is represented by Sm’y. Then the inference rule of
modus ponens is applied on Sm’x, Sm’y and the implication
(4). The result is the intension Bi’z. The latter is to be
interpreted as a fuzzy set ′ ⊂ . To obtain one concrete
value, the resulting fuzzy set B’ should further be defuzzified
[2]. The software was developed at the Institute for Research
and Applications of Fuzzy Modeling (IRAFM) at the
University of Ostrava. Its demo version LFLC 2000 (a limited
number of rules) is freely available on the website
http://irafm.osu.cz/en/c100_software.
II. 2D MAPPING OF SPACE USING LFLC
A. The Proposed Rule Base
The base of rules is designed so that the robot could decide
how it should get the coordinates of obstacles. Ideally, the
sensor scanning obstacles behaves like a radar which is set
forward relative to the driving of the robot and rotated by 180°
right or left (Fig. 1). Scanning of the sensor is based on the
assumption that its location is [0, 0] (marked with a purple dot).
The distance of obstacle and angle are important input
variables for our decision. It is obvious that the rule base would
be too extensive, therefore it is sufficient to propose a rule base
scanning the first quadrant, i.e. an angle between 0 ° - 90 °. The
next proposal of the rule base ensures in which quadrant the
obstacle is scanned. In fact, the resulting location (square
region) has the dimensions 15 × 15 mm.
Fig. 1. Full view of the scanned area
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represents the space between two adjacent circles. This
distance reaches, in fact, 75mm. In LFLC, the linguistic
description is defined using available linguistic expressions.
Concerning variable distance of obstacle, we used the
following: extremely small (ex sm), significantly small (si sm),
very small (ve sm), roughly small (ro sm), small (sm), more or
less medium (ml me), roughly medium (ro me), medium (me),
significantly medium (si me), big (bi), roughly big (ro bi), very
big (ve bi), significantly big (si bi), extremely big (ex bi). Each
of these terms has a trapezoidal membership function. These
terms are shown in the above-mentioned order, see Fig. 2. The
membership function ex sm is highlighted in red.
Fig. 2. Fuzzification of the input variable distance of obstacle
The input variable angle expresses the rotation of the
sensor, which is in the range 0°-90°. It is composed of a set of
terms which have triangular membership function, see Fig. 3.
Concerning variable angle, we used the following linguistic
expressions: very small (ve sm), small (sm), more or less
medium (ml me), medium (me), big (bi), very big (ve bi),
significantly big (si bi). In Fig. 3, the membership function ve
sm is highlighted in red.
Fig. 3. Fuzzification of the input variable angle
The output variable coordinate depends on the input
variables distance of obstacle and angle and represents the x-
coordinate, i.e. the order of the square in the horizontal
direction from [0, 0], see Fig. 4. The variable coordinate is
composed of a set of terms which have triangular membership
function. Thus, we used the following linguistic expressions:
very small (ve sm), small (sm), more or less medium (ml me),
medium (me), big (bi), very big (ve bi), significantly big (si
bi). The base of IF-THEN rules is composed according to eq.
(3) as follows: If the measured length is located between
neighboring circles (the input variable distance of obstacle) at
an appropriate angle (the input variable angle and also it is
located entirely within the square areas), the obstacle is
located precisely in this square. If the measured length
overlaps the two square areas, we decide that the closest
intersecting area from the sensor is the resultant square. The
proposed rule base includes 98 IF-THEN rules.
ℜ ∶= IF is AND is THEN is
⋯ (4)
ℜ ∶= IF is AND is THEN is
The base of IF-THEN rules representing the quadrant in
which the obstacle is located is composed as follows: This rule

base has the input variable angle and the output variable sign.
The input variable angle assumes values of the rotated angle
and the rotated robot. The values can be defined from -359° to
359°. Using these rules , we get the real obstacle position, i.e.
the quadrant where it is located (Fig. 1). To obtain the y
coordinate, we will gradually increase the angle by 90°. It is
important to respect that the angle value was from the defined
range of the interval for this variable.
Fig. 4. The output variable - coordinates
B. The Test Robot
The test robot is assembled from Lego Mindstorm EV3 [1].
The robot has a Programmable EV3 with implemented Linux
operating system LeJOS [6]. Furthermore, it uses two large
motors for movement, one medium motor to rotate the sensor,
and one ultrasonic sensor. It is designed so that the size of the
belt length, by means of which it moves, and the distance
between the two belts would be the same as a sensed square
region. Let us consider the size of the chassis with belts (13.5 ×
13.5 cm) identical with an area of size 15 × 15 cm. The
medium motor allows to rotate the sensor from -105 ° to 105 °.
Scanning the sensor is defined in the range from -90° to 90°.
The top view of the robot is shown in Fig. 5.
Fig. 5. The test robot
C. Implementation
The proposed approach, based on fuzzy logic, implements
the behavior of the robot for mapping the space. It is divided
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into five parts (layers) representing particular functionalities,
see Fig. 6 [4].
Fig. 6. The use-case diagram – robot behavior
LFLC program allows you to generate a CSV file [3],
where combinations of input variable values distance of
obstacle and angle are in each row and after performing
inference, the final output value is also inserted. Thanks to this
file, it is easy to find such an output value from the row in
which the input values approximately match with the values
entering the defined base of rules.
There is class IOVariableClass created in the layer
inferences, which is adapted for obtaining output values
according to the respective input values received from the
CSV file. The ordered n-tuple of input variables are stored
here, where n is the number of input linguistic variables
including the appropriate output value. We use two instances
of IOVariableClass, because we use two bases of rules. Each
instance stores data, where we receive output values according
to given input values, which is done in real time during the
runtime.
There is class EV3Controller created in the layer EV3
brick control, which controls particular parts of the robot
(motors, sensors). The objective of the class is to define
instances of motors (left and right large motor, medium motor)
and the ultrasonic sensor. Important parameters for controlling
these devices are the following: maximal measurable distance
of the sensor (it is set up to 1000 mm), angle of rotation of the
sensor (it is set to 15°), and traveled distance of motors -
movement occurs through the square (it is set to 15 cm).
Additional parameters for synchronization of the two large
motors are the following: diameter of the drive wheel (i.e. 30
mm) and distance between the centers two drive wheels (i.e.
104.5 mm). Such defined parameters ensure rotation as well as
displacement of the robot in the desired accuracy. GetDistance
is an important method in which scanning of five samples is
performed with subsequent averaging which is used to
monitor that the values do not exceed the maximal removable
distance. Thanks to this instance, we have secured movement
of the robot, its rotation and obtaining input values for further
processing.
There are two classes, Quadrant and Memory, created in
the layer memory management. Quadrant represents a square
area whose parameters are Boolean. This class is a basic cell
for storing the scanned space with indications of obstacles in
the area. Memory includes a two-dimensional array of class
Quadrant, which is by default set to 101 × 101. The reason for

introducing this class is a transfer of coordinates from the
coordinate system into the memory as a two-dimensional array
that represents a 2D map of the scanned area. The X-axis, Y-
axis respectively, is converted to an index of a row, column
respectively, in the field. Here we enter the final coordinates
representing the location of obstacles to the map.
There is class Main created in the layer scanning process,
which ensures the whole process of the robot. It decides which
direction the robot will move in a way that it calculates the
number of areas in each direction that are explored from
sensor coordinates. (However, it is also ensured that the
sensing distance is not exceeded). Furthermore, it sets the
angle of the robot and direction the robot should take as well
as how many areas are available. There is a creation of the
output image realized in the layer as well. The coordinates of
the robot and the sensor are initially set to [0;0] and [0;1].
These coordinates do not have the same values for the reason
that the sensor is about one square area farther than the body
of the robot, but mapping of space is oriented according to the
coordinates of the sensor. This does not apply to the
movement and rotation of the robot. It depends on the
coordination of robot’s body so that it is necessary to
continuously recalculate the coordination of the sensor
according to the coordination of the body (Fig. 5). Files for the
rule bases are also set in this layer. The process of scanning
the space is set to n iterations (in our experiments, n = 15).
Each iteration consists of sub-activities (Fig. 7):
• scanning of the space
• recording coordinates into the memory
• determining the direction of the travel
• updating the location and direction of the travel of the
robot
The creation of the output image is done after all iterations
and the program is terminated.
Fig. 7. The test robot
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There is class ImageBuilder created in the layer output
image which, after finishing the scanning process, creates an
output image of the map, which is drawn from the instance
Memory (i.e. two-dimensional array of dimension 101 × 101).
The instance of ImageBuilder defines colors of pixels for the
scanning area (it is divided into squares), for which the
following applies (Fig. 8-11):
• white color
o indication of explored squares is false
o indication of obstacles is false
• black color
o indication of explored squares is true
o indication obstacles is true
• gray color
o indication of explored squares is true
o indication obstacles is false
• blue color
o represents the initial location of the robot’s
body
• red color
o represents the initial placement of the sensor
After initialization, the instance creates an image of the
map with resolution 101 × 101 pixels, which is saved in a BMP
file. Here, one pixel represents a space of dimension 15 × 15
cm. Due to the miniature image consisting of elementary
pixels, we are able to store more than one output image on the
EV3 device.
III. EXPERIMENTAL STUDY
Consider a specified space where we place the test robot
that scans this space and create its map. The scanning area is
covered with a grid with dimensions of one cell 5 × 5 cm. This
grid facilitates to determine the location of obstacles and the
test robot and it also helps to facilitate the orientation of the
robot in space. During the experiment, the robot senses its
surroundings and records coordinates with the corresponding
color of pixels into its memory. After scanning, it creates the
output image, i.e. a map of the scanned area. The resulting
map was compared with a map of the real space - so it should
look like an ideal final map created by robot.
The location of the robot and its positioning on the starting
position is chosen in each experiment differently. They are
successively displayed in Figures 8 – 10 a) The scanned area.
(b) The map of the area. (c) The map created by the robot.
Black areas represent obstacles, blue areas represent the body
of the robot, and red area represents the sensor.
In Figure 11 is shown a continuous scanning of the area
during experiment 1 (15 iterations). The figure is in a bad
quality due to the miniature image consisting of 101 × 101
pixels, where one pixel represents a space of dimension 15 ×
15 cm.

Fig. 8. Experiment 1 (a) The scanned area. (b) The map of the area. (c) The
map created by the robot
Fig. 9. Experiment 2 (a) The scanned area. (b) The map of the area. (c) The
map created by the robot.
Fig. 10. Experiment 3 (a) The scanned area. (b) The map of the area. (c) The
map created by the robot.
IV. CONCLUSION
The main purpose of LFLC software system is the design,
testing and learning of linguistic descriptions. We used these
descriptions to control robot’s behavior. The resulting map of
all executed experiments almost coincides with a map of the
real space. We analyzed the test results and reached the
following conclusions explaining the inaccuracy of the
scanning, the elimination of which will be the focus of our
future work.
Fig. 11. Experiment 1 – continuous scanning. The Figure is of a bad quality due to the miniature image consisting of 101 × 101 px, where one pixel represents a
space of dimension 15 × 15 cm. There are shown 1st, 5th, 10th and 15th iteration.
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• The robot does not move to the precise distance and
does not rotate under the angle which we want to
achieve. This is due to the deviation of the track and
rewriting the parameters of the scanned square area.
• The sensor does not have an appropriate location. It
causes poor evaluation of the direction for the next
iteration of scanning, e.g. the body of the robot is built
next to the obstacle, but the adjacent sensor sees a clear
path. This results in rotating the robot, causing a
collision of the sensor with the obstacle. In any case,
there has been a continual rotation left and right.
• During scanning, locations of obstacles are rewritten. It
happens that the sensor does not notice the obstacle at
a certain angle that is in front of it. This causes that the
previously recorded obstacle is then evaluated as an
area without obstacles, thus the black point is
overwritten with a gray point in the resulting map (Fig.
11).
• Recording areas outside the scanned area is caused by
the fact that the obstacle is made of a material through
which ultrasound waves pass.
ACKNOWLEDGMENT
This work was supported by the SGS grant of University of
Ostrava.
REFERENCES
[1] Bagnall, B. Maximum LEGO EV3: Building Robots with Java Brains.
Variant Press. 2014.
[2] Dvořák, A., Habiballa, H., Novák, V., Pavliska, V. The concept of
LFLC 2000 - its specificity, realization and power of applications.
Computers in industry, 2003, 51(3), 269-280.
[3] Habiballa, H., Volna, E., Janosek, M., Kotyrba, M. Modelling and
reasoning with fuzzy logic redundant knowledge bases, In Proceedings
27th European Conference on Modelling and Simulation, ECMS 2013,
Norway, pp. 361-366 3.
[4] Jalůvka, M. Using fuzzy logic for autonomous robot control - 2D
mapping of space (in Czech). Ostrava 2015. Bachelor thesis. Faculty of
science, University of Ostrava.
[5] Novak, V. Perfilieva, I. and Mockor, J. Mathematical Principles of
Fuzzy Logic, Kluwer Academic Publisher, Boston, 1999.
[6] Solorzano, J., Bagnall, B., Stuber, J., and Andrews, P. leJOS, Java for
LEGO Mindstorms, 2012.
[7] Zadeh, L. A. Toward a theory of fuzzy information granulation and its
centrality in human reasoning and fuzzy logic. Fuzzy sets and systems,
1997, 90(2), 111-127.
 Back to Contents

Effects of Required Coefficient of Friction for

Female in Different Gait
Yu Ting Chen Kai Way Li Yi Yang Chen
Department of Industrial Management Department of Industrial Management Department of Physical Education
Chung Hua University Chung Hua University National Hsinchu University of Education
Hsin-Chu, Taiwan Hsin-Chu, Taiwan Hsin-Chu, Taiwan
p2f3020@gmail.com kai@chu.edu.tw hc7022709@gmail.com

Abstract—The aim of this study was investigate the effects of forces, at the same instant [8, 9]. Fig.1 shows the first and
required coefficient of friction (RCOF) in level walking and stair second peak values of RCOF in the typical gait cycle. The first
climbing (ascending and descending) in different gait ways. We peak values usually occur when the foot step on the ground, and
recruited eight healthy female adult subjects to join our the second peak values was occur before the foot push off.
experiment. The RCOF of the subjects walked on the level
Those values were the basis to be prevent slipping or falling
walkway and the stair with barefoot and wearing lab shoes in full
stride and half stride were analyzed using a Bertec® force plate. [10,11] .
Descriptive statistics, two-way ANOVA and correlation analyses
were adopted to analyze the data. The results showed that the
RCOF of stair climbing was higher than level walking condition
whether the subjects were barefoot or shod. The RCOFs of full
stride were higher than half stride.

Keywords—gait; required coefficient of friction; stairs

climbing; slips and falls.

I. INTRODUCTION
Slip and fall incidents in workplaces were very serious
issues of occupational safety and health [1]. The literature has
shown that falls resulted in a fracture easily especially for
women who were overweight or in menopause. The loss of
Fig. 1. Required coefficient of friction (RCOF) during walk on the flat floor,
labor productivity, medical payments and injury compensation the first peak and the second peak[8].
due to falls at work are heavy burden [2] for our society. When
walking, sliding of the foot on the floor due to lack of friction
between the floor and the shoe sole or foot occurs. This
contributes to the risk of falls [3]. However, there are many Based on the literature reviewed, the process of gait, the
kinds of floor in the workplace such as flat floor, lumpy floor or floor of different types of materials, friction, reaction force and
stairs climbing. The literature has shown that falls on the stairs individual capability are all factors affecting the risk of slips and
are a common accident in industrial injury for both young and falls. The reaction force and required coefficient of friction are
older workers, and the fall-related deaths occur on stairs are normally collected using a force plate. The purpose of this study
approximately 10% [4]. How to prevent the falls accidents was to investigate the variability of required coefficient of
occurs for stairs climbing is an important issue. For falls, the friction of the lower limbs in the different gait conditions.
frictional demands and the ground reaction force of the foot on
the floor for walking are considerable relevance [5]. II. METHOD
The ground reaction force (GRF) and required coefficient of
A. Participants
friction (RCOF) can be measured by the force plate. There were
many studies determined the required coefficient of friction In this experiment, eight female adults who have no lower
with the force plate. One of the studies was to investigate the limb disease history were recruited as human subjects.
effects of RCOF in three kinds of gait speed [6]. Another study Participants signed an informed consent prior to join the
used three force plates to measure the different RCOF between experiment. Their body weight, height, foot length, thigh and
calf length were measured and recorded. The basic data of the
the right foot and left foot [7]. The RCOF is obtained by
subjects are shown in Table I.
dividing the dimension of measured the vertical ground reaction

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TABLE I. SUBJECTS BASIC INFORMATION (N = 8) force plate collected the ground reaction force for each of the
experimental conditions (see Fig. 4 and Fig. 5)

Age Height Weight Thigh Calf Foot

(year) (cm) (kg) length length length
(cm) (cm) (cm)
Mean 21 162 55 41 39 20
Std. 2 6.8 12.4 4.5 3.6 1.6

B. Stride Length
In this study, there were two stride length conditions: full
stride and half stride. Before the experiment, subject walked on
a three-meter walkway. The gait was shot using a high speed
camera. The first and the last gait cycle were used to determine
the subject’s average stride length. The half stride condition was
that the subject was requested to walk on his averaged stride
length. The full stride was that the subject was requested to walk Fig. 3. Bertec® Force Plate.
on her double half stride.

C. Apparatus
Both a walkway and a staircase were used in the experiment.
The walkway was approximately 5 m long and 1.2 m wide. A
Bertec® force plate was installed in the walkway. The staircase
included four steps, each with a run of 32 cm, a rise of 18 cm
and was 90 cm width, and the force plate was placed on the
ground as the first step (see Figs. 2 and 3). The sampling rate
of the force plate was 1000 Hz.

Fig. 4. The staircase with marked the start lines and force plate placed.

Fig. 2. The staircase (left) and the walkway (right) in the experiment.

D. Experimental Procedure
There were three factors: walkway, gait, and footwear. The
walkway factor included walking on a level walkway, stair
ascending and stair descending. This comprised a 3-level
condition. The gait pattern included walking on full or half
stride. The footwear condition included barefoot and shod
Fig. 5. The walkway with marked the start lines and force plate placed.
conditions. There were a total of 12 experimental conditions.
Each subjects Performed two trials in each conditions. When the
subjects walked on the walkway, a start line based on the E. Data Analysis
subject’s stride length was marked on the floor in front of force The RCOF data collected were analyzed using descriptive
plate. The subject needed to walk twice both for full stride and statistics, two-way ANOVA and correlation analyses.
half stride in barefoot and footwear. Then, the subject needed to
walk up and down stairs in the full stride and half stride. The Microsoft® Excel 2010 and SAS® 8.0 were adopted for data
foot stepping on the force plate must be their preferred foot. The processing and statistical analyses.

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III. RESULTS
Fig. 6 shows the first peak value of RCOF (RCOF 1) under
barefoot condition. The descending RCOF1 of full stride and
half stride were approximately the same level. For level walking
and ascending, full stride has higher RCOF 1 than half stride.
Fig. 7 shows the first peak value of RCOF under shod condition.
The half stride has higher RCOF1 than full stride in descending.
For level walking, The RCOF1 for the half stride and full stride
were approximately the same. For ascending condition, the
RCOF 1 of the full stride was higher than those of the half stride
condition. For descending, however, the RCOF1 of half stride
condition was higher than those of the full stride.

Fig. 8. Second peak value of RCOF in different gait under barefoot condition.

Fig. 6. First peak value of RCOF in different gait under barefoot condition.

Fig. 9. Second peak value of RCOF in different gait under shod condition.

The two-way ANOVA results of the RCOF1 from the eight

subjects and 12 walking conditions were shown in Table II. The
different mode (walking on the straight walkway, stair
ascending and descending) and step (full stride and half stride)
were both statistically significant (p<0.0001). Fig. 10 shows the
interaction of different mode and step are reached statistically
significant level (p<0.0001).

TABLE II. RCOF 1 OF TWO-WAY ANOVA

Fig. 7. First peak value of RCOF in different gait under shod condition. Source DF SS MS F Value Pr > F

Fig. 8 shows the second peak force of RCOF (RCOF2) with Mode 2 0.04 0.02 35.88 0.0001
barefoot. The full stride of RCOF 2 was higher than those of Step 1 0.01 0.01 18.38 0.0001
half stride condition in descending and was slightly higher than
those in ascending condition. However, the RCOF2 of the full Mode*Step 2 0.01 0.01 11.46 0.0001
stride condition was slightly lower than those in half stride
Shod 1 0.00 0.00 2.09 0.15
condition in level walking. Fig. 9 shows the second peak value
of RCOF under shod condition. The RCOF 2 values of the full Mode*Footwear 2 0.00 0.00 0.13 0.88
stride conditions were higher than those in the half stride
condition both in ascending and descending. However the Step*Shod 1 0.00 0.00 0.3 0.59
RCOF values of the full stride and half stride of RCOF 2 were Mode*Step*Shod 2 0.00 0.00 2.21 0.11
approximately same.

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IV. DISCUSSION AND CONCLUSION

Slips and falls cause injuries and fatalities in the workplace.
The understanding of the RCOF for both level walking and stair
climbing is important to develop fall prevention strategy.
However, when we are walking, both the ground reaction force
and stride length affect the RCOF value. In this study, the
RCOF value of stair climbing condition was higher than that of
flat floor condition. The RCOF value of full stride condition was
significantly higher than that of half stride condition. This
implies that level walking and a half stride gait pattern will
result in less risk of slipping and falling under our experimental
scenario.

MREFERENCES
Fig. 10. The interaction of different mode and step on RCOF1.
[1] Courtney TK, Sorock G, Manning DP, Collins JW,.Holbein-Jenny MA.
The ANOVA results of the RCOF2 were shown in Table III. (2001) .Occupational slip, trip, and fall-related injuries-can the
contribution of slipperiness be isolated? Ergonomics ,44,1118-37.
The different mode (walking on the straight walkway, stair
[2] Cherry N, Parker G, McNamee R, Wall S,Chen Y, Robinson J.
ascending and descending) and step (full stride and half stride) (2005).Falls and fractures in women at work. Occupational
had both reached statistically significant level (p<0.0001). Fig. Medicine ,55,292-7.
11 shows the interaction of different mode and step are reached [3] Perkins PJ. Measurement of slip between the shoe and ground during
statistically significant level (p< 0.0001). walking. Walkway surfaces: measurement of slip resistance. In: Anderson
C, Senne J, (editors). ASTMSTP 649. American Society for Testing and
Materials, Philadelphia, PA; 1978, p.71-87.
TABLE III. RCOF2 OF TWO-WAY ANOVA
[4] Startzell, J., Owens, D., Mulfinger, L., & Cavanagh, P. (2000). Stair
negotiation in older people: A review. Journal of the American Geriatrics
Source DF SS MS F Value Pr > F Society, 48(5),567-580.
Mode 2 1.04 0.52 59.56 0.0001 [5] Yoon HY, Lockhart TE. Nonfatal occupational injuries associated with
slips and falls in the United States. International Journal of Industrial
Step 1 0.35 0.35 39.72 0.0001 Ergonomics 2006; 36:83-92..
[6] Chang WR, Chang CC, Matz S, Lesch MF (2008). A methodology to
Mode*Step 2 0.43 0.22 24.75 0.0001 quantify the stochastic distribution of friction coefficient required for
level walking. Applied Ergonomics, 39, 766-771
Shod 1 0.01 0.01 1.12 0.29
[7] Finoa P, Lockhatdt TE. (2014). Required coefficient of friction during
Mode*Footwear 2 0.01 0.01 0.71 0.49 turning at self-selected slow, normal, and fast walking speeds. Journal of
Biomechanics, 47, 1395-1400
Step*Shod 1 0.01 0.01 1.13 0.29 [8] Perkins PJ, Wilson MP. Slip resistance testing of shoes—
newdevelopments. Ergonomics 1983;26:73–82
Mode*Step*Shod 2 0.02 0.01 1.1 0.33 [9] Change WR, Matz S, Chang CC. (2012). A comparison of required
coefficient of friction for both feet in level walking. Safety Science, 50,
240-243
[10] Buczek FL, Cavanagh PR, Kulakowski BT, Pradhan P. Slip resistance
needs of the mobility disabled during level and grade walking. In: Gray
BE, editor. Slips, Stumbles and Falls: Pedestrian Footwear and Surfaces,
ASTM STP 1103. Philadelphia: American Society for Testing and
Materials, 1990:39–54.
[11] Christina KA, Cavanagh PR.(2002). Ground reaction forces and frictional
demands during stair descent: effects of age and illumination. Gait and
Posture, 15, 153-158.

Fig. 11. The interaction of different mode and step on RCOF2.

42

An Application of Statistical Modeling for
Classification of Human Motor Skill Level
Wenqi Ma
Strategic Research Group
Yanfeng Automotive Interiors
Holland, MI, US
wenqi.ma@yfai.com
Abstract—Automation technology has expanded dramatically
in the recent years; however human manual work is still required
in many domains. To facilitate appropriate design of manual skill
training and to reduce individual differences in manual
performance, there is a need to assess individual skill level in
advance of training exercises. Unfortunately, current motor skill
assessment approaches do not provide direct indicators of human
operator skill levels (e.g., high, medium, or low). Therefore, there
is also a need to identify appropriate methods by which to classify
novice operators based on their initial motor performance. In the
present study, a statistical model was developed to classify
participant motor ability level using a set of features based on
kinematic parameters generated through a computerized motor
test. The final model achieved a classification accuracy of ~98%
using a 75/25 cross validation approach. Results verified the
reliability of the motor-control test and validated the quantitative
motor skill classification algorithm. Based on this work, it is
expected that the algorithm and the test could be applied for
design of novel manual skill training approaches to compensate
for performance gaps among novice operators.
Keywords—motor skill assessment; motor skill classification;
psychomotor testing; manual performance; statistical modeling
I. INTRODUCTION
Due to advances in automation and information technology,
reliance on the human workforce has significantly decreased.
However, human work is still required in many domains, such
as industrial assembly operations. In order to promote
uniformity of operator performance from one production unit
to the next, proper training methods should be designed.
Related to this, prior research [1] has revealed differences
among operators in motor performance characteristics and
baseline skill levels. Huegel [1] used a simple virtual reality
(VR)-based target-hitting task to classify participants into three
types of learners (i.e., high, low, or transitional) based on their
task performance. Consequently, rather than treating a group of
novice operators as comparable in skill, it would be more
effective and efficient to identify individual skill levels before
assigning them to training conditions or specific types of work
tasks.
Numerous clinical-based techniques have been developed
and applied to assess human motor skill level [2, 3, 4]. All
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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David B. Kaber
Edwards P. Fitts Department of Industrial and Systems
Engineering
North Carolina State University
Raleigh, NC, US
dbkaber@ncsu.edu
these methods require subjective decisions to be made by
experienced clinicians and measurements are usually presented
in form of completion time, scores, or ratings. In order to
generate objective measures of motor skill, in an efficient
manner, several other studies have made use of computer-
based virtual realities (VRs) and different types of control input
devices (e.g., haptic controls). For example, in [5] a VR-based
simulation of the Nine-Hole-Peg-Test (NHPT) [6] was
developed. Experimental results demonstrated the system to
provide all the advantages of the classical NHPT (i.e., easy to
administer, standardized methodology, and validated results) as
well as the benefits of use of a virtual environment (e.g., a
controlled test scenario, adjustable parameters, quantitative and
objective measurements). Another study [7] collected
movement and motor control measures using a SensAble
Technologies, Phantom haptic interface with a virtual
environment. The responses were related with measures
collected from a set of clinical assessment tests, including the
NHPT, Purdue Pegboard Test (PPT) [8], and others. Results
demonstrated a high reliability and validity of measurements
obtained in the virtual tasks for assessing arm and hand motor
function.
Although validated as accurate and reliable, the quantitative
and objective measures collected from the virtual tasks
developed in the above studies do not directly indicate a
specific skill level (e.g., high, medium, or low) for an
individual operator. In order to generate such information from
raw motor response data, a classification model must be
developed. Several prior studies [9, 10] have demonstrated the
use of simple linear regression models for this purpose.
However, in many cases, the data collected on human
performance did not satisfy the strict parametric assumptions of
linear regression analysis [11]. For example, human motor
response time has been identified as a key measure for
evaluating motor skill; however, computer science research has
demonstrated such response time to follow a lognormal
distribution [12]. Consequently, such data poses violations of
the assumptions of linear regression and many results and
conclusions of prior skill classification studies are actually
invalid. To achieve more accurate results, Support Vector
Machines (SVMs) have been applied for solving many
classification problems with human performance data sets [14,
15]. SVMs are a common machine learning algorithm with

advantages of flexible model form, robust computation and
unique solution delivery [13].
On this basis, as part of an earlier study, we developed a
simple VR-based block manipulation task [16]. Experimental
results generated with this task indicated the potential for use
as a method to evaluate participant motor ability level.
However, the reliability of the task was not validated through
cross-validation with other standardized assessment methods.
In the present study, human motor performance was measured
in another simple VR-based task and a standardized
psychomotor test was used to identify the specific skill level of
participants. Both linear regression and a SVM algorithm were
applied in order to develop an accurate classification model on
the basis of performance in the simple task. The overarching
objective of the study was to verify the capability of the basic
VR simulation for assessing human motor skill level and to
identify the most accurate algorithm for a skill classification
model.
II. METHOD
A. Participants
A group of 21 right-handed participants (11 male, 10
female, average age = 30.2, SD = 9.2) were recruited for this
experiment. All participants were required to have 20/20 or
corrected vision. (If vision was corrected, participants were
required to wear the corresponding prosthetic to reach 20/20
acuity during the experiments.) Any participant with current or
chronic wrist disorders was excluded. All requirements were
confirmed through an online questionnaire before the
beginning of the experiment.
B. Apparatus
The VR simulation was presented to participants using a
PC integrated with a stereoscopic display and an NVIDIA® 3D
VisionTM Kit, including 3D goggles and an emitter (see Fig.
1). Stereoscopic rendering of the task simulation was facilitated
by an OpenGL quad-buffered stereo, high-performance video
card (NVIDIA® QuadroTM). A SensAble Technologies
Phantom Omni® Haptic Device was used as the haptic control
interface. The Omni included a boom-mounted stylus that
supported 6 degrees-of-freedom (DOFs) of movement and 3
DOFs of force-feedback. All data on participant performance
with the Omni was recorded automatically by the simulation
software.
Fig. 1. Virtual reality work station
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C. Tasks and procedures
All participants were asked to complete 40 trials of a
computer-based dice manipulation task and three trials of the
PPT. The dice manipulation task, developed in [17], involved
manipulation of a virtual die using the haptic-VR workstation
described above. The training virtual environment included a
single virtual die placed near the left-side of a virtual work
surface and a square near the right-side of the surface (see Fig.
2). A 2D image of a single side of a die (stimulus) was
presented at the top of the screen in the display area. The goal
of the task was to move the die as quickly and accurately as
possible to the target square with the top surface of the die
matching the stimulus.
The three trials of the standardized PPT were presented to
participants after the 40 trials of the dice manipulation tasks. In
each trial, participants were required to insert as many small
pins as possible into a column of holes on task board with a 30-
second time limit. The PPT was only used to test right hand
motor skill in order to be consistent with the dice manipulation
task.
D. Data processing
During the 40 trials of the dice manipulation task,
kinematic response data were automatically captured with the
haptic device and recorded in the form of time series with a
frequency of 10 Hz. The raw data included the elapsed task
time, and stylus displacement and orientation in the Cartesian
coordinate frame. Based on the raw kinematic data, a set of 29
task performance parameters were computed for each trial,
including time spent in different phases (reaction, target
approach, manipulation), speed and acceleration in moving the
virtual die along x-, y- and z-axes during target approach,
speed and acceleration in rotating the die in yaw, roll and pitch
during the manipulation phase, and deviation distance and
angle at the target position. These particular task parameters
were selected as bases for motor skill assessment based on the
results of prior research [17, 18, 19, 20] investigating
performance in virtual object manipulation tasks.
After computing the 29 parameters for each of the 40 trials
of the task, a 40 × 29 matrix was obtained. For each parameter,
four statistical features – mean, standard deviation (SD),
minimum, and maximum – were generated to describe
participant performance across trials. In addition, the 40 data
points corresponding to one parameter were fitted using a
learning model in order to compute the task learning
percentage (k-value), according to the following formula [21]:
Y n = Y1 × n b (1)
Fig. 2. Dice manipulation task

where Yn is task performance in the nth trial. Taking the natural
log of both sides, the formula becomes:
ln(Yn) = ln(Y1) + b × ln(n) (2)
After solving for the coefficient b, the learning parameter, by
using linear regression, the learning percentage (k) can be
calculated as:
k = 2b (3)
Therefore, five features corresponded to each of the 29
parameters, yielding a set of 145 (i.e., 29 × 5) features for each
participant. These features were considered as potential
predictors of motor skill in the classification models.
Based on group performance in the PPT (mean score =
14.52, SD = 1.42), each individual was assigned to one of three
motor performance levels, including high, low and medium.
High performers were identified as those achieving an average
score at least one SD higher than the overall average PPT score
(higher than 15.94). Low performers were identified as those
persons achieving an average score at least one standard
deviation lower than the overall average PPT scores (lower
than 13.10). Medium performers were identified as those
persons generating an average score in between the high and
low performer levels (between 13.11 and 15.93). (The specific
PPT score criteria are identified here in case the reader seeks to
make comparison with the extensive normative data on the
PPT task for various study populations.) Following our
method, the 21 participants were labeled with three levels,
including seven participants in each level. The level
information for each individual served as an a priori label for
developing the classification models.
E. Model construction
A linear regression model was initially developed using the
above described statistical and learning features as predictors
of motor skill level and average PPT scores as responses. All
145 features were available to serve as predictors; therefore,
the potential model factor set was much larger than the number
of standardized test responses (i.e., 21 average PPT scores).
Thus, in order to guarantee the validity of the linear model, a
forward selection algorithm was applied. For selection of
features to fit the model to the data set, the adjusted R-squared
value was used as a criterion.
As mentioned above, SVM has a flexible model form
allowing for use of different kernel functions. Considering the
influence of data characteristics on classification results, it
would be difficult to predict the best-performing kernel
function. Therefore, three different kernel functions, including
the radial basis function (RBF) [22], linear function, and a
polynomial function, were tested to identify the model with the
highest classification accuracy. Again, a forward selection
algorithm was applied to determine the most influential feature
set for inclusion in the SVM model.
In this study, the motor performance level determined for
each participant was used as an a priori label and it contained
ordering information (i.e., high > medium > low). However,
the original form of the SVM algorithm does not utilize such
information for developing classification models. Although this
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problem can still be solved using the SVM methodology,
discarding the ordering information would potentially degrade
the predictive performance of the resulting classifier [23]. To
make use of such information with the original SVM
algorithm, we used a simple method, as described in [23], and
developed ordinal classification models. In this method, the
original dataset (with attributes of high, medium, and low for
each participant) was converted into two new datasets:
New dataset 1: Class attribute of “low” was converted to 0
and all others to 1.
New dataset 2: Class attribute of “high” was converted to 1
and all others to 0.
Subsequently, a binary SVM algorithm was applied to the
two new datasets separately, generating classification models
with probabilities of Pr(Target > low) (i.e., the likelihood new
participant performance would be higher than a low performer)
and Pr(Target > medium) (i.e., the likelihood new participant
performance would be higher than a medium performer). The
probabilities that a new participant belonged to each of the
three groups were then computed as:
Pr(Target is low) = 1 – Pr(Target > low)
Pr(Target is medium) = Pr(Target > low) – Pr(Target >
medium)
Pr(Target is high) = Pr(Target > medium)
The class with the highest estimated probability was assigned
to the new participant.
To evaluate the classification accuracy, a 75/25 cross
validation was applied for the linear regression model and
SVM models. The entire experimental data set was randomly
partitioned such that 75% (16 response data points) was used to
train the model while the remaining 25% (5 data points) was
used to test the model accuracy. To reduce bias, the process
was repeated 500 times such that all data points were used as
both training and model verification observations. The average
rate of error was computed as an evaluation criterion for each
replication in order to compare model accuracy.
F. Hypotheses
There were three hypotheses for this study. The first
hypothesis (H1) was that the computer-based VR task would
prove to be a reliable tool for evaluating human motor skill. It
was expected that features generated from the VR task
performance data would be highly related to results obtained
on the standardized PPT tasks. The second hypothesis (H2)
was that the SVM algorithm would generate higher motor skill
classification accuracy than the linear regression model. This
hypothesis was formulated based on a review of results of prior
studies [13, 14, 15, 22]. The third hypothesis (H3) was based
on the results presented in [23] and posited that ordinal SVM
models would yield higher prediction accuracies than original
SVM models.
III. RESULTS
Through application of the forward selection algorithm and
use of the adjusted R-squared criterion, a total of 15 features
were selected as predictors for inclusion in the linear
classification model. For each of the 15 intermediate linear
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models, error rate was computed using the 75/25 cross-
validation method. The changing trend of the adjusted R-
squared value and rate of error, along with the increase in
number of predictors during the selection process, is presented
in Fig. 3. For the first 11 predictors, the model accuracy
improved as more predictors were added to the model.
However, beginning with the model with 12 predictors, the rate
of error started to rebound with the addition of more predictors.
In this case, the greater number of predictors actually degraded
the model classification accuracy. Therefore, the final linear
model was chosen as the one with the first 11 predictors, which
had a prediction error rate of 8.88% and adjusted R-squared
value of 0.9966.
Both original and ordinal SVM models using the RBF,
linear, and polynomial kernel functions were developed. The
rates of error for these non-linear models are summarized in
Table 1, along with the selected number of features for each
model. By comparing prediction error rates generated by the
various models, it was found that ordinal SVM with the linear
kernel function produced the lowest error rate, i.e., the highest
prediction accuracy. Two-sample t-tests were conducted to
compare the classification accuracy between original and
ordinal SVM models. Results are summarized in Table 2.
disease diagnosis [26]. However, for the specific data collected
in this study, a polynomial kernel function did not perform as
good as it might with other data sets.
To further improve the predictive model accuracy, ordinal
SVM models were developed to exploit ordinal information
contained in the participant skill level labels. The ordinal SVM
model produced a decreased error rate as compared to the
original SVM model with the same kernel function, which
supported the third hypothesis (H3). However, this
improvement in accuracy was not significantly greater (as
summarized in Table 2), which was likely influenced by the
relatively small number of classification groups. These results
were consistent with the conclusion of [23], which indicated
that the degree of improvement in ordinal model performance
over the original SVM model would increase with the number
of classes. Therefore, while model prediction accuracy was not
substantially improved in this study, as a result of applying
ordinal SVM, it is possible that an ordinal model would show
superior performance to non-ordinal SVM in addressing
similar motor skill classification problems with more levels of
classification.

IV. DISCUSSION
The first hypothesis (H1), stating that human performance
in the haptic-VR dice manipulation task would prove to be a
reliable and efficient indicator of motor skill, as compared with
standardized psychomotor tasks, was supported. The dice
manipulation task performance records were used to generate a
set of statistical features. Linear regression analysis revealed
subsets of these features to have utility for predicting average
PPT scores. The resulting linear regression model produced an
adjusted R-squared value of 0.9966, indicating a good fit of
performance in the dice manipulation task to the standardized
Fig. 3. Adjusted R2 values and error rates for linear models with various
psychomotor test (PPT) results. Therefore, the computer-based predictor counts
dice manipulation task proved to be a valid and reliable method
for assessing motor skill. Most importantly, the dice TABLE I. SUMMARY OF CLASSIFICATION ACCURACY FOR VARIOUS SVM
ALGORITHMS AND KERNAL FUNCTIONS
manipulation task can be administered with efficiency as
compared to other physical psychomotor tests (e.g., PPT, Algorithm Kernel function Rate of error (%)
Number of
NHPT, etc.) and use of a haptic control interface with the VR features
simulation allows for spatial and temporal data on participant RBF 4.56 10
motions to be captured automatically, which supports rich Original SVM Linear 2.44 15
kinematic parameter calculations. Polynomial 26.24 4

The second hypothesis (H2) stated that a non-linear RBF 3.61 9

classification model would achieve higher classification Ordinal SVM Linear 1.96 14
accuracy than a linear model. Results also supported this Polynomial 23.44 5
hypothesis. The ordinal SVM with linear kernel function
produced the lowest error rate and was significantly more
TABLE II. COMPARISON OF CLASSIFICATION MODEL ACCURACY
accurate than the linear regression model (p < 0.001) in skill
classification. The original SVM algorithms applying the RBF Two-sample t-test
Statistical
and linear kernel functions both achieved reductions in the power (1 – β)
prediction error rate that was obtained with the linear RBF: Original vs. Ordinal
SVM t = 1.13, p = 0.129 0.1930
regression modeling approach. However, the SVM model Linear: Original vs. Ordinal
using a polynomial kernel function degraded the classification SVM t = 1.30, p = 0.096 0.2321
accuracy with a significantly high error rate of 26.24%. Polynomial: Original vs.
Previous research demonstrated the capability of polynomial Ordinal SVM t = 1.19, p = 0.117 0.2074
kernel functions in studies concerning natural language Ordinal SVM with linear
kernel vs. Linear model t = 11.24, p < 0.001 1.0
processing [24], facial expression pattern recognition [25], and

46

V. CONCLUSIONS
The objective of the present research was to verify the
capability of a custom VR-based simulation for evaluating
motor performance and to develop a classification model to
accurately predict individual motor skill level. Performance
measures collected on a simple dice-manipulation task were
related to results obtained in a standardized psychomotor test
using linear regression. Moreover, various SVM models were
developed and compared in terms of motor skill classification
accuracy. The simple motor task was verified as a reliable and
efficient means for assessing motor performance. The most
accurate classification algorithm incorporated a non-linear
model exploiting ordinal information contained in training and
verification data sets. This model was validated and proved
superior in classification accuracy as compared to the linear
model.
Although the classification model validated in this study
produced high motor skill classification accuracy, the model
was only verified using results generated from the same group
of participants. In addition, the model validation was limited to
use of a computational cross-validation method. To overcome
these limitations in future work, it would be worthwhile to
apply the model with a new group of participants and verify the
classified results with performance in other motor tests.
Moreover, the simple VR-based dice manipulation task could
also be evaluated for predicting motor skill in other types of
visual-spatial and fine-motor control tasks. It is possible that
performance in the fundamental motions as part of dice
orientation and discrete movement might also be predictive of
skill in graphomotor (drawing) production or tasks involving
constructional praxis (3D object manipulation). Such validation
could support use of the dice manipulation task for predicting
performance in some high level skilled physical work.
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Analysis of Vehicle Crash Injury-Severity in a
Superhighway: A Markovian Approach
John Carlo F. Marquez1, Darwin Joseph B. Ronquillo2, Noime B. Fernandez3, Venusmar C. Quevedo4
Industrial Engineering Department
Adamson University
Manila, Philippines 1000
jcmarquez000@gmail.com1, darwinjosephronquillo@gmail.com2, fernandez.noime@yahoo.com3, vcquevedo@gmail.com4
Abstract— According to the World Health Organization
(WHO), road traffic accidents is one of the top causes of death
worldwide that claims roughly 1.3 million lives annually. In the
Philippines, the Philippine National Police-Highway Patrol
Group (PNP-HPG) data showed that there were 15,572 road
accidents nationwide for the whole of 2014, with 1,252 persons
killed and 9,347 others injured. A comprehensive study was
conducted which aims to determine which road traffic accident
factors are significant with the severity of road traffic accidents,
determine which factors are significant per level of severity, and
determine the human factors associated in the occurrence of road
traffic accidents that are significant with the levels of severity.
Markov Chain Switching Approach enables to determine the
probability of occurrence of road traffic accidents and the
significant factors that affects the severity of a road traffic
accident since it takes into consideration the heterogeneity of the
variables and the different time-varying and time-dependent
constraints which are not considered by other regression
techniques used in road traffic accidents severity literature.
Keywords—Markov Chain Switching Model; Road Traffic
Accidents; Injury Severity; Commonwealth Avenue
I. INTRODUCTION
Road traffic is one of the most common causes of death
worldwide. In which during 2013, an estimation of about 1.24
million people died from road traffic accidents which is one
on the reason that it claimed the ninth spot on the list of the
World’s Health Organization’s (WHO) Top Ten Causes of
Death. Road traffic accidents are the only cause of death that
is not associated with any human diseases and in 2012, road
traffic accidents claimed nearly 3,500 lives each day.
In the Philippines, a report coming from the Metropolitan
Manila Development Authority (MMDA). that in 2012 there
were a total of 82, 757 road accidents that were recorded in
Metro Manila alone, an average of 227 accidents per day. Of
which 412 are fatal and the victims were mostly pedestrians.
According to the status report published by the Department of
Health (DOH), road accidents rank fourth in the top causes of
death in the country during 2013. The only cause of death that
is not of health-related issue. Ranking fourth in the top causes
of death is very alarming since there are a lot of campaigns,
ordinances, and other efforts made by the Metropolitan Manila
Development Authority (MMDA), Land transportation Office
(LTO), and Local Government Units (LGUs) in order to
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
48
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increase the awareness of the different road accidents and
preventive measures in order to minimize the occurrence of
this accident, but instead of decreasing the frequency of
accidents it is still gradually increasing every year.
The reason why this study was conducted is for the
proponents to know if what are the significant factors that
affect the severity of crash injury accidents in Commonwealth
Avenue, the significant factors per level of severity of road
traffic accidents in Commonwealth Avenue, and the critical
driver error/s related to the level of severity of crash and other
factors affecting the casualty of having road accidents.
II. REVIEW OF RELATED LITERATURE AND STUDIES
A. Road Traffic Accidents
With the sudden increase of frequency of road traffic
accidents all over the world it is now considered as a growing
problem that threatens the lives of many people all over the
globe. According to the World Health Organization, road
traffic accidents cause the death of more than 1.2 million and
the injury of between 20 and 50 million people annually
worldwide with more than 90% of deaths in low and middle
income countries. (Ismail & Abdelmageed, 2010). Traffic
accidents are dependent events. In general, accidents are
defined by a series of variables that helps to analyze traffic
accident and to identify significant factors that affect injury
severity.(de Oña, López, Mujalli, & Calvo, 2013).
Despite of continuous improvements in vehicle technology
and road engineering, road accidents are still one of the major
accidental causes of death and injury. (WHO, 2004). Traffic
accidents is an important issues in the world and both the
location and frequency of traffic accidents are subject to
changes as time passed, and these accidents can be measured
as discrete random, which represents a low occurrence
probability. (Soler-Flores, 2013).
The concern with road accidents has become global and an
important social issue. According to a study made in Britain,
there were 7000 deaths and injuries recorded each year which
usually occurs among cyclists and pedestrians. (Bartrip, 2010).
The National Highway Traffic Safety Administration of the
United States of America report, states that the fatality rate per
100 million vehicle miles traveled has reached the lowest
point of 1.10 in 2010 while the injury rate per 100 million

VMT is the same as those of 2009. (“Research Note 2010
Motor Vehicle Crashes : Overview,” 2012). In China, an
average of one person died in every four reported traffic
crashes. Also, Urban Roads in China had alarmingly higher
rates of crashes in China. They are situated in urban areas
where traffic volume is high and road traffic conditions are
particularly complicated. (Loo, Cheung, & Yao, 2011)
B. Accident Factors
Analysis of crash data that are collected through police
reports and integrated with road inventory data reveals
important relationships that can help focus on high-risk
situations and coming up with safety countermeasures. (Dong,
Clarke, Yan, Khattak, & Huang, 2014). The factors
contributing to road site accidents are age, alcohol intake,
gender, vehicle speed, whether seatbelts were used, whether
the driver was ejected from the vehicle, whether the crash was
a head-on collision, whether an airbag was deployed, and
whether one of .the vehicles was following too close behind
another vehicle. (Zhang, 2010) The study in USA shows that
drivers’ adaptation to weather conditions influence the
changes in roadway-surface conditions and results injury
severity that influenced by many factors, including age and
gender.(Morgan & Mannering, 2011).
Human factor remains the leading cause of road traffic
accidents, such as over speeding, carelessness and fatigue.
(Khan, Al Asiri, & Iqbal, 2010). A study has concluded that
there is a significant potential human behavioral contribution
to pedestrian injury at the study sites. (Cinnamon, Schuurman,
& Hameed, 2011) Road transport is definitely a huge benefit
to our society, but it also has problem such as delays because
of traffic congestion and transport accidents. (Quddus, 2008)
C. Markov Chain Switching Approach
Markov-switching models of severity have the advantage
to obtain unobserved heterogeneity in accident data that could
relate to different weather conditions and other different
factors that may not be known to the analyst. (Malyshkina &
Mannering, 2009) Some other study shows how incidents are
very notorious for their delays to road users. Heterogeneity
models such as Markov switching random parameters models
give a promising method to decompose unobserved
heterogeneity for an ordered or unordered discrete result data
analysis. (Xiong, Tobias, & Mannering, 2014)
There are other studies of determining road accidents
frequency. A Bayesian network used to estimate a frequency
which is applicable in any situation and any set of data that is
available. (Soler-flores, 2013). Other model use in
determining crash frequency is multivariate model. It is a
useful method for analysis since it account accounts the
correlation among specific crash types. (Dong, Richards,
Clarke, Zhou, & Ma, 2014).
A study is conducted in Arkansas to evaluate the
intersection accidents using traffic safety analysis methods. In
2004, Arkansas was the top three in the states with highest
traffic fatalities. A statistical approach was made using
Poisson, Negative Binomial and Logistics Regression Model.
The study considered significant contributors namely road
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width, number of lanes, pavement condition, horizontal and
vertical curvature of the road design. The result of the study
gave a highlight to the potential issues of the driver behaviors
and roadway characteristics that affect road traffic safety.
(Nam & Song, 2008)
III. METHODOLOGY
The data used was provided by the Metropolitan Manila
Development Authority (MMDA) which was composed of a
five-year historical data of the entire road traffic accidents
occurred along the road stretch of the Commonwealth Avenue
located at Quezon City. The factors that were considered was
only limited to the available statistics from the database of
MMDA. These factors were then transmuted into numerical
values as shown in table I.
TABLE I. VARIABLE DESCRIPTION OF FACTORS
Variable Description
Injury Severity 1. Fatal; 2. Non-Fatal; 3. No Injury
1. Night 0:01-06:00; 2. Morning 06:01-
Time 12:00; 3. Afternoon 12:01-18:00; 4. Evening
18:01-0:00
1. January; 2. February; 3. March; 4. April;
5. May; 6. June; 7. July; 8. August;
Month
9.September; 10. October; 11. November;
12.December
1. U-turn slot; 2. T-Junction; 3. Not at
Type of Junction Junction; 4. Rotunda; 5. Cross Roads; 6.
Y-Junction; 7. Others
1. Traffic Light; 2. School Zone; 3. None; 4.
Type of Junction Control
Others
Darkness Indication 1. Dark; 2. Light
Weather 1. Dry; 2. Fair; 3. Wet
1. Angle Impact; 2. Hit and Run; 3. Hit
Type of Collision
Object; 4. Hit Pedestrian; 5. No Collision; 6.
Rear-end; 7. Self-Accident; 8. Slide Swipe;
9. Head-on; 10. Others
Accident Factor
1. Human Error; 2. Machine Error; 3. No
Error; 4. Other
Age 1: Below Legal Age; 2. Legal Age
From the statistics collected from the MMDA,
samples were chosen through a purposive or judgmental
sampling, a non-probability sampling technique wherein the
researchers selected units to be sampled based on their
knowledge and professional judgment (Castillo, 2009). The
collected data had undergone an evaluation and validation
process wherein each data entry was evaluated if it complies
with the different requirements that was set by the proponents
such as the completeness of the data entry.
IV. DATA AND RESULTS
The Markov Switching Approach Analysis was used to
determine the different factors that are significant with the
severity of road traffic accidents along Commonwealth
Avenue. Multinomial Logistics Regression was used to
analyze the factors that are found significant with the severity.
From the factors that are found significant with the levels of
severity, the factors are now analyzed for its relevance from
the different level of severity. The different critical driver
error/s in the occurrence of road traffic accidents along
Commonwealth Avenue is also analyzed to determine if which
 Back to Contents

among the factors are relative per level of the severity of the B. Multinomial Logistic Regression Analysis for testing the
accident. Significant factors per level of severity
There is a total of 11,894 road traffic accidents that are Multinomial Logistic Regression enables to test for the
recorded from 2009 up to March of 2013. With the validation significance of the significant factors gathered from the
process of data, it was trimmed down to 2,029 road traffic Markov Chain Switching approach with respect to the three
accidents record. The data are grouped into two categories, severity level (Fatal, Non-Fatal, and No Injury) that are
data will complete details and with incomplete details. The observed in every road traffic accident. The data result in the
historical data with complete details are used in determining table below shows the results. The regression analysis was
the significant factors and the historical data incomplete computed at 95% level of significance.
details are compiled into one spreadsheet wherein they can be Illustrated on table III is the results gathered from the IBM
used for future reference. SPSS Statistics software with the Multinomial Logistic
Regression using both the B coefficient and odds ratio(Exp
A. Markov Chain Switching Approach (B)). For a factor to be considered significant with the level of
Markov Chain Switching model allows to tests for the severity, the Exp (B) should be greater than 1 (>1) and the B
significance of a variable to the severity level with respect to coefficient should be greater than zero (>0). The factors that
different time-varying constraints. Through this method, the were found significant with the road traffic accidents resulting
significant variables of severity of road traffic accidents are to fatal injuries are: Accident factor; Month; Gender; Type of
extracted. The probability of occurrence and expected duration Junction; and Type of Junction Control.
for the significant predictor variables are also identified and
interpreted. The test for significance is performed at a 95% TABLE III. MULTINOMIAL LOGISTIC REGRESSION ANALYSIS TEST FOR
level of significance. Shown in Table I is the 10 variables SIGNIFICANCE FOR ACCIDENTS WITH FATAL INJURIES (CI=95%)
available for testing. These variables are demographic and
95% C.I. for Exp(B)
accident-related in nature. The results that were gathered from Severity B Exp(B) Lower Upper
computing Markov Switching Approach from the different Bound Bound
factors, the factors that have a significant effect with the Intercept 17.849
severity (Fatal, Non-Fatal, No Injury) of road accidents in
Accident_Factor .547 1.727 .364 8.199
Commonwealth Avenue were able to distinguish with its
- 4.361E-
behavior with respect to their values based both from regimes Age_Indicator 9.053E-07 1.879E-06
13.915 07
1 and regime 2.
Collision_Type -.423 .655 .356 1.207
The variable will be considered a significant factor, its p- Gender 13.836 1020575.781 0.000 2943024.102
value should be less than 0.05 (< 0.05) for both regimes 1 and
Junction_Control .267 1.307 .070 24.404
2. The factors that have probabilities that the level of severity
is dependent are: Accident Factor, Age Indicator, Collision Junction_Type .454 1.574 .741 3.343
Type, Month, Gender, Junction Control, Junction Type, and Month .092 1.096 .639 1.881
Weather. While factors: Darkness Indication, and Time have Weather -2.371 .093 .004 2.304
probabilities that the level of severity is independent.
Illustrated on table IV is the results gathered from the IBM
TABLE II. MARKOV CHAIN SWITCHING APPROACH TEST FOR
SPSS Statistics software using Multinomial Logistic
SIGNIFICANCE (CI=95%) Regression which used both the B coefficient and odds ratio,
Exp(B), as a basis to determine the factors that were found
Expected
Probability of
Duration Standard Error
significant to non-fatal injuries. The factors that were found
Occurrence significant are: Accident factor; Month; Gender; Type of
Variable (Months)
Regime Regime Regime Regime Regime Regime Junction; and Type of Junction control.
1 2 1 2 1 2
Accident
66.6016% 99.9014% 2.99 1013.98 0.002706 0.000063
Factor TABLE IV. MULTINOMIAL LOGISTIC REGRESSION ANALYSIS TEST FOR
Age SIGNIFICANCE FOR ACCIDENTS WITH NON-FATAL INJURIES (CI=95%)
95.1478% 99.9013% 20.61 1013.59 0.003937 0.000116
Indicator
Collision
76.2777% 99.9271% 4.22 1372.02 0.003871 0.002274 95% C.I. for Exp(B)
Type Severity B Exp(B) Lower Upper
Darkness
0.0063% 99.8518% 1.00 674.58 0.00539 0.1678 Bound Bound
Indicator
Intercept 19.575
Month 71.3337% 99.6336% 3.49 272.93 0.001855 0.0262
Accident_Factor .425 1.529 .331 7.069
Gender 97.7917% 79.3084% 45.28 4.83 0.001286 0.026085
- 1.106E-
Junction Age_Indicator 1.106E-06 1.106E-06
98.0600% 99.9013% 51.55 1013.08 0.00286 0.000979 13.715 06
Control
Junction Collision_Type -.271 .763 .418 1.392
62.9393% 50.7012% 2.70 2.03 0.019 0.0259
Type
Junction_Control .455 1.576 .089 27.898
Time 0.0625% 99.8520% 1.00 675.73 0.005423 0.4171
Junction_Type .517 1.677 .798 3.523
Weather 99.9014% 0.0002% 1013.87 1.00 0.0286 0.007286 Month .132 1.141 .669 1.946

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95% C.I. for Exp(B) Injury_Severity B df Exp(B)

Severity B Exp(B) Lower Upper Buildings And Etc.
Bound Bound Avoided Hitting Pedestrian -.121 1 .886
Weather -2.111 .121 .005 2.818 Lost Control 15.615 1 6047664.724
Moving Backward/ Backing
Gender 14.215 1491077.823 0.000 1735352.149 Inattentively
-.155 1 .856
Sudden Stop 14.557 1 2099189.408
Table V shows the results gathered after applying the Slept -.380 1 .684
Multinomial Logistic Regression which used both the B Bad Turn -.210 1 .810
coefficient and odds ratio, Exp(B), as a basis to determine if Driver Error .388 1 1.473
what factors were found significant to non-fatal injuries. It Miscalculated Movement -.380 1 .684
was found out that the Collision Type; Age Indicator; and Lost Balance 14.557 1 2099189.408
Weather are significant to road traffic accidents resulting with Inattentive/ Too Fast 15.158 1 3829174.649
no injuries. Bad Overtaking -.199 1 .820
Disobey Traffic Lights/ Signs -0.456 1 0.84
TABLE V. MULTINOMIAL LOGISTIC REGRESSION ANALYSIS TEST FOR
SIGNIFICANCE FOR ACCIDENTS WITH NO INJURIES (CI=95%) Table VII illustrates the results gathered after the
application of the Multinomial Logistic Regression from the
95% C.I. for Exp(B) IBM SPSS Statistics software, and using both the B
Severity B Exp(B)
Lower Bound Upper Bound
coefficient and odds ratio, Exp(B), as a basis to determine the
Intercept -20.848 critical driver errors that were found significant with road
Accident_Factor -.547 .579 .122 2.748 traffic accidents with non-fatal injuries, which are: Alcohol
Age_Indicator 16.915 22175601.732 22175601.732 22175601.732 Suspected; Avoided Hitting Other Vehicle, Buildings And
Etc.; Lost Control; Sudden Stop; Driver Error; Lost Balance;
Collision_Type .423 1.526 .828 2.810
and Inattentive/ Too Fast.
Gender -16.835 4.883E-08 0.000 3.124
Junction_Control -.267 .765 .041 14.296
TABLE VII. MULTINOMIAL LOGISTIC REGRESSION ANALYSIS TEST FOR
Junction_Type -.454 .635 .299 1.349 SIGNIFICANCE FOR HUMAN FACTORS RELATIVE TO NON-FATAL INJURIES
(CI=95%)
Month -.092 .912 .532 1.564
Injury_Severity B df Exp(B)
Weather 2.371 10.709 .434 264.295 Intercept -1.792 1
Alcohol Suspected 1.281 1 3.600
C. Multinomial Logistic Regression Analysis for testing the
Avoided Hitting Other Vehicle, 1.099 1 3.000
Significant factors per Critical Driver Errors Buildings And Etc.
Avoided Hitting Pedestrian -.511 1 .600
Human error has been one of the major contributor of the
Lost Control 1.827 1 6.214
occurrence of an accident, the proponent was able to draw 14
Moving Backward/ Backing -.693 1 .500
driver errors which were based on the most usual errors that Inattentively
were committed that can be observed from the entire road Sudden Stop 17.078 1 26110021.061
stretch and based from the data that came from the Slept -13.478 1 1.402E-06
Metropolitan Manila Development Authority (MMDA). These Bad Turn -1.041 1 .353
human errors that are usually committed are: Alcohol Driver Error 1.106 1 3.021
Suspected; Avoided Hitting Other Vehicle, Buildings and Etc.; Miscalculated Movement -13.478 1 1.402E-06
Avoided Hitting Pedestrian; Lost Control; Moving Backward/ Lost Balance 17.078 1 26110021.061
Backing Inattentively; Sudden Stop; Slept; Bad Turn; Driver Inattentive/ Too Fast 1.910 1 6.754
Error; Miscalculated Movement; Lost Balance; Inattentive/ Bad Overtaking -.960 1 .383
Too Fast; Bad Overtaking; and Disobey Traffic Lights/ Signs. Disobey Traffic Lights/ Signs -.856 1 .215

The result from the performed statistical test is illustrated
in table VI in which the B coefficient and odds ratio, Exp(B),
was used as a basis to determine if which factors are found
significant between the critical driver errors and road traffic
accidents with fatal injuries which are: Alcohol Suspected;
Avoided Hitting Other Vehicle, Buildings And Etc.; Lost
Control; Sudden Stop; Driver Error; Lost Balance; and
Inattentive/ Too Fast.
Shown in table VIII is the results after the application of
the Multinomial Logistic Regression that was used to
determine if what critical driver error/s are found significant
with road traffic accidents with no injuries. In which the
factors: Avoided Hitting Pedestrian; Moving Backward/
Backing Inattentively; Driver Slept; Bad Turn; Miscalculated
Movement; Bad Overtaking; and Disobey Traffic Lights/
Signs were found significant.

TABLE VI. MULTINOMIAL LOGISTIC REGRESSION ANALYSIS TEST FOR

SIGNIFICANCE FOR HUMAN FACTORS RELATIVE TO FATAL INJURIES (CI=95%) TABLE VIII. MULTINOMIAL LOGISTIC REGRESSION ANALYSIS TEST FOR
SIGNIFICANCE FOR HUMAN FACTORS RELATIVE TO NO INJURIES (CI=95%)
Injury_Severity B df Exp(B)
Injury_Severity B df Exp(B)
Intercept -18.254 1 Intercept 18.254 1
Alcohol Suspected 15.952 1 8466730.613 Alcohol Suspected -15.952 1 1.181E-07
Avoided Hitting Other Vehicle, .385 1 1.469

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Injury_Severity B df Exp(B) Injury). This statistical test was used since all of the variables
Avoided Hitting Other Vehicle, -.385 1 .681
Buildings And Etc.
are in categorical form, in which it is the most applicable test
Avoided Hitting Pedestrian .121 1 1.129 to use in order to determine the relationship of the variables.
Lost Control -15.615 1 1.654E-07
There were seven (7) human errors that were significant
Moving Backward/ Backing .155 1 1.168
Inattentively with the probability of road traffic accidents with fatal and
Sudden Stop -14.557 1 4.764E-07 non-fatal injuries which are: Alcohol Suspected; Avoided
Slept .380 1 1.462 Hitting Other Vehicle, Buildings and Etc.; Lost Control;
Bad Turn .210 1 1.234 Sudden Stop; Driver Error; Lost Balance; and Inattentive/ Too
Driver Error -.388 1 .679 Fast. There were also seven (7) factors that were found
Miscalculated Movement .380 1 1.462 significant with the probability of road traffic accidents with
Lost Balance -14.557 1 4.764E-07 no injury which are: Avoided Hitting Pedestrian; Moving
Innatentive/ Too Fast -15.158 1 2.612E-07 Backward/ Backing Inattentively; Miscalculated Movement;
Bad Overtaking .199 1 1.220 Slept; Bad Turn; Bad Overtaking; and Disobey Traffic Lights/
Disobey Traffic Lights/ Signs 0.158 1 1.112 Signs.

V. CONCLUSION
The proponents were able to draw 10 independent
variables (Time, Month, Type of Junction, Type of Junction
Control, Darkness Indication, Weather, Type of Collision,
Accident Factor, Age, and Gender) from the different road
traffic accidents that occurred along Commonwealth Avenue.
The dependent variable is the Level of Severity which is then
classified into three (3) levels, Fatal Injury, Non-Fatal Injury
and No Injury.
The results obtained through Markov Chain showed
an interesting result. Markov Chain Switching Approach was
able to determine 8 out of 10 significant variables that has an
effect with the severity of road traffic accidents. The eight
significant variables: Accident Factor, Age Indicator,
Collision Type, Month, Gender, Junction Control, Junction
Type, and Weather; all obtained a p-value of less than 0.05
and testing for a 5% level of significance. This implies that
implies that the null hypothesis that the factor is not
significant to severity of crash injury accident is rejected.
Therefore these variables are considered significant with
respect to the severity of road traffic accidents.
The eight (8) factors that were found significant or
affects the severity of road traffic accidents are analyzed
further in order to know if which among these factors are
relevant with the three levels of severity (Fatal, Non-Fatal and
No Injury). Multinomial Logistic Regression was the most
appropriate statistical test to be used to analyze the relevance
with respect to the level of severity since the said factors are
of categorical type.
Among the eight (8) factors that are found significant,
there are five (5) factors that were found relative to the
occurrence of road traffic accidents which could resulted into
fatal and non-fatal injuries, which are: Accident Factor,
Gender, Month, Type of Junction, and the Type of Junction
Control. While the occurrence road traffic accidents that could
result into No injury, the factors that were found significant
are: Age, Type of Collision, and Weather.
Multinomial Logistic Regression was used in order to
identify if which among the human errors are significant with
the three levels of severity of injury (Fatal, Non-Fatal and No
References
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[5] Libres, G. T. E. D. C., Galvez, M. A. L. I., Cordero, C. J. N., &
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[11] Soler-flores, F. (2013). Expert system for road accidents frequency
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[13] WHO. (2004). GLOBAL STATUS REPORT. Global Status Report on
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vehicle crash injury-severity data: A Markov switching approach with
road-segment heterogeneity. Transportation Research Part B:
Methodological, 67, 109–128. doi:10.1016/j.trb.2014.04.007

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Assessing Participation in Decision-Making among
Employees in the Manufacturing Industry
Shiau Wei Chan*, Abdul Razak Omar, Ramlan, R.
Siti Sarah Omar, Khan Horng Lim
Faculty of Technology Management and Business
Universiti Tun Hussein Onn Malaysia
Batu Pahat, Johor, Malaysia
swchan@uthm.edu.my
Abstract— Participation in decision-making (PDM) results in
a positive attitude for workers toward their job and an increase
in productivity and efficiency. Thus, the main objective of this
paper is to determine the implementation of PDM among
employees of the manufacturing industry. The second objective is
to determine their PDM in terms of age, gender, qualification and
length of employment. In this study, a total of 160 manufacturing
employees were chosen randomly from manufacturing industries
in Batu Pahat, Malaysia. Questionnaires were administered to
the employees. Then, the data generated was analyzed
statistically using descriptive and inferential analysis. The results
revealed that the implementation of PDM remains in the infancy
stage. Besides that, employee PDM in the manufacturing industry
does not significantly differ in terms of gender, age,
qualifications, or length of employment. This present research is
vital to the manufacturing industry in order to gain insight on
PDM among employees in the manufacturing field.
Keywords— Participation in decision-making (PDM),
manufacturing industry
I. INTRODUCTION
A lack of employee PDM has been known as motivation to
leave a profession and a source of suffering from job stress.
This is because a lack of involvement in decision-making
would lead to a lack of self-worth, feeling of being a mere
employee, decreasing self-esteem and job satisfaction, despair,
sadness, anger, discouragement and lack of motivation (1). For
instance, the strike actions of staff of Bank of Ghana, Ghana
Railways Company, and Barclays Bank among others were due
to the Boards of the various organizations did not allow
employees to become involved in decision-making on issues
related to their welfare and sustainability.
PDM is very important for the manufacturing industry as it
can reduce turnover and increase effectiveness. It can result in
good effects on the workers and increase their self-esteem.
They not only will work more efficiently, but also will have a
more positive attitude toward the organization (2). The
subordinates can provide some suggestions and ideas to their
company to achieve its goal by participating in decision-
making. As a result, development and necessary changes occur
fruitfully in (a) setting goals; (b) making decisions; (c) solving
problems; and (d) designing and implementing organizational
changes (3). Employees will be committed to the desired goals
of the organization if they have the chance to engage in
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Izzuddin Zaman
Faculty of Mechanical and Manufacturing Engineering
Universiti Tun Hussein Onn Malaysia
Batu Pahat, Johor, Malaysia
izzuddin@uthm.edu.my
decision-making by exercising their self-directed and self-
control activities.
To date, many studies on employees’ PDM had been
implemented in other countries. However, there is a little study
conducted in Malaysia (4). In previous studies, a majority of
PDM studies focused on the service sector rather than the
manufacturing sector. Therefore, this study aims to determine
the implementation of PDM among employees, particularly in
the manufacturing industry, as well as to examine PDM in
terms of age, gender, qualifications, and length of employment.
II. LITERATURE REVIEW
Participation in decision-making is (PDM) is a process
which enables employees to have some positive impact on
their work. Shlomo (5) mentioned that employee involvement
in decision-making can help employers and employees’ co-
determination rights. According to Sager & Gastil (6), the
PDM style consists all of the decisions which are receive from
a superior to their subordinates. In his study, the PDM hss
needed the high involvement of employees at the
administrative level and policies. Also, Steinheider, Bayerl, &
Wuestewald (7) pointed out five types of PDM, which are
level of participation, decision domain, structure, and rationale
for the process and target of participation. In addition, Cotton,
Vollrath, Froggatt, Lengnick-Hall & Jennings (8) mentioned
there are five basic of attributes related to PDM, which are (a)
indirect participative deciding versus direct participative
deciding; (b) informal participative deciding versus formal; (c)
standard of employee influence in decision process; (d) short-
term versus long-term participative deciding; and (e) content
of decisions. Researchers categorized these attributes to six
dimensions of participation which are participation of
consultation, duration of participation, participation in
working decisions, representative participation, and informal
participation, employee ownership.
PDM has various advantages for an organization. Rice (9)
stated that implementation of PDM is very useful to generate
an idea in a short time. Besides, PDM cultivates employees to
maximize high productivity to achieve the company goal. In
addition, employees who have involved in the decisions of the
organizational, they will be satisfied with their hard work (10).
PDM has become a guideline to help managers figure out the
employees who are willing to give ideas and allow them to
voice their ideas. The company can take action with the ideas

given from employees like enhancing the maintenance system,
safety equipment restore and always listen to employee’s
views. It may reduce turnover and avoid unnecessary costs
like accidents and buy new equipment. PDM may generate
opportunities to diverse workforces in organizational plan and
it also encourages diverse workforce in the company. It helps
to achieve company goal in terms of maximization of profit,
good motivation, as well as an awaking effect towards a
diverse workforce on their job because employees will be
happy to involve in the company plans and it may reduce the
absences rate and mistake in the company (11).
There have been some studies done on PDM in Malaysia,
but only a few researchers focus on employee PDM in the
manufacturing industry. The researchers mostly focused on
targeted population of citizens, teachers, youth, nurses and so
forth. Ting (4) performed a research on the level and effects
PDM on employee groups for manufacturing and servicing
sector in Malaysia. The targeted respondents were those
employees who worked in either manufacturing or servicing
sectors. This researcher also concluded that both
organizational commitment and job satisfaction are strongly
related with the employee’s PDM and that it is one of the
elements for companies to reduce the employee turnover rate.
On the other hand, earlier studies also explored the PDM
in terms of four elements, i.e. gender, age, qualification, and
length of employment. Gill, Stockard, Johnson & Williams
(12) pointed out that women are more affected by the
environment; they look for more information and dedicate
more time to the decision process. On the contrary, Wood (13)
mentioned that men are more dominant, assertive, objective,
and realistic. Furthermore, María & María (14) conducted a
study of factors that affect decision-making in gender and age
differences. The findings of the study are the different age
range of people will influence the different outcome in terms
of experience, emotional and knowledge. Johnson (15)
reported that although young and elderly participants complete
their tasks in similar amounts of time, young participants
consider more options in that time frame and therefore make
higher quality decisions. However, the results of a study by
Dodi (16) indicated that there is not a significant influence of
age in terms the PDM.
Knowledge is one of the factors that may be of great value
for an organization in order to increase the employees’ PDM
with their work (17). Yang, Kao & Huang (18) found no
significant differences between the level of education and
PDM. Higher education background does not mean that
employees have more opportunities to involve in decision
making based on findings by Bruiyan (19) because the
findings showed that most respondents who were involved in
decision-making only qualified at a middle level of education.
Based on the Dodi (16), respondent age and education were
negatively correlated with all the aspect of PDM in his study.
On the other hand, Sophia, Kostas, & Cosmas (20) indicated
the opportunities to involve in decision-making is affected by
employee's length of employment. Bruiyan (19) found that
employees have higher participate in decision-making among
those with more service experience while less working
experience resulted in the lowest involvement in decision-
making.
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III. METHODOLOGY
A. Research Design
Quantitative research involves the numerical measurement
and analysis methods to address the research objective (21).
This study applies a quantitative research approach to
determine the implementation of PDM in the manufacturing
industry as well as to identify their PDM in terms of age,
gender, qualification, and length of employment. The
researcher use survey as sources of data. A pre-test had been
conducted to confirm the validity and reliability of the
questionnaire. After that, the questionnaires were distributed to
160 employees from manufacturing industry. The obtained data
was analysed quantitatively using SPSS software version 22.0.
Types of the analysis employed were descriptive and
inferential statistics, including independent T-test and analysis
of variance (ANOVA).
B. Participants
The targeted population was employees who are working in
the manufacturing industry at Batu Pahat, Malaysia. The
population size in the manufacturing industry is about 300
employees. Based on Krejcie & Morgan’s (22) table, the
sample size for 300 employees is 169. They were selected
randomly from the manufacturing industry. Among the
participants, there are 113 male respondents (70%) and 47
female respondents (30%). In addition, the age range in 0
below 19 years old, 1 within 25-35 years old, 2 within 36-45
years old, 3within 46-55 years, and 4 at age 56 and above.
There are 79 respondents (49.4 %) within 25 to 35 years old,
51 respondents (31.9%) within 36 to 45 years old, 15
respondents within 46 to 55 years of age, and 15 respondents
older than 55 years. Moreover, there is only 1 respondent with
a Doctorate degree (0.6%), 13 with a Master’s Degree (8.1%),
47 (29.4%) with a Bachelor’s Degree, 63 respondents have
Diploma (39.4%) certificates while 36 respondents completed
high school (22.5%). Furthermore, there are 66 respondents
(41.3%) working for 0-4 years, 60 respondents working for 5-
10 years (37.5%), 21 respondents working for 10-20 years
(13.1%), and 13 respondents (8.1%) working over 20 years in
the organization.
C. Instrumentation
In this study, the researcher utilized a questionnaire to
collect the data. There were two sections of the questionnaire.
Section A was demographic information for the participants
while the section B was the PDM questionnaire with 30 items.
The questionnaire was modified from the studies of Rumpf
(23) and Faduma (24). It is based on five Likert scales, which
are ranging from 1= strongly disagree and 5=strongly agree.
The researcher conducted a pre-test by distributing 15 sets of
this questionnaire to the employees who are working in the
manufacturing industry at Batu Pahat, Malaysia. The Cronbach
Alpha Value for this instrument was 0.867, which was deemed
as good based on George and Mallery (25).
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IV. FINDINGS

A. Descriptive Statistics Analysis Table III revealed the output of the ANOVA analysis and
whether it has a significant difference between our employee’s
Descriptive statistics show the mean and standard education qualifications over the PDM. Based on the ANOVA
deviation of each item under the PDM. Item Q30, which is table, the significance level is 0.29 (p = .297), which is greater
“This organization encourages differences of opinion” had the than 0.05. Therefore, there is no significant difference in the
lowest mean of 2.79 with standard deviation 1.041. Moreover, highest education’s qualification to the PDM.
item Q24 which is “I can tell what impact my work makes on
Table III. ANOVA test for employee’s education
the product or service” had the highest mean of 3.74 with
qualification
standard deviation of 0.906. According to Wiersma (26) in
Table I, the average mean of all the items is 3.4275 and the Sum of df Mean F Sig.
standard deviation is 0.497. This result shows a moderate Squares Square
Between Group 1.217 4 .304 1.238 .297
agreement level of mean. It may be concluded that this present Within Group 38.097 155 .246
research company had implemented the PDM in their Total 39.315 159
company at the moderate level.

Table I. Level of Mean Measurement Table IV shows the ANOVA analysis and whether we have
Mean Range Central Tendency Level a statistically significant difference between our group means.
Based on the ANOVA table, the significance level is 0.783 (p
High 3.68-5.00 = .783), which is greater than 0.05 and, therefore, there is not a
significant difference between age and the PDM.
Moderate 2.34-3.67
Table IV. ANOVA table for age group of employees
Low 1.00-2.33 Sum of df Mean F Sig.
Squares Square
Between Group .269 3 .090 .359 .783
Within Group 39.045 156 .250
Total 39.315 159
B. Inferential Statistics Analysis
Inferential statistics are commonly used to compare the
average performance of two or more groups on a single
Table V shows that the results of ANOVA analysis to
measure to see if there is a difference. Whenever comparisons
determine it whether it has a significant difference between the
are made to the average performance between two groups and
length of employment of employees in terms of PDM. Based
above, statistic techniques like t-test or ANOVA should be
on the ANOVA table, the significance level is 0.148 (p = .148),
considered in order to get the presentable results (4). An
which is greater than 0.05, and therefore, there is not a
independent sample T-test was done to identify any significant
significant difference between working experience and the
difference between male and female to the PDM as shown in
PDM.
Table II. Levene’s Test for equality of variances, which known
as a test that determines if the two conditions have about the Table V. ANOVA table for length of employment of
same or different amounts of variability between scores. F employees
value of Levene’s Test is 0.880, and the value in the Sig.
Sum of df Mean F Sig.
column is 0.350. A significance value of greater than 0.05 Squares Square
means that the variability between the male and female are Between Group 1.323 3 .441 1.810 .148
about the same. It means that the variability in the two different Within Group 37.992 156 .244
gender of employees is not significantly different in terms of Total 39.315 159
PDM in the manufacturing industry. Besides that, the result of
the t-test for equality of means indicates the significant value is
0.823 which is greater than 0.05. It can be concluded that there
is no statistically significant difference between males and V. DISCUSSION AND CONCLUSION
females in terms of PDM.
The first objective of this research study is to determine the
Table II. T-Test for Gender Group implementation of PDM among employees in the
manufacturing industry in Batu Pahat. In order to achieve this
objective, the research determined the average means for the
entire item and concluded that the average mean of all of items
is 3.42. It considers a moderate level of central tendency based
on the agreement level mean measurement table. Therefore,
this present research company had implemented PDM but
remain at the infancy stage of PDM due to a moderate level of
mean.

55

The second objective in this research study is to determine
the employee’s PDM in terms of gender, age, length of
employment and education qualification in the manufacturing
industry at Batu Pahat. The first component to be determined is
gender group. There is only two group of gender which is male
and female thus, the independent sample T-test is used to
determine the gender and the PDM. In the independent T test
result, the independent sample T-test was 0.350, so there is no
significant difference of employee’s gender in terms of PDM in
the manufacturing industry at Batu Pahat. The present result is
supported by Ting’s (4), Burke (27) and Cortis & Cassar (28)
outcomes that male and female does not have a significant
difference in terms of PDM. This finding confronted with the
finding of Gill, Stockard, Johnson & Williams (12), women
dedicated more time in decision-making and it also opposite
with Wood’s study findings. (13); men are more dominant in
decision-making. In addition, Maria & Maria (14) depicted
their findings of the study which is significant difference
between men and women is also opposite with this research
finding.
The second tested component in objective two is employee
education qualifications concerning PDM in the manufacturing
industry in Batu Pahat. The ANOVA test has been applied to
carry out the research outcome. The one-way ANOVA result
for this component shows a 0.297 significance value which
means that there is no significance between employee’s age
group and PDM in the manufacturing of Batu Pahat. Therefore,
it can be concluded that higher educated employees do not
have more opportunities for decision-making relative to low
educated of employees. These results oppose the study by Dodi
(16) in which respondent age and education were negatively
correlated with all the aspects of PDM in his study.
The third tested component in objective two is employee’s
age group in terms of PDM in the manufacturing industry in
Batu Pahat. The ANOVA test is applied to carry out the
research outcome. The one-way ANOVA results for this
component show 0.783 significance value, which means that
there is no significance between employee’s age group and
PDM in the manufacturing of Batu Pahat. This result is
consistent with results of a study by Dodi (16) in which there
was no significant influence of age in terms of PDM. This
ANOVA result is confronted with María & María (14) which is
the different age range of people will influence the different
outcome in terms of experience, emotional and knowledge.
These results are also opposed to those of Johnson (15), who
found that young participants consider more options in that
time frame, and, therefore, make higher quality decisions.
The fourth tested component in objective two is employee’s
length of employment in terms of PDM in the manufacturing
industry in Batu Pahat. The ANOVA test is applied to
determine the research findings. The one-way ANOVA result
for this component was 0.148 of significance value which
means that there is no significance between employee’s length
of employment and PDM in manufacturing at Batu Pahat. At
any rate, the present results are contrary to those of Sophia,
Kostas, & Cosmas (20) that indicated the opportunities to
involve in decision-making is affected by employee's length of
employment. At the same time, its findings are opposite those
of Bruiyan (19) and his research findings of a higher
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participation rate in decision-making among those with more
service experience while those with less working experience
have the lowest involvement in decision-making.
The sample size of this research is relatively small. There
were only 160 questionnaires which could be used in data
analysis. Normally, research with more respondents will be
more precise if there are more questionnaires done. First, a
future researcher may extend the target scope to all sectors of
organizations in Malaysia to compare with the result of present
research. Second, future researchers should widen the
respondents’ scope such as accessing the different departments.
It would produce more accuracy outcome in the similar
research topic. Lastly, future researchers may examine more
human resource variables such as job motivation, employee
performance and job satisfaction.
In conclusion, the researcher found that the present research
companies had implemented the PDM in manufacturing at the
moderate level. In addition, employee age, gender, education
qualifications, and length of employment did not have a
significant effect on PDM in the manufacturing industry at
Batu Pahat, Johor.
ACKNOWLEDGMENT
This work was supported by Universiti Tun Hussein Onn
Malaysia under Grant No. U431.
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 Back to Contents

Estimation of Response Surface based on Central

Composite Design using Spatial Prediction

Haeil Ahn
Department of Industrial Engineering
Seokyeong University
Seoul, Korea 136-704
hiahn@skuniv.ac.kr

Abstract—An attempt is given to the employment of spatial
prediction (SP) models such as kriging and splines into the
estimation of response surface in central composite design
(CCD), with a view to enhancing the reproducibility of
actual response surfaces by combining CCD and SP. A
brief introduction to CCD and SP is presented in the
paper, and a numerical example is examined to discuss on
the merits of the method. In the modeling process, a
computer program is developed to carry out the spatial
prediction. Software for plotting is utilized in order to
represent the response surfaces graphically.
Keywords—central composite design; polynomial regression;
spatial prediction; kriging
In the SP model, the multivariable polynomial is employed
to represent the large-scale variation and usually fit into the
scattered data to reproduce the irregular surfaces. For this
reason, the SP model lacks in the concept of orthogonality or
rotatability of the model, whereas the orthogonality concept
plays a key role in central composite design (CCD).
In this paper, we give a try to the problem of employing
spatial prediction methods in estimating the response surfaces
of experimental designs based on central composite design
(CCD) in order to take advantage of the two methods by
combining them and thus to reproduce more plausible
response surfaces of the experiment.
II. CENTRAL COMPOSITE DESIGN

A. Background
I. INTRODUCTION
Normally, CCD consists of three types of design points
When it comes to designing an experiment of ongoing
such as factorial points, axial points and the design center. In
processes, multivariable polynomial regression models such as
the literature, there are several types of CCD [1]. In this study,
central composite design (CCD), Box-Behnken design (BBD),
the CCD of second type (CCD2) is considered for study. Let
and mixture design (MD), are in extensive use as in Myers and
Montgomery [7]. In a usual modeling process, the multi- k be the number of variables and F = 2k be the number of
variable polynomials are fit for the observed data. Low-order factorial points. The design points of CCD2 are shown in
polynomial may not reflect the actual responses of the Figure 1. x3
involved experiments, which is often called lack-of-fit. For x2 ( −1,1,1) (1,1,1)
( −1, −1,1)
this reason, an experimenter might be in trouble, unless he or ( −1,1) (1,1)
she designs the experiment with some additional design points (1, −1,1)

or replicates to measure lack-of-fit and fit higher-order terms. (α1 , 0) (α 2 , 0) x2 x1

As the number of design points increases, the higher-order x1 (α1 , 0, 0) (α 2 , 0, 0)
model is conceivable. However, the higher-order model might
entail some problems. Among those problems encountered by ( −1,1, −1)
many experimenters are what is called over-fitting. To avoid ( −1, −1) (1, −1) (1,1, −1)
over-fitting, one must refrain from employing high-order ( −1, −1, −1) (1, −1, −1)

polynomials. Usually, the polynomial models higher than the Figure 1 Design points of CCD2 where k = 2 and k = 3
second order are not considered because higher order model
shows irregular fluctuations or ‘over-fitting’ as in CCD [1]. The multivariable polynomial model in relation to CCD2
In the literature, spatial prediction methods such as kriging can be identified as follows:
k k k −1 k
and splines are available as in Cressie [3]. The methods might y = β0 + βi xi + βii xi2 +  βij xi xj + ε (1)
be able to help experimenters overcome those problems that i=1 i=1 i=1 i< j =2
can arise in fitting a polynomial model into the data.

978-1-5090-1671-6/16/$31.00 ©2016 IEEE

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For design points, an index set U is conceivable. For any For example, the regression matrix X of CCD2 with
index u ∈ U , the centered model can be rewritten as follows: k = 2 is given as follows:
k k k −1 k
1 x12 x22 x1 x2
yu = β0′ + βi xiu + βii (xiu2 − xi2 ) +  βij xiu xju + eu
x1 x2
(2)
i=1 i=1 i =1 i< j =2 1 −1 −1 1 1 1  
Here, the intercept of the centered model can be identified 1 −1 1 1 1 −1  
1 1 −1 1 1 −1  F
 
k
as β 0′ = β 0 + i =1
β ii xi2 . For convenience sake, let mi = xi2 1 1 1 1 1 1 
for i = 1,2,..., k . Note that m1 = m2 = ⋅⋅⋅ = mk = m . That is 1 0 0 0 0 0  
m = xi2 =  u =1 xiu2 / N
N
for i = 1, 2, ⋅⋅ ⋅, k (3) .. .. .. .. .. ..   nC
1 0 0 0 0 0   (10)
2
The centered square columns of (x − m) for i = 1, 2, ⋅ ⋅ ⋅, k iu 1 −α1 0 α12 0 0  
can be given as follows:   
1 α1 0 α12 0 0  
x1 − m x22 − m ⋅⋅⋅ xk2 − m
2 1 0 −α1 0 α12 0  
  
 1 0 α1 0 α12 0 
1 − m 1 − m ⋅ ⋅ ⋅ 1 − m

 4k
1 −α 2 0 α 22 
1 ⋅−⋅ ⋅m 1 − m ⋅ ⋅ ⋅ 1 − m
F 1
0 0


⋅⋅⋅ ⋅⋅⋅ ⋅⋅⋅ α2 0 α 22 
1 − m 1− m ⋅ ⋅ ⋅ 1 − m    0 0  
1 0 −α 2 0 α 22 0  
 −m −m ⋅ ⋅ ⋅ −m   1 
 0 α2 0 α 22 0  
 −⋅ m
⋅⋅ ⋅⋅⋅ ⋅⋅⋅ ⋅⋅⋅
  nC
 −m ⋅ ⋅ ⋅ −m  
B. Orthogonal and Rotatable CCD
α −m
2
−m ... − m   (4) The CCD2 is known to be orthogonal and rotatable at the
... − m  
1
α −m
2
−m same time. Rotatable CCD2 is subject to the same conditions
...  
1
 ... ... ... as rotatable CCD [4, 5]. Necessary and sufficient conditions
 −m −m ... α12 − m   for rotatability are that all odd moments through order four are
 −m −m ... α12 − m   4 k zero, that is to say,
α 22 −m −m ... − m 
 N N

α 22 −m −m ... − m 


x 4
iu = 3 xiu2 x 2ju (11)
 ... ... ... ... 
u =1 u =1

 −m −m ... α 2 − m 
2  According to Kim [4], the orthogonality condition for
 − m ... α 2 − m 
 CCD2 is as follows:
−m 
2

The m can be identified as follows: F (F + 4k + nC ) − F

α12 + α22 = (12)
m = ( F + 2α12 + 2α 22 ) N (5) 2
The centered model can be rewritten as In this case, N = F + 4k + nC . The rotatability condition
k k k−1 k for CCD2 is as follows:
yu = β0′ + βi xiu + βii (xi2u − m) +  βij xiu xju + eu (6)
i=1 i=1 i=1 i< j=2
α14 + α24 = F (13)
for any u ∈ U . Since the centered square columns are By solving these two equations simultaneously, we can
orthogonal to the column of ones, it can be shown that obtain an exactly orthogonal and rotatable CCD2 as in Kim
[4]. We can devise numerously different CCD2s using α1 and
(7)
α 2 values as shown in Kim and Park [5].
In addition, it is not difficult to observe that centered square For the sake of notational convenience, let us define
columns are also orthogonal to linear and interaction columns. χij ≡ xi x j i = 1, ⋅⋅⋅, k j = 1, ⋅⋅⋅, k (14)
The condition that centered square columns are orthogonal to
each other is required. The following is a necessary condition: χ ii ≡ xi2 − m i = 1, ⋅⋅⋅, k (15)
N The centered model can be rewritten as follows:
 (x
u =1
2
iu − m)( x 2ju − m) = 0 , (8) k k
yu = β0′ + βi xiu + βii χiiu +   βij χiju + eu
k −1 k
(16)
for and . The condition for i =1 i =1 i =1 i< j =2

centered square columns can be determined as follows: Owing to the orthogonal decomposition, parameter
estimates and the variation due to each term can be calculated
 F + 2α12 + 2α22 
m2N =  N =
( F + 2α12 + 2α 2
2)
2 2

=F
directly from design and observation points, which is one of
 (9) the merits of orthogonal decomposition of the model.
 N  N

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C. Numerical Example The temperature at the design center was measured 5 times,
In order to examine the heat distribution of induction range, but only once at the rest of design points. The temperatures at
surface temperature of the radiation panel was measured with all the points are presented in terms of Celsius in Table 2.
an infrared thermometer in accordance with design points of Figure 2 shows regression analysis result of multivariable
CCD2 where k = 5 and nC = 5 . polynomial model. As it turned out, most of monomial terms
are insignificant, except intercept and second-order terms.
Table 1 α1 and α 2 for various k , F and nC The regression matrix and the data for centered model is
shown in Table 3. We can make use of the data either in Table 2
k F nC 1 2 3 4 5 6 7 8 9 10
or Table 3.
α1 - - - 0.000 0.3566 0.5095 0.6318 0.7409 0.8453 0.9533 Table 3 Regression Data for Centered Model
2 4
Centered Regression Variables
α 2
- - - 1.4142 1.4128 1.4082 1.3999 1.3868 1.3667 1.3348 Design
point 1 x1 x2 χ 11 χ 22 χ 12 y
α - - - 0.3187 0.5041 0.6426 0.7617 0.8709 0.9760 1.0824
3 8
1
1 1 -1 -1 0.5149 0.5149 1 262
α - - - 1.6813 1.6784 1.6728 1.6638 1.6507 1.6319 1.6045 2 1 -1 1 0.5149 0.5149 -1 259
2
3 1 1 -1 0.5149 0.5149 1 264
α - - - 0.0000 0.4112 0.5862 0.7242 0.8445 0.9547 1.0593 4 1 1 1 0.5149 0.5149 -1 261
1
4 16 5 1 0 0 -0.4851-0.4851 0 420
α 2
- - - 2.0000 1.9992 1.9963 1.9913 1.9839 1.9735 1.9594 6 1 0 0 -0.4851-0.4851 0 422
7 1 0 0 -0.4851-0.4851 0 423
α 1
- - - - - - 0.2629 0.508 0.6723 0.8074 8 1 0 0 -0.4851-0.4851 0 418
5 32 9 1 0 0 -0.4851-0.4851 0 419
α 2
- - - - - - 2.3783 2.3772 2.3746 2.3705 10 1 -0.3566 0 -0.3579-0.4851 0 460
11 1 0.3566 0 -0.3579-0.4851 0 455
α 0.4112 0.5862 0.7242 0.8445 0.9547 1.0593 1.1616 1.2652 1.3756 1.5079
1 12 1 0 -0.3566-0.4851-0.3579 0 467
5 16
13 1 0 0.3566 -0.4851-0.3579 0 464
α 1.9991 1.9963 1.9913 1.9839 1.9735 1.9594 1.9405 1.9146 1.8772 1.8141
2 14 1 -1.4128 0 1.5109 -0.4851 0 255
15 1 1.4128 0 1.5109 -0.4851 0 258
Table 2 Temperatures at Design Points 16 1 0 -1.4128-0.4851 1.5109 0 266
17 1 0 1.4128 -0.4851 1.5109 0 259
Regression Variables ℃ Total 17 0.0 0.0 0.0 0.0 0.0 6032
Design
point 1 x1 x2 x1
2
x2
2
x1 x2 y
1 1 -1 -1 1 1 1 262 For the parsimony of model, we decided to carry out the
2 1 -1 1 1 1 -1 259 stepwise selection of terms. The result is shown in Figure 3.
3 1 1 -1 1 1 1 264
4 1 1 1 1 1 -1 261 Regression Analysis: y versus x1, x2, x11, x22, x12
5 1 0 0 0 0 0 420 Stepwise Selection of Terms
6 1 0 0 0 0 0 422 α to enter = 0.15, α to remove = 0.15
7 1 0 0 0 0 0 423 Analysis of Variance
8 1 0 0 0 0 0 418 Source DF Adj SS Adj MS F-Value P-Value
9 1 0 0 0 0 0 419 Regression 2 132060 66030.2 146.27 0.000
10 1 -0.3566 0 0.1272 0 0 460 X11 1 68392 68392.2 151.50 0.000
11 1 0.3566 0 0.1272 0 0 455 X22 1 63671 63671.2 141.04 0.000
12 1 0 -0.3566 0 0.1272 0 467 Error 14 6320 451.4
13 1 0 0.3566 0 0.1272 0 464 Lack-of-Fit 10 6303 630.3 146.58 0.000
14 1 -1.4128 0 1.9960 0 0 255 Pure Error 4 17 4.3
15 1 1.4128 0 1.9960 0 0 258 Total 16 138380
16 1 0 -1.4128 0 1.9960 0 266 Model Summary
17 1 0 1.4128 0 1.9960 0 259 S R-sq R-sq(adj) R-sq(pred)
Total 17 0 0 8.24648.2464 0 6032 21.2471 95.43% 94.78% 94.19%
Mean 0 0 0.48510.4851 0 354.82 Figure 3 ANOVA for the Final Model
The final model has to be the following.
Regression Analysis: y versus x1, x2, x11, x22, x12
Analysis of Variance yˆ = 354.82 −92.46⋅ (x12 −0.4851) −89.21⋅ (x22 −0.4851) (17)
Source DF Adj SS Adj MS F-Value P-Value
Regression 5 132103 26420.5 46.29 0.000
There seems to be no need for canonical analysis. However,
x1 1 5 5.1 0.01 0.927 the extremely significant lack-of-fit indicates that the model
x2 1 28 28.3 0.05 0.828 might need more monomial terms.
x1x1 1 68392 68392.2 119.84 0.000
x2x2 1 63671 63671.2 111.57 0.000
Coefficients
x1x2 1 2 2.4 0.00 0.949
Term Coef SE Coef T-Value P-Value VIF
Error 11 6278 570.7
Constant 354.82 5.15 68.85 0.000
Lack-of-Fit 7 6261 894.4 207.99 0.000
X11 -92.46 7.51 -12.31 0.000 1.00
Pure Error 4 17 4.3
X22 -89.21 7.51 -11.88 0.000 1.00
Total 16 138380
Regression Equation
Figure 2 ANOVA for Polynomial Model y = 354.82 - 92.46 X11 - 89.21 X22
Figure 4 Parameter Estimates of Final Model

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The parameter estimates do not change, even though some the model with micro-scale variation results in an
regression variables are eliminated, due to the fact that the approximation. The large-scale variation of y ( x) is a poly-
design is orthogonal. The estimated response surface is rather
nomial of degree d − 1 , say μ ( x) = pd ( x) . A k -variable
simple and should look like the following.
polynomial of degree d − 1 has k + d −1 Ck = r monomials
denoted by q j (x) ’s. Let μ ( x) = pd ( x) be a multivariable
polynomial of order d − 1 . Then,

l
E[Y ( x )] = μ ( x ) = pd ( x) = j =1
β j q j ( x) (20)
where β j is coefficient of each monomial. In case of response
surface models, this polynomial can be transformed into the
Figure 5 Estimated Surface indicating Lack-of-Fit canonical forms. As a result, the total number of monomials r
However, we feel misgivings that stem mainly from the fact reduces to l (l < r ) . Using vector and matrix notation, let us
that the estimated surface does not seem adequate enough to define a unitary vector
represent the actual response surface, because lack-of-fit is so
significant. u = ( q1 (x) q2 ( x) ⋅⋅⋅ ql (x) )′ (21)
The observations and regression matrix are as follows:
III. SPATIAL PREDICTION MODEL
 y ( x1 )   q1 ( x1 ) q2 (x1 ) ⋅⋅⋅ ql (x1 ) 
The spatial prediction method named “kriging” is an  y(x2 )   
analogue for spatial stochastic process of Wiener-Kolmogorov y = X =  q1 (x 2 ) q2 ( x 2 ) ⋅⋅⋅ ql (x 2 )  (22)
⋅⋅⋅  ⋅⋅⋅ ⋅⋅⋅ ⋅⋅⋅ ⋅⋅⋅
theory. In this method, an irregular surface y ( x) is regarded  y(x )   q ( x ) q (x ) ⋅⋅⋅ q (x ) 
 N   1 N 2 N l N 
as a realization of multi-dimensional variable Y (x) where
Given the vector y at design points {x1 , x 2 , , x N } and
{Y (x) : x ∈ D ⊂  k } is thought of as a real-valued stochastic order d , the polynomial part can be rewritten as
k
process defined on a domain D of  . The coordinate data l
E[Y (x)] = μ(x) = pd (x) = β j q j (x) = β 'u (23)
in the domain of interest D is obtainable by measuring j =1
y (x), x ∈ D in the form of {(xi , y (xi )), i = 1, ⋅⋅⋅, N } . The As mentioned earlier, if the small-scale variation ( ε ) is
domain of interest is not restricted in 2-D space. In case of assumed to be negligible, the problem reduces to ordinary
response surface design, the domain of interest D can be least square (OLS) or multivariable polynomial regression
defined in k dimensional space. A set of scattered problem. Using the normal equation (X'X)β = X'y , the
observations in multi-dimensional space can be analyzed to
estimate of β̂ can be obtained by
reproduce the actual surface.
Spatial prediction methods are traditionally divided into two βˆ ≡ b = (X'X)−1 ⋅ X'y (24)
study areas such as kriging and splines. An irregular surface If the small-scale variation is incorporated in the model, the
y ( x) is regarded as the realization of stochastic process predictor at point x is defined as follows:
Y (x) . The observations of the realizations consist of two N
Yˆ (x) =  λi (x)Y (xi ) (25)
parts, that is, large-scale and small-scale variations. In some l =1
cases, micro-scale variation is considered as an additional
where λi = λi ( x) = λ ( x, x i ) and the statistic is known as
source of variation. That is to say, Y (x) can be represented as
the best linear unbiased predictor (BLUP). Without
a summation of variations of large-scale ( μ ), small-scale( ε ),
considering micro-scale variation, the predictor can be
and micro-scale( θ ). obtained from the following
Y ( x) = μ ( x) + ε ( x) + θ ( x) (18) ŷ ( x ) = y ′λ = y ′Bu + y ′Aκ = b′u + c′κ (26)
where μ (x) is a deterministic polynomial representing trend,
where A = K −1 − K −1 X ( X′K −1 X ) X′K −1 , B = K −1 X ( X′K −1 X )
−1 −1

whereas ε (x) and θ (x) are random variables with zero

expectations. In most cases, at the two distinct design points x
and x ' , ε ( x) and ε (x ') are correlated, while θ (x) and θ ( x ')
are not. Given a series of observation points and a set of
design points {x1 , ⋅⋅⋅, x N } , the estimate of y ( x) at prediction
point x can be thought of as
yˆ ( x) = μˆ ( x) + εˆ ( x) (19)
If the micro-scale variation is omitted in the model, then the
prediction is equivalent to interpolation. The prediction with
, and λ = Bu + Aκ . The matrix K is the distance matrix based
on the kernel function. The identity that c′ = y ′A and b′ = y ′B
holds. The algebraic identity X′a = 0 also holds, which
indicates the orthogonal decomposition. Each element of the
′
kernel vector κ = κ ( x, x1 ) ,κ ( x, x2 ) , ⋅⋅⋅,κ ( x, xN )  is called
variance function or variogram in kriging and kernel function
in splines. There are different types of models depending on
the order of the model and the stationarity of the variogram.

61

On the other hand, the spliners represent the small-scale
variation of the actual surface as a weighted sum of kernel
functions. For instance, in case that k = 2 , the typical spline
model looks like the following.
N of-fit.
y ( x) = β 0 + β1 x1 + β 2 x2 + β12 x1 x2 +  γ i ⋅ κ (x, xi ) (27)
i =1
Usually, large-scale variation μ (x) does not have any
second-order term. However, we are going to employ second-
order terms into large-scale variation and fit the model into the
data, just as shown in multivariable polynomial model for
CCD2. That is to say,
y (x) = β 0 + β1 x1 + β 2 x2 + β11 x12 + β 22 x22 + β12 x1 x2
N points. Moreover, an experimenter may well think that the
(28)
+  γ i ⋅ κ ( x, x i )
i =1
There are different kernel functions frequently used in
practice. Among those, thin plate spline (TPS), multi-quadric
(MQ) or any other radial basis functions (RBF) are most
famous. According to Michelli [6], in which the validity of
those kernels or basis functions is investigated, the distance
matrix K based on the kernel function should be
conditionally positive definite in order for a kernel to be valid,
and closely related to the order of the model. Thin plate spline
is used in this study for the kernel function, because it is
known to be naturally smooth.
κ ( x, x j ) = κ ( x − x j ) = x − x j ln x − x j
2
(29)
According to Cressie [3], there is a close link between
kriging and splines. If one thinks kriging is a primal form, then
the splines are the dual form of kriging. In many respects,
kriging and splines are closely related to each other.
The result of spatial prediction after fitting the model into
the same data as before is shown in Figure 6.
Figure 6 Surface Estimated using Spatial Prediction
The polynomial part of the model reflecting the large-scale
variation is of second-order. In addition, thin plate spline
(TPS) kernel function is employed to represent the small-scale
variation. In order to estimate the response surface, the
programming language of Microsoft Visual Basic. NET is
used. The 3D plot is a result of Gnuplot 5.0. As a matter of
fact, the estimated surface is an interpolant of the data points
in that the interpolating surface passes through the data points
or the mean value of replicates at the design center.
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We were able to obtain more plausible response surface just
by employing spatial prediction method. The surface has a
dimple in the middle, which seems to be the major reason for
why the ANOVA table for polynomial model indicates lack-
IV. CONCLUSION
In central composite design, an experimenter designs the
experiment with some additional runs or replicates at the
design center, which help measure lack-of-fit. Nevertheless,
an experimenter might be in trouble whenever he or she
encounters lack-of-fit, because it demands to fit higher-order
terms. To fit the higher-order model requires the more design
orthogonality of the model is desirable. However, the
orthogonal regression model for multivariable polynomial
higher than the second-order is not known in the literature.
Besides, the higher-order models are not free of over-fitting.
Meanwhile, the spatial prediction method enables an
experimenter to estimate and investigate the response surface
even with minimum required runs to fit the designated model.
The merit of employing SP method lies in the fact that the
response surface is obtainable either with or without any
replication. It is not necessary that an experimenter has to bear
the design points or replication in mind. The drawback of SP
method is that it requires much of work for programming
because any commercialized software package for this type of
problem solving is not available.
For this reason, it is highly recommended that the SP
method should be taken into consideration when designing an
experiment and analyzing the response surfaces. The SP
method can be regarded as a tool for the pilot study of the
surfaces of experimental design problems. It pays to make an
experimenter more confident over the behavior of the response
surfaces of the experiments in which he or she is engaging.
V. REFERENCES
[1] Box, G. E. P. and Hunter, J. S., Multifactor Experimental Designs for
Exploring Response Surfaces, The Annals of Mathematical Statistics,
Vol. 28: 195-241, 1957.
[2] Box, G. E. P. and Wilson, K. B., On the Experimental Attainment of
Optimum Conditions, Journal of the Royal Statistical Society, Series B,
Vol. 13: 1-45, 1951.
[3] Cressie, N.A.C., Statistics for Spatial Data, John Wiley & Sons, USA,
1991
[4] Kim, H. J., Extended central composite designs with the axial points
indicated by two numbers, The Korean Communications in Statistics,
Vol. 9: 595-605, 2002.
[5] Kim, H. J. and Park, S. H., Statistical Properties of Second type Central
Composite Designs, The Korean Journal of Applied Statistics, Vol.
19(Issue 2): 257-270, 2006.
[6] Michelli, C. A. (1986), Interpolation of Scattered Data: distance
Matrices and Conditionally Positive Definite Functions, Constructive
Approximation, 24(2), 11-22, 1986
[7] Myers, R. H. and Montgomery, D. C., Response Surface Methodology–
Process and Product Optimization Using Designed Experiments, 2nd
Edition, (Wiley Series in Probability and Statistics, 2002).
 Back to Contents

Reducing Operational Downtime in Service

Processes: A Six Sigma Case Study
Raid Al-Aomar*, Saeed Aljeneibi, and Shereen Almazroui
Master of Engineering Management Program
College of Engineering, Abu Dhabi University
Abu Dhabi, UAE
*Email: raid.alaomar@adu.ac.ae

Abstract—This paper presents a Six Sigma approach for reducing ensures complete understanding of process steps, measures
operational downtime in service processes. The objective is to process capability at the process Critical-to-Quality metrics
improve and bring betterment in the service processes for timely (CTQs), applies Six Sigma tools and analysis to improve
delivery of products and services. A case study of downtime process performance, and implements methods to control the
reduction in service processes at a local company is used to achieved improvement. Details of Six Sigma DMAIC process
illustrate the Six Sigma application. The company has been can be found in Breyfogle [10].
experiencing unexpected increase in downtime in the provision of
goods and services supporting aviation equipment. The Six Sigma In this paper, the Six Sigma DMAIC methodology is
implementation has significantly reduced the loss in operational applied to reduce the downtime of operations in a service
effectiveness by reducing downtime. The paper also presents the company to a tolerable level. Several attempts were made to
tools and techniques used in the DMAIC process to reduce overcome the issue including circular distribution, brain-
downtime and improve the overall service level. storming sessions, and punctuality scorecard. However, as no
tangible improvement was achieved, Six-sigma was adopted to
Keywords—Six Sigma; Downtime Reduction; Service Operations. reduce the downtime frequency at key process tasks/functions
I. INTRODUCTION to improve labor productivity and resources utilization and to
improve the overall processes performance.
Process improvement through downtime reduction is a
common business practice. At the operational level, process II. DMAIC METODOLOGY
improvement has a more focused view as downtime impacts The “Define” stage of DMAIC specifies the set of CTQs that
productivity, utilization of resources, and service level. Such characterize the quality attributes of interest to the improvement
performance aspects are increasingly becoming the focus of Six study. Measurement stage is used to estimate the quality
Sigma studies in both manufacturing and transactional attributes of the underlying system. The measured values are
operations [1, 2, and 3]. also utilized in the “Analyze” and “Improve” stages to identify
In service operations, the uptime is a key indicator of causes of variability and to set effective improvement actions.
operational effectiveness. This particularly important to costly Finally, Control actions are prescribed to maintain the achieved
services of 24-7 nature such as technical support, shipping process improvement. Figure 1 shows the DMAIC process.
services, emergency services, maintenance and repair, and call
center. In such services, every lost minute of operation often
translates into significant cost to the firm in addition to the
negative impact on customer care and service. Examples of Six
Sigma application to service processes can be found in Ray and
John [4], Hensley and Dobie [5], and Johannsen et al. [6].
Six-Sigma is one of the commonly practiced data-driven
approaches with proven results in quality measurement,
improvement, and design and is widely used in industries
belonging to almost every sector of the economy [7]. Six Sigma
measures the quality level at each quality aspect in terms of a
Sigma Rating. Six Sigma targets product/service attributes as
well as the overall process improvement. It improves process
performance by reducing products defects and process
variability. Details of Six Sigma methods and applications can
be found in Keller [8] and Zu et al. [9].
Six Sigma improves quality and performance using the
structured approach of DMAIC (Define-Measure-Analyze-
Improve-Control). DMAIC is a problem-solving approach that Fig. 1. The Six Sigma DMAIC Process

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DMAIC tollgates provide a concise roadmap to various
process stakeholders. Based on that, a plan is developed to
collect process data and measure process performance,
opportunities, and defects. A data-driven and well-structured
approach is then followed to analyze sources of variation, solve
problems, and enhance performance toward the nearly-perfect
Six Sigma target. Table 1 summarize the commonly used tools
and expected deliverables at each DMAIC tollgate.
Table 1. Tools of DMAIC Tollgates
III. APPLICATION CASE STUDY
The Six Sigma DMAIC process was applied to reduce the
downtime in a local service company (a growing group of
multiple businesses). The group’s primary business is in
providing aviation parts required for aircrafts (i.e., accessories
and spare parts) and other specific pieces of equipment to major
airlines in the region. The group has expanded dramatically to
supply several other types of aviation equipment such as airport
ground machinery. The company also manufactures and
partially outsources the production of these parts to carefully
selected world-class manufacturers mainly in France, UK, and
USA. The company stores aircraft parts and equipment in
custom-designed warehouses where they are subject to minor
repairs and quality assurance tests. Once approved from the
quality control department, they can be delivered to the clients.
The need for the Six Sigma project for downtime
reduction stems from the company’s intention to excel in
achieving high level of customer satisfaction through a flawless
and uninterrupted provision of both products and services. The
primary short-term objective is to provide standardized
manufacturing and delivery approvals. The top management
believes that achieving such standards mainly depends on the
quality provision of both goods and services. Thus, the
company is continuously trying to improve their aviation
business by conducting quality audits, following a Just-in-Time
(JIT) approach, and adopting lean and Six-Sigma tools and
techniques.
The company has an established system of 24 hours
service to support the orders of aviation parts and accessories
and for post delivery services. However, the company is
experiencing unexpected increase in downtime in the provision
of goods and services. In the last seven months, records showed
several bounced back orders due to the downtime. Several
attempts were made to overcome the issue but no significant
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improvement was achieved. Thus, a Six Sigma study is initiated
to deliver all the ordered components and requested technical
assistance in a more timely efficient manner (i.e., with minimal
delay and interruption caused by frequent process downtime).
The following sections present the application of DMAIC
tollgates for downtime reduction. Full details are not shown for
brevity.
A. Define Stage
The “Define” stage of DMAIC was focused on defining the
underlying problem and rationalizing the need for initiating the
Six Sigma project. This was formalized in terms of a Six Sigma
project charter and management approved. The charter has
limited the project scope to processes performed by the teams
responsible for supporting aviation services and products. This
stage also requires a clear understanding of the service process
flow and a concise definition of the CTQ metric of the process
(i.e. process downtime). To gain more process knowledge, the
project team studied the details of the service process and
developed a process flowchart (Figure 2).
Fig. 2. The Service Process Flowchart
B. Measure Stage
The “Measure” stage of DMAIC was focused on data
collection and measurement of current state performance to
estimate process capability and Sigma level. The efficiency of
the process was measured in terms of time required to dispatch
and deliver the service or product required by the customer.
Digital clocks were used to collect the precise readings of times
consumed by different teams at different tasks and at random
times. The data was recorded in spreadsheets and then
transferred to MINITAB software for analysis. Any observed
time that exceeded the standard time of the task was considered
as a delay caused by some kind of downtime in the process and
was allocated to the corresponding task and team.
Data was collected across the underlying aviation service
process performed by 8 service teams with a focus on the
downtime accumulated monthly. The sheets of collected data
are not shown for brevity. Figure 3 shows a summary downtime
minutes within the data collection period (last 7 months).
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Fig. 3. Monthly distribution of collected downtime minutes Fig. 5. Pareto chart of downtime at 8 service teams

To check the accuracy of collected data, the AIAG standard
is used for Measurement System Analysis (MSA) [11]. The
standard has a tolerance level of 10% for the used measurement
system. Figure 4 shows that the measurement’s tolerance is
below 10% and the overall accuracy is 93.3%. The analysis is
based on 942 downtime entries.
The Pareto chart in Figure 5 shows that 80% of downtime is
contributed by the first 4 service teams. Pareto analysis was also
applied to the tasks performed by the team with highest
downtime contribution (Development Team). Figure 6 ranks
the team tasks based on downtime contribution. Similar
analysis was applied to all 8 teams of the service process to
identify the specific tasks that need improvement.

Fig. 4. The accuracy of downtime measurement system

The overall short term Sigma level of the service process was
estimated monthly from the collected data. Results are shown
in Table 2.
Table 2. The current state monthly Sigma level
Fig. 6. Pareto chart of downtime at various tasks of the development team
Month February March April May June July August
To arrive at the root causes of downtime in each service task
Downtime (min) 8079 6961 7047 6263 6559 5405 6645
(RCA), a fishbone diagram is utilized. Experts’ opinion,
Monthly minutes 40320 44640 43200 44640 43200 44640 44640
operational records, and brainstorming were adopted to identify
%yield 0.80 0.84 0.84 0.86 0.85 0.88 0.85
root causes. Figure 7 shows a fishbone diagram of downtime in
Z-Scrore 0.84 1.01 0.98 1.08 1.03 1.17 1.04
the “update script” (the task with highest downtime
Sigma Level (ST) 2.34 2.51 2.48 2.58 2.53 2.67 2.54
contribution).
As shown in Table 2, monthly downtime has resulted in a
reduced process Sigma level. All reported Sigma levels are less
than 3.0 with an average of 2.52 indicating low process
capability and low performance and service level. As
mentioned earlier, such low performance has resulted in delays
and financial issues with customers.
C. Analyze Stage
The “Analyze” stage of DMAIC was focused on identifying
the causes of process variability that lead to the reported process
downtime. Pareto analysis, Root Cause Analysis (RCA), and
ANOVA were the main Six Sigma tools utilized at this stage.
The project team has allocated the observed downtime to the 8
teams involved in the aviation service process. Figure 5 shows
a Pareto chart of the downtime contributed by the 8 service
Fig. 7. Fishbone diagram used in RCA
teams.

65

Based on the Pareto and RCA, the root causes of downtime
in each service tasks were identified for all teams and an
improvement action plan is developed accordingly. As the
aviation service runs a 24-7 mode, the project team has also
analyzed the impact of working shift on the produced
downtime. Figure 8 shows the downtime produced per each
shift of operation
Fig. 8. Average downtime per shift
As shown in Figure 8, the evening shift produces most of the
process downtime. To verify that statistically, ANOVA analysis
using MINITAB [12] were utilized to assess the impact of shift
change on process downtime. Figure 9 summarizes the
ANOVA results graphically.
Fig. 9. ANOVA analysis of downtime by shift
As shown in Figure 9, the analysis confirms that the operating
shift has a significant impact on the process downtime. Similar
analyses were conducted to assess the impact of workers’ years
of experience on process downtime. Results are summarized in
Figures 10 and 11.
Fig. 10. Average downtime per years of experience
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Figure 10 shows that most of the downtime is contributed by
employee with 4-5 experience years working in the evening
shift. Beyond, the 4-5 years level, downtime decreases with the
increase in the years of experience. The p-value in the ANOVA
results in Figure 11 confirms that “years of experience” has a
significant impact on the process downtime.
Fig. 11. ANOVA analysis of downtime by years of experience
D. Improve Stage
The “Improve” stage of DMAIC was focused on
implementing the improvement action plan derived from the
“Analyze” stage. As mentioned earlier, the action plan includes
specific improvement action at each process task that
contributes to process downtime. The details were not shown
for brevity. Design of Experiments (DOE) was also utilized to
further optimize the process by setting the two critical factors
(operating shift and years of experience) with highest impact on
process performance (i.e., process downtime). Thus, a simple
DOE is conducted to identify the operating levels that lead to
reduced downtime. Figure 12 shows the resulting cubic plot of
process downtime at different levels of shift and years of
experience.
Fig. 12. Cubic plot of process downtime
Based on DOE results, the project team recommended that
the supervisory staff from the night shift (those with high
experience) should be mixed with the low-experience staff of
the evening shift. The objective is to reduce the overall
downtime in the evening shift and to concurrently improve the
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performance of workers with less than 5 years of experience. the X-bar-R chart for SPC of downtime level and developed a
The project team has then observed the process downtime after FEMA matrix to analyze and monitor risks involved in the
changing the process operating pattern and implementing the service process. Details were not shown for brevity.
key items in the process improvement action plan. Results
showed that the service process has exhibited less levels of IV. CONCLUSION
down time. Figure 13 depicts the down time reduction pattern The paper presented a Six Sigma application to reduce the
in the last 4 months (September through December). downtime in a service process and improve the overall process
effectiveness. The study has targeted an important service that
supports aviation equipment in a local company (an expensive
service that provides a 24-7 parts and technical support to
aviation companies). High downtime in such process has
negatively impacted the availability of the provided services and
has resulted in delays and interruptions in equipment usage at
the customer end. The paper presented a briefing on how
DMAIC tollgates were used to develop a specific process
improvement action plan. Results showed that implementing the
improvement actions has resulted in reduced process downtime
and improved process capability and Sigma level.
REFERENCES
[1] J.E. Ståhl, P. Gabrielson, C. Andersson, M. Jönsson, “Dynamic
manufacturing costs: Describing the dynamic behavior of downtimes
Fig. 13. Process downtime reduction after improvement from a cost perspective,” CIRP Journal of Manufacturing Science and
Technology, 5(4), 284–295, 2012.
The process improvement was also observed through the [2] N. Roth and M. Franchetti, “Process improvement for printing operations
increase in the overall short term Sigma level estimated for the through the DMAIC Lean Six Sigma approach,” Lean Six Sigma Journal,
1(2), 119-133, 2010.
last 4 months. Table 3 shows that the reported Sigma level in
[3] M. George, Lean Six Sigma for Service: How to Use Lean Speed and Six
the last four months have relatively improved. Indeed, in the Sigma Quality to Improve Services and Transactions, McGraw-Hill,
last two months they exceeded 3.0 which indicates a capable 2003.
process and an improved performance and service level. [4] S. Ray and B. John, “Lean Six‐Sigma application in business process
Consequently, customers complaints were less and the impacts outsourced organization,” Lean Six Sigma Journal, 2(4), 371-380, 2011.
of the downtime financial issues were significantly reduced. [5] R. Hensley and K. Dobie, “Assessing readiness for six sigma in a service
setting,” Managerial Service Quality, 15, 82–101, 2005.
Table 3. The improved state monthly Sigma level
[6] F. Johannsen, S. Leist, and G. Zellner, “Six sigma as a business process
Month September October November December management method in services: analysis of the key application
Downtime (min) 5430 4355 2122 2276 problems,” Inf Syst E-Bus Management, 9, 307–332, 2011.
Monthly minutes 43200 44640 43200 44640 [7] M. Harry and R. Schroeder, Six Sigma: The breakthrough management
%yield 0.87 0.90 0.95 0.95 strategy revolutionizing the world's top corporations, Doubleday, 2000.
Z-Scrore 1.15 1.30 1.65 1.64 [8] P. Keller, Six sigma demystified. New York: McGraw-Hill, 2005.
Sigma Level (ST) 2.65 2.80 3.15 3.14 [9] X. Zu, L.D. Fredendall, and T.J. Douglas, “The evolving theory of quality
management: The role of Six Sigma,” Journal of Operations
E. Control Stage Management, 26, 630–650, 2008.
[10] F. Breyfogle, Implementing Six Sigma: Smarter Solutions using Statistical
The “Control” stage of DMAIC was focused on sustaining Methods, Wiley, 1999.
the improved level of performance for the aviation service [11] Automotive Industry Action Group, 2015, (http://www.aiag.org).
process. This was attained by monitoring the generated process [12] Q. Brook, Lean Six Sigma and Minitab: The Complete Toolbox Guide for
downtime and by controlling the various elements of the service all Lean Six Sigma Practitioners, 3rd edition, OPEX Resources, 2010.
process. The key Six Sigma tools used in this stage include SPC
and FMEA in addition to existing standard operating
procedures and process control plans. The project team utilized

67

Ownership structure, internal control and real
activity earnings management
Xiao Wang Jie Gao
Department of Department of
Management Science and Management Science and
Engineering Engineering
Harbin Institute of Harbin Institute of
Technology Technology
Shenzhen Graduate Shenzhen Graduate
School School
Shenzhen, China Shenzhen, China
Abstract—Reasonable assurance of the reliability of financial
report is one of the main objectives of internal control. Thus,
high-quality internal control should help to improve the quality
of corporate’s financial report theoretically. In this paper, we
examine the effect of internal control on earnings management,
which was measured by real activity earnings management.
Besides, we further test the moderating effect of ownership
structure on the association between internal control quality and
earnings management. The results indicate that higher quality of
internal control can restrain real activity earnings management.
Specially, this restrain function is more obvious in un-stated
firms compared to state-owned firms. And the restrain function
cannot be found in companies exist separation of corporate
controlling right from the right to control cash flow.
Keywords—internal control; earnings management; ownership
structure
I. INSTITUTIONAL BACKGROUND
Internal control deficiencies have long been the main cause
of accounting scandals and captured more and more attention
both from regulators and the stakeholders. In reference to
experiences of the Sarbanes-Oxley Act, China issued internal
control standards in 2008, which could be called C-SOX, a
similar framework about corporate internal control system.
According to US COSO (Committee of Sponsoring
Organizations of the Treadway Commission) integrated
framework, internal control system is designed to provide
reasonable assurance to achieve effectiveness and efficiency
of operations, reliability of financial reporting and compliance
with laws and regulations. It is said that the quality of internal
control system has direct impact on the financial report quality.
Thus, in theory, internal control efficiency can improve
earnings quality. There have been many foreign researches
indicated that internal control efficiency can restrain earnings
manipulation, which improve earnings quality as a result.
Under China’s institutional background, because of the
existence of special single-largest-shareholder ownership
structure, the relationship between internal control efficiency
and earnings manipulation cannot be predicted. Hence,
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Chunling Shang Qiang Lu
Department of Department of
Management Science and Management Science and
Engineering Engineering
Harbin Institute of Harbin Institute of
Technology Technology
Shenzhen Graduate Shenzhen Graduate
School School
Shenzhen, China Shenzhen, China
China’s unique institutional characteristics provide
opportunities for us to investigate the problem.
This article makes some contribution as follows. In theory,
the point-cut of the unique ownership structure in China can
provide a new angle for the research into internal control on
the basis of exist domestic research. In practice, the results of
the empirical study in the paper contribute to a universal
guiding significance for further perfection of the internal
control system and optimization of the equity structure in
Chinese listed companies.
In this paper, we first examine the relation between
internal control efficiency and real activity earnings
manipulation. Then we test the moderating impact of
ownership structure. The paper proceeds as follows. Section 2
describes the related research. Section 3 illustrates the
motivation develops empirical hypotheses. Section 4 is the
empirical study. Section 5 is the conclusion.
II. LITERATURE REVIEW
Previous researches on internal control and earnings
management in abroad have concluded the relationship
between internal control quality and accrued and real activity
earnings management. Doyle (2007) found that firms with
weak internal control over financial reporting generally have
lower accruals quality. And the relation between weak internal
controls and lower accruals quality is driven by weakness
disclosures that relate to overall company-level controls,
which may be more difficult to "audit around." But there is no
such effect for account-specific weaknesses [1]. Beneish
(2008) obtained the consistent conclusions that companies
with serious internal control deficiencies have stronger
motivation of earnings management and higher extent to carry
earnings manipulation [2]. Chan et al(2008)draw the same
conclusion and consider that Section 404 of the Sarbanes-
Oxley Act has promoted the improvement of internal control
and earnings quality[3]. Ashbaugh - Skaife (2007) found that
firms whose auditors confirm remediation of previously
reported internal control deficiencies exhibit an increase in

accrual quality relative to firms that do not remediate their
control problems [4].
The related research in China starts late and domestic
scholars cannot come to the consistent conclusions. With the
promulgation of Internal Control Standards in 2008, more and
more scholars begin to focus on the empirical studies about
the related problems of internal control and reach some
empirical evidence. Guoqing Zhang（2008） indicated that
the improvement of internal control quality does not
necessarily go with higher earnings quality and there exist
some inner factors of the firms influencing the quality of
internal control and earnings [5].Zhongbo Yu and Gaoliang
Tian came to a similar conclusion that there was no significant
correlation between internal control quality and earnings
management [6].However, others oppose it. Yugui Hao and
Yongxin Sun point out that the higher the internal control
quality, the less the profit manipulation is, which can be
helpful to increase the earnings quality [7]. Lirong Chen and
Shuguang Zhou demonstrate a negative correlation between
the degree of earnings management and the detail of the
information disclosure of internal control, but a positive
correlation between the degree of earnings management and
internal control deficiencies [8]. Jianfang Ye et al. (2012) also
showed that internal control deficiencies are significantly
positively associated with the extent of accrual-based and real
activity-based earning management [9]. Hongxing Fang and
Yuna Jin conclude that higher internal control quality can
significantly inhibit both the accrual-based and real activity-
based earnings management. They also find that companies
disclosing audit report on internal control have lower degree
of earnings management compared to companies without
internal control audit report [10].Yan Tong and Feng Xu
（2013）arrived at the same conclusion and earnings quality
can cause a reaction to the internal control[11].
By combing the exiting literature, we find foreign scholars
always use internal control deficiencies as the proxy of
internal control and have come to an accordant conclusion that
there is a negative correlation between internal control
deficiencies and earnings management. Constrained by the
information sources of internal control, the scholars in China
have different ideas and still lack the research including real
activity earnings management. Therefore, we will carry out
this research to explore the relation between internal control
and earnings management based on the moderating effect of
Chinese ownership structure.
III. MOTIVATION AND HYPOTHESES
A. Internal Control and Real Activity Earnings Management
According to agency theory, there are different goals
between owner and manager. Maximizing the value of the
company is the owners' objective and the goal of the
managers is to maximize their self-interest. As a result, the
managers may deviate from maximizing firm value because of
influence of their cognition problems. Internal control, as an
effective corporate governance mechanism, can supervise and
restrict managers' self-interested behaviors, which will reduce
the space for manipulation of the profit and descend the
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degree of earnings management. Either the Sarbanes-Oxley
Act or Internal Control Standards of China, providing
reasonable assurance of financial report quality is one of the
fundamental goals. High quality internal control can decrease
the occurrence of managers' opportunism behaviors whether in
the accounting information processing or the production and
operation of an enterprise, thereby increasing earnings quality.
On the contrary, the lower quality of internal control may be
almost nonexistent, which could hardly contain managers'
self-interested behaviors. Then it provides a chance for
managers to manipulate earnings in order to maximize their
benefit which can result in quality degradation of the earnings.
Based on the analyses above, we put forward the following
hypothesis.
H1: Other things being equal, internal control can inhibit
real activity earnings management, the higher the quality of
internal control, the lower degree of real activity earnings
management.
B. State-owned Ownership Sstructure
Internal control can be implemented effectively based on
appropriate corporate governance. Corporate governance
structure always has an impact on the orientation of managers'
values and behaviors, as well as the internal control quality.
As the foundation of property right of governance structure,
ownership structure is the critical factor influencing agency
conflict between controlling shareholders and minority
shareholder, and also determines the way that the governance
system operates. Therefore, reasonable ownership structure is
helpful to improve the corporate governance structure which
can fundamentally raise the quality of internal control.
Different with the west, there usually exists special ownership
structure which dominance by a single shareholder state-
owned shares in Chinese listed companies, which can affect
the construction of internal control system. In state-owned
companies, the government carry out the regulatory authority
but don't have residual claim right, thus the supervisory cost
does not match the benefits which can lead to inefficient
supervision of the managers. In addition, the minority
shareholders would not like to monitor effectively because of
the free-rider problem, either. As a result, state-owned
enterprises always have higher agency costs and more serious
agency problems. Hence, state-owned companies in China
have more serious Insider Control problem that is more likely
to initiate managers' opportunism behaviors. By contrast, in
non-state firms, majority shareholders will supervise the
managers strictly to secure their interests so that inhibit the
behavior of managers. This makes majority shareholders and
managers more easily behave as opportunists which is against
the effectively operation of internal control and cannot
improve the earnings quality. There raises the next hypothesis.
H2: Other things being equal, compared with state-owned
companies, internal control can inhibit real activity earnings
management more effectively in non-state firms.
C. Separation of Cash Flow Right and Control Right
For major shareholder-controlled companies, the control
right held by controlling holders of listed companies may
exceed their cash flow right, which leads to the deviation of
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the two rights. Present empirical studies indicate that the abnormal levels are measured as the estimated residual from
characteristics of the corporation governance structure affect the three equations. Aggregating the three real activity
the controlling shareholders' tunnelling behavior. The higher manipulation measures into one proxy, we get the proxy of
levels of the separation of cash flow right and control right, real activity earnings management in equation (4).
the more motivated the controlling shareholders would like to
carry out the tunnelling behavior, which can occupy the RM it = A C F O it + A P R O D it + A D IS X it (4)
interests of small shareholders. Less powerful cash flow right Based on the previous studies, we use ICD (internal
drives the controlling shareholders to seize the private benefits control deficiencies) as proxy for the independent variable,
of control rights. What's more, larger control right makes it internal control quality. From the perspective of ultimate
easier to establish profitable accounting policies which controller, we choose ownership property (State: state-owned
contributes to more private benefits. Chengbing Chu (2013) and non- state-owned) and the separation of cash flow right
finds that of the separation of cash flow right and control right and control right (SOC) as the moderating variables to
have negative effects on internal control effectiveness [12]. measure the ownership structure. In contrast to the prior
Thus it is not good for internal control in firms existing literature, we select several control variables. LNA, the log
deviation of the two rights, as well as the earnings quality. value of total assets, is used to control for relative firm size.
Then we propose the third hypothesis. ROA, computed using net income divided by total assets in
H3: Other things being equal, internal control cannot year t, is used to control for firm performance. We choose
inhibit real activity earnings management effectively when GROW (Assets Growth Rate) as the proxy for the firms in
there is the separation of cash flow right and control right. growth, which is measured as the increase in assets from year
t-1 to year t divided by the amount of total assets in year t-1.
We use BS to control for director board size and LEV
IV. EMPIRICAL STUDY
represents the financial leverage.
A. Sample Collection and Variables
B. Models
The data for this paper are mainly obtained from CCER
database in China. We choose the firms listed in Shenzhen and In order to examine the relation between internal control
Shanghai Stock Exchange from 2010 to 2012 as the sample. deficiencies and real activity earnings management, as well as
Banks and financial institutions are eliminated. ST and *ST the moderate effects of ownership structure, we establish three
firms are also eliminated. After taking out the extreme values regression models as follows. We use model (1) to test
at 5% level, we get 3926 observations. Hypothesis 1. Model (2) and model (3) are used to examine
Hypothesis 2 and Hypothesis 3, respectively.
The dependent variable in this study is real activity
earnings management. Following Roychowdhury (2006) [13], RM=β0+β1ICD+β2LNA+β3LEV+β4GROW+β5BS+β6Year
we examine it from the following three aspects: the abnormal dummies+β7Industrydummies+ε (1)
level of cash flow from operation, the abnormal level of RM=β0+β1ICD+β2LNA+β3LEV+β4GROW+β5BS+β6State
production cost, and the abnormal level of discretionary +β7ICD*State+β8Yeardummies+β9Industrydummies+ε (2)
expenditure.
RM=β0+β1ICD+β2LNA+β3LEV+β4GROW+β5BS+β6SOC
CFOit / Ait −1 = β 0 + β1 (1 / Ait −1 ) + β 2 ( Sit / Ait −1 ) + β 3 ( ΔSit / Ait −1 ) +β7ICD*SOC+β8Yeardummies+β9Industrydummies+ε (3)
+ β 4 ( ΔSit −1 / Ait −1 ) + β 5 ( ECit / Ait −1 ) + β 6 (TCit / Ait −1 )
+ β 7 ( OCit / Ait −1 ) +ε it (1) C. Empirical Results
Table 1 presents the regression results regarding the
P R O D it / Ait − 1 = β 0 + β 1 (1 / Ait − 1 ) + β 2 ( S it / Ait − 1 ) (2) relation between internal control and real activity earnings
+ β 3 ( Δ S it / Ait − 1 ) + β 4 ( Δ S it − 1 / Ait − 1 ) + ε it management. The coefficient is negative and significant at the
level of 0.01, indicating that firms with more internal control
D ISX it / Ait − 1 = β 0 + β 1 (1 / Ait − 1 ) + β 2 ( S it − 1 / Ait − 1 ) + ε it (3)
deficiencies have lower level of real activity earnings
In equation (1), CFOit is the net operating cash flows management. On the contrast, higher internal control quality
reported in the statement of cash flows in year t; Sit is the sales can restrain real activity earnings management, consistent with
in year t; ΔSit is the change in sales from year t-1 to t; ΔSit −1 is H1.
TABLE 1 INTERNAL CONTROL AND RM
the change in sales from year t-2 to t-1; ECit is cash paid to Pred.Sign Coefficient
employees in year t; TCit is tax payments in year t; and OCit is Intercept -4.002***
cash received relating to other operating activities in year t. In (-5.78)
equation (2), PRODit is the sum of the cost of goods sold in ICD - -0.229***
(-11.76)
year t, equals the change in inventory from year t-1 to t. In
LNA + 0.161***
equation (3), DISXit denotes the discretionary expenditures, (4.94)
the sum of operating costs and administration costs. We first GROW + -0.004
estimate the normal level of cash flow from operations, the (2.71)
abnormal level of production cost, and the abnormal level of LEV 0.404**
discretionary expenditure with the following equation. The (2.14)

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ROA -0.004 V. CONCLUSION

(-0.71)
BS 0.134 Internal control problems have drawn more and more
(0.78) attention because of the frequent cases in accounting scandals
Year both in China and abroad. This article tries to learn the
controlled
Industry
construction and run process of the internal control system in
controlled China through examining the relation between internal control
Obs. and real activity earnings management. Combing with the
3926
unique stock right structure of Chinese listed companies, we
Adj.R2 0.014
test moderating impact of ownership structure on the relation
F-value 10.27 between internal control and real activity earnings
*** (**, *) indicates two-tailed significance at the 1 % (5 %, 10%) level. management in order to provide new ideas for optimizing
Taking State as the moderating variable, we get the equity structure. Through the empirical study, we conclude
regression results in table 2, Panel A. It is noteworthy that the that higher quality of internal control can restrain real activity
coefficient of ICD*State is positive and significant at the 0.01 earnings management. Specially, this restrain function is more
level, which indicate that in state-owned firms, the higher the obvious in non-stated-owned firms compared to the state firms.
internal control quality, the higher level of real earnings And the restrain function cannot be found in companies exist
management. We can learn that state-owned ownership separation of corporate controlling right from the right to
structure may inhibit internal control increase earnings, control cash flow.
consistent with H2.
In order to test H3, we use SOC as the other moderating REFERENCES
variable .The regression results are put in table 2, Panel B. We
can find that the coefficient of SOC is positive and significant [1] Doyle J, Ge W, McVay S. Accruals Quality and Internal Control over
Financial Reporting[J].The Accounting Review, 2007, 82(5): 1141-1170
at the 0.01 level, showing that the higher level of the
[2] Beneish M D, Billings M B, Hodder L D. Internal control weaknesses
separation of cash flow right and control right, the higher and information uncertainty[J]. The Accounting Review, 2008, 83(3):
degree of real activity earnings management. We can conclude 665-703.
that the separation of cash flow right and control right have [3] Chan K C, Farrell B, Lee P. Earnings management of firms reporting
negative effects on real activity earnings management. But the material internal control weaknesses under Section 404 of the Sarbanes-
coefficient of the cross term is not significant, which cannot Oxley Act[J]. Auditing: A Journal of Practice & Theory, 2008, 27(2):
verify H3. 161-179.
[4] Ashbaugh-Skaife H, Collins D W, Kinney Jr W R. The discovery and
TABLE 2 RESULTS OF MODERATING FUNCTION reporting of internal control deficiencies prior to SOX-mandated
audits[J]. Journal of Accounting and Economics, 2007, 44(1): 166-192.
Panel A Panel B
[5] Guoqing Zhang. Internal control and earnings quality [J]. Economic
Pred. Coefficient Pred. Coefficient Management, 2008, (23):112-119.
Sign Sign
[6] Zhongbo Yu, Gaoliang Tian. Do the internal control evaluation reports
Intercept -3.134*** Intercept -2.903*** really work?[J]Journal of Shanxi University of Finance and Economics,
(-14.13) (-17.70) 2009 (10): 110-118.
ICD - -0.321*** ICD - -0.251***
[7] Yugui Hao,Yongxin Sun. Study of the relation between internal control
(-11.32) (-8.88)
and earnings quality o [J].The Chinese accounting association branch of
State - -0.099*** SOC + 0.305***
high engineering college and university academic essays in 2010, 2010:
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572-582.
ICD* 0.161*** ICD* - -0.318
State (3.80) SOC (-1.41) [8] Lirong Chen,Shuguang Zhou. Research of the relation between internal
control effeciency and earnings management [J].Communication of
LNA + 0.123*** LNA + 0.123***
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LEV 0.278*** LEV 0.078 Research, 2012 (6): 50-59.
(5.28) (1.04) [10] Hongxing Fang,Yuna Jin.Coporate goverance, internal control and
ROA 0.001 ROA 0.008 inefficient investment: theoretical analysis and empirical evidence [J].
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3926 3926 [13] Roychowdhury S. Earnings Management through Real activity
Adj.R2 0.154 Adj.R2 0.150 Manipulation[J]. Journal of Accounting & Economics, 2006 42(3):335.
F-value 90.60 F-value 116.14
*** (**, *) indicates two-tailed significance at the 1 % (5 %, 10%) level.

71

Sustained Quality Award Status in Developing Country: A study on
the Dubai Quality Award Recipients
M. Doulatabadi
Razak School of Engineering and Advanced Technology
Universiti Teknologi Malaysia (UTM)
Kuala Lumpur, Malaysia
dmehran2@live.utm.my
Abstract – Quality has been regarded as one of the most
important factors for achieving competitive advantage with
an emphasis on excellence. Achieving excellence through
quality award is a challenging task, but sustaining this
achievement is even more challenging. Given the importance
and benefits of continuously practicing with a quality award
to organizations, very limited empirical research has been
carried out especially in organizations in developing
countries. This study attempts to reduce this knowledge gap
by focusing exclusively on organizations that have received a
Dubai Quality Award in the United Arab Emirates. The main
purpose of this research is to identify those critical factors
perceived as crucial for sustaining quality award status. To
achieve this purpose, a structured questionnaire survey was
carried out to elicit the opinions of quality managers from 138
quality award organizations about the importance of critical
factors and their current practices. Survey results indicated
that eight factors as the most critical factors to sustain quality
award status. The results of this paper can be used by quality
managers to prioritize the implementation of the proposed
critical factors for long-term sustainability towards higher
quality levels.
Keywords – Critical factors, Dubai Quality Award, sustaining,
survey, United Arab Emirates.
INTRODUCTION
In increasingly competitive business environment
around the world, quality has been regarded as one of the
most important factors for achieving competitive
advantage with an emphasis on ‘excellence’. Organizations
have now come to understand that in order to keep pace
with global competitiveness; they need to excel in every
aspect of their business operations [1,2]. In response to
these challenges, a variety of quality improvement
approaches have been proposed as the prime driver for
enhanced business performance towards achieving
excellence [3]. These approaches have been widely
recognized as the most important competitive priority for
many organizations toward organizational success [4].
Among the quality improvement approaches which
have been proposed, Business Excellence (BX), as a
modern operation management practice based on the
concept of Total Quality Management (TQM), has gained
widespread attention of organizations [5,6]. It has been
developed as the result of intense world-wide competition
based on the quality award models/frameworks to the
improvements of overall business performance [7].
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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K.Y. Wong
Department of Manufacturing and Industrial Engineering
Universiti Teknologi Malaysia (UTM)
Johor Bahru, Malaysia
wongky@mail.fkm.utm.my
European Foundation for Quality Management (EFQM)
Excellence Model and the Baldrige Criteria for
Performance Excellence (BCPE) are two examples of
globally accepted major quality excellence award models.
The first and immediate aim of these models is the
continuous improvement of performance towards
achieving excellence [4,6]. Self-assessment and
benchmarking is the main element of these models [8,9].
The United Arab Emirates as the first developing
country in the Middle East including North Africa
(MENA) has enhanced competitiveness in the region by
creating several significant quality and excellence award
programs and schemes [10].
Given the importance and benefits of continuously
practicing with quality award programs to organizations
there is a clear lack of research concerning this issue
especially among organizations in developing countries.
From the limited literature, it can also be seen that there is
limited empirical research related to sustaining quality
practices through a quality award that examined both
manufacturing and service organizations. Therefore, this
leaves much room and opportunity for further empirical
studies to be made in this context.
This empirical study therefore pursues to investigate
those factors that are critical for sustaining quality award
status with focusing exclusively on the Dubai Quality
Award as a premier and the most prestigious quality award
programs recognized by all public and private
organizations within the United Arab Emirates.
This paper is organized into five sections. In the first
section, a description of the literature on the previous
critical factors that have been reported with respect to
sustaining quality practices is presented. Then, the
methodology of study followed by a discussion on the
survey analysis and respective results are provided.
Finally, the paper ends with final conclusions, and
suggestions for future research.
LITRATURE REVIEW
One of the most recommended and common ways for
achieving excellence is to participate in a quality award
program that exist around the world [6,11,12]. On the
whole, the participation in a quality award program is
considered as an effective pillar that can be undertaken by
any organization striving for excellence status. In other
words, receiving a quality award is an accreditation level

that organizations need to achieve before they move on to
become a world-class company [3, 13].
In the UAE, following the successful implementation
of the EFQM Excellence Model in European organizations,
Dubai Quality Awards (DQA) program was established to
develop and promote quality practice toward
organizational excellence amongst UAE based
organizations. It is a fully government sponsored program
which is entirely based on the EFQM Excellence Model. It
is given each year to successful companies for their effort
and commitment to continuous quality improvement in
three categories includes Dubai Quality Appreciation Prize
(DQAP), Dubai Quality Award (DQA) and Dubai Quality
Award - Gold (DQAG). Since its creation, the DQA has
also had a significant impact on business community at
national and regional levels through promoting the need for
quality improvement and building a culture of excellence
between the UAE companies [14].
With the increasing levels of international competition
and the demand of major customers for quality, becoming
a ‘world-class’ company has become a main vision of
many organizations in every line of business activities [6].
For that reason, over the past few years, a large number of
organisations around the globe adopted quality award
programs primarily as a means of self-assessment of their
progress on the key dimensions of the model and for
introducing organisation wide quality [15]. There has been
an increasing interest in the area of organizational self-
assessment using quality award models among
organizations around the world and it is the same with UAE
based organizations.
It has been strongly suggested that quality management
practices will only produce significant benefits if it is
implemented and sustained in a long-term basis [4].
However, it has been reported that organizations are facing
challenges not only to implement of quality excellence but
also on sustaining this practices for the long-term.
Organizations using a business excellence framework and
those who have reached award status have now come to
realize that achieving excellence is a challenging task and
sustaining the position of being excellent is harder and
more challenging task. While many large organizations
have succeeded in sustaining this achievement through
participating in quality award process, the results of recent
studies showed that there are as many failures as successes
in sustaining this practice after receiving the award [4, 6,
16, 17, 18].
A comprehensive review of literature confirms that the
success and failure of practices with quality management
approaches are generally linked with certain critical factors
[10]. As a definition, critical success factors refer to "the
limited number of areas in which satisfactory results will
ensure successful competitive performance for the
individual, department, or organization” [19].
Alternatively, the critical success factors (CSFs) have been
used significantly to present or identify a few main factors
that a manager or an organization, should focus on to be
successful.There are some studies that have examined the
critical success factors for organizational excellence
[5,20,21]. However, because of the inconsistent results of
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these studies due to some methodological and sampling
limitations (i.e. different region/industry/company size) the
confirmation of their outcomes remains unclear. This
argument is supported by [22] who notes that the
importance of the critical factors identified by previous
research may be different from one region to another, more
empirical research therefore required to be conducted in
this context. In a similar view, [23] stressed that critical
factors, however, do not change regularly, but they are
subject to change during the different stages and they need
therefore to be reviewed and modified for the different
times and situations.
A review of current literature indicates that previous
research on critical success factors of quality management
mostly have examined those factors that are crucial for
implementation process [3,5,24,25,26,27]. However, only
a few empirical studies have attempted to examine critical
success factors that contribute to sustaining quality
excellence practices such as the research by [16,18, 31,32].
It is suggested by [6], consistent with [4], that more
research should be undertaken to explore these apparent
contradictions in more detail. Apart from that, it is also
apparent that most of previous studies discussed on the
‘hard’ elements of critical success factors of quality
practices, while very few studies were found to be
exclusively addressing the ‘soft’ critical success factors
[33, 34].
Despite to the broadly published literature on the
implementation of quality practices where very few studies
have been carried out regarding to sustaining quality and
its related issues. This is especially lacking with respect to
Asian organizations, particularly within the UAE context.
In the UAE context, some studies, while identifying critical
success factors for quality management practices,
investigated the relationship between these elements and
organizational performance [24, 28] conducted a survey
with the aim to validate measurement of the critical success
factors of quality management practices by focusing in
UAE service and manufacturing industry. This study has
shown that critical success factors of quality management
practices could be reduced to eight factors, similar to those
presented by [24]. A study carried out an empirical study
through survey questionnaire to identify critical ‘soft’
factors for successful TQM implementation process. They
highlighted 16 critical factors for successful
implementation of TQM practices in the banking sector.
Another study attempted to investigate the most critical
success factors for achieving organizational excellence for
engineering companies in the UAE and Saudi Arabia.
Their research suggested 15 traditional critical success
factors without focusing on the ‘soft’ factors of quality
practices.
METHODOLOGY
Survey Population and Sample
The target population for the questionnaire survey was
included 168 local and foreign companies and institutions
 Back to Contents

that have received award between the years 1995 and 2010. its purposes to make it easy for the respondents to answer.
However, due to significant cultural differences at Three common types of survey question including multiple
organizational levels between local and international questions, ranking scales and yes/ no questions were
companies in the context of quality practices, only 138 included in developing the questionnaire. Respondents
UAE-based organizations were included as the target were requested to tick their response at the appropriate box
sample. This sample was contained all three award and select the degree of their agreement or write in the
organizations including DQAP certificate, DQA award, space provided. To guide the respondents on how to answer
and DQA-GOLD Prize. These organizations are physically the questions, a short introduction with a clear instruction
operating in four main states (Emirates) of the UAE was provided for each section.
namely Abu-Dhabi, Dubai, Sharjah, and Al-Ain. The respondents were requested to determine the level
Selected sample consisted of different size of of importance of the critical factors rating on a five-point
organizations including ‘micro’ (with less than 20 interval scale ranging from 1 (being not important) to 5
employees); ‘small’ (21 to 100 employees); ‘medium’ (101 (being an extremely important). The first page highlighted
to 250 employees); and ‘large’ (with more than 250 the objectives of the study.
employees) based on Dubai Chamber of Commerce and
Industry classification. It is notable that this sample Survey Data Analysis
represented 82 per cent of the whole population of the
study from various business activities including In other to analyze the collected data from the survey,
manufacturing, service, construction, healthcare, the Statistical Package for Social Sciences (SPSS) software
professional, trade, education, finance, and tourism. 21.0 as the latest version was applied to analyze general
For the purpose of this study, senior officer or characteristics of the respondents (demographic variable).
management representative in charge of quality was The tests used were descriptive and inferential statistical
selected as the primary information sources for answering analysis in the form of frequency, percentages, cumulative
the survey questions. These included quality directors, frequency, and cumulative percentages. Some initial
quality mangers; business excellence managers, quality statistical techniques such as reliability test, means,
assurance/quality control managers, or operations variance and standard deviations were also used in
managers. However, only a person within each company interpreting the results.
was invited to participate in the survey based on
availability and interest. The reason for choosing these Survey Reliability and Validity Test
individuals was mainly due to their first-hand knowledge
and years of experience in driving and planning of quality In this study, to determine whether or not the survey
activities in respective companies. questionnaire measures critical factors in a useful way,
Table I presents a summary of selected population, Cronbach’s coefficient alpha was adopted as the most
sample and unit of analysis and respondents in more common and the best index to calculate internal
details. consistency. Table II shows the final results of internal
consistency analysis for the eight critical factors. As it can
TABLE I be seen, the alpha values for each factor has internal
TARGET POPULATION AND SAMPLE OF SURVEY consistency value ranged between 0.748 and 0.947 which
Description Participants/respondents are considered as acceptable value. From the results
Target population All 168 DQA recipients across the UAE
including public and private, local and
obtained, it can be concluded that the proposed critical
foreign companies and institutions. factors are sufficiently reliable and the questionnaire is a
Target sample Only the 138 local companies from three consistent instrument for further analyses since all the
different award categories i.e. DQAP factors have reliability coefficients with alpha value above
certificate, DQA, and DQA- GOLD awards. 0.70 (α > 0.70).
Unit of analysis UAE based organizations from
manufacturing, service, trade, finance,
tourism, construction, professional, TABLE II
healthcare and education. INTERNAL CONSISTENCY TEST RESULT
Target respondents Senior quality coordinator; quality manager; # Main Factors Cronbach Da Mean
business excellence manager, quality C01 Top management commitment 0.870 4.4097
assurance/quality control manager, C02 Strategy and quality planning 0.869 4.2810
operations manager, manager representative. C03 Empowerment and involvement 0.784 4.0879
C04 Education and training 0.838 4.0754
C05 Teamwork and cooperation 0.748 4.1538
Survey Questionnaire Design C06 Recognition and reward 0.947 4.3407
C07 Communication and relationship 0.839 4.3375
The survey questionnaire of the study which was C08 Work culture and climate 0.775 4.3344
administrated for the final survey was basically developed a
Cronbach’s Coefficient Alpha (D
into an A4-size questionnaire in five (5) pages includes
four sections with a total of 72 questions. All questions For validity of the survey questionnaire, literature
were arranged sequentially with a clear title according to review was first carried out to elicit critical factors and

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related sub-factors of the survey questionnaire. The main TABLE III

aim was to ensure that the empirical findings accurately THE MEAN SCORES FOR CRITICAL FACTORS OF DQAP VS. DQA

reflect the proposed critical factors and provide confidence. P P p-
# Main Factors Results
DQAP DQA value
Following this review, the proposed critical factors and Recognition and Not
related sub-factors as well as content of the questionnaire C06 4.389 4.250 0.276
reward Sig.
were evaluated by quality experts including of academics Top management Not
C01 4.377 4.468 0.439
and practitioners. Through this evaluation, necessary commitment Sig.
corrections and adjustments were done after the Work culture and Not
C08 4.375 4.2589 0.315
climate Sig.
questionnaire was reviewed by the panel of experts.
Communication and Not
To ensure that the survey instrument serve its purpose C07 4.370 4.276 0.434
relationship Sig.
and could understand by potential respondents, it was Strategy and Not
C02 4.278 4.285 0.946
piloted by quality directors/managers before main data planning Sig.
collection. The aim of the pilot study was to evaluate the Teamwork and Not
C05 4.118 4.218 0.454
cooperation Sig.
effectiveness, content, clarity and style of the questions.
C03 Empowerment and Not
Each participant was requested to verify and assess the involvement
4.082 4.098 0.893
Sig.
survey questionnaires in terms of its content, wordings, Education and Not
C04 4.058 4.107 0.732
relevance, and clarity. Through the pilot study, some training Sig.
corrections were made on the questions structures to
improve and enhanced the survey instrument. Lastly, in
order to ensure that the survey questions were meaningful CONCLUSIONS
to potential respondents, the final questionnaire was
reviewed by an English native expert with sufficient This paper was addressed the issue of quality practices
background and knowledge on the topic of quality before by focusing exclusively on organizations based in the
the actual data collection. United Arab Emirates with Dubai Quality Awards status.
The paper has provided a detailed discussion of those
critical factors perceived as crucial for sustaining quality
SURVEY RESULTS AND DISCUSSION practices in the context of the UAE. The need for such a
study arises as there is a paucity of empirical research
Having analyzed the proposed critical factors, an relating to quality excellence practices through a quality
attempt was made to examine to what extent there are award in the published literature and more specifically in
significant differences on the perception of the respondents the context of the UAE.
on the degree of importance of the critical factors. The prime purpose was to recognize and empirically
The data analysis involved a comparison between two assess ‘soft’ critical factors that contribute to the success of
independent categories of the quality award recipients (i.e. sustaining quality excellence practices. Based on the
DQAP and DQA) to observe the differences in perception survey findings, Leadership and Management
by using independent samples t-test. Commitment identified as the highest and most crucial
To help achieve this purpose, the following research driving factors followed by Recognition and Reward as the
null hypotheses were formulated for testing the significant second highly ranked critical factor for sustaining quality
difference in perceived level of importance: excellence practices. Communication and Relationship,
Work Culture and Climate, and Strategy and Quality
Ho: μ1 - μ2 = 0, i.e. there is no significant Planning are other critical factors with a near equal
differences between perceived importance of DQAP importance. The findings and conclusions from this study
and DQA companies. offer significant contribution to the enhancement of
existing body of knowledge related to quality excellence
H1: μ1 - μ2 ≠ 0, i.e. there is a significant difference practices in general, and in the context of UAE, in
between the perceived importance of DQAP and particular. In terms of originality, this study is considered
DQA companies. as one of the pioneer empirical studies that examine the
UAE based organizations with the DQA status.
In order to analyze the above hypothesis, an
independent-samples t-test was carried out using SPSS.
This test was more suitable to compare the mean values ACKNOWLEDGMENT
between two different groups of respondents.
Based on the results, since the p-value of each factor The authors would like to acknowledge all invited
is more than 0.05 (significant level), therefore, the null experts panel were reviewed the survey questions as well
hypothesis was not rejected. In this case, it can be as the Dubai Quality Award (DQA) companies that
concluded that the result is not significant, meaning both of participated in this research project. The authors would like
the DQAP and DQA companies have almost the same to extend a special thanks to Ms. Azizah Yusof from UTM-
perceptions on the importance of the proposed critical Lead for her valuable help.
factors. The results of this test are summarized in Table III.

75

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 Back to Contents

Software Reliability Model Selection Based on

Deep Learning
Yoshinobu Tamura
Graduate School of Science and Engineering,
Yamaguchi University
Tokiwadai 2-16-1, Ube-shi, Yamaguchi, 755-8611, Japan
Email: tamura@yamaguchi-u.ac.jp
Mitsuho Matsumoto, Shigeru Yamada
Graduate School of Engineering,
Tottori University
Minami 4-101, Koyama, Tottori-shi, 680-8552, Japan
Email: M15T7019Y@edu.tottori-u.ac.jp, yamada@sse.tottori-u.ac.jp

Abstract—In the past, many software reliability models have
been proposed by several researchers. Several model selection
criteria such as Akaike’s information criterion, mean square
errors, predicted relative error and so on, are used for the
selection of optimal software reliability models. These assessment
criteria can be useful for the software managers to assess the past
trend of fault data. However, it is very important to assess the
prediction accuracy of model after the end of fault data in the
actual software project. In this paper, we propose a method of
optimal software reliability model selection based on the deep
learning. Also, we show several numerical examples of software
reliability assessment in the actual software projects. Moreover,
we compare the methods to estimate the cumulative numbers of
detected faults based on the deep learning by using the fault data
sets of actual software projects.
Index Terms—deep learning; software reliability model; opti-
mal model selection
I. I NTRODUCTION
In actual software development processes, the comprehen-
sive use of the technologies and methodologies in software en-
gineering is needed for improving software quality/reliability.
In particular, the waterfall model is well known as the se-
quential phases in software development process. We show
software engineering activities in the respective software life-
cycle phases as follows:
∘ Software specification
Software specifications are served as contract between the
customer and manufacturer of a software system.
∘ Software design
After software requirements are analyzed and specified,
preliminary and detailed designs have to be made.
∘ Software implementation
Implementation is the process of transforming design
documents into an executable form.
∘ Software testing
By executing test-cases, the testing is performed to detect
and remove software faults latent in the software system
and ascertain whether the software system satisfies its
requirements.
∘ Software maintenance
Software maintenance is the modification and revision of
a software system after its first delivery.
In the past, many software reliability models [1]–[3] have
been applied to assess the reliability for quality manage-
ment and testing-progress control of software development.
However, it is difficult for the software managers to select
the optimal software reliability model for the actual software
development project. As an example, the software managers
can assess the software reliability for the past data sets by
using the model evaluation criteria. On the other hand, the
estimation results based on the past fault data cannot be
guaranteed for the future data sets of actual software projects.
The selection method of the optimal software reliability
model based on the deep learning is proposed in this paper.
Also, several numerical examples of software reliability as-
sessment by using the fault data in the actual software projects
are shown. Moreover, we compare the methods to estimate
the cumulative numbers of detected faults based on the deep
learning with that based on neural network.
A. Optimal Software Reliability Model Based on Neural Net-
work
The structure of the neural networks in this paper is shown
in Fig. 1. Let 𝑤𝑖𝑗 1
(𝑖 = 1, 2, ⋅ ⋅ ⋅ , 𝐼; 𝑗 = 1, 2, ⋅ ⋅ ⋅ , 𝐽) be the
connection weights from 𝑖-th unit on the sensory layer to 𝑗-
2
th unit on the association layer, 𝑤𝑗𝑘 (𝑗 = 1, 2, ⋅ ⋅ ⋅ , 𝐽; 𝑘 =
1, 2, ⋅ ⋅ ⋅ , 𝐾) denote the connection weights from 𝑗-th unit on
the association layer to 𝑘-th unit on the response layer. More-
over, 𝑥𝑖 (𝑖 = 1, 2, ⋅ ⋅ ⋅ , 𝐼) represent the normalized input values
of 𝑖-th unit on the sensory layer, and 𝑦𝑘 (𝑘 = 1, 2, ⋅ ⋅ ⋅ , 𝐾) are
the output values. We apply the actual number of detected

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Sensory Response
Layer Layer where 𝑑𝑘 (𝑘 = 1, 2, ⋅ ⋅ ⋅ , 𝐾) are the target input values for
wij wjk the output values. We apply 5 kinds of model type to the
1 1 1 target input values 𝑑𝑘 (𝑘 = 1, 2, ⋅ ⋅ ⋅ , 5) for the output values,
i.e., the exponential NHPP (nonhomogeneous Poisson process)
model, the delayed S-shaped NHPP model, the Logarithmic
2 2 2 Poisson execution time model, the exponential SDE (stochastic
differential equation) model, and the S-shaped SDE model,
respectively. Then, the number of units 𝐼 in sensory layer is
. . .

. . .

. . .
xi yk 37 because of 5 models.

B. Optimal Software Reliability Model Based on Deep Learn-

ing
I J K
wIJ wJK The structure of the deep learning in this paper is shown
xI Association yK in Fig. 2. In Fig. 2, 𝑧𝑙 (𝑙 = 1, 2, ⋅ ⋅ ⋅ , 𝐿) and 𝑧𝑚 (𝑚 =
Layer
1, 2, ⋅ ⋅ ⋅ , 𝑀 ) means the pre-training units. Also, 𝑜𝑛 (𝑛 =
1, 2, ⋅ ⋅ ⋅ , 𝑁 ) is the amount of compressed characteristics. Sev-
Fig. 1. The structure of our neural network based on back-propagation. eral algorithms in terms of deep learning have been proposed
[5]–[10]. In this paper, we apply the deep neural network to
learn the software testing phase.
faults per unit time 𝑁𝑖 (𝑖 = 1, 2, ⋅ ⋅ ⋅ , 𝐼) to the input values
As with the neural network, we apply the following amount
𝑥𝑖 (𝑖 = 1, 2, ⋅ ⋅ ⋅ , 𝐼).
of information to the parameters of pre-training units.
Considering the amount of characteristics for the software
reliability models, we apply the following amount of infor- ∙ The estimated values of Akaike’s information criterion
mation as parameters 𝜆𝑖 (𝑖 = 1, 2, ⋅ ⋅ ⋅ , 𝐼) to the input data ∙ The estimated values of mean square errors
𝑥𝑖 (𝑖 = 1, 2, ⋅ ⋅ ⋅ , 𝐼). ∙ The estimate of all parameters included in model
∙ The estimated error in the testing time point of 25%, 50%,
∙ The estimated values of Akaike’s information criterion
and 75% for data sets
∙ The estimated values of mean square errors
∙ The estimate of all parameters included in model Moreover, we apply 5 kinds of model type to the amount
∙ The estimated error in the testing time point of 25%, 50%, of compressed characteristics, i.e., the exponential NHPP
and 75% for data sets (nonhomogeneous Poisson process) model, the delayed S-
shaped NHPP model, the Logarithmic Poisson execution time
The input-output rules of each unit on each layer are given
model, the exponential SDE (stochastic differential equation)
by
( ) model, and the S-shaped SDE model, respectively.
𝐼
∑
1
ℎ𝑗 = 𝑓 𝑤𝑖𝑗 𝑥𝑖 , (1) II. N UMERICAL E XAMPLES
𝑖=1
⎛ ⎞
∑𝐽 We focus on actual software project data sets [11] in order
𝑦𝑘 = 𝑓 ⎝ 2
𝑤𝑗𝑘 ℎ𝑗 ⎠ , (2) to assess the performance of our method.
𝑗=1
A. Estimation Results Based on Trend Analysis for Each
where a logistic activation function 𝑓 (⋅) which is widely-
Model
known as a sigmoid function given by the following equation:
1 We apply 5 models as the typical two kinds of curve types
𝑓 (𝑥) = , (3) to the actual fault data sets. The estimation results by using
1 + 𝑒−𝜃𝑥
where 𝜃 is the gain of sigmoid function. We apply the multi- 90% of data set for each software development project are
layered neural networks by back-propagation in order to learn shown in Figs. 3 ∼ 5. Similarly, The estimation results by
the interaction among software components [4]. We define the using 80% of data set for each software development project
error function given by the following equation: are shown in Figs. 6 ∼ 8. From Figs. 3 ∼ 8, we can confirm
that the model best fitted for the past data are not always fitted
𝐾
1∑ for the future in fact. Then, it is necessary for the software
𝐸= (𝑦𝑘 − 𝑑𝑘 )2 , (4)
2 managers to offer the model best fitted for the future.
𝑘=1

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[Pre-Training Units]
1st
Input and Output Compressed
Layer zm Characteristics
Continued
Deep
1 1 Learning
1

. . . . .
2 2 2
. . . . .
. . .

. . .

. . .
zl
. . . . . on

L M N

zl [Pre-Training Units] on
m nd
Input and Output Layer
as
Hidden Layer

Fig. 2. The structure of deep learning.

4000 2000
Actual Estimate Actual Estimate
CUMULATIVE NUMBER OF

CUMULATIVE NUMBER OF

3000 1500
DETECTED FAULTS

DETECTED FAULTS

2000 1000
Actual (100%) Actual (100%)
Actual (90%) Actual (90%)
Exp (NHPP) Exp (NHPP)
1000 S−shape (NHPP) 500 S−shape (NHPP)
Log (NHPP) Log (NHPP)
Exp (SDE) Exp (SDE)
S−shape (SDE) S−shape (SDE)
0 0

0 5 10 15 20 0 20 40 60

TIME (MONTHS) TIME (MONTHS)

Fig. 3. The estimation results by using 90% of data set of software project Fig. 4. The estimation results by using 90% of data set of software project
1. 2.

B. Estimated Results of the Optimal Model Based on the Deep
Learning
The estimated results of the optimal model based on the
neural network and deep learning are shown in Tables I and II.
From Tables I and II, we found that the estimated recognition
rates based on the deep learning perform better than that of
the neural network. In particular, the estimation results based
on the deep learning give a high-recognition rates in terms of
the type of model. Moreover, the estimation results based on
the deep learning for the long-term prediction of 80% perform
significantly better than that of neural network.
III. C ONCLUSION
In the past, many software reliability models have been
proposed. In fact, these software reliability models have been
applied to many software development projects. However, it is
very difficult for the software managers to select the optimal

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Table I
T HE COMPARISON OF PREDICTION ACCURACY AFTER 90% OF ACTUAL FAULT DATA .

Accurate Model Model selected by Neural Network Model selected by Deep Learning
S-shape (NHPP) Exp (SDE) Exp (NHPP)
S-shape (SDE) Exp (SDE) S-shape (SDE)
S-shape (SDE) Exp (SDE) S-shape (NHPP)
Recognition Rate by Neural Network Recognition Rate by Deep Learning
Type of Model 0% 67%
Name of Model 0% 33%

Table II
T HE COMPARISON OF PREDICTION ACCURACY AFTER 80% OF ACTUAL FAULT DATA .

Accurate Model Model selected by Neural Network Model selected by Deep Learning
Exp (NHPP) Exp (SDE) Log (NHPP)
S-shape (NHPP) Exp (SDE) Exp (SDE)
S-shape (SDE) Exp (SDE) S-shape (SDE)
S-shape (SDE) S-shape (SDE) S-shape (SDE)
S-shape (NHPP) S-shape (SDE) S-shape (SDE)
S-shape (SDE) S-shape (SDE) S-shape (SDE)
Recognition Rate by Neural Network Recognition Rate by Deep Learning
Type of Model 67% 83%
Name of Model 33% 50%

2500 4000
Actual Estimate Actual Estimate
Actual (100%)
Actual (90%)
CUMULATIVE NUMBER OF

CUMULATIVE NUMBER OF

2000 Exp (NHPP)

3000
DETECTED FAULTS

DETECTED FAULTS

S−shape (NHPP)
Log (NHPP)
1500 Exp (SDE)
S−shape (SDE) 2000
Actual (100%)
1000 Actual (80%)
Exp (NHPP)
1000 S−shape (NHPP)
500 Log (NHPP)
Exp (SDE)
S−shape (SDE)
0 0

0 5 10 15 20 0 5 10 15 20

TIME (MONTHS) TIME (MONTHS)

Fig. 5. The estimation results by using 90% of data set of software project Fig. 6. The estimation results by using 80% of data set of software project
3. 1.

software reliability model for the actual software development
project. As an example, the software managers can assess the
software reliability for the past data sets by using the model
evaluation criteria such as the Akaike’s information criterion,
mean square errors, predicted relative errors, and so on. On
the other hand, the estimation results based on the past fault
data cannot guarantee for the prediction of future data sets in
actual software projects.
This paper focuses on the learning for the software devel-
opment projects. We have proposed the selection method of
optimal software reliability model based on the deep learning.
In particular, it is difficult to assess the reliability by only using
the past fault data, because the estimation results based on the
past fault data cannot be guaranteed for the future data sets
of actual software projects. In this paper, we have compared
the methods of reliability assessment based on neural network
with that of deep learning. Moreover, we have shown that the
proposed method based on the deep learning can assess better
than that based on neural network. Thereby, we have found
that our method can assess the software reliability in the future

80
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2000 [4] E. D. Karnin, “A simple procedure for pruning back-propagation trained

Actual Estimate
neural networks,” IEEE Trans. Neural Networks., vol. 1, pp. 239-242,
June 1990.
CUMULATIVE NUMBER OF

1500
[5] D.P. Kingma, D.J. Rezende, S. Mohamed, M. Welling, “Semi-Supervised
DETECTED FAULTS

Learning with Deep Generative Models,”Proceedings of Neural Infor-

mation Processing Systems, 2014.
1000
Actual (100%)
[6] A. Blum, J. Lafferty, M.R. Rwebangira, and R. Reddy, “Semi-supervised
Actual (90%)
Exp (NHPP) learning using randomized mincuts,”Proceedings of the International
500 S−shape (NHPP) Conference on Machine Learning, 2004.
Log (NHPP)
Exp (SDE) [7] E.D. George, Y. Dong, D. Li, and A. Alex, “Context-dependent pre-
S−shape (SDE) trained deep neural networks for large-vocabulary speech recogni-
0
tion,”IEEE Transactions on Audio, Speech, and Language Processing,
0 20 40 60
Vol. 20, No. 1, pp.30-42, 2012.
TIME (MONTHS) [8] P. Vincent, H. Larochelle, I. Lajoie, Y. Bengio, and P.A. Manzagol,
“Stacked Denoising Autoencoders: Learning Useful Representations in
a Deep Network with a Local Denoising Criterion,”Journal of Machine
Fig. 7. The estimation results by using 80% of data set of software project Learning Research, Vol. 11, No. 2, 3371–3408, 2010.
2. [9] H.P. Martinez, Y. Bengio, and G.N. Yannakakis, “Learning deep phys-
iological models of affect,”IEEE Computational Intelligence Magazine,
Vol. 8, No. 2, pp. 20–33, 2013.
2500 [10] B. Hutchinson, L. Deng, and D. Yu, “Tensor Deep Stacking Net-
Actual Estimate
Actual (100%)
works,”IEEE Transactions on Pattern Analysis and Machine Intelli-
Actual (90%)
CUMULATIVE NUMBER OF

2000 Exp (NHPP) gence, Vol. 35, No. 8, pp. 1944–1957, 2013.
DETECTED FAULTS

S−shape (NHPP) [11] W.D. Brooks and R.W. Motley, Analysis of Discrete Software Reliability
Log (NHPP)
1500 Exp (SDE) Models, Technical Report RADC–TR–80–84, Rome Air Development
S−shape (SDE) Center, Berlin, 1980.
1000

500

0 5 10 15 20

TIME (MONTHS)

Fig. 8. The estimation results by using 80% of data sets of software project
3.

with high accuracy based on the past software project data.

In the future study, it will be necessary to analyze by
using many training data sets in actual software development
projects. Thereby, the proposed method based on the deep
learning will be useful for the software managers to assess
the software reliability.

ACKNOWLEDGMENTS

This work was supported in part by the Telecommunications

Advancement Foundation in Japan, and the JSPS KAKENHI
Grant No. 15K00102 and No. 25350445 in Japan.

R EFERENCES

[1] M.R. Lyu, ed., Handbook of Software Reliability Engineering, IEEE

Computer Society Press, Los Alamitos, CA, 1996.
[2] S. Yamada, Software Reliability Modeling: Fundamentals and Applica-
tions, Springer–Verlag, Tokyo/Heidelberg, 2014.
[3] P.K. Kapur, H. Pham, A. Gupta, and P.C. Jha, Software Reliability
Assessment with OR Applications, Springer–Verlag, London, 2011.

81

A Comprehensive Analysis Method for System
Resilience Considering Plasticity
Yanbo Zhang† , Rui Kang†‡ , Ruiying Li†‡∗ , Chenxuan Yang†
† School of Reliability and Systems Engineering, Beihang University, Beijing 100191, China
‡ Science and Technology on Reliability and Environmental Engineering Laboratory, Beijing 100191, China
Abstract—Resilience is generally described as the ability of a
system to absorb disturbance and to recover rapidly back to its
original state. However, the system may not recover thoroughly
after every interruption. This paper defines resilient limit and
system plasticity, and proposes an analysis method for system
resilience considering plasticity, which provides a comprehensive
evaluation for both resilience and plasticity of systems suffering
from performance degradation. The resilience and plasticity of an
airborne GPS/INS navigation system is then analyzed to illustrate
the effectiveness of our method.
Keywords—Resilience triangle; Resilient limit; Plasticity; Per-
formance evaluation
I. I NTRODUCTION
The concept of resilience was initially used in ecology [1],
and then resilience theory advanced dramatically and found
its wide application in a range of areas, such as engineering
[2], sociology [3] and economics [4]. In engineering, system
resilience is not only concerned with the influences of the
failures on system performance, but also focuses on the time
needed for the interrupted system to recover back to its normal
operation [5]. For example, Fiksel [6] defined resilience as the
ability of the system to tolerate disruptions while maintaining
its original structure and function; Haimes [7] conceptualized
resilience as the ability of systems to withstand a major
disruption within acceptable degradation parameters and to
recover within an acceptable time and composite costs and
risks; and Zobel [8] continued to describe resilience as the
ability of the system to return to its original state or move to
a new, more desirable state after being disturbed.
In order to quantify system resilience, researchers pro-
posed different evaluation frameworks and methods, both
performance-based and structure-based [9]. Bruneau et al. [10]
introduced the concept of resilience triangle and proposed a
simple quantification method of the loss of system resilience,
characterizing the loss of system resilience with the time
integral of performance loss. Then, this notion was further
extended by Zobel et al. [11], who took the upper bound of the
acceptable recovery time 𝑇 ∗ into consideration, aiming at the
approximate prediction and calculation of system resilience.
Note that if this upper bound of recovery time 𝑇 ∗ is exceeded,
we can simply think that the resilience strategy of this system
fails.
Although the resilience triangle and its extended work
seem reasonable for the system resilience evaluation, previous
studies only concern the effects of time limit on the resilience
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evaluation, without considering the influences brought by the
severity of external disturbances or internal failures. However,
the resistance and recovery capacity of practical systems is
limited, and interrupted systems cannot necessarily recover to
its original state within the acceptable time limit. To solve
this problem, the concepts of system resilient limit and system
plasticity are provided in this paper and the evaluation method
proposed in [8] is also improved so as to better describe
the resilient behaviors of systems. A GPS/INS navigation
system is then analyzed in various electromagnetic interference
environments to reflect its resilience and plasticity processes.
II. R ESILIENT LIMIT AND PLASTICITY
In general, resilience refers to the capacity of the system to
withstand the impact and to recover back to its normal state
when interruptions occur. Considering that the capacity of both
resistance and recovery is limited, let 𝑇 ∗ be the maximum
acceptable recovery time, and 𝐷∗ be the severity threshold of
the interruptions under which the system can absorb and fully
recover, so the resilient limit 𝐾 can be defined by
𝐾 = {𝑇 ≤ 𝑇 ∗ and 𝐷 ≤ 𝐷∗ } (1)
However, since the severity of interruptions is often difficult
to measure, in most cases, we represent the severity with the
initial performance loss 𝑋0 . According to (1), the system is
resilient when and only when 1) the initial performance loss
𝑋0 is less than 𝑋 ∗ , which is the performance loss threshold
in accordance with 𝐷∗ , and 2) the time needed for perfect
recovery 𝑇 does not exceed 𝑇 ∗ . However, either when 𝑋0 ≥
𝑋 ∗ or 𝑇 ≥ 𝑇 ∗ happens, the system will move to a plastic state,
which cannot recover to the original state within required time
without external intervention, as shown in Fig.1.
The plastic state refers to the state where the interrupted sys-
tem fails to recover to the original performance level 𝑄0 within
the required time 𝑇 ∗ . Compared with the previous resilience
concepts which focuses on the system performance loss and
the recovery time only, the resilience considering plasticity
also concerns whether the severity of external disturbances
and internal failures exceeds the severity threshold 𝐷∗ .
In practical applications, the resilience and plasticity be-
haviors of the system are diverse. Take the cloud computing
system as an example, when a server suffers a small scale D-
DoS attack, the response time of legitimate traffic may increase
rapidly, then the system behaves in a resilient state. Otherwise,
 Back to Contents

where 𝑄1 is the performance level after the recovery process,

7 𝑇1 is the recovery time, and 𝑇2 is the maintenance time. We
3HUIRUPDQFH/HYHO
4 then have 0 < 𝑅𝑃 ≤ 1, and a larger 𝑅𝑃 usually indicates
a better resilience strategy with better performance robustness
; . and recovery rate, and vice versa. Fig.2(a) shows a resilience
'  ;
process, where 𝑋0 ≤ 𝑋 ∗ and 𝑇1 ≤ 𝑇 ∗ ; Fig.2(b), (c) and (d)
demonstrate three types of plasticity processes, with 𝑇1 > 𝑇 ∗ ,
𝑋0 > 𝑋 ∗ and both 𝑇1 > 𝑇 ∗ and 𝑋0 > 𝑋 ∗ , respectively.


W W7
7LPH 4
7
4
7

3HUIRUPDQFH/HYHO

3HUIRUPDQFH/HYHO
; ;
Fig. 1. Resilient limit and plastic state of the system ; . ;
'  '  .

if the number of malicious requests keeps increasing and 

W W7 W7

W W7 W7
7LPH 7LPH
succeeds in exhausting the bandwidth, the service may be D E
interrupted, and hence the system exhibits plasticity and cannot 7 7
recover perfectly without external intervention [12]. System 4 4

3HUIRUPDQFH/HYHO

3HUIRUPDQFH/HYHO
plasticity can be used to describe the system with imperfect 4 . ;
4 ;

; '
 ; . '

recovery, and can also be used as a resilience strategy to reduce
the effects of adverse events. When a disruptive event occurs,
such strategy allows the system to shut down part of its low  
W W7 W77 W7
W W7 W7
W77
priority functions or degrade its performance automatically. 7LPH 7LPH
It helps curb the influence of external disturbances on the
system and also helps maintain its structure, avoiding devas-
tating failures and guaranteeing the normal operation of basic
services. Let’s take a mobile communication network as an
example. We provide two scenarios, 1) when a communication
base station breaks down and cannot be substituted by other
stations, it would be difficult to support the normal traffic with
full services due to a lack of network node; and 2) when traffic
surges and causes network congestion, leading to the increase
of delay, delay jitter and package loss, the voice services will
be degraded [13]. In these cases, the network supplier can
limit its low priority services such as data and short messages
proactively, in an attempt to avoid large network congestions
and to guarantee its basic voice service.
III. R ESILIENCE CALCULATION CONSIDERING PLASTICITY
In order to describe the resilient behaviors of systems ac-
curately, we combine the concept of system plasticity into the
original resilience definition and define the system resilience
as the intrinsic ability of the system to withstand a certain
performance loss after interruptions and to recover to its
normal state within required time.
Since the resilience triangle model is built upon the real-
time performance of systems and the integral of the area is
relatively difficult to achieve, the system resilience 𝑅𝑃 can
be calculated using triangle area as
⎧ SRVLWLRQYHORFLW\
 𝑋 0 𝑇1
⎨ exp(− 2𝑄0 𝑇 ∗ ),
 𝑋0 < 𝑋 ∗ ,
𝑅𝑃 =


⎩ exp[− 𝑋0 𝑇1 + (𝑄0 − 𝑄1 )(𝑇1 + 𝑇2 ) ], 𝑋0 ≥ 𝑋 ∗ ,
∗ 2𝑄0 𝑇
(2)
83
F G
Fig. 2. Resilience calculation considering plasticity
IV. C ASE STUDY
Fig.3 shows a typical structure diagram of airborne G-
PS/INS integrated navigation system. The ephemeris and
pseudorange data the GPS obtained from satellites and the
estimates of positions from INS are processed and calculated
in the Kalman filter, then the estimations of position and
velocity of the aircrafts are presented, which can be further
applied to the accurate calibration of INS [14]. When GPS
is disturbed by electromagnetic interference, the carrier noise
power density rate (𝐶/𝑁0 ) decreases, deteriorating its posi-
tioning accuracy. In extreme situations, the receiver may lose
lock and the INS has to take over the whole navigation work.
Moreover, considering the existence of gyro drift error, the
position deviation is accumulated over time, impacting the
capability of localization and navigation of GPS/INS system
gradually [15].
)HHGEDFN&RUUHFWLRQ
3RVLWLRQ
(VWLPDWHV
,168QLW
(VWLPDWLRQRI
'DWD)XVLRQ
.DOPDQ)LOWHU
(SKHPHULV
3VHXGRUDQJH
*365HFHLYHU
Fig. 3. The structure diagram of GPS/INS integrated system

We consider GPS’s susceptibility to interference and its
poor reliability under dynamic environment, and then analyze
the resilient and plastic behaviors of GPS/INS system under
varying electromagnetic jamming conditions using our method
provided in Section III.
A. GPS/INS system performance
Considering the fact that accurate positioning for aircrafts
is one of the key performance outputs of navigation systems,
this paper chooses real-time navigation precision 𝑁 (𝑡) as the
performance index, and the initial performance level during
normal operation is set as 100%, namely, 𝑄0 = 100%. We
also assume that the navigation precision of GPS/INS system
starts with 𝑁0 = 0.3 meters, and the real-time navigation
performance level at time 𝑡, 𝑃 (𝑡), can be expressed as
𝑁0
𝑃 (𝑡) =
𝑁 (𝑡)
If the navigation precision at time 𝑡 is 1.5 meters, then the
corresponding real-time performance level is 20%. In the
meanwhile, if the navigation precision is slightly superior to
𝑁0 , 𝑃 (𝑡) is considered as 100%.
B. The resilience and plasticity process analysis
For different jamming intensity, the GPS/INS system often
shows different resilient behaviors, and three possible cases
are illustrated in Fig.4.
7
7 
Back to Contents
and the position is updated [15]. And the sampling period 𝑇0∗
is the maximum acceptable recovery time.
In this case, the navigation performance declines with
the increase of jamming intensity. Considering the complex
mechanism and multiple factors, a simplified linear equation is
formulated to express the relationship between the interference
and the performance, namely,
d𝑃 (𝑡) = d𝐼(𝑡) ⋅ C (4)
where 𝐼(𝑡) signifies the jamming intensity at time 𝑡, and C is
a negative constant.
2) Case 2: GPS lock-lose case: As shown in Fig.4(b),
at time 𝑡1 , the interference strength exceeds the tracking
threshold 𝐷𝐿 but stays below the damage threshold 𝐷𝐺 , the
tracking loop loses lock and the receiver is disabled. Then the
INS operates in a stand-alone mode, and the systematic errors
× 100% (3)
increases with time until GPS recaptures satellite signal and
resumes its work [16], while 𝑇1∗ is the maximum acceptable
recovery time.
3) Case 3: GPS collapse case: In Fig.4(c), at time 𝑡2 , GPS
is intensively jammed and the jamming signal oversteps the
damage threshold 𝐷𝐺 , and thus the limiter tube is damaged,
leading to the collapse of GPS. Therefore 𝐷𝐺 is namely the
severity threshold of the navigation system, 𝐷∗ . In this case,
plastic damage is produced and the system cannot recover
to its normal state without the assistance of external inter-
ventions, with 𝑇2∗ as the maximum acceptable recovery time.
Moreover, the maintenance time follows some certain proba-
bility distribution, with the constraints of aircrafts retrieving
1DYLJDWLRQ3HUIRUPDQFH

1DYLJDWLRQ3HUIRUPDQFH

4 4 and restoration time, maintenance labors and resources, etc.

;
'/ '/ C. Simulation process
;
'* ' 
Considering the complexity of systems and the randomness
of interruptions, it is difficult to build a real-time performance
function, making it unrealistic to obtain resilience with analytic
 
W W7 W7 W W7 W7 method. To solve these issues, this paper analyzes the re-
7LPH 7LPH
D E
silience and plasticity processes of GPS/INS navigation system
and estimates the average system resilience with Monte Carlo
7 method. For simplicity of the model, we assume that
1DYLJDWLRQ3HUIRUPDQFH

4
∙ jamming signals only last for a short time and this time
'* ' 
; can be ignored compared to that for system recovery;
∙ jamming intensity follows normal distribution, with 𝜇 =
10 and 𝜎 2 = 25.
The simulation is conducted starting with the random sam-

W W7 W7 pling based on the predefined parameters for different cases,
7LPH
F and the system performance is recorded according to the
jamming intensity sampling results. The simulation iterates
Fig. 4. Resilience and plasticity processes of GPS/INS navigation system for 10,000 times and thus we obtain its average resilience and
the probability of the system failing to be repaired within the
1) Case 1: GPS degradation case: As shown in Fig.4(a), maximum acceptable recovery time. The simulation procedure
at time 𝑡0 , GPS receiver is slightly jammed, and the jamming is illustrated in Fig.5.
intensity is below the tracking threshold 𝐷𝐿 . Consequently,
a certain degree of positioning error is generated, leading to D. Discussion
a descending navigation performance. The navigation system After iterations for 10,000 times, the average resilience
cannot recover back to normal until the receiver is resampled of the navigation system is 0.8546, while the probability of

84
 Back to Contents

V. C ONCLUSION
ZOSK#
O#T[S#
Considering that the existing methods fail to describe the
O"#%
4U resilient and plastic behaviors of systems simultaneously, this
?KY
paper introduces the concepts of system resilient limit and
0GSSOTM system plasticity, focuses on the influence of interruptions
JKTYOZ_*O
on system resilience, and proposes an analysis framework
4U
*O"#*%
for system resilience considering plasticity. The GPS/INS
?KY
navigation system is taken as an example to evaluate its
)GYK
*O%"*2%
4U RUYY9O
resilience. For different jamming intensity, different types of
?KY resilience strategies are taken. Our method can serve as an
)GYK )GYK XKYZUXKUT 4U effective tool for the decision makers to evaluate the resilience
RUYY9O RUYY9O ZOSK%
strategies and to achieve the optimal tradeoff balance between
?KY T[S
the quality of services and the recovery time. However, since
86O#9O: system plasticity cannot be described simply by performance
loss and recovery time after interruptions, further studies will
O
focus on the system plasticity analysis.
86#Y[S86O
6XUHELGOR#T[S
ACKNOWLEDGMENT
This work was supported by the National Natural Science
KTJ
Foundation of China (No.61304220; 61573043).

Fig. 5. Simulation procedures of GPS/INS system

delayed recovery is 0.67%. We can conclude that the resilience
strategies of the given navigation system is quite successful
and the system exhibits a significant capability of withstand-
ing electromagnetic interference and recovering back within
required time after being interrupted. Fig.6 presents both the
frequency histogram and the cumulative frequency curve of
the resilience of the navigation system. Since plasticity is
considered in the resilience analysis, some extreme situations
with relatively small resilience values are shown in Fig.6,
indicating that navigation system enters plastic state after
severe interference.
1000
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A M, ... & von Winterfeldt D, “A framework to quantitatively assess
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[12] Thenmozhi R, Karthikeyan P, Vijayakumar V, Keerthana M, & Amud-
Frequencies

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[16] Parkinson B W, Progress in Astronautics and Aeronautics: Global
Resilience distribution of GPS/INS system
Positioning System: Theory and Applications, Vol. 2, Aiaa, 1996.

Fig. 6. Resilience distribution of GPS/INS navigation system

85

Reliability and failure behavior model of
optoelectronic devices
Ning Tang,Ying Chen, ZengHui Yuan
Science and Technology on Reliability and Environmental Engineering Laboratory
School of Reliability and System Engineering, Beihang University
Beijing, China
632057638@qq.com
Abstract—Recent dramatic development of science and
technology has made optoelectronic devices, a crucial pole in
many sophisticated systems, more powerful, accurate and
complicated than ever. As a result, the development of these
optoelectronic products not only increases the complexity of
their structures, but leads to increasing challenge to predict the
reliability of them. Based on this situation, this paper provides
an engineering method to obtain the reliability prediction of
optoelectronic products. In addition, several kinds of software
have to be utilized to assist with computation in the method.
Pspice is used to simulate the electrical stress, Calce FAST
mainly resolve life prediction problems correlating electro-
mechanism individually, and MATLAB is utilized to fit the
degradation curves according to enough data which have been
obtained above. Finally, a system failure mechanism tree which
considering each failure mechanism is established. The result
of lifetime prediction of sun sensor would be obtained
according to the failure mechanism tree.
Keywords—failure behavior;nonlinear sequence
accumulation; failure mechanism tree
I. INTRODUCTION
With the development of the science and technology ,
optoelectronic products plays an increasingly important role,
therefore, the life prediction of optoelectronic products is
also expected to become urgent. However, the mechanism of
damage caused by different environmental stress is different,
and they couldn’t be seen equivalently. How to use a
systematic approach to accumulate the damage caused by
various stresses becomes a popular research area. At present,
there are two ways to estimate lifetime of products. One is
based on the estimated statistics method, typical manual are
GJB Z299C-2006 and MIL-HDBK-217F US. Predicting the
reliability of electromechanical products is usually based on
historical data. The second method is based on the physical
of failure by choosing failure mechanism according to the
physical model, obtaining the relevant parameters and
calculating the prediction life of the product. Correlations
among the failure mechanisms have already been studied by
some scholars. Keedy and Feng [1,2] study a medical stents
which be accompanied with degradation and a failure
mechanisms of random vibration. Two probability model of
failure process are given by them , based on the assumption
that the failure process is unrelated, the reliability of system
can be obtained., The reliability of the binary system have
already been studied by Wang and Xing [3]. Huang and
Askin [4] studied the reliability analysis method of electronic
equipments, many failure models that they studied is
National Natural Science Foundation of China,61503014.
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
86
Back to Contents
competitive. Ying Chen [5] proposed five basic failure
mechanisms relationship, they are competition, triggering,
promotion, suppression and damage accumulation. And a
failure mechanism tree which considering the correlation of
failure mechanism is used to predict and simulate the life of
the product. According to the type of injury, damage
accumulation can be divided into destructive accumulation
and parameters joint cumulative. Based on Crack Growth
Model ,Mason [6] professor in Case Western Reserve
University and NASA Lewis Research Center in Cleveland
reaserched the bilinear damage rule when the stress is same
and loading sequence is different. Advanced Life Cycle
Engineering at the University of Maryland [7] use Coffin-
Manson model to calculate system cumulative damage when
the temperature cycling and vibration are exist
simultaneously. There are also a number of scholars research
damage accumulate in domestic, Yuan Wei, Nanjing
University of Aeronautics and Astronautics [8] published a
study of metal fatigue life prediction under multiaxial
random loading conditions. Fei Chai and Michael Pecht [9]
proposed the Miner linear rule which be widely used in
engineering, but it is conservative so that the results is larger
than the standard values. For optoelectronic products, the
failure mechanism is diverse and the failure behavior of
system is complex, it is necessary to consider the relationship
of the fault mechanism if you want to assess the reliability of
the system. Ying Chen [5] proposed failure mechanism tree
which could describe failure mechanisms that have a
complex relationships.
In this paper, A nonlinear sequence accumulation model
[10] was proposed when the different stress affect the
system in sequence. Finally, we use failure mechanism tree
to calculate the life of a system, and this method considers
the correlation of all failure mechanisms.
II. THE FAILURE BEHAVIOR AND FAILURE
CORRELATION
The concept of failure behavior is the variation which
could be observed from the surface of product and appear
along with time. It includs the appearance, development,
coupling of failure mechanism and the process which results
in system failure.
The logical relationship of failure mechanisms refers to
that each component contains a variety of failure
mechanisms, and they are independent or mutual influence .
There are five relationships among the failure mechanisms

and they are competition, triggering, promotion, suppression
and damage accumulation. After analysis, the sun sensor’s
main logical relationships are damage accumulation and
parameters joint accumulation. It is competition that the
system has some failure mechanisms and they are
independent, meanwhile, each of them would lead to the
system invalid. Similarly, if two or more failure
mechanisms cause the same type damage in the same
position, the relationship be called as damage accumulation.
There are many different kinds of damage accumulations,
they are linear accumulation under the same stress condition,
bilinear cumulative when the same stress operates in order
and nonlinear accumulation when thermal and vibration
operate together.
A. The linear cumulative damage model when stress is
same.
The average injury caused by each cycle is 1 / N, this
damage can be accumulated. n times damage caused by
constant amplitude load is equal to its recycle ratio C = n / N .
Damage D of variable amplitude loading is equal to the sum
of the cycle radio,
l
D =  ni / Ni
=1
i (1)
where i is the level number of the main load, n i is the
number of cycles of i th stress level. N i is the life of i th
stress level. The formula is as follows,
l OPTOELECTRIC PRODUCTS
D =  ni / N i = D f
i =1 (2)
When the accumulated damage amount reaches a critical
value D f ,the product is invalid.
B. Bilinear cumulative damage model of the same kind of
stress effect in order
Based on Crack Growth Model ,Mason [6] professor in
Case Western Reserve University and NASA Lewis
Research Center in Cleveland reaserched the bilinear
damage rule when the stress is same and loading sequence is
different. Bilinear damage rule formula is as follows:
NI I = Nf − NI = Nf 1 − exp ZNfφ 
  ( )
Where，
 N 1 0 .2 5 
1  ln[0.3 5( N ) ] 
φ = ln  2

N N
ln ( 1 )  ln[1 − 0.65( 1 ) 0.25 ] 
N2  N2 
N
ln [ 0 .3 5 ( 1 ) 0 .2 5 ]
N2
Z =
N 1φ (5)
Where N 1 and N2 are respectively the number of faigure
failure cycles under the different stress level conditions. N I
is the number of cycles that the product suffers in the first
stage, N II is the number of cycles that the product suffers
from the first stage to failure.
Back to Contents
C. Nonliner cumulative damage modle under heat and
vibration operate in sequence
CASPaR center [11]of he University of Georgia have
studied cumulative damage model respectively when the
loading sequence is different. By doing experiments, they
obtain the cumulative damage model as follows,
number.of.load.steps
ni
CDI =  Ni
(6)
i =1
where CDI is the cumulative damage index, ni is actual
number of applied cycles for the i th load step, and Ni is the
number of cycles to failure for the i th load step. CDI ranges
from 0 to 1.0 with 0 being the undamaged state and 1.0
being the fully damaged state. Failure is typically defined
when the CDI exceeds a critical value of 0.7.
When the first stress is vibration and the last is
temperature cycle, the cumulative damage model is as
follows,
mT mV
n  n 
CDI =  T  +  V  (7)
N
 T N
 V
where CDI is the cumulative damage index, its value is
0.7. When the first stress is vibration and the last is
temperature cycle, mT and mV are the fitting parameters
according to the experimental results.
III. THE PROCESS OF FAILURE BEHAVIOR OF
The structure of the optoelectric product is composed of
both the circuit part and the optical part. Common failure
mechanisms of the circuit part is consist of thermal fatigue,
vibration fatigue, electromigration, TDDB and hot carrier.
Failure mechanisms of the optical part mainly include the
coloring effect of quartz glass, the aging of silicon rubber
and the degradation of silicon photo cell.
IV. CASE ANALYSIS
A sun sensor could obtain its vector of the orientation
in the celestial coordinate system, Which mainly includes
the optical probe and a signal processing circuit section.
(3)
A. The structure and composition of the sun sensor
The structure of sun sensor are shown in Fig 1, and the
basic principle and composition of sun sensor are shown in
Fig 4. The incident light through the cylindrical mirror, plate
glass, flat glass disc, the silicon photocell, and finally get
(4) into the signal processing circuit board.
B. Environmental and working stress in life cycle
In the process of rocket launching, the sun sensor is
mainly affected by vibration, and the vibration is random
vibration. After entering the track, it is no longer affected by
vibration, but mainly affected by the spatial temperature
cycle, the temperature range from -50 to 50 degrees, so the
life cycle of the sun sensor integrated section is shown in
Fig. 2. Vibrational spectra are shown in Fig. 3.
87
 Back to Contents

Fig. 2. Sun sensor’s comprehensive stress Fig. 3. Vibration spectrum

Fig. 1. Structure of sun sensor profile of simulation analysis

Fig. 4. The basic principle and composition of the sun sensor

In the space, there are ionospheric plasma,
magnetospheric plasma and auroral plasma and other low-
energy charged ion. There are also solar cosmic rays,
galactic cosmic rays, earth radiation belt and other Energetic
charged particles. In the space, circuit portion of the sun
sensor will appear thermal fatigue, vibration fatigue and
electrical stress injuries. The glass coloring effect, surface
sputtering erosion, charge and discharge effects and
radiation-induced pollution effects will appear in the optical
portion of the sun sensor.
C. Single Stress Analysis and Damage Calculation
1) Using Calce SARA Software to simulate emperature
stress distribution of the sun sensor.
The sun sensor circuit board model could be established
by the Calce SARA software. Entering the board boundary
temperature, the thermal simulation results for each
temperature couldn’t been obtained. Finally, the temperature
profile was entered into the life sectional bar. As seen from
Table 6 , the thermal prediction life results of the circuit
portion when running the procedure would been obtained.
2) Using Calce SARA Software to simulate vibration
stress distribution of the sun sensor.
Using the model established in the last step, the
vibration results could been obtained by inputing the
vibration power spectral density. Finally , the vibration
According to the electrical stress simulation results, the
damage which is cased by electromigration could been
calculated , TDDB and hot carrier. then, inputing some
important parameters as shown in Table II, the prediction
life calculated by the Calce FAST software are presented in
table III.
4) Silicone rubber life expectancy of the optical part.
The prediction life of the silicone rubber according to
the selected aging failure model was calculated.
The failure physical model of silicon rubber is,
a
y = Be− Kt , K = Ae − E / RT (8)
Where , B is the constant, K is the velocity constant, α is
empirical constant, τ is the ageing time , y is index which
indicates the degree of degeneration. E is the activation
energy, R is gas constant, T is absolute temperature, A is
the frequency factor. In this paper, the value of α , E , A and B
are 0.38,27.03,623.45and 1.0208 respectively.
Firstly, the constant K could been obtained according to
the formula. Among them, A=623.45，E=27.03 KJ/mol-1，
−1 −1
R=8.314 J ⋅ mol ⋅ K , the absolute temperature which could
obtained according to the thermal analysis of the probe is
72.249 ℃ (345.409K). K = Ae
− E / RT
=0.0509. The silicon
rubber compression permanent deformation model could
and y = 1 − ε ,the
a
− Kt

profile was entered into the life sectional bar, and the been obtained according to y = Be
vibration prediction life results of the circuit portion when formulate is as follows,
running the procedure was obtained. a
ε = 1 − y = Be− Kt (9)
3) Using Pspice, Cadence, Cyber and other software to α

simulate the electric stress of the sun sensor. B

ln
Establishing Pspice circuit model of the signal t= 1- ε (10)
processing circuit board which is normal state. Making a K
transient circuit simulation for it. Finally, the output The threshold value of silicone rubber deformation is
parameters of the circuit could be obtained, such as voltage 20%, and then the prediction life could been obtained,
and current curves change over the time. namely, t =82.698years.
The degradation of the light transmittance of silicone
rubber in the space radiation environment was calculated.

88
 Back to Contents

In order to predict the degradation of the light elect W is Width T is thickness J is Metal T is chip
transmittance of silicone rubber, the least square fitting bar in rom of the chip of the metal layer operating
igra metallization layer of the current temperature
MATLAB software was used according to the experimental
tion layer (m) chip (m) density （K）
data. The formula which was selected is as follows, E modle Eox
1/E modle Vox 1/E modle T is chip
is gate
Tr = a ⋅ e bt + c ⋅ e dt （11）
TD is voltage of Xox(off) is
oxide field
operating
DB oxide layer effective oxide temperature（
acceleration
Where, t is time, a，b，c，d are the fitting parameters, (V) thickness (m) K）
factor (m/v)
Tr is the light transmittance. hot Isub is
Id is leakage W is channel
carri substrate -
Fitting the degradation data of light transmission of er
current (A) width（m）
current (A)
silicone rubber ,the curve equation is
TABLE III. ELECTROMIGRATION, TDDB AND HOT CARRIER
Tr = 6.35e −0.3635t + 75.9e −0.01287 t (12) MECHANISM -- THE RESULTS OF FAILURE TIME (25℃)
If the threshold of degradation of silicone rubber is 60%, T chip Mean time Mean
and then y = 60% * 82.45 = 49.47, the failure life of silicone fault operati to failure
Mean
time to
rubber was 33.259 years according to the formulate model. time to
location ng of failure
type failure of
(Chip temper electromig of hot
5) life expectedncy of Quartz glass and Silicon TDDB
code) ature ration carrier
(year)
photovoltaic cells under space radiation environment （K） (year) (year)
Similarly, the degradation formula of quartz glass and U1 4051 339.15 23.20 25.38 15.82
silicon photovoltaic cells were obtained respectively,
U10 AD574 317.95 19.75 26.54 15.17
Tr = 14.07e −8.47 t + 78.18e −0.02809 t
(13) U11 LM108A 312.15 22.11 26.38 17.48
Tr = 402 e −0.01196 t (14) U17 DS26F32M 330.19 22.55 29.59 16.88
The light transmittance degradation threshold of quartz U18 DS26F31M
glass and silicon photovoltaic cells is 60% , Similarly, the 329.99 22.73 28.37 17.49
prediction of quartz glass and silicon photovoltaic cells by U22 80C32E 318.75 21.72 30.53 16.51
calculating are 12.29years and 24.47years respectively. U23 54AC373 319.75 21.71 27.32 17.66
U24 6664RH 317.35 20.24 27.11 15.35
TABLE I. THE CALCULATION RESULTS OF THE FAILURE TIME OF
THE CIRCUIT MODULE UNDER THE CONDITION OF TEMPERATURE CYCLE U26 4060 316.45 24.24 29.35 15.14
AND VIBRATION
U28 CC4011 316.55 18.74 26.93 17.26
（
（ U32 HS-565BH 307.55 >30 27.88 21.43
fa tempera
vibrati
ult (temperature ture U39 54AC02
（vibration） on） 319.35 22.29 28.69 16.49
loc type cycles） cycles）
failure mode Mean U40 54AC138
ati failure mode Mean 320.45 26.20 29.65 15.61
on time to
time to
failure
failure D. More stress damage accumulation of the sun sensor
Solder joint Solder joint 11.32 12.33
U3 4051
cracking cracking years years
Equation (1) shows the accumulation formula. In this
U2 80C3 Interconnection Solder joint 12.60 13.11 paper, where n is the actual number of applied cycles, N is
2 2E site cracking cracking years years the number of cycles to failure, and the subscripts T and V
Interconnection Solder joint 18.92 13.86 refer to thermal and vibration loading respectively.
U4 4051
site cracking cracking years years Meanwhile, mT=0.91,mV=0.93. U3 was took as an example
U2 6664 Interconnection Solder joint 19.13 14.31 to calculate. CDI=0.7, nV=0.166h, NV=11.32, NT=12.33, So,
4 RH site cracking cracking years years
nT=8.07. Similarly, the accumulation life of the rest
R2 resista Interconnection Solder joint 19.56 14.77
F4 nce site cracking cracking years years components could be got.
R1 resista Interconnection Solder joint 19.98 15.16
03 nce site cracking cracking years years E. Using the failure mechanism tree to establish system
R1 resista Interconnection Solder joint 20.54 16.73 model and predicte life.
02 nce site cracking cracking years years
R2 resista Interconnection Solder joint 21.35 17.23 Failure mechanism tree describes the correlation of the
C4 nce site cracking cracking years years respective failure mechanism. Fig. 7 is the failure mechanism
U2 54AC Interconnection Solder joint 21.91 17.83 tree of output signal degradation of the sun sensor.
3 373 site cracking cracking years years
Interconnection Solder joint 22.31 18.14 There are two kinds of failure mechanism correlations.
U1 4051
site cracking cracking years years they are Joint parameter and damage accumulation, the
former is represented by APA, the latter is represented by
TABLE II. SOME IMPORTANT PARAMETERS OF ELECTRO UMACO. Fig. 5 shows the symbol of joint parameter and
MIGRATION, TDDB AND HOT CARRIERS damage accumulation.

89
 Back to Contents

Fig. 5a) illustrates failure mechanism accumulation TABLE IV. THE PREDICTION LIFE RESULTS OF THE SUN SENSOR
correlation, where M1,…,Mn are failure mechanisms and F distributed parameter Average
equi
is their common consequence. According to the destructive pme
distributio life（
type, If M1,… Mn have damage accumulation correlation, n Type mean value standard deviation
nt year）
the threshold of system due to this kind of damage is Xth,
sun normal
then senor distribution
12.26 2.55 12.113

X th
ΔX i =
ti
(15)

a）parameter joint b) Damage accumulation

Fig. 5. The symble of failure mechanism.

Where ΔXi is the damage in unit time due to Mi, it is the

failure time due to Mi when it works alone. Then lifetime of
system is Fig. 6. The failure mechanism tree.
X X th
ς = th =
ΔX λ1ΔX 1 + ... + λi ΔX i
ACKONWLEDGMENT
X th
=
X th X The authors would like to thank National Natural Science
λ1 + ... + λi th
t1 ti Foundation of China for support research activities.
1 1
= =
λ1 λn n
λi
t1
+ ... +
tn t REFERENCES
(16)
i =1 i

Where ΔX is the accumulated damage in unit time. And

λi is a scaling factor of Mi, i=1,2,…,n.
System failure probability F(t) is,
1 operation. Reliability engineering and system safety 2012;103:94-
F (t) = P(ς ≤ t) = P(
n
λi
t
i =1 i
(17)
Assume XMi(t) indicates some kind of damage that Mi
brings to the system and varies with time t, and XMith is the
threshold of damage caused by Mi. When damage XMi
increases to the threshold XMith, mechanism Mi will result in
system failure. So system lifetime ς is,
ς = min {arg t { X Mi ( t ) = X Mith }}
(18)
Based on the lifetime data of the failure mechanisms
calculated in the above steps, we can obtain the output
paramenters and the distribution of failure life according to
Monte Carlo simulation method and the failure mechanism
tree as shown in Fig. 6 . And then results of lifetime
prediction of sun sensor are obtained in the table 4.
V. CONCLUTIONS
The paper describes the life prediction method of the
general optoelectronic products, and establishs a life
prediction method which based on nonlinear damage
accumulation and integrate multiple failure mechanisms.
Meanwhile the paper proposes a non-linear formula when
the stresses is different but operating in order, and then
proposes a new method using failure mechanism tree to
calculate life of the system which has more failure
mechanisms.
[1] Keedy E, Feng QM Reliability Analysis and Customized preventive
maintenance policies for stents with stochastic dependent competing
risk processes. IEEE Transactions on reliability 2013; 62 (4):887-898.
[2] Keedy E, Feng Q. A Physics-of-failure based reliability and
maintenance modeling framework for stent deployment and
≤ t)
101
[3] Wang C, Xing L, Levitin G. Reliability analysis of multi-trigger
binary systems subject to competing failures. Reliability Engineering
and System Safety 2013; 111: 9-17.
[4] Wei Huang，Ronald G. Reliability analysis of electronic devices
with multiple competing failure modes involving performance aging
degradation. Quality and Reliability Engineering International2003;
19( 3):241-254
[5] Chen Y, Yang L, Ye C, et al. Failure mechanism dependence and
reliability evaluation of non-repairable system[J]. Reliability
Engineering & System Safety, 2015, 138: 273-283.
[6] Manson S S, Halford G R. Practical implementation of the double
linear damage rule and damage curve approach for treating
cumulative fatigue damage[J]. International Journal of Fracture,
1981, 17(2): 169-192.
[7] Pang J H L, Wong F L, Heng K T, et al. Combined vibration and
thermal cycling fatigue analysis for SAC305 lead free solder
assemblies[C]//Electronic Components and Technology Conference
(ECTC), 2013 IEEE 63rd. IEEE, 2013: 1300-1307.
[8] Yuan Wei.A study on some problems in the life prediction of metal
fatigue under multi axial random load condition [D]. Nanjing
University of Aeronautics & Astronautics, 2012.
[9] Fei Chai and Michael Pecht.Strain-Range-Based Solder Life
Predictions Under Temperature Cycling With Varying Amplitude and
Mean. IEEE Transactions On Device And Maerials Reliability, 2014,
14(1): 351-357.
[10] Andy Perkins and Suresh K. Sitaraman. a study into the sequencing
of thermal cycling and vibration tests. Electronic Components and
Technology Conference. 2008,584-592.

90

Optimal Replacement Policy based on cumulative
damage for a Two-unit System
Shey-Huei Sheu
Department of Statistics and Informatics Science
Providence University
Taichung 433, Taiwan
shsheu@pu.edu.tw
Tzu-Hsin Liu
Department of Statistics and Informatics Science
Providence University
Taichung 433, Taiwan
ounce_liou@yahoo.com.tw
Abstract—This article studies a two-unit system with failure
interactions. The system is subject to two types of shocks (I and
II). A type I shock, removed by a minimal repair, causes a minor
failure of unit A and type II shock causes a complete system
failure that calls for a corrective replacement. Each unit A minor
failure also results in a random amount of damage to unit B and
such a damage to unit B can be accumulated to trigger a
preventive replacement or a corrective replacement action.
Besides, unit B with cumulative damage of level z may become
minor failed with probability π(Z) at each unit A minor failure
and fixed by a minimal repair. This paper proposes a more
general replacement policy which prescribes that a system is
preventively replaced at the Nth type I shock, or the time which
the total damage to unit B exceeds a pre-specified level Z (but less
than the failure level K where K>Z) or is replaced correctively
either at the first type II shock or when the total damage to unit
B exceeds a failure level K, whichever occurs first.
Keywords—Optimal maintenance; minimal repair; Cumulative
damage model; Shock model; Replacement policy.
I. INTRODUCTION
Some systems are subject to random external shocks. Each
shock weakens the system and makes it less efficient to run.
Therefore, it is desirable to find the optimal replacement for a
system. In the classical age replacement policy (Barlow and
Hunter, [1], a system is replaced at a failure or at age T,
whichever occurs first. Makabe and Morimura [2] proposed a
new replacement model where a system is replaced at the Nth
failure. Several extensions of these policies have been made by
Berg et al. [3], Park [4], Montoro-Cazorla and Pérez-Ocón [5],
Zhao and Nakagawa [6], Sheu and Zhang [7].
Cox [8] proposed cumulative damage models to analyze the
system degradation process due to a sequence of random
shocks causing some damage to a system. The system fails
when the cumulative damage exceeds a threshold level. Esary
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
91
Back to Contents
Zhe-George Zhang
Department of Decision Sciences
Western Washington University
Bellingham, WA98225-9077, USA
George.Zhang@wwu.edu
Hsin-Nan Tsai
Department of Statistics and Informatics Science
Providence University
Taichung 433, Taiwan
D9601401@mail.ntust.edu.tw
et al. [9] discussed the damage models from the reliability
viewpoint. Some applications with cumulative damage models
have been made by Nakagawa and Kijima [10], Ito and
Nakagawa [11], Chien et al. [12].
In a multi-unit system, a failure in one unit may affect the
other units. For example, a cooling system failure in a
computer can cause some damage of the CPU or other units.
Murthy and Nguyen [13] called such a phenomenon the
“failure interaction” and considered two types of failure
interactions: induced failure and shock damage. Nakagawa and
Murthy [14] studied a two-unit (unit A and B) system with
shock damage interaction. Satow and Osaki [15] proposed a
two-parameter (T, k) replacement model for a two-unit system
under shock damage interactions.
II. GENERAL MODEL
We study a more general two-threshold replacement policy
for a two-unit system subject to shocks in which minimal repair
or replacement takes place according to the following scheme.
1. A system consisting of two units, denoted by A and B,
is subject to shocks that arrive according to a non-
homogeneous Poisson process (NHPP) { N ( t ) , t ≥ 0} with
intensity function (failure rate function) r ( t ) and mean value
t
function Λ ( t ) =  r ( u ) du where t is the age of the system.
0
Assume that r ( t ) is a continuous and positive increasing
function for t ≥ 0 .
2. The shock can be classified into two types. A type I
shock, removed by minimal repair (the failure rate function is
unchanged by any minimal repair at failures), causes a minor
 Back to Contents

failure of unit A, whereas a type II shock causes a major
system failure and results in a system corrective replacement.
3. The probability of type II shock depends on the
number of shocks since the last replacement. Let M be the
number of type I shocks until the first type II shock from the
last replacement, and Pk denote the probability that the first k
shocks of the system are type I shocks. Assume that the domain
of Pk is {0,1, 2,} and 1 = P0 ≥ P1 ≥ P2 ≥  . Denote
{Pk } as an abbreviation for a sequence of probabilities. Let
pk = P ( M = k ) = Pk −1 − Pk = Pk −1 (1 − Pk Pk −1 )
(b) Let η ( z ) be the cost of minimal repair for a unit B
minor failure when the total damage to unit B is z.
(c) Let β j (t ) be the cost per unit time of maintenance
of the system at time t ∈  S j , S j +1 ) , where S j is the arrival
instant of the jth shock for j = 0,1, 2, .
For the presented model, let U i denote the length of the ith
successive replacement cycle (renewal interval) for
i = 1, 2, and let Vi denote the operational cost over the
with

domain {1, 2,3,} .

renewal interval U i . Thus {(U ,V )} constitutes a renewal
i i

reward process. If D ( t ) denotes the expected cost of

4. Each unit A minor failure results in a random amount
of damage to unit B. These damages to unit B can be operating the unit over the time interval [0,t ] , then it is well-
accumulated to trigger a preventive replacement or a corrective known that
replacement action. A damage amount W j to unit B caused by
D ( t ) E [V1 ]
the jth unit A minor failure has a distribution function lim = = B(N, Z ) .
G j ( y ) = P(W j ≤ y ) ( j = 1, 2,...) . Thus, the total damage t →∞ t E [U1 ]
to unit B up to the jth unit A minor failure (2)
j Hence, the expected cost per unit time is given by
Z j =  Wi ( j = 1, 2,...) has a distribution function −Λ( t )
Λ( t )
N −1
i =1 ( N) ∞ e
RNG ( Z ) PN 0 r ( t ) dt
1, j =0 ( −1)!
N
( j)
G (z) = P(Z j ≤ z) =   Z G ( K − y) − G ( Z − y)  dG( j) ( y) 
G1 *G2 *...*Gj (z), j =1,2,3, 0  j+1
N −1 j +1  
(1) +RZ Pj+1  ∞ −Λ(t ) 
× e Λ( t ) r ( t ) dt
j

 0
j =0
where “*” represents the Stieltjes convolution. When the 
j!
cumulative damage to unit B exceeds a critical level K, a
e−Λ(t ) Λ( t )
j
corrective replacement is immediately conducted. N −1 ∞
+RII G( j) ( Z ) Pj − Pj+1   r ( t ) dt
5. Unit B is also subject to a minor failure with j =0
0 j!
probability π ( z) at each unit A minor failure instant if the  Z G ( K − y) dG( j) ( y) 
total damage to unit B is z. Such a failure is also corrected by a 0 j+1
N −1 
+RK Pj+1  ∞ −Λ(t )
minimal repair (the failure rate function is unchanged by any
( ) r t dt 
j
× e Λ t
minimal repair at failures). j =0
 0
() 
j! 
6. The system is preventively replaced at the Nth type I
e−Λ(t ) Λ( t )
j −1
shock or at the time which the total damage to unit B exceeds a N −1 ∞
pre-specified level Z (but less than the failure level K where +G( j) ( Z ) Pj  α j ( t ) r ( t ) dt
K>Z) or is replaced correctively either at the first type II shock j =1
0
( j −1)!
or when the total damage to unit B exceeds a failure level K,  Z π ( y)η ( y) dG( j) ( y) 
whichever occurs first. N −1 0 
+Pj  ∞ e−Λ(t ) Λ t j−1
We define the following various costs. × ( ) r t dt 
j =1
 0 ( j −1)!
() 
(a) The cost of replacement at the Nth type I shock is 
RN . The cost of replacement at the time which the total
e−Λ(t ) Λ( t )
j
∞ N −1
damage to unit B exceeds pre-specified level Z is RZ . The cost +
0
β j ( t ) G( j) ( Z ) Pj j!
dt
B( N, Z ) =
j =0
of replacement at the first type II shock and at the time which −Λ( t )
Λ( t )
j
N −1 ∞
e
the total damage to unit B exceeds a failure level K is RII and 
j =0
0
G ( j)
( Z ) Pj
j!
dt
RK , respectively. .

92

(3)
III. CONCLUSIONS
We consider a more general replacement model with either
preventive replacement or corrective replacement. The
expected net cost rate was derived.
REFERENCES
[1] Barlow, R. E. and Hunter, L. C., “Optimum preventive maintenance
policies,” Operations Research, 1960, 8, 90-100.
[2] Makabe, H. and Morimura, H., “Some considerations on preventive
maintenance policies with numerical analysis,” Journal of Operations
Research Society of Japan, 1965, 7, 154-171.
[3] Berg, M., Bievenu, M. and Cléroux, R., “Age replacement policy with
age-dependent minimal repair”. INFOR, 1986, 24, 26-32.
[4] Park, K. S., “Optimal number of minor failures before replacement”,
International Journal of Systems Science, 1987, 18, 333-337.
[5] Montoro-Cazorla, D. and Pérez-Ocón, R., “Two shock and wear systems
under repair standing a finite number of shocks.” European Journal of
Operational Research, 2011, 214, 298-307.
93
Back to Contents
[6] Zhao, X. and Nakagawa, T., “Optimization problems of replacement
first or last in reliability theory.” European Journal of Operational
Research, 2012, 223, 141-149.
[7] Sheu, S. H. and Zhang, Z. G., “An optimal age replacement policy for
multi-state systems,” IEEE Transactions on Reliability, 2013, 62, 722-
735.
[8] Cox, D. R., Renewal theory. London: Methuen, 1962.
[9] Esary, J. D., Marshall, A. W. and Proschan, F., “Shock model and wear
process.” The Annals of Probability, 1973, 1, 627-649.
[10] Nakagawa, T. and Kijima, M., “Replacement policies for a cumulative
damage model with minimal repair at failure. ”IEEE Transactions on
Reliability, 1989, 38, 581-584.
[11] Ito, K. and Nakagawa, T., “Comparison of three cumulative damage
models.” Quality Technology and Quantitative Management, 2011, 8,
57-66.
[12] Chien, Y. H., Sheu, S. H. and Zhang, Z. G., “Optimal maintenance
policy for a system subject to damage in a discrete time process.”
Reliability Engineering & System Safety, 2012, 103, 1-10.
[13] Murthy, D. N. P. and Nguyen, D. G., “Study of two-component system
with failure interaction.” Naval Research Logistics, 1985, 10, 239-247.
[14] Nakagawa, T. and Murthy, D. N. P., “Optimal replacement policies for a
two-unit system with failure interactions,” RAIRO Operations Research,
1993, 27, 427-438.
[15] Satow, T. and Osaki, S., “Optimal replacement policies for a two-unit
system with shock damage interaction,” Computers and Mathematics
with Applications, 2003, 46, 1129-1138.

Method Construction for Risk Factors Identification
of Public Hospital Operation
Shirui Peng
Institute of Safety Science and Technology,
Dept. of Engineering Physics, Tsinghua University
Beijing, China
psr14@mails.tsinghua.edu.cn
Jianguo Chen
Institute of Safety Science and Technology,
Dept. of Engineering Physics, Tsinghua University
Beijing, China
chenjianguo@mail.tsinghua.edu.cn
Abstract—Except traditional clinical risk, hospitals face
increasingly number of hazards threatening their daily
operation, including natural disasters, public health crisis, and
societal security incidents etc. To promote the ability of hazard
prevention and emergency response, hospitals need take
measures in risk assessment and risk management, the first step
of which is risk factors identification. Here an event-oriented
method for risk factors identification were proposed, whereby
the medium and root risk-caused factors of potential incident as
complete as possible were figured out. The study also provide the
bases for further risk assessment and risk management, since we
tease out the relationship between the risk events and their risk
factors.
Keywords—risk factors identification; assessment index;
hospital operation safety
I. INTRODUCTION
In the past century and even in nowadays, public hospitals
play an irreplaceable role in developing countries[1]. In routine
work, public hospitals are fronted with large amounts of risk,
since health care involves so many complexities and
uncertainties and they undertake most tasks of them.
To promote risk management, hospitals need to carry out
Beijing Municipal Administration of Hospitals
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
94
Back to Contents
Guofeng Su
Institute of Safety Science and Technology
Dept. of Engineering Physics, Tsinghua University
Beijing, China
sugf@tsinghua.edu.cn
Zhiru Wang
Institute of Safety Science and Technology,
Dept. of Engineering Physics, Tsinghua University
Beijing, China
wzrzpp@tsinghua.edu.cn
systematic methods. With the purpose to promote the
reliability and prevent the conceivable adverse consequence,
risk assessment is firstly developed in complex industry
sectors, such as nuclear power plants, airspace and aerospace,
and mineral mining etc., by realizing risk assessment and risk
control[2]. Since then, hospitals adopt the method of risk
assessment to regulate their clinical work, whereas the daily
operation work is usually ignored.
In recent years, hospitals in China mainland are facing
increasingly number of hazards threatening their daily
operation, such as natural disasters, breakdown of devices or
systems, fires, violent criminals aiming at medical care
personnel, and so on. In order to provide high quality and
continuous medical service and ensure the safety of patients
and medical staff, hospitals as well as concerned government
departments now pay more attention on risk management of
daily operation of hospitals. In this study, our group
investigated 22 tertiary public hospitals in Beijing, whose
routine works of fundamental operation is restraint under many
guidance and criteria. Their work experience in hospital daily
operation is of great significance in the method construction.
Risk factors identification is the first step for risk
assessment and management[3]. The purpose of risk factors
 Back to Contents

identification is to find out the medium and root causes of event-oriented analytical method, building the bridge between
hazards or accidents, through the control of which we can the emergencies and the risk factors.
prevent the happening of adverse incidents or decrease the
II. EMERGENCIES SELECTION AND CLASSIFICATION
negative effect of them.
There are different method to classify the emergencies
probably occurring in hospitals. In general, hazards can be
divided into natural disasters and human-made accidents[5]. In
the National System of Emergency response Platform of
Communication and consultation

China, there are 4 types of emergencies/hazards in the first

Monitoring and review

level, natural disasters, accidents, public heath events, societal
security events[11, 12]. Combined with the practical work of
management experience in these hospitals, fire disasters and
transportation accidents, constitute parts of accidents, are
added into the first level in the study, which take a great
proportion of their work. According to the properties,
influence, and position etc., the hazards or incidents, on the
range of the 6 first level emergencies, are classified into 92
basic emergencies.
Fig.1 Iterative process of risk management from ISO [4]
III. RISK ANALYSIS AND DECOMPOSITION
Researchers have done some work in the field. To deal A. The first level risk factors
with natural and human-made disasters, such as earthquake,
windstorm, rainstorm and fire etc., the Word Health
Organization (WHO) provides a standard scoring method for
the vulnerability of buildings, medical devices, and critical
support systems of hospitals in the risk prone area, with the
goal that hospitals in disasters can be reserved and provide
effective health service[5]. Focusing on the safety of human,
the survey of employee safety investigation conducted by
Occupational Safety and Health Administration (OSHA), an
agency of US Department of Labor, surveyed the occupational
injuries and disease occurring in hospitals, divided detailedly
into categories of sharp instrument injury, devices failures, Fig.2 initial triangle module of public safety[11, 12]
slipping, and patient attacks etc.[6]
The triangle module is widely used to deal with the
In China mainland, related researches are conducted in emergencies in public safety research area. (see fig.2). The
specific domains in hospital, for example, errors of drug initial triangle model is composed of three sides, which
management, breakdown of devices, and hospital fires[7-10] respectively stand for emergencies, emergency response, and
etc. Nonetheless, there is no research on the overall risk hazard-affecting objects. Inside the triangle, there is
assessment of hospital fundamental operation (nonclinical). hazard-pregnancy environment, including substance, energy,
The methods referred in the above focus on the process of and information. The three sides and the relationship of them
daily operation. As a further study, we propose an present the complete dynamic process of emergencies on
public safety. The happening of emergency companied with

95

the state of out of control of substance, energy and
information, which will affect hazard-affecting elements
without effective emergency response measures.
Hazard-affecting objects are indispensable. For example, levee
failure is not an emergency if there are no residents or facilities
adjacent the sides of the river, since there are no
hazard-affecting objects. Meanwhile, the ability of emergency
meeting response is necessary to be considered, for people can
decrease the effect of emergencies or prevent them, if detailed
plan made and proper measures taken, and the adverse if not.
In order to describe the each aspect of risk elements
beforehand, a revised triangle model was proposed in this
study(see fig.3). There are three edges respectively represent
dangerousness of hazard-caused elements, vulnerability of
hazard-affecting elements, and ability of emergency response.
The first side, the dangerousness of hazard-affecting elements,
like the earthquake scale or the amount of rainfall, means the
destructiveness and the probability of occurrence
emergencies, while the second side represents the probable
casualties, losses of asset and estates, and the breakdown of
support systems caused by emergencies. The ability of
Emergency response consists of the emergency preparedness
of goods and materials, the dealing strategies, the training of
personnel and the coordinated action with concerned
organizations or departments.
Fig.3 revised triangle module of emergencies
In this model, each side represents a respect of the risk
elements of the basic emergencies. Destructiveness of
emergencies/hazards depends on the states of the three aspects.
Obviously the Ms8.0 earthquake is much more destructive
than the Ms5.0 one. And if there is Ms8.0 earthquake
Back to Contents
happening in the desert of Xinjiang (a first level administrative
subdivision of China) or in the metropolitan city, like Tokyo,
the destructive effects are greatly different, for the
vulnerability of hazard-effecting elements differs significantly.
In addition, with considerate and efficient emergency response
managements, hospitals are able to relieve the adverse effects
of accidents, such as electricity or water support outage. The 3
items consist the first level risk factors (for further risk
assessment, they are also the first level index).
B. The second level risk factors
The next step, the second level risk factors were
established, the subdivision of first level ones, with the
consideration of the experience of medical staff, the work of
organizations (including WHO, OSHA etc.), and the basic idea
of public safety.
In terms of the dangerousness of hazard-caused elements, the
of dangerousness of natural hazard-caused elements (like weather
or geological conditions), unsafe human behaviours, unsafe
states of substance or equipment, and the disadvantage of the
environment or situation were considered. On the part of the
vulnerability of hazard-effecting elements in hospitals, there
are 5 components need to be taken into account, the
vulnerability of architectures, support systems, personnel,
properties and facilities, and the hospital’s reputation. Finally
the ability of emergency response is composed of the
substance allocation sufficiency, the completeness of the
pre-arranged planning, the emergency response manoeuver
quality, and the effectiveness and efficiency of system of
direction and organization.
C. The third level risk factors
The third level factors are the list of items, describing the
second level factors, and directly triggering hazards or
accidents in most cases. Causal connection and the operability
of assessment are the two standard of selecting these items.
First intuitive and more detailed risk factors were identified
completely within the limit of every second level factor. In the
next step, the access to assess these risk factors needs to be
considered. For instance, the frequency of err operation in
laboratory or on special equipment is the significant risk factor
of emergencies, like fire, equipment failures, and so on.
96

Although it is important, it cannot be included into the third
level factors (belonging to the unsafe behaviours of human), as
data of the occurrence frequency (in the other word, we can’t
assess it) is difficult to obtain. As a replacement, we need to
consider the completeness of related management steps that
are able to control the frequency of err operation, such as
qualification of staff, and training and education (including the
pre-post training, and job training on a regular basis etc.).
TABLE I. LIST OF SECOND LEVEL RISK FACTORS
Fist level Factors
the dangerousness of hazard-causing elements
the vulnerability of hazard-affecting elements
the ability of emergency response
TABLE II. THE THIRD LEVEL RISK FACTORS UNDER THE COVER OF “THE UNSAFE BEHAVIORS OF HUMAN”
Fist level Factor Second Level Factors
the dangerousness of
the unsafe behaviors of human
hazard-caused elements
D. Further work
The final work is to point out the third risk factors that
need to be assessed aiming at each emergency and what
respects of the third level risk factors need to be considered. In
terms with high wind, for example, the Beaufort wind force
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TABLE II is an example of the list of third level risk
factors under the cover of “the unsafe behaviors of human,”
and there are 50 third level factors concluded in the research.
Meanwhile, it is necessary to point out that the list of the third
level risk factors is the complete one for all emergencies
possible happening in the investigated city public hospitals,
which can be altered with regard to different areas, and not all
third level risk factors are related to the each emergency.
Second Level Factors
the dangerousness of natural hazard-caused elements
the unsafe behaviours of human
the unsafe states of substance or equipment
the disadvantage of environment or situation
the vulnerability of architecture
the vulnerability of support system
the vulnerability of personnel
the vulnerability of property and facilities
the reputation of hospital
substance allocation sufficiency
the completeness of the pre-arranged planning
the emergency response manoeuver quality
the effectiveness and efficiency of system of direction and
organization
Third Level Factors
Personnel allocation insufficiency
Professional credentials lack of staff
Health problem of staff
Deficiency of management rules
Poor training and education
scale, whether companied with other severe weather, like
rainstorm or thunder and lighting, are taken into account. They
are the forth level risk index. Although 3 level classes of risk
factors are logically complete, the forth level risk index for
further risk assessment, critical for practical assessment, is
indispensable. The 3 level risk factors are, at the same time,

the 3 level risk index; the 4th level risk index, designed for
assessment operation, is the hint for staff what should be
record and evaluated exactly. On account of different
emergencies, there are great differences in the fourth index.
IV. DISCUSSION
From the three-level risk factors, evaluators are able to map
into the risk factors from the emergencies. Compared with the
process-oriented method of risk identification greatly
dependent on fragmented experience, it is easier to completely
get the risk factors if the election of adverse events is
appropriate, because the hospital daily operation covers so
much process that it is hard to get a comprehensive list of them.
And identifying the parts related to possible emergencies is a
more complex and more laboursome work, for there is a gap
between technologists who are familiar with the operation
process and management staff who are responsible for the
whole hospital safety.
To construct accurate and effective system of risk factors,
especially in the steps of the possible emergencies selection
and third level risk factors identification, there are two points
need to be brought to the forefront. The first one is the
historical data collection, which will prompt people what kind
of hazards or accidents happened and the procedure apt to go
wrong. The other is the communication with staff from related
departments. Their experience of daily operation compensate
for the lack of daily err operation, for there is no related data
unless adverse events happened.
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The work is the bases to determine the weights of each risk
factor, for further risk assessment and risk management, since
the relationship between the adverse events and risk factors is
clear.
V. ACKNOWLEDGEMENTS
[1] P. De Vos, P. Ordu Ez-García, M. Santos-Pe A, and P. Van der Stuyft,
"Public hospital management in times of crisis: Lessons learned from
Cienfuegos, Cuba (1996–2008)," Health Policy, vol. 96, pp. 64-71, June
2010.
[2] A. J. Card, J. R. Ward and P. J. Clarkson, "Trust-Level Risk Evaluation
and Risk Control Guidance in the NHS East of England," Risk Analysis,
vol. 34, pp. 1469-1481, 2014.
[3] F. H. van Duijne, D. van Aken and E. G. Schouten, "Considerations in
developing complete and quantified methods for risk assessment,"
Safety Science, vol. 46, pp. 245-254, 2008.
[4] Z. Jiliang, Research on Risk Assessment of Government Emergency.
Beijing: Chinese Academy of Government, 2013.
[5] WHO, "Hospital Safety Index Guide for Evaluators," 2015.
[6] OSHA, "Worker Safety in Hospitals," 2012.
[7] F. Yang and F. Yang, "On the Risk Assessment of Fire Hazards in
Hospitals," The Science Education, pp. 190-192, June 2015.
[8] S. Li, S. Lai, X. Zhen, J. Cai, G. Xie, and L. Zheng, "Application
Research on Disaster Vulnerability Analysis on Emergency
Management of Hospital Pharmacy," Pharmacy Today, pp.
378-381+384, May 2015.
[9] S. Duan, Y. Li, and T. Li, "Risk Management and Quality Control of
Medical Equipment," Chinese Medical Equipment Journal, pp. 139-141,
Feb. 2014.
[10] J. Lei, P. Guan, K. Gao, X. Lu, Y. Chen, Y. Li, Q. Meng, J. Zhang, D.
F. Sittig, and K. Zheng, "Characteristics of health IT outage and
suggested risk management strategies: An analysis of historical incident
reports in China," International Journal of Medical Informatics, vol. 83,
pp. 122-130, 2014.
[11] W. Fan, Y. Liu, W. Weng, and S. Shen, Introduction to Public Safety
Science. Beijing: China Science Publishing & Media Ltd., 2013.
[12] H. YUAN, Q. Huang, G. Su, and W. Fan, Theory and Practice of Key
Technologies of Emergency Platform System. Beijing: Tsinghua
University Press, 2012.

A Study on Device Security in IoT Convergence
Hyun-Jin Kim Hyun-Soo Chang
Department of Department of
Computer Engineering Computer Engineering
Ajou University Ajou University
Suwon, Republic of Korea Suwon, Republic of Korea
ny24007@gmail.com ics_dant@naver.com
Abstract—IoT(Internet of Things) is global infrastructure
that enables any object to communicate. The term IoT is being
widely used and that technologies are being applied to various
areas. IoT technologies is expected to increase many services’
convenience, expandability, accessibility and interoperability, but
existing ICT environment could be exposed new security threats
due to increased openness and IoT device’s specialty. Actually,
IoT devices’ vulnerabilities and exploits are reported. If attacks
on IoT devices succeed, it can cause much damage over the
various areas. Therefore, we categorize IoT devices and examines
threats of each category. Finally we deduct security requirements
of IoT devices.
Keywords—IoT; Internet of Things; IoT domain; IoT device;
security threats;
I. INTRODUCTION
Recently IoT technologies are applied in various areas, so
industries heighten interest. IoT includes services and
technologies based on connectivity with objects on the Internet
and by connecting independently distributed objects it
increases efficiency and makes new services like a Wireless
Sensor Network (WSN) that provides situation based services
without human interactions by connecting physical actuators or
sensors applied ICT technologies.
But while existing devices conducted process in closed
environment, as adopting IoT technologies the devices has
openness and because of increased external point of contact,
security incident rate become much higher. And there are some
IoT specific characteristics like a low power consumption, low
computing power, so existing ICT technologies can be
restricted. Therefore security requirement for IoT devices and
technologies is necessary.
The rest of this paper is organized as follows: we
summarize international standards organizations related on IoT
and their standard documents in section II, categorize IoT
devices using standards’ IoT domains categories in section III,
and examine each IoT categories’ reported vulnerabilities and
exploits in section IV. We suggest security requirements for
IoT devices in section V, and finally, conclude the paper in
Section VI.
This work was supported by Institute for Information & communications
Technology Promotion(IITP) grant funded by the Korea government(MSIP)
(R0166-15-1034,A Development of Standard for Infrastructure Security
Technologies in ICT Convergence Service and No.B0713-15-0007,
Development of International Standards Smart Medical Security Platform
focused on the Field Considering Life Cycle of Medical Information)
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Jeong-Jun Suh Tae-shik Shon
Convergence Security Department of
Industry Team Cyber Security
Korea Internet & Security Ajou University
Agency (KISA) Suwon, Republic of Korea
jjun2@kisa.or.kr tsshon@ajou.ac.kr
II. IOT INTERNATIONAL STANDARDS ORGANIZATION
In this section, we summarize IoT international standards
organizations ITU-T, IEC/ISO, oneM2M and their IoT
documentations for each organization.
A. ITU-T
ITU-T(International Telecommunication Union
Telecommunication Standardization Sector) is proceeding
international standardization activities related to IoT. In 2005,
ITU-T emphasized importance of the IoT over the ‘ITU
Internet Report 2005 – The Internet of Things’ and organized
JCA-IoT and IoT-GSI to carry forward IoT standardization
activities and major documents follows:[1]-[4]
• Y.2060-Overview of the Internet of things: Y.2060
standard is about IoT’s overall outline and it includes
IoT’s terms, definitions, concept and scope,
characteristics, high-level requirements, reference
models. And this standard is referenced in many other
IoT standards.
• Y.2066-Common requirements of the Internet of things
: Y.2066 standard provides IoT common requirements
based on IoT’s generic use cases and role categorization.
• Y.2068-Funtional framework and capabilities of the
Internet of things : Y.2068 standard describes IoT
functional framework based on Y.2060 standard and
Y.2066 standard and basic capabilities that satisfy
Y.2066 standard’s common requirements.
• Y.2069-Terms and definitions for the Internet of things
: Y.2069 standard specifies terms and definitions related
IoT from a ITU-T point of view.
B. ISO/IEC JTC 1
As the interest in IoT is gradually increase and importance
is emphasized in the industry, ISO/IEC JTC 1 established
‘Special Working Group on Internet of Things’, SWG 5, for
IoT standardization and this working group is proceeding
various standardization works.
• Internet of Things(IoT) Preliminary Report 2014: This
report includes ongoing ISO/IEC JTC1works, IoT mind
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map, market requirements, collection of standards and home and health care. Therefore this paper selects energy,
so on.[5] smart home and health care as major service domains.

C. oneM2M TABLE I. IOT SERVICE CATEGORIZATON OF MAJOR ORGANIZATION

oneM2M is a global scale Partnership Project organized
Organization IoT Service Category
by 7 major standard organization around the world
- Health care
(ETSI(Europe), TIA, ATIS(North America), ARIB,
- Security, Emergency administration
TTC(Japan), CCSA(China), TTA(Korea)) to develop global
IoT service platform's standard technology. Followings are - Transportation
the major standard of the oneM2M.[6]-[15] ITU-T - Agriculture
- Smart grid
• TS0001-Functional Architecture: defines functional - Smart Home
structure of oneM2M in end-to end.
- Digital signpost
• TS0002-Requirements: defines oneM2M’s informatic - Health care
role model and common requirements related to - Information and communication
technology. - Manufacture and industry
• TS0003-Security Solutions: defines security solution - Finance and banking
for M2M systems. - Food and Agriculture
- Transportation
• TS0004-Service Layer Core Protocol Specification: - Home
defines service layer’s core protocol. ISO/IEC
- Water management
• TS0005-Management Enablement(OMA): describes - Education
how to use resources of OMA DM and OMA LWM2M - Energy
and description of the corresponding message flow. - Entertainment and sports
- Public safety and defense
• TS0006-Management Enablement(BBF) : describes
BBF and BBF TR-069 protocol and its message flow. - Retail and accommodation
- Government
• TS0009-HTTP Protocol Binding: describes oneM2M - Smart home
system protocol and how to binding RESTful HTTP. - Smart vehicle
• TS0010- MQTT Protocol Binding: describes how to - Smart grid
oneM2M
binding oneM2M protocol on MQTT transport layer. - E health
- Intelligent transportation system
• TS0011- Common Terminology: describes technical
- Intelligent agriculture
terms and abbreviations in the oneM2M specification.

B. IoT Devices of each Service Domain

III. IOT DEVICES CATEGORIZATION Physical devices that can communicate and have additional
In this section, we examine international standards capabilities like sensing, data collection, data reposition and
organizations’(ITU-T, ISO/IEC JTC 1, oneM2M) IoT service data processing are called IoT devices and there is various IoT
domains and deduct our IoT service domain and examine IoT devices in each domain. Therefore selection of representative
devices of each service domain device for each domain is needed.
To deduct IoT device’s security requirements,
TABLE II. SERVICE DOMAIN AND DEVICES
categorization of IoT devices implemented various areas and
examination of each category’s IoT devices are necessary. Domains Devices Description
Some agencies and organizations categorize IoT devices by - Stores, manages, processes collected
function, network role, device form and service but this paper data
MDMS
categorizes IoT devices based on IoT service domain. - Provides interfaces for sharing
processed data with various applications

Energy - Calculates account data from smart

A. International Standards Organization’s IoT Domain meter’s measured value
Service
Categorization CIS - Provides remote connect/disconnect
Domain
For IoT device categorization, we examine major belongs to customer’s service admission
international standards organization’s IoT services domains. /withdrawal
And the result are classified in Table 1, some service domains
are categorized in multiple organization, such as energy, smart DCU
- Collects electricity meter data
- Connects over TCP/IP network

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Domains Devices Description TABLE III. THREAT CASES FOR IOT DOMAINS

- Collects time of use data, consumption

data, net-metering Domain Threat Cases
- Alerts blackout - In December 2013, Germany IT Security enterprise
- Remotely blocks and restores ‘Recurity Labs’ did simulation hacking to electricity control
Smart
- Restricts undependable payers or load system in Germany’s small town Ettlingen and only 3 days
Meter they got whole system of control, emphasized control
limits for demanding response
- Monitors electricity quality and system’s security magnitude.
- In August 2014, about 50 oil/energy companies including
electricity theft Energy
Statoil, biggest oil/energy company in Norway, were hacked
- Communicates with smart home devices Service
from unknown attacker. Attack’s purpose was system
Domain
destruction, but detection engine detected fatal malicious
- Smart chip that enables internal
program before execution and appropriate measures was
processing and communicating act.
Smart
capabilities is equipped - According to ICS-CERT March 2015 report, cyberattack
Appliance
Smart - Controls electricity consumption itself to control system is increasing, the most part of attack is
Home linkage Customer EMS energy area.[16]
Service - In 2014 Black Hat conference, using KNX that one of
- Major components of AMI home automation protocol vulnerability, took over Ipad and
Domain
IHD - Provides electricity consumption and controlled room’s temperature, TV on/off, blind.
(In Home statistical information, high value service - In 2015, security enterprise ‘Rapid7’ reported more than
Display) information in real time at home with 10 baby monitoring CCTV has vulnerabilities including
Smart Gynonii-GCW, iBaby. The vulnerabilities are about web
smart meter Home application, authentication and others and using these
- Locates with a patient of outside of Service vulnerabilities attacker can take over the vulnerable baby
Medical hospital Domain monitoring CCTVs.
Sensor - Collets patients of physical status - In 2015, security enterprise ‘Symantec’ reported
- Transmits data on one-way ‘Insecurity in the Internet of Things’ that examined 50
devices of vulnerabilities including smart temperature,
- Locates with a patient of outside of smart locker, smart bulb and figured out many devices have
hospital multiple vulnerabilities.[17]
Medical - In 2012 BreakPoint Security conference, IOActive
- Has an effect based on a hospital’s
Actuator presented that some pacemaker can be hacked and remotely
prescription received from a mobile
controlled about 15m distance from the device.
device - In 2013, ICS-CERT and FDA found out more than 300
E-health medical devices have hard coded password vulnerability
- Handles whole devices of a patient
among more than 40 companies and medical devices
Data - Functions as a gateway for the hospital include surgery device, anesthesia devices, drug injection
collector - Transmits patient’s data to hospital and device, monitoring patient device and others. Using this
and control receives hospital’s feedback E-health
vulnerability, attacker can modify device’s configuration
device - Enables patient to check physical and internal firmware.[18]
conditions using infographics - In 2015, DerbyCon security conference, security
- Locates in hospital researcher presented that using Shodan, he could get about
68,000 medical devices connected Internet. And he
e-health - Receives patients data from collection
connected a virtual medical device, during 6 months he
server and control devices through Internet reported hundreds of thousands of login attempts and 299
- Processes data and stores to database malicious code attack attempt were happened.[19]

IV. THREAT CASES FOR IOT DOMAINS
In this section, we summarize real threat cases, simulation
hacking, vulnerability reports for each IoT device domains.
Various service domains provides diverse and convenient
services by using IoT devices, but because of increased
openness and IoT device’s specialty, threats to IoT devices also
increased. Actually, HP, Symantec and others reported
vulnerabilities for various using IoT devices and in major
conference like Black Hat, Defcon presented IoT exploits and
real threat cases.
V. SECURITY REQUIREMENTS FOR IOT DEVICES
IoT devices are using many technologies including
communication, sensing, big data and others, so there are
various security issues. And there are other issues due to IoT
devices use lightweight security protocol because of IoT
device’s specialty like a low power consumption, low
computing power and so on. This section deducts security
requirements of IoT devices.
A. Lightweight Protocol and Cryptography
Considering IoT device’s specialty, lightweight Protocol
research like a CoAP, MQTT and lightweight cryptography
research like a PRESENT, PRINCE, Kecak have actively done
but verification of security strength is ongoing. Protocol and
cryptography should be selected by considering device and
data’s importance, capability, power consumption and trade-off
of these factors.

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VI. CONCLUSION & FUTUREWORK

B. Communication Security
This paper identified IoT devices and examined security
IoT devices can use short distance communication (NFC,
threats and attack techniques of IoT devices. And we deducted
ZigBee, Bluetooth), wireless communication (Wi-Fi, 3G, LTE),
security requirements for IoT devices.
wired communication (ADSL, Optical) and others, so security
requirements for each communication technologies. And if For the future works, detailed analysis of each IoT category
devices use multiple communication technologies, additional and deducting security requirements of each IoT domains are
security requirements are needed. Each communication needed.
technology should support integrity, availability,
confidentiality and other security factors like authentication, REFERENCES
permission, charging.
[1] “Y.2060-Overview of the Internet of things,” ITU-T, 2012.
[2] “Y.2066-Common requirements of the Internet of things,” ITU-T, 2014.
C. Data Protection
[3] “Y.2068-Functional framework and capabilities of the Internet of
Data of IoT devices can include user’s private information things,” ITU-T, 2015.
(physical information, location, behavior pattern), so when data [4] “Y.2069-Terms and definitions ofr the Internet of things,” ITU-T, 2012.
sent to other devices or cloud, confidentiality should grantee by [5] “Internet of Things(IoT) Preliminary Report 2014,” ISO/IEC, 2014
using cryptography. [6] “TS0001-Functional Architecture,” oneM2M, 2015.
[7] “TS0002-Requirements,” oneM2M, 2015.
D. Physical Protection [8] “TS0003-Security Solutions,” oneM2M, 2015.
IoT devices are closely located, so physical access is easy [9] “TS0004-Service Layer Core Protocol Specification,” oneM2M, 2015.
and security risk of devices is also increased. Actually, root [10] “TS0005-Management Enablement(OMA),” oneM2M, 2015.
authority capturing attacks through external connection were [11] “TS0006-Management Enablement(BBF),” oneM2M, 2015.
reported. Therefore security requirements for physical control, [12] “TS0008-CoAP protocol Binding,” oneM2M, 2015.
destruction, capturing should be considered. [13] “TS0009-HTTP protocol Binding,” oneM2M, 2015.
[14] “TS0010-MQTT protocol Binding,” oneM2M, 2015.
E. IoT Devices Identification and Permission [15] “TS0011-Common Terminology,” oneM2M, 2015.
Many IoT devices can be added or removed from network [16] "NCICC/ICS-CERT Monitor" newsletter (ICS-MM201506), ICS-
and each device has different authority and domain, so CERT, 2015
requirements for IoT devices’ identification, authentication and [17] “Insecurity in the Internet of Things,” symantec, 2015
permission using ID/Password/Mac/Certificate. [18] “Medical Devices Hard-Coded Passwords,” ICS-ALERT-13-164-01,
October 2013.
F. IoT Devices Monitoring and Controlling [19] Scitt Erven, Mark Collao, “Medical Devices: Pwnage and Honeypots,”
Derbycon 2015, September 2015.
Identified IoT devices can cause malfunction, damage,
removal and infection from malware, so security requirements
for monitoring and controlling in case of abnormal activities or
situations are discovered.

102

Design of Arc Fault Pressure and Temperature
Detectors in Low Voltage Switchboard
Kuan Lee Choo
Faculty of Engineering and Technology Infrastructure
Infrastructure University Kuala Lumpur
Selangor, Malaysia
lckuan@iukl.edu.my
Abstract— This paper presents the design of the arc fault
pressure and temperature detectors that is able to detect the
overpressure and overheating in the interior of the low voltage
switchboard prior to the occurrence of an arcing fault. The
simulation results show that the proposed arc fault pressure and
temperature detectors will activate the relay and send a trip
signal to the circuit breaker if and only if both the detectors
detect a pressure and temperature level which are higher than
the reference value. This is to ensure that no fault tripping signal
is sent to the circuit breaker and therefore unnecessary power
shut down.
Keywords—LM 335 Temperature Sensor; 1140 Pressure
Sensor; Arc Fault Pressure Detector; Arc Fault Temperature
Detector; Low Voltage Switchboard.
I. INTRODUCTION
An arc fault is a high power discharge of electricity
between two or more conductors. This discharge translates into
heat, which can break down the wire's insulation and possibly
trigger an electrical fire. These arc faults can range in power
from a few amps up to thousands of amps high and are highly
variable in terms of strength and duration. Common causes of
arc faults include faulty connections due to corrosion and faulty
initial installation.
Arc incidents occur due to various reasons such as, poorly
installed equipment (human mistakes), natural aging of
equipment, bad connections, faulty connection due to
corrosion. Statistics have shown that 80% of electrically related
accidents and fatalities involving qualified workers are caused
by arc flash or arc blast. A true arc fault will rapidly increase
energy level up to 20MW cycle, increase in pressure up to
3 atm, and in heat up to 3000 degrees Celsius [1].
II. BEHAVIOUR AND CHARACTERISTIC OF ARC FAULT
An arc fault is the discharge of electricity through the air
between two conductors which creates huge quantities of heat
and light. It is a high resistance fault with resistance similar to
many loads and it is a time varying resistor which can dissipate
large amount of heat in the switchboard [2].
Circuit breakers are tested by bolting a heavy metallic short
across the output terminals to determine their capabilities of
handling an essentially zero resistance load. The zero resistance
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Ahmad Azri Sa’adon
Faculty of Engineering and Technology Infrastructure
Infrastructure University Kuala Lumpur
Selangor, Malaysia
azriaces@gmail.com
faults are named as bolted fault. Bolted fault current is the
highest possible current supplied by the source and a protective
system is designed according to the value of bolted fault
current. The protective system must be able to detect the bolted
fault and the protective devices must be capable of interrupting
this value of current [3].
Due to the high resistance loads, an arcing fault will result
in much lower values of current. Thus, the protective devices
such as circuit breakers, fuses and relays, which are designed to
operate for bolted fault, may not detect these lower values of
current. As a result, the arcing fault will persist until severe
burn down damage occurs. The magnitude of the arc current is
limited by the resistance of the arc and the impedance of the
ground path [4].
Arc faults are categorized into series arc faults and parallel
arc faults. Series arc faults happen when the current carrying
paths in series with the loads are unintentionally broken
whereas parallel arc faults happen between two phases, phase
to ground or phase to neutral of the switchboard [5].
Large amounts of heat will be dissipated during an arc
event. A portion of this heat is coupled directly into the
conductors, a portion heats the air and another portion is
radiated in various optical wavelengths. Hasty heating of the
air and the expansion of the vaporized metal into gas produces
a strong pressure wave which will blow off the covers of the
switchboards and collapse the substations [5].
Fig. 1 shows the time, current and damage for the 53 arcing
tests. When the circuit breakers are tripped within less than
0.25 seconds, the damage will be limited to smoke damage.
The triangle markers represent arcs that cause only smoke
damage to the side of switchboards. The square markers
represent arcs that cause surface damage to the side of
switchboards whereas the star pointers represent holes of
several square inches at the side of the switchboards [2].
When an arc is ignited, the plasma cloud expands
cylindrically around the arc. The expansion of the plasma is
constrained by the parallel busbar and thus the plasma expands
more to the front and the back of the bus. As the plasma
reaches any obstructions such as the switchboard, plasma
expansion is retarded by the obstructions. Due to the lower
velocity of the arc, the plasma becomes more concentrated and
its temperature and current will increase [2].

Figure 1. Damage to the Side of a Switchboard versus Arc Current and Time
The root of the arc where the arc contacts the conductor is
reported to reach temperatures exceeding 20000ºC, whereas the
plasma portion or positive column of the arc is around
13000 ºC [6]. For reference, surface of the sun is reported to be
about 5000 ºC. The components in the switchboard can only
withstand this temperature within 250 milliseconds before
sustaining severe damages [7].
III. SYTSTEM DESCRIPTION OF ARC FAULT PRESSURE AND
TEMPERATURE DETECTORS
Fig. 2 shows the block diagram for the proposed design of
an arc fault pressure and temperature detectors consists of a
pressure detector, a temperature detector, voltage comparator,
an AND gate, a relay and a LED. The pressure and temperature
detectors will detect the arc fault by amount of pressure and
heat produce and convert into corresponding voltage and the
output of voltage comparator from both sensors will send to the
AND gate then the output will trigger the relay to trip the
signal that will turn on the LED.
Figure 2. Block Diagram of an Arc Fault Pressure and Temperature Detectors
The 1140 pressure sensor is used to detect the presence of
an arcing fault by sensing the pressure changes in the
switchboard. 1140 has a breakdown voltage directly
proportional to the temperature, which is +12 mV/kPa. 1140 is
chosen because the 1140 Absolute Pressure Sensor is an air
pressure sensor that measures the absolute pressure of its
environment. It can measure pressures from 20 kPa to 400 kPa.
In addition, it has a high precision and narrow measurement
range compared to other types of pressure sensors. It has
typically less than ±1.5% error. The pressure range for 1140 is
20 kPa to 400 kPa. In other words, the output voltage of this
pressure sensor will range from 240 mV to 4.8 V.
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The calculations for the output voltage are shown below:
Output voltage for 20 kPa = 20 × 12 × 10-3
= 0.24 V (1)
Output voltage for 400 kPa = 400 × 12 × 10-3
= 4.8 V (2)
Every 1 kPa increases in the pressure of the surrounding.
The output voltage will increase by 12 mV. Since the
atmospheric pressure is 100 kPa, it is assumed that under
normal condition, the pressure inside a switchboard is about
150 kPa which is equivalent to 1.8 V. From [1], a true arc fault
will rapidly increase in pressure up to 3 atm or equivalently to
303.975 kPa. Therefore, in this proposed design, the pressure
of 250 kPa is set as the reference value. By calculation, the
voltage value corresponding to 250 kPa is 3.0 V. This voltage
is set as the reference voltage. The input voltage (i.e. the
pressure inside the switchboard) will be compared with the
reference voltage (i.e. the reference pressure value of 250 kPa).
A “HIGH” output from the voltage comparator will send to the
AND gate if the input voltage is higher than the 3.0 V.
The LM 335 temperature sensor is used to detect the
presence of an arcing fault by sensing the temperature changes
in the switchboard. LM 335 has a breakdown voltage directly
proportional to the temperature, which is +10 mV/oK. LM 335
is chosen because it is precise, easily calibrated and integrated
circuit temperature sensor. In addition, it has a linear output
and it is cheaper compared to other types of temperature
sensors. When it is calibrated at 25oC, it has typically less than
1oC error over a 100oC. The temperature range for LM 335 is -
40oC to 100oC. In other words, the output voltage of this
temperature sensor will range from 2.33 V to 3.73 V.
The calculations for the output voltage are shown below [6]:
Output voltage for -40oC = (-40 + 273) × 10 × 10-3
= 2.33 V (3)
Output voltage for 100 C = (100 + 273) × 10 × 10-3
o
= 3.73 V (4)
o
For every 1 K increase, the output voltage will increase by
10 mV. Under normal condition, the temperature inside a
switchboard is about 40oC. It is assumed that the temperature
inside a switchboard will rise to 92oC and by calculation; the
corresponding voltage is 3.65 V. This voltage is set as the
reference voltage. The input voltage will be compared with the
reference voltage. The relay will be activated, once the input
voltage is more than the reference voltage.
IV. MODELLING OF ARC FAULT PRESSURE AND TEMPERATURE
DETECTORS CIRCUIT
A buffer amplifier provides electrical impedance
transformation from one circuit to another circuit. It is used to
transfer a voltage from the pressure sensor and temperature
sensor to voltage comparator. A unity gain buffer is used in the
circuit design. The output of the op-amp (buffer) is connected
to its inverting input, which is the negative feedback.
Therefore, the output voltage is simply equal to the input

voltage of the buffer. The output from the pressure sensor and
temperature sensor is connected to the non-inverting input of
the buffer (op-amp), which is the positive feedback, and the
output from the buffer is identical to the pressure sensor and
temperature sensor output.
The pressure sensor and temperature sensor will generate a
voltage based signal with respect to the amount of pressure and
temperature detected from the surrounding of the switchboard.
The signal is then sent to a voltage comparator through a
buffer. The voltage comparator is used to compare the signal
with a reference voltage. The output of the comparator from
both pressure sensor and temperature sensor will produce a
positive (‘HIGH’ output) value which will then become the
inputs for the 7408 AND gate. Then the output of the AND
gate will activate the relay and send a trip signal to the circuit
breaker (i.e.to turn on the LED) if both the pressure sensor and
temperature sensor detect a pressure and temperature that
exceed the reference voltage of the voltage comparator. Else,
the output voltage of the voltage comparator will indicate a
negative value (‘LOW’ output) which will not trigger the trip
signal.
Before detect the changes of pressure and temperature in
the environment and operate the LED when the pressure and
temperature exceeds the predetermined limit. The arc fault
pressure and temperature detectors are modeled to lower values
of pressure and temperature with respect to the practical
pressure and temperature.
Fig. 3 shows the schematic diagram of an arc fault pressure
and temperature detectors using PSpice program. The input for
this circuit is an AC supply. An AC supply is used to represent
the output signal from the pressure and temperature sensor. The
output voltage range of the sensor is used as the input voltage
range for the circuit. The AC input voltage for temperature
sensor, Vin1, is ranged from 2.33 V (corresponding to -40oC)
to 3.73 V (corresponding to 100oC) as obtained from
Equation (3) and Equation (4). The AC input voltage for
pressure sensor, Vin2, is ranged from 0.2 mV (corresponding
to 20 kPa) to 4.8 V (corresponding to 400 kPa) as obtained
from Equation (1) and Equation (2).
Figure 3. PSpice Schematic Diagram of an Arc Fault Pressure and
Temperature Detector
U1 and U3 is an op-amp, which represents a buffer in this
circuit. The AC supply is connected to the positive feedback of
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U1 and U3 and the negative feedback of U1 and U3 is
connected to the output of U1 and U3 to produce a unity gain
buffer. The output voltage of U1 and U3 is same as the input
voltage since it is a unity gain buffer.
Then, the output voltage of U1, Vin1, is connected to the
positive feedback (pin 3) of U2, which is a voltage comparator.
Also, the output voltage of U3, Vin2, is connected to the
positive feedback (pin 3) of U4, which is a voltage comparator.
The output voltage of the buffer is used as the input voltage
of the comparator. Theoretically, the input voltage of U2 and
U4 are identical to the output voltage of U1 and U3 and are
also identical to the output voltage of the pressure and
temperature sensor, which is represented by an AC source in
this circuit. uA741 op-amp is used as the voltage comparator.
A DC input voltage, Vref1, of 3.65 V is placed at the negative
feedback (pin 2) of U2 to produce a constant value of reference
voltage. The voltage value of 3.65 V is equal to the temperature
value of 92oC. Also, a DC input voltage, Vref2, of 3 V is
placed at the negative feedback (pin 2) of U4 to produce a
constant value of reference voltage. The voltage value of 3 V is
equal to the pressure value of 250 kPa.
A +9 V DC supply is connected to pin 7 and a -9 V DC
supply is connected to pin 4 of U2 and U4 to supply voltage for
this component. Output voltage from U2 and U4 (pin 6), Vout1
and Vout2, is used to indicate the comparison result of the
input voltage and the reference voltage.
The 7408 AND Gate inputs are connected with the outputs
voltage of U2 and U4 then AND Gate output is connected to
the Voltage Controlled Switch which act as a relay that will
activate the Voltage Pulse and therefore turn on the LED if
output voltage of the AND gate is positive.
V. SIMULATION RESULTS
The PSpice simulation result from the schematic diagram of
the arc fault pressure and temperature detectors is shown in
Fig. 4. From Fig. 4, the input voltage of temperature sensor of
3.03 V is represented by the sine waveform (in pink color) and
input voltage of pressure sensor of 2.4 V is represented by
another sine waveform (in light blue color). The reference
voltages are the two straight lines at 3.65 V for temperature
sensor and 3.0 V for pressure sensor. The two square waves are
the output from voltage comparator which trigger as logic ‘1’
(‘HIGH) at 8.5 V if the input voltage of sine wave is higher
than the reference voltage and becomes logic ‘0’ (‘LOW’) at -
5.0 V if the input voltage of sine wave is lower than the
reference voltage.
The red line at 3.5 V between the times of 0 ms to 10ms is
the output voltage of AND gate which combine the output
voltage of pressure and temperature detector. After 10 ms the
red line becomes 0 V as it trip the signal at the Controlled
Voltage Switch. The controlled voltage switch is act like a
relay and will close when it receive a ‘HIGH’ output from the
AND gate. Equivalently, it will trigger the voltage pulse at
5.0 V (represent in green color) which will turn on the LED.

Figure 4. Simulation Result of an Arc Fault Pressure and Temperature
Detectors
In other words, these pressure and temperature detectors
could detect early precautions of arc fault occurrence. This
could reduce the possibilities of arc occurrences and avoid
damages to the switchboard, buildings and personnel injury.
VI. CONCLUSION
Arcing faults in low voltage switchboards is a serious issue
as the effects of the arcing faults are devastating. In this paper,
the proposed arc fault pressure and temperature detectors
circuit will activate the relay and send a trip signal to the
circuit breaker if and only if both the detectors detect a
pressure and temperature level which are higher than the
reference value. This is to ensure that no fault tripping signal
is sent to the circuit breaker and therefore unnecessary power
shut down.
An early detection of arc fault in low voltage switchboard
enable the isolation of the power supply to the consumer side
106
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just before the occurrence of arc fault and thereby reduce the
danger to personal injury and building. In addition, it improves
the system reliability without power interruption which is
particular essential to hospitals and certain industries with
sensitive loads. The circuit help to eliminate the possibility of
an arc occurring and hence prevents against the effects of arc
occurrence. The proposed circuit can be modeled to meet
specifications of industry with different supply requirements. It
is easy to design and highly reliable.
REFERENCES
[1] L.C. Kuan, “Arc Fault Pressure Detector in Low Voltage Switchboard”,
International Journal of Scientific and Research Publications, Volume 3,
Issue 6, June 2013.
[2] H. B. Land, “The Behavior of Arcing Faults in Low Voltage
Switchboards”, IEEE Transactions on Industry Applications, Vol. 44, No.
2, March/April 2008.
[3] K. Malmedal and P. K. Sen, “Arcing fault current and the criteria for
setting ground fault relays in solidly-grounded low voltage systems”,
Industrial and Commercial Power Systems Technical Conference, 2000.
[4] T. Gammon and J. Matthews, “Arcing Fault Models for Low Voltage
Power Systems”, Industrial and Commercial Power Systems Technical
Conference, 2000.
[5] L.C. Kuan, “Arc Fault Temperature Detector in Low Voltage
Switchboard”, International Conference of Information, System and
Convergence Applications, June 2015.
[6] B. R. Baliga and E. Pfender, “Fire Safety Related Testing of Electric
Cable Insulation Materials”, Univ. Minnesota, 1975.
[7] H. B. Land, C. L. Eddins and J. M. Klimek, “Evolution of Arc Fault
Protection Technology”, John Hopkins APL Technical Digest, 2004.

Performance Evaluation of Discrete-time Hedging
Strategies for European Contingent Claims
Easwar Subramanian, Vijaysekhar Chellaboina and Arihant Jain
TCS Innovation Labs, Tata Consultancy Services, India
easwar@atc.tcs.com, vijay@atc.tcs.com, arihantjain.iitg@gmail.com
Abstract—We consider the use of discrete-time quadratic
optimal hedging strategies for hedging European contingent
claims (ECCs). Specifically, the objective of the current work is to
numerically compare the effectiveness of two quadratic trading
strategies with the standard delta hedging. The two quadratic
optimal hedging strategies that we consider are mean-variance
hedging in a risk-neutral measure and optimal local-variance
hedging in a market probability measure. The objective function
for the former is the variance of the hedging error calculated in
a risk-neutral measure and the latter optimizes the variance of
the mark-to-market value of the portfolio over a single trading
interval in a market probability measure. The comparison is
done on multiple performance measures such as the probability
of loss, expected loss, different moments of the hedging error and
shortfall measures such as value at risk (VaR) and conditional
value at risk (CVaR). The performance evaluation results on
path-independent and exchange like options conclude that in
the discrete-time setting the quadratic optimal hedging strategies
outperform the delta hedging strategy. Indeed, as the re-balancing
is done more sparsely, the quadratic-optimal trading schemes fair
better than the standard delta-hedging.
I. I NTRODUCTION
We consider the problem of performance evaluation of
discrete-time quadratic optimal hedging strategies for Eu-
ropean contingent claims. The ECC that is being hedged
could be a single or multi-asset ECC and may be path-
dependent. The trading portfolio consists of risky securities
and a risk less money market asset that grows continuously at
the risk-free rate. The risky securities of the trading portfolio,
known as the hedging assets, are the underlying assets of the
ECC that is being hedged. Trading occurs at pre-specified
discrete times between the time of initiation and the time
to maturity of the ECC. We consider two quadratic optimal
hedging schemes, namely, risk-neutral mean-variance hedging
and optimum local-variance hedging. While the former is a
trading strategy that minimizes the variance of the hedging
error to the seller of the ECC in an equivalent risk-neutral
measure, the latter minimizes the variance of the mark-to-
market value of the trading portfolio between current and the
next trading instance in a market probability measure.
A. Background and Motivation
Much of the work on hedging have their origin in the
celebrated works of Black and Scholes in [1] and that of
Merton in [2] wherein the authors provided a way to replicate
a European call option with its underlying and eliminate the
risk completely under the assumption that trading can be
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
107
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performed continuously. However, in reality, a portfolio can
only be readjusted at discrete times over any finite period
and herein lies our primary motivation behind this work
which is to consider discrete-time trading strategies. While
deploying discrete-time trading, it is not possible to hedge a
seller’s risk completely and the seller of the ECC typically
accumulates a net P/L. This accumulated P/L contributes to
the risk associated with a trading strategy which in some sense
has to be minimized.
B. Scope of the work
Popular approaches to discrete-time hedging involve formu-
lating quadratic criterion on the net P/L or hedging error as
the risk associated with a discrete-time hedging strategy [3, 4]
and perform suitable optimization. The work evaluates the
efficacy of two quadratic optimal strategies over the discrete-
time version of the standard delta hedging. The delta hedging
strategy, which is well suited to mitigate the effects of risk due
to price movements of the underlying assets of the ECC on
the illiquid portfolio, is based on the theory of continuous-
time trading. Our intention is to show that, when trading
is performed in discrete-time, quadratic optimal strategies
perform better than the standard delta-hedging strategy. To
this end, we consider different risk measures such as the
moments of the hedging error, VaR, CVaR, probability of loss
and expectation of loss. The performance evaluation results are
demonstrated on path-independent ECCs including multi-asset
options like exchange options.
C. Outline
The outline of the current work is as follows. In Section II
we introduce our notations and provide a mathematical formu-
lation of the discrete-time hedging problem. In Section III we
introduce the two different hedging techniques that we study in
this paper. For each hedging technique, generalized solutions
involving Monte-Carlo computations are provided. Thereafter,
in Section IV we introduce our performance measures and
thereafter demonstrate the efficacy of the quadratic hedging
solutions over the standard delta hedging in Section V. We
summarize the results in Section VI.
II. P RELIMINARIES
We begin by introducing our notations and then proceed to
the problem description.

A. Notations and Problem Setup
Consider an ECC that matures at time 𝑇 . To hedge this
ECC, we consider a hedging portfolio consisting of a risk less
money-market asset 𝑆0 , and 𝑚 underlying (or risky) assets on
which the ECC is written. We let 𝑆 𝑙 , 𝑙 = 1, ..., 𝑚, to denote
the 𝑚 underlying assets. Trading on the risky assets occur at
pre-specified discrete times {𝑇0 , 𝑇1 , ⋅ ⋅ ⋅ , 𝑇𝑛 }, 𝑇𝑘−1 < 𝑇𝑘 , 𝑘 ∈
{1, . . . , 𝑛}, with 𝑇𝑛 = 𝑇 (with ℱ𝑗 as filtrations at time 𝑇𝑗 ) and
let 𝑆𝑘𝑙 denote the price of the asset 𝑆 𝑙 at time 𝑇𝑘 . With 𝑟 as
the risk-free interest rate, we let 𝑆¯𝑘𝑙 = 𝑆𝑘𝑙 𝑒−𝑟𝑇𝑘 be the price of
the asset 𝑆 𝑙 discounted to time 𝑇0 . We let 𝛽 ∈ ℝ be the initial
amount invested at time 𝑇0 in the money market asset which
includes the premium received for the ECC and let 𝑉 be the
payoff of the ECC. Finally, let Δ𝑙𝑘 denote the amount of the
underlying asset 𝑆 𝑙 held in the hedging portfolio over the time
△
interval (𝑇𝑘−1 , 𝑇𝑘 ], and let Δ𝑘 = [Δ1𝑘 , ⋅ ⋅ ⋅ , Δ𝑚 𝑇
𝑘 ] ∈ ℝ
𝑚
and
△ 1 𝑚 𝑇 𝑚 der consideration. The optimum local-variance minimization
𝑆𝑘 = [𝑆𝑘 , ⋅ ⋅ ⋅ , 𝑆𝑘 ] ∈ ℝ denote the amounts and prices of
underlying assets 𝑆 at time 𝑇𝑘 , 𝑘 ∈ {0, ⋅ ⋅ ⋅ , 𝑛}. At time 𝑇𝑛 ,
the positions Δ𝑛 in the underlying assets 𝑆𝑛 are liquidated
in order to deliver the payoff of the ECC. The hedging error,
which is the discounted final money-market position to the
seller of the ECC is then given by,
𝑛
∑
𝐻(Δ) = Δ𝑇𝑘 (𝑆¯𝑘 − 𝑆¯𝑘−1 ) + 𝛽 − 𝑉¯ (1)
𝑘=1
where 𝑉¯ = 𝑉 𝑒−𝑟𝑇 . The hedging error (1) represents the profit
to the seller of the ECC, with positive values of 𝐻 indicating
profit.
III. H EDGING STRATEGIES
In this section, we provide a brief description of the two
quadratic hedging strategy that we consider in this exposition.
A. Risk-neutral minimum-variance hedging
In this case, we seek trading strategies such that the global
variance of the hedging error is minimized in a risk neutral
measure. The term global variance may be understood as the
variance of the overall profit (P/L) to the trader starting from
the time of initiation till the time of maturity of the ECC.
A risk-neutral probability measure is characterized by the
property that the expected rate of return of any market asset
in the risk-neutral measure equals the risk-free interest rate
offered by the economy. As per the theory of asset pricing,
the risk-neutral measure determines the prices of all derivative
assets in the market. For the purpose of this exposition, let 𝑃
denote a risk-neutral measure that is equivalent to the market
measure 𝑄 in the sense that both 𝑃 and 𝑄 are mutually ab-
solutely continuous. In addition, the discrete-time discounted
asset price processes {𝑆¯𝑘𝑙 }𝑛𝑘=0 , 𝑙 ∈ {1, ⋅ ⋅ ⋅ , 𝑛} are martingales
under the measure 𝑃 . In other words, 𝔼𝑃 (𝑆¯𝑘𝑙 ∣ℱ𝑗 ) = 𝑆¯𝑗𝑙 , where
0 ≤ 𝑗 ≤ 𝑘 ≤ 𝑛, 𝑙 ∈ {1, ⋅ ⋅ ⋅ , 𝑚}. For this hedging scheme, we
additionally assume that the discounted payoff 𝑉¯ and the asset
price processes 𝑆𝑘𝑙 , 𝑘 ∈ {0, ⋅ ⋅ ⋅ , 𝑛}, 𝑙 ∈ {1, ⋅ ⋅ ⋅ , 𝑛} are square
integrable with respect to the measure 𝑃 . The risk-neutral
minimum-variance hedging scheme seeks a trading strategy
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Δ = (Δ1 , . . . , Δ𝑛 ) such that Δ ∈ 𝒫 and var𝑃 (𝐻(Δ, 𝛽, 𝑉 )) is
minimum. A general solution to the risk-neutral mean-variance
hedging problem for the martingale case is given by,
𝑔𝑣
Δ𝑘 = [covar𝑃 (𝑆𝑘 ∣ℱ𝑘−1 )]−1 covar𝑃 (𝑆𝑘 , 𝑉𝑘 ∣ℱ𝑘−1 ), (2)
where 𝑉𝑘 = 𝔼𝑃 (𝑉 ∣ℱ𝑘 ) is the risk-neutral price of the ECC at
time 𝑇𝑘 . For a rigorous derivation of (2), the reader is referred
to [5] and generalizations are found in [6, 7].
B. Optimum local-variance hedging
In here, we seek a trading strategy such that the local vari-
ance of the hedging error is minimized in the market measure
𝑄. The term local variance may be understood as the variance
of the P/L to the trader between successive trading time
instances. It could also be viewed as the variance of the mark-
to-market value of the total portfolio in the trading interval un-
problem is to determine a trading strategy Δ = (Δ1 , . . . , Δ𝑛 )
such that Δ ∈ 𝒫 and the conditional variance var𝑄 (𝐻𝑘 ∣ℱ𝑘−1 )
is minimum, where 𝐻𝑘 = 𝔼𝑃 (𝐻∣ℱ𝑘 ).
To see the motivation for considering such a local-variance
minimization, fix 𝑘 ∈ {1, . . . , 𝑛}. Using the ℱ𝑘−1 measura-
bility of Δ𝑘 one can from (1) deduce that,
𝐻𝑘 = 𝐻𝑘−1 + Δ𝑇𝑘 (𝑆¯𝑘 − 𝑆¯𝑘−1 ) − (𝑉¯𝑘 − 𝑉¯𝑘−1 ). (3)
In (3), 𝑉¯𝑘 − 𝑉¯𝑘−1 represents the change in the discounted
value of the ECC that occurs over the interval (𝑇𝑘−1 , 𝑇𝑘 ],
while Δ𝑇𝑘 (𝑆¯𝑘 − 𝑆¯𝑘−1 ) represents the change in discounted
value of the underlying assets held in the hedging portfolio
over the same interval. Thus 𝐻𝑘 −𝐻𝑘−1 represents the change
in the discounted mark-to-market value of the total portfolio
consisting of a long position in the underlying assets and a
short position in the ECC. Since 𝐻𝑘−1 is ℱ𝑘−1 measurable,
var𝑄 (𝐻𝑘 ∣ℱ𝑘−1 ) = var𝑄 (𝐻𝑘 − 𝐻𝑘−1 ∣ℱ𝑘−1 ) is a measure
of the risk exposure due to movements in the price of the
underlying assets and the value of the ECC over the inter-
hedging time interval (𝑇𝑘−1 , 𝑇𝑘 ]. The general solution to the
optimum local-variance hedging problem is given by (see [8]),
𝑙𝑣
Δ𝑘 = [covar𝑄 (𝑆𝑘 ∣ℱ𝑘−1 )]−1 covar𝑄 (𝑆𝑘 , 𝑉𝑘 ∣ℱ𝑘−1 ). (4)
IV. P ERFORMANCE MEASURES
In this section, we compare the performance of the two
quadratic hedging strategies with the standard delta hedging.
The evaluation process can be better performed if a trader
relies on the results of multiple performance metrics instead
of just one. This is because one single number cannot capture
all the risks involved in the trading process. For example,
a trader might want to know the probability of loss or the
expected loss due to a trading strategy. Further, it may also
be useful to know the uncertainty in the hedging error that
results from performing the suggested trade. In addition, it
is important to look at the (left) tail of the distribution of
the returns to know about the worst possible outcomes. The
knowledge of the worst possible outcomes is important for
capital budgeting and regulatory compliance. The outputs of
 Back to Contents

0.52 -4.1
Delta hedging Delta hedging
Risk-neutral mean-variance hedging Risk-neutral mean-variance hedging
0.5 Optimum local-risk hedging -4.2 Optimum local-risk hedging

0.48 -4.3

0.46 -4.4

0.44 -4.5

Expectation of loss
Probability of loss

0.42 -4.6

0.4 -4.7

0.38 -4.8

0.36 -4.9

0.34 -5

0.32 -5.1

0.3 -5.2
Eu

Ex

Eu

Ex
.O

.O
r.C

r.C
pt

pt
al

al
io

io
l

l
n

n
Fig. 1: Plot of probability of loss and expected loss for different strategies and different ECCs. Observe that the performance
of the quadratic optimal strategies are better than delta-hedging. Parameters used ; European call : spot value 𝑆0 = 50; strike
𝐾 = 50; Exchange Option : spot values 𝑆01 = 50; 𝑆02 = 45;

6 28
Delta hedging Delta hedging
Risk-neutral mean-variance hedging Risk-neutral mean-variance hedging
5.9 Optimum local-risk hedging Optimum local-risk hedging

26

Conditional Value at Risk (CVaR) at 99%

5.8
Value at Risk (VaR) at 99%

5.7 24

5.6
22
5.5

5.4 20

5.3
18
5.2

5.1 16
Eu

Ex

Eu

Ex
.O

.O
r.C

r.C
pt

pt
al

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io

io
l

l
n

n
Fig. 2: Plot of value-at-risk (VaR) and conditional value-at-risk (CVaR) for different strategies and different ECCs. Re-balancing
frequency used is 7 days

various measures can be useful to choose particular trading
strategy in a given scenario. In the current work, we consider
three types of measures to evaluate a trading strategy.
A. Loss measures
We consider two loss measures that convey the quantum
of loss resulting from a trading strategy. They are probability
of loss and expected loss. The former is the probability of
making a loss in hedging an ECC with the underlying asset(s)
using a trading strategy and the latter provides an estimate
of the average loss in hedging an ECC given that loss has
occurred on using a trading strategy. If we let ℋ represent the
set of hedging errors obtained on multiple scenarios due to the
application of a trading strategy on hedging an ECC and ∣ ⋅ ∣
denotes cardinality of the set, then, numerically, probability
− performed.
of loss is calculated as ∣ℋ ∣ −
∣ℋ∣ where ℋ ⊂ ℋ are the negative
values of ℋ (loss making scenarios). And, expected loss is
calculated numerically, as the average of (ℋ− ). A strategy
that has lower probability of loss or expected loss is a better
strategy.
B. Measures based on moments
It is also desirable for a strategy to possess less uncertainty
over the eventual P/L values at the time of maturity. Such
strategies can be obtained by optimizing the variance or second
moment of the hedging error. Numerically, variance of the
hedging error is calculated as var𝑄 (ℋ) over many possible
scenarios. The strategy with a lower variance is a better
strategy. Yet another performance measure considered in the
literature is the so-called effectiveness of hedge denoted by Γ
in which the performance of a hedging strategy is compared
with no hedging. It is evaluated as,
var𝑄 (ℋ𝐻𝑆 )
Γ=1− (5)
var𝑄 (ℋ𝑁 𝐻 )
where var𝑄 (ℋ𝐻𝑆 ) is the numerical variance of the hedging
error of an arbitrary trading strategy and var𝑄 (ℋ𝑁 𝐻 ) is the
numerical variance of the hedging error when no hedging is
C. Shortfall measures
We also consider two popular shortfall measures i.e. mea-
sures that focus on the worst 𝛼% outcomes or tail outcomes.
They are value-at-risk (VaR) which is the maximum likely loss
to occur in (1 − 𝛼)% of cases and conditional value-at-risk
(CVaR) which is the expected tail loss if a tail event occurs.
In its most common form, value-at-risk (VaR) measures the

109
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European Option 0.88

Delta hedging
40 Risk-neutral mean-variance hedging
Delta hedging Optimum local-risk hedging
Risk-neutral mean-variance hedging 0.86
Optimum local-risk hedging
35

0.84
30
Variance of the hedging error

Effectiveness of hedge
0.82
25

0.8
20

0.78
15

0.76
10

0.74
5

0.72
0

Eu

Ex
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1-

7-

14

91

r.C
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pt
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-D

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ay

ay

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ay

ay

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s

s
Fig. 3: Left hand side is a plot of variance of P/L versus hedging frequency. Right hand side plots the effectiveness criterion as in
(5) for different strategies and different ECCs. Quadratic optimal strategies performs better than the conventional delta-hedging.

European call Exchange option

40 450
Delta-hedging Delta-hedging
Risk-neutral mean-variance hedging Risk-neutral mean-variance hedging
35 Optimum local-risk hedging 400 Optimum local-risk hedging

350
30
Variance of the hedging error

Variance of the hedging error

300
25
250
20
200
15
150

10
100

5 50

0 0
0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
X X

Fig. 4: Plot of 𝜎 2 d𝑡 versus variance of the hedging error where d𝑡 is the re-balancing frequency (or trading interval). Observe
that the variance obtained from delta-hedging scheme is higher than the quadratic hedging schemes. Parameters used ; European
call : spot value 𝑆0 = 50; Strike 𝐾 = 50; Exchange Option : Spot values 𝑆01 = 50; 𝑆02 = 45;

boundaries of risk in a portfolio over short durations under at different re-balancing frequencies of 1 day, 7 days, 14
normal market conditions at a given confidence level. Condi- days and 91 days. Re-balancing done only on the 1st and
tional VaR, on the other hand, provides information about the 91st day corresponds to the case of static hedging. For each
average level of loss, given that the VaR has exceeded. That path a particular hedging scheme is applied at a particular
is, CVaR tells us about the extent of the loss that could be re-balancing frequency and the corresponding hedging error
incurred in the event that VaR is exceeded. is recorded. Thereafter we calculate statistical measures on
the hedging errors to obtain a desired performance measure.
V. N UMERICAL S IMULATION
Six performance measures were considered which include
We begin the section by explaining our experimental setup. probability of loss, expected loss, variance of the hedging
A. Experimental setup error, effectiveness of the trading strategy, VaR and CVaR. VaR
and CVaR were calculated with 𝛼 = 0.01 (99% percentile) and
For simulations, we considered European call options and
the time horizon ℎ was set to time to maturity of the hedged
exchange options as the hedged ECCs. Given parameters 𝜇 and
ECC. The results of the simulation exercise were also tested
𝜎, we simulated multiple paths of the underlying asset prices
for multiple choices of parameters to include out-of-money,
𝑆𝑡 using the GBM model. For the multi-asset exchange option,
at-the-money and in-the-money options to test robustness of
correlated Brownian with suitable correlation coefficient 𝜌
the performance results.
were used. Time to maturity was set at 𝑇 = 91 days and
the risk-free interest rate of the market was fixed at 𝑟 = 10%
B. Results
for all simulations. The growth rate of the underlying asset(s)
were typically set at twice of the risk-free interest rate i.e., at Figure 1 plots the probability of loss and expected loss for
𝜇 = 20% unless otherwise stated. For a given spot value 𝑆0 different trading strategies and for European and exchange
of the underlying asset, 100, 000 GBM paths were generated. options. Observe that the performance of the quadratic optimal
For each path, 𝑆𝑡 value was recorded at multiple frequencies strategies are superior to that of the delta hedging schemes.
of daily, weekly and fortnightly. Hedging was performed The plots were qualitatively similar for high and low volatili-

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European call European call

26 26
Delta-hedging Delta-hedging
Risk-neutral mean-variance hedging Risk-neutral mean-variance hedging
Optimum local-risk hedging Optimum local-risk hedging
24 24

Variance of the hedging error

Mean-squared hedging error

22 22

20 20

18 18

16 16

14 14

12 12
40 45 50 55 60 40 45 50 55 60
Strike of European call option Strike of European call option

Fig. 5: Plot of mean-squared hedging error and variance of the hedging error as a function of strike for European call option.
The quadratic optimal strategies fair better for all values of the strike. Parameters used ; Spot value 𝑆0 = 50;

ties and different re-balancing frequencies. In Figure 2, we plot CVaR. In all of these performance measures, the discrete time
the VaR and CVaR resulting from a hedging strategy calculated quadratic optimal strategies faired better than the delta-hedging
for different strategies and for different ECCs. One can observe approach. The results were even more skewed in favor of
that the performance of the quadratic optimal strategies are the quadratic hedging strategies when trading is performed
superior to that of the delta hedging schemes. The left hand more sparsely. The results obtained in this work make a case
side of Figure 3 depicts that the quadratic optimal strategies for the use of quadratic optimal hedging strategies over the
performs better than the conventional delta-hedging when classic delta hedging in practice. These discrete-time strategies
trading is performed more sparsely. Although the plot is for not only incur less risk when measured in terms of the loss
European option, the result is qualitatively same for Exchange measures such as the probability and expectation of loss but
option. On the right figure we plot the effectiveness criterion as also helps in efficient capital budgeting for regulatory purposes
in (5) for different strategies and different ECCs which again since they fair better in shortfall measures such as VaR and
shows the superiority of the quadratic hedging schemes. CVaR.
In Figure 4, we plot the variance of the hedging error calcu-
R EFERENCES
lated in market probability measure 𝑄 with 𝜎 2 d𝑡. The quantity
𝜎 2 d𝑡 is calculated from four re-balancing frequencies of daily [1] F. Black and M. Scholes, “The pricing of options and cor-
(1 day), weekly (7 days), fortnightly (14 days) and static hedg- porate liabilities,” Journal of Political Economy, vol. 81,
ing (91 days) and three volatilities (20%, 80% and 200%). pp. 637–659, 1973.
Observe that the variance obtained from delta-hedging scheme [2] R. C. Merton, “Theory of rational option pricing,” Bell
is higher than the quadratic hedging schemes. Figure 5 plots Journal of Economics and Management science, vol. 4,
the variance and the mean-squared hedging error for call pp. 141–183, 1973.
options which are deep-in-the-money, at-the-money and out- [3] H. Föllmer and D. Sondermann, Hedging of non-
of-money. For all cases, the performance of the quadratic redundant contingent claims. North Holland: In W.
optimal schemes were better than the standard delta hedging. Hildenbrand and A. Mas-Colell, editors,, 1986, ch. 12,
pp. 205–223.
VI. S UMMARY AND OUTLOOK [4] D. Duffie and H. R. Richardson, “Mean variance hedging
In this work, we considered the problem of evaluating in continuous time,” The Annals of Probability, vol. 1,
the performance of quadratic optimal hedging schemes with no. 1, pp. 1–15, 1991.
delta hedging. The portfolio that is being hedged consists of [5] S. Bhat, V. Chellaboina, M. U. Kumar, A. Bhatia, and
an ECC that could be possibly be a multi-asset and path- S. Prasad, “Discrete time minimum variance hedging
dependent. The trading portfolio consists of the underlying for european contigent claims,” in IEEE Conference on
assets of the hedged ECC. The quadratic optimal strategies Decision and Control, Shanghai, 2009.
that were considered in this exposition are risk-neutral mean- [6] M. Schweizer, “Variance-optimal hedging in discrete
variance hedging and optimum local-variance hedging. The time,” Mathematics of Operations Research, vol. 20, pp.
former minimizes the variance of the overall profit to the 1–32, 1995.
seller of the ECC and the latter minimizes the variance [7] M. Sc̈hal, “On quadratic cost criteria for option hedging,”
of the mark-to-market value of the portfolio over a single Mathematics of Operations Research, vol. 19, no. 1, pp.
trading interval. For the purpose of performance evaluation, 121–131, 1994.
we evaluated the strategies on multiple measures such as [8] E. Subramanian and V. Chellaboina, “Explicit solutions
probability and expectation of loss, second-order moments of of discrete-time quadratic optimal hedging strategies for
the hedging error, and shortfall measures such as VaR and european contingent claims,” London, 2014, pp. 449–456.

111

Explicit Solutions of Discrete-time Hedging
Strategies for Multi-Asset Options
Easwar Subramanian, Vijaysekhar Chellaboina and Arihant Jain
TCS Innovation Labs, Tata Consultancy Services, India
easwar@atc.tcs.com, vijay@atc.tcs.com, arihantjain.iitg@gmail.com
Abstract—We consider the use of discrete-time quadratic op-
timal hedging strategies for hedging Multi-asset options. Specifi-
cally, the objective of the current work is to provide specialized
closed form solutions to hedge Exchange options using two
quadratic hedging schemes. The two quadratic optimal hedging
strategies that we consider are mean-variance hedging in a risk-
neutral measure and optimal local-variance hedging in a market
probability measure. The objective function for the former is
the variance of the hedging error calculated in a risk-neutral
measure and the latter optimizes the variance of the mark-to-
market value of the portfolio over a single trading interval in a
market probability measure. To arrive at closed-form solutions,
we assume geometric Brownian motion (GBM) as the stochastic
model for the underlying asset prices. The hedging solutions
are expressed in terms of the pricing function of the hedged
ECC and the prices of the underlying assets. The motivation
to provide these explicit solutions is that the proposed hedging
solutions are well suited for computer implementation and reduce
compute time and complexity unlike the Monte-Carlo based
solution formulations.
I. I NTRODUCTION
We consider evaluation of explicit solutions of discrete-time
quadratic optimal hedging strategies for multi-asset European
contingent claims. Specifically, we consider exchange option
as the ECC that is being hedged and the trading portfolio
consists of the underlying assets of the ECC and a risk less
money market asset that grows continuously at the risk-free
rate. Trading occurs at pre-specified discrete times between
the time of initiation and the time to maturity of the ECC. We
consider two quadratic optimal hedging schemes, namely, risk-
neutral mean-variance hedging and optimum local-variance
hedging. While the former is a trading strategy that minimizes
the variance of the hedging error to the seller of the ECC in
an equivalent risk-neutral measure, the latter minimizes the
variance of the mark-to-market value of the trading portfolio
between current and the next trading instance in a market
probability measure.
A. Background and Motivation
Much of the work on hedging have their origin in the
celebrated works of Black and Scholes in [1] and that of
Merton in [2] wherein the authors provided a way to replicate
a European call option with its underlying and eliminate the
risk completely under the assumption that trading can be
performed continuously. However, in reality, a portfolio can
only be readjusted at discrete times over any finite period
and herein lies our primary motivation behind this work
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
112
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which is to consider discrete-time trading strategies. While
deploying discrete-time trading, it is not possible to hedge a
seller’s risk completely and the seller of the ECC typically
accumulates a net P/L. This accumulated P/L contributes to
the risk associated with a trading strategy which in some sense
has to be minimized.
In this exposition we consider variance or the second
moment of the hedging error (P/L) as the criterion function
to be minimized. The solutions to various quadratic hedging
problems depend on the assumptions made on the measurabil-
ity and the integrability of the underlying asset price processes.
Indeed, as the problem setting becomes more generic, the
associated solution gets more complicated and involve compu-
tationally intensive Monte-Carlo simulations (see [3, 4]). Our
second motivation is to provide hedging solutions that are not
compute intensive and therefore we consider stronger problem
settings and derive explicit closed form solutions for different
quadratic discrete-time hedging problems, thus making it well
suited for computer implementation.
B. Scope of the work
We derive explicit closed form solution for the two quadratic
optimal hedging problems for exchange option. To arrive at
closed-form solutions, we assume geometric Brownian motion
(GBM) as the stochastic model for the underlying asset prices.
The hedging solutions are expressed in terms of the pricing
function of the hedged ECC and the prices of the underlying
assets. These explicit solutions when used instead of complex
Monte-Carlo based solutions makes the proposed hedging
solution well suited for computer implementation and reduce
compute time and complexity.
C. Outline
The outline of the current work is as follows. In Section
II we introduce our notations and provide a mathematical
formulation of the multi-asset discrete-time hedging problem.
In Section III we introduce the two different hedging tech-
niques that we study in this paper. For each hedging technique,
generalized solutions involving Monte-Carlo computations are
provided. Thereafter, in Section IV we introduce exchange
option, its pricing function and provide a derivation of the
hedging solutions for the quadratic hedging schemes consid-
ered. We summarize in Section V.

II. P RELIMINARIES
We begin by introducing our notations and then proceed to
the problem description.
A. Notations and Problem Setup
Consider an exchange option that matures at time 𝑇 . To
hedge the exchange option, we consider a hedging portfolio
consisting of a risk less money-market asset 𝑆0 , and 2 un-
derlying (or risky) assets on which the ECC is written. We
let 𝑆 𝑙 , 𝑙 = 1, 2, to denote the two underlying assets of the ex-
change option that is being hedged. Trading on the risky assets
occur at pre-specified discrete times {𝑇0 , 𝑇1 , ⋅ ⋅ ⋅ , 𝑇𝑛 }, 𝑇𝑘−1 <
𝑇𝑘 , 𝑘 ∈ {1, . . . , 𝑛}, with 𝑇𝑛 = 𝑇 and let 𝑆𝑘𝑙 denote the
price of the asset 𝑆 𝑙 at time 𝑇𝑘 . With 𝑟 as the risk-free
interest rate, we let 𝑆¯𝑘𝑙 = 𝑆𝑘𝑙 𝑒−𝑟𝑇𝑘 be the price of the
asset 𝑆 𝑙 discounted to time 𝑇0 . We let 𝛽 ∈ ℝ be the initial
amount invested at time 𝑇0 in the money market asset which
includes the premium received for the ECC and let 𝑉 be the
payoff of the ECC. Finally, let Δ𝑙𝑘 denote the amount of the
underlying asset 𝑆 𝑙 held in the hedging portfolio over the time
△ instances. It could also be viewed as the variance of the mark-
interval (𝑇𝑘−1 , 𝑇𝑘 ], and let Δ𝑘 = [Δ1𝑘 , ⋅ ⋅ ⋅ , Δ𝑚 𝑇
𝑘 ] ∈ ℝ
𝑚
△ 1 𝑚 𝑇 𝑚
𝑆𝑘 = [𝑆𝑘 , ⋅ ⋅ ⋅ , 𝑆𝑘 ] ∈ ℝ denote the amounts and prices of
underlying assets 𝑆 at time 𝑇𝑘 , 𝑘 ∈ {0, ⋅ ⋅ ⋅ , 𝑛}. At time 𝑇𝑛 ,
the positions Δ𝑛 in the two underlying assets 𝑆𝑛 are liquidated
in order to deliver the payoff of the ECC. The hedging error,
which is the discounted final money-market position to the
seller of the ECC is then given by,
𝑛
∑ bility of Δ𝑘 one can from (1) deduce that,
𝐻(Δ) = Δ𝑇𝑘 (𝑆¯𝑘 − 𝑆¯𝑘−1 ) + 𝛽 − 𝑉¯
𝑘=1
where 𝑉¯ = 𝑉 𝑒−𝑟𝑇 . The hedging error (1) represents the profit
or loss (P/L) to the seller of the ECC, with positive values of
𝐻 indicating profit.
III. H EDGING STRATEGIES
In this section, we provide a brief description of the two
quadratic hedging strategy that we consider in this exposition.
A. Risk-neutral minimum-variance hedging
In this case, we seek trading strategies such that the global
variance of the hedging error is minimized in a risk neutral
measure. The term global variance may be understood as the
variance of the overall profit (P/L) to the trader starting from
the time of initiation till the time of maturity of the ECC.
A risk-neutral probability measure is characterized by the
property that the expected rate of return of any market asset
in the risk-neutral measure equals the risk-free interest rate
offered by the economy. As per the theory of asset pricing,
the risk-neutral measure determines the prices of all derivative
assets in the market. For the purpose of this exposition, let 𝑃
denote a risk-neutral measure that is equivalent to the market
measure 𝑄 in the sense that both 𝑃 and 𝑄 are mutually ab-
solutely continuous. In addition, the discrete-time discounted
asset price processes {𝑆¯𝑘𝑙 }𝑛𝑘=0 , 𝑙 ∈ {1, 2} are martingales
under the measure 𝑃 . In other words, 𝔼𝑃 (𝑆¯𝑘𝑙 ∣ℱ𝑗 ) = 𝑆¯𝑗𝑙 ,
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where 0 ≤ 𝑗 ≤ 𝑘 ≤ 𝑛, 𝑙 ∈ {1, 2} where ℱ𝑗 are filtrations
at time 𝑇𝑗 . For this hedging scheme, we additionally assume
that the discounted payoff 𝑉¯ and the asset price processes
𝑆𝑘𝑙 , 𝑘 ∈ {0, ⋅ ⋅ ⋅ , 𝑛}, 𝑙 ∈ {1, 2} are square integrable with
respect to the measure 𝑃 . The risk-neutral minimum-variance
hedging scheme seeks a trading strategy Δ = (Δ1 , . . . , Δ𝑛 )
such that Δ ∈ 𝒫 and var𝑃 (𝐻(Δ, 𝛽, 𝑉 )) is minimum. A
general solution to the risk-neutral mean-variance hedging
problem for the martingale case is given by,
𝑔𝑣
Δ𝑘 = [covar𝑃 (𝑆𝑘 ∣ℱ𝑘−1 )]−1 covar𝑃 (𝑆𝑘 , 𝑉𝑘 ∣ℱ𝑘−1 ), (2)
𝑃
where 𝑉𝑘 = 𝔼 (𝑉 ∣ℱ𝑘 ) is the risk-neutral price of the ECC at
time 𝑇𝑘 . For a rigorous derivation of (2), the reader is referred
to [5] and generalizations are found in [3, 6].
B. Optimum local-variance hedging
In here, we seek a trading strategy such that the local vari-
ance of the hedging error is minimized in the market measure
𝑄. The term local variance may be understood as the variance
of the P/L to the trader between successive trading time
and
to-market value of the total portfolio in the trading interval un-
der consideration. The optimum local-variance minimization
problem is to determine a trading strategy Δ = (Δ1 , . . . , Δ𝑛 )
such that Δ ∈ 𝒫 and the conditional variance var𝑄 (𝐻𝑘 ∣ℱ𝑘−1 )
is minimum, where 𝐻𝑘 = 𝔼𝑃 (𝐻∣ℱ𝑘 ).
To see the motivation for considering such a local-variance
minimization, fix 𝑘 ∈ {1, . . . , 𝑛}. Using the ℱ𝑘−1 measura-
(1)
𝐻𝑘 = 𝐻𝑘−1 + Δ𝑇𝑘 (𝑆¯𝑘 − 𝑆¯𝑘−1 ) − (𝑉¯𝑘 − 𝑉¯𝑘−1 ). (3)
In (3), 𝑉¯𝑘 − 𝑉¯𝑘−1 represents the change in the discounted
value of the ECC that occurs over the interval (𝑇𝑘−1 , 𝑇𝑘 ],
while Δ𝑇𝑘 (𝑆¯𝑘 − 𝑆¯𝑘−1 ) represents the change in discounted
value of the underlying assets held in the hedging portfolio
over the same interval. Thus 𝐻𝑘 −𝐻𝑘−1 represents the change
in the discounted mark-to-market value of the total portfolio
consisting of a long position in the underlying assets and a
short position in the ECC. Since 𝐻𝑘−1 is ℱ𝑘−1 measurable,
var𝑄 (𝐻𝑘 ∣ℱ𝑘−1 ) = var𝑄 (𝐻𝑘 − 𝐻𝑘−1 ∣ℱ𝑘−1 ) is a measure
of the risk exposure due to movements in the price of the
underlying assets and the value of the ECC over the inter-
hedging time interval (𝑇𝑘−1 , 𝑇𝑘 ]. The general solution to the
optimum local-variance hedging problem is given by (see [7]),
𝑙𝑣
Δ𝑘 = [covar𝑄 (𝑆𝑘 ∣ℱ𝑘−1 )]−1 covar𝑄 (𝑆𝑘 , 𝑉𝑘 ∣ℱ𝑘−1 ). (4)
IV. E XCHANGE OPTION
In this section we consider the exchange option, provide
its pricing function and derive explicit expressions for the
two quadratic hedging schemes discussed in this exposition.
An exchange option is a multi-asset option written on two
underlying assets, that allows the holder of the option to
exchange one asset for another. Accordingly, the payoff at time
𝑇 is given by max(𝑆𝑇1 − 𝑆𝑇2 , 0) with 𝑆𝑇1 and 𝑆𝑇2 representing
prices of the two underlying assets at terminal time 𝑇 . These
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Lemma 3.1: Consider an Exchange option with payoff given by 𝜙(𝑆𝑇1 , 𝑆𝑇2 ). Let the prices of the underlying assets 𝑆𝑡𝑖 , 𝑖 ∈ {1, 2}
follow the GBM as in (9) with 𝛿𝑘 as the time left until next hedging instance 𝑇𝑘 . The risk-neutral mean-variance hedging
strategy (2) for the trading interval (𝑇𝑘−1 , 𝑇𝑘 ], 𝑘 ∈ {1, ⋅ ⋅ ⋅ , 𝑛} is given by,
( )
𝑔𝑣 Δ1𝑘
Δ𝑘 = = 𝐴−1 𝐵, where
Δ2𝑘
( 2
)
1
(𝑆𝑘−1 )2 𝑒2𝑟𝛿𝑘 (𝑒𝜎1 𝛿𝑘 − 1) 1
𝑆𝑘−1 2
𝑆𝑘−1 𝑒2𝑟𝛿𝑘 (𝑒𝜌𝜎1 𝜎2 − 1)
𝐴 = 2 (5)
1 2
𝑆𝑘−1 𝑆𝑘−1 𝑒2𝑟𝛿𝑘 (𝑒𝜌𝜎1 𝜎2 − 1) 2
(𝑆𝑘−1 )2 𝑒2𝑟𝛿𝑘 (𝑒𝜎2 𝛿𝑘 − 1)
⎛ [ ( 2
) ( 1 )]⎞
1
𝑆𝑘−1 𝑒2𝑟𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒𝜎1 𝛿𝑘 , 𝑆𝑘−1
2
𝑒𝜌𝜎1 𝜎2 𝛿𝑘 − 𝑉𝑘−1 𝑆𝑘−1 2
, 𝑆𝑘−1
𝐵 = ⎝ [ ( 2
) ( 1 )]⎠
2
𝑆𝑘−1 𝑒2𝑟𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒𝜌𝜎1 𝜎2 𝛿𝑘 , 𝑆𝑘−1
2
𝑒𝜎2 𝛿𝑘 − 𝑉𝑘−1 𝑆𝑘−1 2
, 𝑆𝑘−1

options are used commonly in FX markets. The prices of and the underlying asset price processes {𝑆¯𝑖 }𝑛𝑘=0 , 𝑖 ∈
the underlying assets of the exchange option are typically {1, 2} are martingales in measure 𝑃 . To compute the risk-
correlated. In the case when the two underlying assets of the neutral mean-variance hedging solution for the exchange op-
exchange option follow a GBM, their dynamics is given by, tion we compute the individual elements of the matrices
[covar𝑄 (𝑆𝑘 ∣ℱ𝑘−1 )] and covar𝑄 (𝑆𝑘 , 𝑉𝑘 ∣ℱ𝑘−1 ). The product
d𝑆𝑡1 = 𝜇1 𝑆𝑡1 d𝑡 + 𝜎1 𝑆𝑡1 dℬ𝑡1 ,
[covar𝑃 (𝑆𝑘 ∣ℱ𝑘−1 )]−1 [covar𝑃 (𝑆𝑘 , 𝑉𝑘 ∣ℱ𝑘−1 )], in the case of
d𝑆𝑡2 = 𝜇2 𝑆𝑡2 d𝑡 + 𝜎2 𝑆𝑡2 dℬ𝑡2 , an exchange option, is a 2 × 1 matrix that conveys the number
where 𝜇1 and 𝜇2 are growth rates of the underlying asset of units in the underlying assets 𝑆 1 and 𝑆 2 to be held during
prices 𝑆 1 and 𝑆 2 respectively, ℬ𝑡1 and ℬ𝑡2 are correlated the trading interval (𝑇𝑘−1 , 𝑇𝑘 ]. Lemma 3.1, whose proof is
Brownian motions in measure 𝑄 with dℬ𝑡1 dℬ𝑡2 = 𝜌 for all provided in the appendix, provides the details that are required
𝑡 and 𝜎𝑖 , 𝑖 ∈ {1, 2} are constants related to the volatilities of to compute the risk-neutral mean-variance hedging solution for
the two underlying asset prices. Alternatively, the dynamics exchange option.
can be expressed as, 2) Optimum local-variance hedging: The dynamics of the
prices of the underlying assets for local-variance hedging
d𝑆𝑡1 = 𝜇1 𝑆𝑡1 d𝑡 + 𝜎1 𝑆𝑡1 d𝑊𝑡1 ,
( √ ) are as given in (6). As in the case of risk-neutral mean-
d𝑆𝑡2 = 𝜇2 𝑆𝑡2 d𝑡 + 𝜎2 𝑆𝑡2 𝜌d𝑊𝑡1 + 1 − 𝜌2 d𝑊𝑡2 , (6) variance hedging, we compute the individual elements of
conditional covariance matrices in solution (4). Recall that
with 𝑊𝑡1 and 𝑊𝑡2 as uncorrelated Brownian motions in mea- these individual conditional covariances are to be computed
sure 𝑄. A closed form price for the exchange option at any in market probability measure 𝑄. Lemma 4.1 outlines the
time 𝑡 < 𝑇 is given by, solution to the optimum local variance hedging of an exchange
𝑉𝑡 (𝑆𝑡1 , 𝑆𝑡2 ) = 𝑒−𝑟(𝑇 −𝑡) 𝑆𝑡1 𝑁 (𝑑1 ) − 𝑆𝑡2 𝑒−𝑟(𝑇 −𝑡) 𝑁 (𝑑2 ), option.
( 2) Note that when 𝜇1 = 𝜇2 = 𝑟 (or when 𝑃 = 𝑄) , the solution
ln(𝑆𝑡1 /𝑆𝑡2 ) + 𝜎2 (𝑇 − 𝑡)
𝑑1 = √ , (7) of optimum local-variance hedging becomes identical to the
𝜎 𝑇(− 𝑡) solution of risk-neutral mean-variance hedging problem.
2
ln(𝑆𝑡1 /𝑆𝑡2 ) + 𝜎2 (𝑇 − 𝑡)
𝑑2 = √ , (8) V. S UMMARY
𝜎 𝑇 −𝑡
√ The results obtained in this work make a case for the use
where term 𝜎 is computed as 𝜎 = 𝜎12 + 𝜎22 − 2𝜌𝜎1 𝜎2 and of quadratic optimal hedging strategies over the classic delta
the notation 𝑁 (⋅) stands for the cumulative normal distribu- hedging in practice. Numerical simulations suggest that these
tion. In the case of hedging an exchange option, the trading discrete-time strategies not only incur less risk when measured
portfolio consists of both the underlying assets of the exchange in terms of the loss measures such as the probability and
option. Therefore, at any time trading time 𝑇𝑘 , 𝑘 ∈ {0, ⋅ ⋅ ⋅ , 𝑛}, expectation of loss but also helps in efficient capital budgeting
the solution to the hedging problem provides the number of for regulatory purposes since they fair better in shortfall mea-
units that is to be held in the underlying assets 𝑆 1 and 𝑆 2 for sures such as VaR and CVaR. One of the main impediments in
the trading time interval (𝑇𝑘−1 , 𝑇𝑘 ]. using trading strategies of such nature is the non-availability of
1) Risk-neutral mean-variance hedging: We begin by not- closed form expressions. The general solutions such as in (2)
ing that, in the risk-neutral world, the dynamics of the under- and (4) require heavy computational resources and are time
lying assets 𝑆𝑡1 and 𝑆𝑡2 are given by, consuming. This exposition and some of our previous work
d𝑆𝑡1 = 𝑟𝑆𝑡1 d𝑡 + 𝜎1 𝑆𝑡1 d𝑊𝑡1 , [5] [7], does address this problem and provides analytical
( √ ) expressions which are well-suited for implementation. The
d𝑆𝑡2 = 𝑟𝑆𝑡2 d𝑡 + 𝜎2 𝑆𝑡2 𝜌d𝑊𝑡1 + 1 − 𝜌2 d𝑊𝑡2 , (9) solution approach rely mainly on manipulations of conditional

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Lemma 4.1: Consider an Exchange option with payoff given by 𝜙(𝑆𝑇1 , 𝑆𝑇2 ). Let the prices of the underlying assets 𝑆𝑡𝑖 , 𝑖 ∈ {1, 2}
follow the GBM as in (6) with 𝛿𝑘 as the time left until next hedging instance 𝑇𝑘 . The optimum local-variance hedging strategy
(2) for the trading interval (𝑇𝑘−1 , 𝑇𝑘 ], 𝑘 ∈ {1, ⋅ ⋅ ⋅ , 𝑛} is given by,
( )
𝑙𝑣 Δ1𝑘
Δ𝑘 = = 𝐴−1 𝐵, where
Δ2𝑘
( 2
)
1
(𝑆𝑘−1 )2 𝑒2𝜇1 𝛿𝑘 (𝑒𝜎1 𝛿𝑘 − 1) 1
𝑆𝑘−1 2
𝑆𝑘−1 𝑒(𝜇1 +𝜇2 )𝛿𝑘 (𝑒𝜌𝜎1 𝜎2 − 1)
𝐴 = 2
1 2
𝑆𝑘−1 𝑆𝑘−1 𝑒(𝜇1 +𝜇2 )𝛿𝑘 (𝑒𝜌𝜎1 𝜎2 − 1) 2
(𝑆𝑘−1 )2 𝑒2𝜇2 𝛿𝑘 (𝑒𝜎2 𝛿𝑘 − 1)
⎛ [ ( 2
)⎞
1
𝑆𝑘−1 𝑒(𝜇1 +𝑟)𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒(𝜇−𝑟+𝜎1 )𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟+𝜌𝜎1 𝜎2 )𝛿𝑘
⎜ ( 1 )] ⎟
⎜ −𝑉𝑘−1 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟)𝛿𝑘 ⎟
𝐵 = ⎜ ⎜ 2 [ ( 2
) ⎟
⎟ (10)
⎝𝑆𝑘−1 𝑒(𝜇2 +𝑟)𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒(𝜇1 −𝑟+𝜌𝜎1 𝜎2 )𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟+𝜎2 )𝛿𝑘 ⎠
( 1 )]
−𝑉𝑘−1 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟)𝛿𝑘

expectations. Using similar techniques, it may be possible to Let the underlying assets 𝑆𝑡1 and 𝑆𝑡2 follow GBM according
arrive at simpler solutions for quadratic hedging problems for to (6). From Ito’s Lemma, we have, for 0 ≤ 𝑡1 ≤ 𝑡2 ≤ 𝑇 ,
more advanced asset price models other than GBM and for 1 2 1 1
𝑆𝑡12 = 𝑆𝑡11 𝑒(𝜇1 − 2 𝜎1 )(𝑡2 −𝑡1 )+𝜎1 (𝒲𝑡2 −𝒲𝑡1 )
wider choices of ECCs. Such studies can further advance
2 1 1
√
1
1−𝜌2 (𝒲𝑡2 −𝒲𝑡2 ))
the case for the use of discrete-time trading schemes by 𝑆𝑡22 = 𝑆𝑡22 𝑒(𝜇2 − 2 𝜎2 )(𝑡2 −𝑡1 )+𝜎2 (𝜌(𝒲𝑡2 −𝒲𝑡1 )+ 2 1

practitioners.
which can be rewritten as
R EFERENCES 1 2 √
𝑆𝑡12 = 𝑆𝑡11 𝑒(𝜇1 − 2 𝜎1 )(𝑡2 −𝑡1 )+𝜎1 𝑡2 −𝑡1 𝜀1
(11)
[1] F. Black and M. Scholes, “The pricing of options and cor- √ √
(𝜇2 − 12 𝜎22 )(𝑡2 −𝑡1 )+𝜎2 1−𝜌2 𝜀
porate liabilities,” Journal of Political Economy, vol. 81, 𝑆𝑡22 = 𝑆𝑡22 𝑒 𝑡2 −𝑡1 (𝜌𝜀1 + 2)
(12)
pp. 637–659, 1973. where 𝜀𝑖 , 𝑖 ∈ {1, 2} are independent unit normal random
[2] R. C. Merton, “Theory of rational option pricing,” Bell variables. The risk-neutral pricing theory asserts that the
Journal of Economics and Management science, vol. 4, discounted price of the ECC is a martingale in measure 𝑃 .
pp. 141–183, 1973. Applying the martingale property for time 𝑇𝑘−1 to compute
[3] M. Schweizer, “Variance-optimal hedging in discrete the expected price of the ECC at time 𝑇𝑘
time,” Mathematics of Operations Research, vol. 20, pp. ( −𝑟𝛿 )
1–32, 1995. 𝔼𝑃
𝑘−1 𝑒
𝑘
𝑉𝑘 (𝑆𝑘1 , 𝑆𝑘2 ) = 𝑉𝑘−1 (𝑆𝑘−1
1 2
, 𝑆𝑘−1 ) (13)
[4] A. V. Melnikov and M. L. Nechaev, “On the mean- Computing the expectation in (13) and substituting 𝑆𝑘𝑙 , 𝑙 =
variance hedging problem,” Theor. Probab. Appl., vol. 43, 𝑙
{1, 2} in terms of 𝑆𝑘−1 we have,
no. 4, pp. 588–603, 1999. [ (
𝑒−𝑟𝛿𝑘
∫∞ ∫∞ 1
√
(𝑟− 12 𝜎12 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1
[5] S. Bhat, V. Chellaboina, M. U. Kumar, A. Bhatia, and
2𝜋 −∞ −∞
𝑉 𝑘 𝑆 𝑘−1 𝑒 ,
S. Prasad, “Discrete time minimum variance hedging 1 2
√ √ 2 )
for european contigent claims,” in IEEE Conference on 2
𝑆𝑘−1 𝑒(𝑟− 2 𝜎2 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌𝜀1 + 1−𝜌 𝜀2 )
Decision and Control, Shanghai, 2009. −1 2 −1 2
]
[6] M. Sc̈hal, “On quadratic cost criteria for option hedging,” 𝑒 2 𝜀1 𝑒 2 𝜀2 d𝜀1 d𝜀2 = 𝑉𝑘−1 (𝑆𝑘−1 1 2
, 𝑆𝑘−1 ). (14)
Mathematics of Operations Research, vol. 19, no. 1, pp. To compute the conditional covariances cov𝑄 (𝑆𝑘1 , 𝑉𝑘 ∣ℱ𝑘−1 )
121–131, 1994. and cov𝑄 (𝑆𝑘2 , 𝑉𝑘 ∣ℱ𝑘−1 ), we recall that,
[7] E. Subramanian and V. Chellaboina, “Explicit solutions
of discrete-time quadratic optimal hedging strategies for cov𝑄 (𝑆𝑘𝑙 , 𝑉𝑘 ∣ℱ𝑘−1) = 𝔼𝑄 (𝑆𝑘𝑙 𝑉𝑘 ∣ℱ𝑘−1 )
european contingent claims,” London, 2014, pp. 449–456. − 𝔼𝑄 (𝑉𝑘 ∣ℱ𝑘−1 )𝔼𝑄 𝑙
𝑘 (𝑆𝑘 ∣ℱ𝑘−1 ), 𝑙 ∈ {1, 2}.

A PPENDIX Evaluating the conditional expectation 𝔼𝑄 (𝑉𝑘 ∣ℱ𝑘−1 ) yields,

[∫ ∞ ∫ ∞ (
Proof of Lemma 4.1 The proof of Lemma 3.1 follows 1 1 1 2
√
𝑉𝑘 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1 ,
from the proof of Lemma 4.1 by setting 𝜇1 = 𝜇2 = 𝑟 (or 2𝜋 −∞ −∞
when 𝑃 = 𝑄). To derive a closed form expression for the 1 2
√ √ 2 )
2
optimum local-variance hedging of an exchange option, we 𝑆𝑘−1 𝑒(𝜇2 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎2 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌𝜀1 + 1−𝜌 𝜀2 )
−1 2 −1 2
]
explicitly compute the conditional covariances matrices in (4) 𝑒 2 𝜀1 𝑒 2 𝜀2 d𝜀1 d𝜀2 = 𝔼𝑄 (𝑉𝑘 ∣ℱ𝑘−1 ) (15)
by evaluating the necessary conditional expectations with the
help of risk-neutral pricing theory. Comparing (15) and (14) we have,

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[∫ ∞ ∫ ∞ (
1 1 1 2 √ 1 2
√
= 𝑆𝑘−1 𝑒(𝜇1 − 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1
𝑉𝑘 𝑆𝑘−11
𝑒(𝜇1 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1 ,
2𝜋 −∞ −∞
1 2
√ √ 2 ) −1 2 −1 2 ]
𝑆𝑘−1 𝑒(𝜇2 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎2 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌𝜀1 + 1−𝜌 𝜀2 ) 𝑒 2 𝜀1 𝑒 2 𝜀2 d𝜀1 d𝜀2
2

1 1 2 [∫ ∞ ∫ ∞ (
𝑆𝑘−1 𝑒(𝜇1 − 2 𝜎1 )𝛿𝑘 1 1 2
√
= 𝑉𝑘 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1 ,
2𝜋 −∞ −∞
√ √ ) −1 2 √ −1 2
]
2 (𝜇2 −𝑟)𝛿𝑘 +(𝑟− 12 𝜎22 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌𝜀1 + 1−𝜌2 𝜀2 )
𝑆𝑘−1 𝑒 𝑒 2 𝜀1 +𝜎1 𝛿𝑘 𝜀1 𝑒 2 𝜀2 d𝜀1 d𝜀2
1 [∫ ∞ ∫ ∞ (
𝑆𝑘−1 𝑒𝜇1 𝛿𝑘 1 1 2
√
= 𝑉𝑘 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1 ,
2𝜋 −∞ −∞
√ √ ) −1 √ 2 −1 2 ]
2
𝑆𝑘−1 𝑒 (𝜇2 −𝑟)𝛿𝑘 +(𝑟− 12 𝜎22 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌𝜀1 + 1−𝜌2 𝜀2 )
𝑒 2 (𝜀1 −𝜎1 𝛿𝑘 ) 𝑒 2 𝜀2 d𝜀1 d𝜀2
1 [∫ ∞ ∫ ∞ (
𝑆𝑘−1 𝑒𝜇1 𝛿𝑘 1 1 2
√
= 𝑉𝑘 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 +(𝑟− 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 𝜀1 ,
2𝜋 −∞ −∞
√ √ √ ) −1 √ 2 −1 2
]
(𝜇2 −𝑟)𝛿𝑘 +(𝑟− 12 𝜎22 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌(𝜀1 −𝜎1 𝛿𝑘 )+ 1−𝜌2 𝜀2 )+𝜌𝜎1 𝜎2 𝛿𝑘
2
𝑆𝑘−1 𝑒 𝑒 2 (𝜀1 −𝜎1 𝛿𝑘 ) 𝑒 2 𝜀2 d𝜀1 d𝜀2
1 [∫ ∞ ∫ ∞ (
𝑆𝑘−1 𝑒𝜇1 𝛿𝑘 1 2 1 2
√ √
= 𝑉𝑘 𝑆𝑘−1 𝑒(𝜇1 −𝑟+𝜎1 )𝛿𝑘 +(𝑟− 2 𝜎1 )𝛿𝑘 +𝜎1 𝛿𝑘 (𝜀1 −𝜎1 𝛿𝑘 ) ,
2𝜋 −∞ −∞
√ √ √ ) −1 √ 2 −1 2 ]
(𝜇2 −𝑟+𝜌𝜎1 𝜎2 𝛿𝑘 )𝛿𝑘 +(𝑟− 12 𝜎22 )𝛿𝑘 +𝜎2 𝛿𝑘 (𝜌(𝜀1 −𝜎1 𝛿𝑘 )+ 1−𝜌2 𝜀2 )
2
𝑆𝑘−1 𝑒 𝑒 2 (𝜀1 −𝜎1 𝛿𝑘 ) 𝑒 2 𝜀2 d𝜀1 d𝜀2
( 2
)
1
= 𝑆𝑘−1 𝑒(𝜇1 +𝑟)𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒(𝜇1 −𝑟+𝜎1 )𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟+𝜌𝜎1 𝜎2 )𝛿𝑘 (16)

( )
𝔼𝑄 (𝑉𝑘 ∣ℱ𝑘−1 ) = 𝑒𝑟𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒(𝜇1 −𝑟)𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟)𝛿𝑘 .compute the covariance matrix 𝐴 given by,
( )
The computation of the conditional expectation cov𝑄 (𝑆𝑘1 , 𝑆𝑘1 ∣ℱ𝑘−1 ) cov𝑄 (𝑆𝑘1 , 𝑆𝑘2 ∣ℱ𝑘−1 )
𝔼𝑄 (𝑉𝑘 𝑆𝑘1 ∣ℱ𝑘−1 ) with respect the underlying asset 𝑆 1 𝐴= .
cov𝑄 (𝑆𝑘2 , 𝑆𝑘1 ∣ℱ𝑘−1 ) cov𝑄 (𝑆𝑘2 , 𝑆𝑘2 ∣ℱ𝑘−1 )
is shown in the float on top (Equation 16). The last equality
in the float follows from (14). We see that the diagonal elements are given by,
𝑄 1
The conditional expectation 𝔼 (𝑆𝑘 ∣ℱ𝑘−1 ) can be evaluated cov𝑄 (𝑆 1 , 𝑆 1 ∣ℱ ) = var𝑄 (𝑆 1 ∣ℱ
𝑘 𝑘 𝑘−1 𝑘−1 𝑘−1 )
as ( )2
𝑄 1 𝑟𝛿𝑘 1 (𝜇1 −𝑟)𝛿𝑘 1 𝜇1 𝛿𝑘
= 𝔼 ((𝑆𝑘−1 )2 ∣ℱ𝑘−1 ) − 𝔼𝑄 (𝑆𝑘−1
𝑄 1 1
∣ℱ𝑘−1 )
𝔼 (𝑆𝑘 ∣ℱ𝑘−1 ) = 𝑒 𝑆𝑘−1 𝑒 = 𝑆𝑘−1 𝑒 (17) 2
= 𝑒(2𝜇1 𝛿𝑘 +𝜎1 𝛿𝑘 ) (𝑆𝑘−1 1
)2 − 𝑒2𝜇1 𝛿𝑘 (𝑆𝑘−1
1
)2
Substituting (17), (16) and (17) into (15) we have the condi- 1 2

tional covariance cov𝑄 (𝑆𝑘1 , 𝑉𝑘 ∣ℱ𝑘−1 ) as = (𝑆𝑘−1 )2 𝑒2𝜇1 𝛿𝑘 (𝑒𝜎1 𝛿𝑘 − 1) (20)

( 2 and
1
= 𝑆𝑘−1 𝑒(𝜇1 +𝑟)𝛿𝑘 𝑉𝑘−1 𝑆𝑘−1 1
𝑒(𝜇1 −𝑟+𝜎1 )𝛿𝑘 ,
2
) cov𝑄 (𝑆𝑘2 , 𝑆𝑘2 ∣ℱ𝑘−1 ) = (𝑆𝑘−1 2
)2 𝑒2𝜇2 𝛿𝑘 (𝑒𝜎2 𝛿𝑘 − 1) (21)
2 (𝜇2 −𝑟+𝜌𝜎1 𝜎2 )𝛿𝑘
𝑆𝑘−1 𝑒
1
Lemma 4.1, follows by computing the off-diagonal element
−𝑆𝑘−1 𝑒𝜇1 𝛿𝑘 𝑒𝑟𝛿𝑘 𝑉𝑘−1 (𝑆𝑘−11
𝑒(𝜇−𝑟)𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇−𝑟)𝛿𝑘 ) cov𝑄 (𝑆𝑘1 , 𝑆𝑘2 ∣ℱ𝑘−1 ) as
[ (
1 (𝜇1 +𝑟)𝛿𝑘 1 (𝜇−𝑟+𝜎12 )𝛿𝑘
= 𝑆𝑘−1 𝑒 𝑉𝑘−1 𝑆𝑘−1 𝑒 , = 𝔼𝑄 (𝑆𝑘−1 1 2
𝑆𝑘−1 ∣ℱ𝑘−1 ) − 𝔼𝑄 (𝑆𝑘−1 1
∣ℱ𝑘−1 )𝔼𝑄 (𝑆𝑘−1 2
∣ℱ𝑘−1 )
)
2 (𝜇2 −𝑟+𝜌𝜎1 𝜎2 )𝛿𝑘 1 2 (𝜇1 +𝜇2 )𝛿𝑘 𝜌𝜎1 𝜎2
𝑆𝑘−1 𝑒 = 𝑆𝑘−1 𝑆𝑘−1 𝑒 (𝑒 − 1)
( )] 𝑄 2 1
= cov (𝑆𝑘 , 𝑆𝑘 ∣ℱ𝑘−1 ). (22)
1
−𝑉𝑘−1 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 , 𝑆𝑘−12
𝑒(𝜇2 −𝑟)𝛿𝑘 (18)

The conditional covariance cov𝑄 (𝑆𝑘2 , 𝑉𝑘 ∣ℱ𝑘−1 ) can similarly

be evaluated as
[ ( )
2 (𝜇2 +𝑟)𝛿𝑘 1 (𝜇1 −𝑟+𝜌𝜎1 𝜎2 )𝛿𝑘 (𝜇2 −𝑟+𝜎22 )𝛿𝑘
= 𝑆𝑘−1𝑒 𝑉𝑘−1 𝑆𝑘− 1𝑒 , 𝑆𝑘2 −
1𝑒
( )]
1
−𝑉𝑘−1 𝑆𝑘−1 𝑒(𝜇1 −𝑟)𝛿𝑘 , 𝑆𝑘−1
2
𝑒(𝜇2 −𝑟)𝛿𝑘 (19)
Equations 18 and 19 constitute the terms of the matrix 𝐵 as
seen in the statement of Lemma 4.1 (Equation 10). Now we

116

Optimal Static Hedging of Uncertain Future Foreign
Currency Cash Flows Using FX Forwards
Anil Bhatia and Sanjay P Bhat
TCS Innovation Labs, Tata Consultancy Services, India
anil.bhatia@tcs.com, sanjay@atc.tcs.com
Abstract—An exporter is invariably exposed to currency risk
due to unpredictable fluctuations in the exchange rates, and it
is of paramount importance to minimize risk emanating from
these forex exposures. The currency risk problem is further
compounded if the future foreign currency receivables are un-
certain in quantity. In this paper, we address the currency risk
hedging problem for an uncertain foreign currency receivables.
We consider a static hedging strategy defined by the positions
in a FX forward contract, and present a minimum-risk static
hedging problem to determine an optimal hedging strategy that
minimizes conditional value at risk (CVaR) due to the loss.
This risk minimization problem can be solved numerically by
using Monte-Carlo simulations which, however, turn out to be
computationally intensive, because of the presence of two sources
of randomness. We consider bounding functions that bound the
CVaR due to the loss above and below, and numerically obtain
an outer estimate of the set of solutions of the minimum-risk
static hedging problem. We present several bounding functions
obtained under different assumptions on the risk factors.
I. I NTRODUCTION
Exposure to foreign exchange (FX) risk [1], [2] arises when
companies conduct business in multiple currencies. A typical
scenario that such a company may encounter involves a future
receivable in foreign currency (FC) for some services/goods
the company exported. Any FC thus received needs to be
converted to the company’s home currency (HC) at some
predetermined time. However, due to uncertain fluctuations
in exchange rates, the company may incur huge losses (or
reduced profits) at the time of conversion. Specifically, if the
value of the HC appreciates against FC by the conversion
date, then the company will receive less HC. On the other
hand if FC appreciates then the company will profit from the
exchange rate fluctuation. Since the direction and magnitude
of these fluctuations are uncertain, the company is exposed to
the FX (or currency) risk. Furthermore, the magnitude of such
fluctuations are significant enough to affect the company’s
profit and loss. The FX risk problem is further compounded
if the future FC receivables are uncertain in quantity.
This uncertainty in the future receivables as well the future
exchange rates necessitates the application of risk management
techniques, in particular, hedging. The company can enter into
different hedging contracts with some financial institution.
Such contracts may involve FX instruments, also known as
hedges, such as forwards, futures, swaps, and a variety of
FX options [1], [2]. A FX forward is an agreement between
the two parties to exchange currencies or equivalently, to buy
or sell a particular currency at a predetermined future date
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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and a predetermined exchange rate. It costs nothing to enter
a forward contract. The party agreeing to buy the currency in
the future assumes a long position, and the party agreeing to
sell the currency in the future assumes a short position. For a
general introduction to various other financial instruments and
their utility in FX hedging, see [3], [4].
In order to capture the impact of the randomness in the
risk factors on the company’s profit and loss, it is necessary
to quantify or summarize the effect of the risk by using an
appropriate risk measure or metric [5]–[7]. There are many
risk measures available to quantify such risk exposure such
as expectation, variance, the probability of loss, value at risk,
conditional value at risk etc.
A hedging strategy represents a trading strategy involving
different types of hedges that can reduce the risk. The company
has a choice of doing nothing (no hedging), enter into a
hedging contract once (static hedging), or enter into multiple
contracts at different times (dynamic hedging). The choice
depends on various factors including the company’s view on
the market and service costs involved in entering hedging
contracts. See [3], [4] for a detailed introduction to hedging.
A minimum-risk hedging problem represents an optimization
problem in which one seeks to minimize a risk metric over a
feasible set of decision variables, which are typically used to
construct a hedging portfolio.
FX risk hedging continues to remain an active area of
research [1], [2], [8], [9]. Most of the existing literature focuses
on specific risk measures such as variance or conditional
value at risk [10]–[12]. The literature on foreign exchange risk
management predominantly addresses the situation of a known
(deterministic) cash flow. The case of an uncertain future
cash flow is addressed in [13], where the authors consider
a correlation between the amount of the foreign currency
cash flow and the actual spot or futures exchange rate. They
derive the hedge ratio by minimizing the variance of a cash
and futures portfolio. Another aspect of uncertain cash flow,
namely the arrival of new information, is investigated in [14].
The optimal hedge, using forward contracts, is determined
by solving a stochastic dynamic programming problem. The
problem of hedging price and quantity has been considered in
other areas as well. In [15], the authors address the hedging
problem of a load serving entity, which provides electricity
service at a regulated price in an electricity market with price
and quantity risk. The authors present an optimal zero-cost
hedging function by exploiting the correlation between the

consumption volume and spot price in the electricity market,
from a portfolio of forward contracts and call and put options.
In this paper, we address the problem of hedging future
FC receivables which can be either deterministic or uncertain
in quantity. We consider a static hedging strategy defined by
the positions in a FX forward contract and introduce the loss
associated with this strategy. We consider conditional value at
risk (CVaR) to capture the effect of the randomness of the risk
factors on profit and loss, and present the minimum-risk static
hedging problem to determine an optimal hedging strategy that
minimizes CVaR due to the loss. When the cash flow is deter-
ministic, the loss variable has a single source of randomness,
namely the exchange rate, and it becomes easier to solve the
risk minimization problem analytically. The uncertainty in the
cash flow introduces a second source of randomness in the loss
variable. In this case, any risk minimization problem can be
solved numerically by using Monte-Carlo simulations which,
however, turn out to be computationally intensive, because of
the presence of two sources of randomness.
In this paper, we address minimum-risk hedging problem
numerically by obtaining an outer estimate of the set of
solutions of the minimum-risk static hedging problem in terms
of the minimum value and sublevel set of the bounding
functions which bound the CVaR of loss from above and
below, respectively. We consider different bounding functions
which are obtained by assuming that the two risk factors are
independent random variables and the random cash flow is
bounded, aprioi. We show that such bounding functions can
be computed either analytically or numerically.
In Section II we introduce our notation and present pre-
liminary results used in later sections. In Section III, we start
by introducing a static hedging problem with a deterministic
cash flow and present the corresponding loss function. Next,
we extend this loss function to include the randomness in the
cash flow. In Section IV we define the minimum-risk static
hedging problem, which minimizes CVaR for the loss variable.
Next, we present expressions for the CVaR in the case where
the cash flow is deterministic and discuss optimal solution
to the minimum-risk static hedging problem. Thereafter, we
consider the case of uncertain cash flow, and present different
bounding functions. In Section V the results are illustrated
through a numerical example.
II. N OTATION AND P RELIMINARIES
Let ℝ (ℝ+ ) denote the set of real (positive real) numbers.
The indicator function of subset 𝑆 of a set 𝑋 is the function
𝑆 : X → {0, 1} such that
{ III. T HE L OSS VARIABLE UNDER A S TATIC H EDGING
1, 𝑥 ∈ 𝑆,
𝑆 (𝑥) =
0, 𝑥 ∈ / 𝑆.
△
For 𝑥 ∈ ℝ, we denote sign(𝑥) = {𝑥>0} − {𝑥<0} .
Let (Ω, 𝔽, ℙ) be a probability space, where (Ω, 𝔽) is a
measurable space, 𝔽 is a 𝜎−algebra on Ω, and ℙ is a
probability measure on (Ω, 𝔽). Let 𝐿0 (Ω, 𝔽, ℙ) denote the set
of random variables and 𝐿(Ω, 𝔽, ℙ) denote the set of integrable
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random variables on (Ω, 𝔽, ℙ). Given 𝑌 ∈ 𝐿(Ω, 𝔽, ℙ), 𝔼[𝑌 ]
denote the expectation (or the expected value) of 𝑌 under the
measure ℙ.
A financial risk may be modeled as a random variable on
a suitable probability space (Ω, 𝔽, ℙ). A risk measure is a
mapping from 𝐿0 (Ω, 𝔽, ℙ) to ℝ. In this paper, we consider one
of the popular shortfall measures, namely, conditional value at
risk (CVaR). CVaR provides the information about the average
level of loss, given that the value at risk (VaR) is exceeded,
where VaR provides an estimate of how much loss is likely
to occur, given normal market conditions. Mathematically, for
a given confidence level 𝛼 ∈ (0, 1) and a random variable
𝑌 ∈ 𝐿(Ω, 𝔽, ℙ) having a continuous distribution function, the
CVaR is defined as
CVaR𝛼 (𝑌 ) = 𝔼[𝑌 ∣ 𝑌 > VaR𝛼 (𝑌 )], (1)
where
VaR𝛼 (𝑌 ) = inf {𝑦 ∈ ℝ ∣ ℙ(𝑌 > 𝑦) ≤ 1 − 𝛼} . (2)
Let 𝑎 ∈ ℝ, and 𝑌 ∈ 𝐿(Ω, 𝔽, ℙ). Define
[ ]
1
𝐺𝛼 (𝑎, 𝑌 ) = 𝑎 − 𝔼 (𝑎 − 𝑌 ) {𝑌 ≥𝑎} . (3)
1−𝛼
Then, CVaR𝛼 (𝑌 ) equals the value of the optimization prob-
lem [16],
CVaR𝛼 (𝑌 ) = min𝑎∈ℝ 𝐺𝛼 (𝑎, 𝑌 ) (4)
while VaR𝛼 (𝑌 ) equals the corresponding optimal solution
VaR𝛼 (𝑌 ) = argmin𝑎∈ℝ 𝐺𝛼 (𝑎, 𝑌 ). (5)
CVaR is a coherent risk measure and exhibits the properties of
monotonicity, translational equivalence, positive homogeneity,
and sub-additivity [5], [17].
Finally, we present a useful result, which we will use later
when we discuss the minimum risk static hedging problem.
The result gives an outer estimate of the set of minimizers of
a given function in terms of the minimum value and sublevel
set of functions which bound the given function from above
and below, respectively. Given a function 𝑓 : ℝ𝑛 → ℝ, denote
argmin 𝑓 = {𝑥 ∈ ℝ𝑛 ∣𝑓 (𝑥) ≤ 𝑓 (𝑦) ∀ 𝑦 ∈ ℝ𝑛 }.
Proposition 2.1: Let 𝑔 : ℝ𝑛 → ℝ, 𝑢 : ℝ𝑛 → ℝ and 𝑙 :
ℝ𝑛 → ℝ be continuous functions such that 𝑙 is convex and
𝑙(𝑥) ≤ 𝑔(𝑥) ≤ 𝑢(𝑥) ∀ 𝑥 ∈ ℝ𝑛 . If argmin 𝑙 is nonempty and
bounded, then argmin 𝑔 is nonempty and bounded. Further,
if 𝑚 = min𝑥∈ℝ𝑛 𝑢(𝑥), then
argmin 𝑔 ⊆ {𝑥 ∈ ℝ𝑛 ∣ 𝑙(𝑥) ≤ 𝑚}.
S TRATEGY
Consider a company that is expecting 𝑛 units of foreign
currency at a future time 𝑇 . In this paper, we restrict our
attention to a static hedging strategy where the company
can invest only once in a FX forward contract and hold the
positions in the forward till 𝑇 . We assume that the forward
contract expires at the future time T, and is initiated at the same
time as the start of hedging, which we denote by 𝑇0 . Let 𝐹
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denote the forward rate at time 𝑇0 of the forward contract. 1000

Let Δ ∈ ℝ represent a short position in FX forward contract 900

bought at 𝑇0 . This arrangement allows the company to sell 𝛿 800

amount of FC currency at an exchange rate of 𝐹 at time 𝑇 . 700

By entering into a forward contract to sell FC, the company 600

locks a future exchange rate without any additional cost. Let

CVaR
500

𝑋 represent the spot exchange rate at time 𝑇 . Thus one unit 400

of FC sold at time 𝑇 fetches 𝑋 units of HC. We assume that

300

𝑋 is an integrable random variable on the probability space

200

(Ω, 𝔽, ℙ).
100

At time 𝑇 , Δ forward contracts held in the hedging portfolio −10 −5 0 5

Delta
10 15 20

mature and generate a HC cash flow of Δ𝐹 . Any remaining

(𝑛 − Δ) units of FC are then spot traded at 𝑋, and generate
an HC cash flow of (𝑛 − Δ)𝑋. Furthermore, we assume that
the company has an obligation to pay 𝑛𝐵 units of HC at time
𝑇 , where 𝐵 is the budget rate 1 . The loss from this hedging
portfolio takes the form
𝜓(𝑛, Δ) = 𝑛𝐵 − (Δ𝐹 + (𝑛 − Δ)𝑋)
= (𝐵 − 𝑋)(𝑛 − Δ) + (𝐵 − 𝐹 )Δ.
Notice that 𝜓 is a random function of the cash flow 𝑛 and
position Δ. Positive values of 𝜓(𝑛, Δ) represent a profit while
negative values represent a loss. We will find it convenient to
treat the amount of deterministic cash flow 𝑛 in (6) as known
and fixed, and view the loss variable as a function of Δ only.
In this case, we denote
△
𝐿D (Δ) = 𝜓(𝑛, Δ).
In the case where the cash flow is random, we denote it by
𝑁 . We assume that 𝑁 ∈ 𝐿(Ω, 𝔽, ℙ). Setting 𝑛 = 𝑁 in (6), the
loss function 𝜓(𝑁, Δ) has two sources of randomness, that is
𝑋 and 𝑁 . We will find it convenient to treat the random cash
flow 𝑁 in 𝜓(𝑁, Δ) as a fixed random variable, and view the
loss variable as a function of Δ only. In this case, we denote
△
𝐿R (Δ) = 𝜓(𝑁, Δ).
IV. M INIMUM -R ISK S TATIC H EDGING P ROBLEM
The minimum-risk static hedging problem is the problem of
determining an optimal static hedging strategy that minimizes
a given risk measure due to the loss. Specifically, for CVaR
measure due to the loss variable 𝐿(Δ), the minimum-risk static
hedging problem can defined as
min CVaR𝛼 (𝐿(Δ)).
Δ∈Λ
where 𝐿(Δ) = 𝐿D (Δ) in the case of a deterministic cash flow
and 𝐿(Δ) = 𝐿R (Δ) in the case of a random cash flow, Λ ⊆ ℝ
denotes the set of feasible static hedging strategies 2 .
In this section we present expressions for CVaR due to
loss from deterministic and random cash flow, and discuss
the solution to the minimum-risk hedging problem (7).
1 Typically the budget rate 𝐵 is determined by the company once a year
based on many factors such as costs and profit expectations.
2 The feasible set Λ is chosen by the company based on its risk appetite,
risk tolerance, and regulatory constraints.
Fig. 1: Plot of CVaR𝛼 (𝜓(𝑛, Δ)) for the loss variable 𝜓(𝑛, Δ)
with a deterministic cash flow 𝑛, given by (6), under a static
hedging strategy defined by Δ units in FX forward contract.
A. Deterministic Cash Flow
(6) The following result provides an expression for
CVaR𝛼 (𝜓(𝑛, Δ)).
Proposition 4.1: Consider the loss random variable
𝜓(𝑛, Δ) given by (6) under a static hedging strategy defined
by Δ ∈ ℝ. Then, for 𝛼 ∈ (0, 1),
CVaR𝛼 (𝜓(𝑛, Δ)) =
𝑛𝐵 − 𝐹 Δ + CVaR𝛼 (sign(Δ − 𝑋)𝑋)∣𝑛 − Δ∣. (8)
Proof. The result is a direct consequence of applying the
translational equivalence and positive homogeneity properties
of CVaR to the loss function 𝜓(𝑛, Δ). □
From (8), CVaR𝛼 (𝜓(𝑛, Δ)) is a piecewise linear function
of the decision variable Δ and continuous at Δ = 𝑛. Also,
CVaR𝛼 (𝜓(𝑛, Δ)) has
1) a positive slope everywhere if 𝐹 > CVaR𝛼 (𝑋),
2) a negative slope for Δ1 < 𝑛 and a positive slope for
Δ1 > 𝑛, in the case 𝐹 ∈ (CVaR𝛼 (−𝑋), CVaR𝛼 (𝑋)),
and
3) a negative slope everywhere if 𝐹 < CVaR𝛼 (−𝑋).
In the unconstrained case Λ = ℝ, if 𝐹 ∈
(CVaR𝛼 (−𝑋), CVaR𝛼 (𝑋)) the minimum value of
CVaR𝛼 (𝜓(𝑛, Δ)) is 𝑛(𝐵 − 𝐹0,𝑇 ) and is achieved at
Δ = 𝑛.
(7)
B. Random Cash Flow
In the case of random cash flow, the loss variable 𝐿R (Δ)
depends on two random variables, and it is difficult to get
an expression for CVaR𝛼 (𝐿R (Δ)). In this case, any risk
minimization problem can be solved numerically by using
Monte-Carlo simulations which, however, turn out to be com-
putationally intensive, because of the presence of two sources
of randomness, namely 𝑁 and 𝑋. A cheaper alternative,
which we pursue, is to use Proposition 2.1 to obtain an outer
estimate of the set of solution of (7). This, however, require
bounding functions that bound CVaR𝛼 (𝐿R (Δ)) above and

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below. Hence, we next turn our attention to obtaining such However, by applying translational equivalence, positive ho-
bounding functions. mogeneity, and sub-additivity properties of CVaR, it is pos-
Throughout the rest of the paper, we assume that 𝑋 and sible to obtain bounding function for CVaR𝛼 (𝜓L (Δ)) and
𝑁 are independent random variables. This assumption is CVaR𝛼 (𝜓U (Δ)). For instance, for each Δ ∈ ℝ, it is easy
reasonable since the spot rate at 𝑇 does not influence the to use (12)-(13) to show that
amount of the realized FC cash flow the company will receive.
CVaR𝛼 (𝜓L (Δ)) ≥ CVaR𝛼 (𝜓(𝑛1 , Δ) {𝐵−𝑋𝑇 >0} )
Define 𝑔 : ℝ × ℝ+ × ℝ → ℝ by 𝑔(𝑎, 𝑚, Δ) =
𝐺(𝑎, 𝜓(𝑚, Δ)), where the function 𝐺(⋅, ⋅) is given by (3). − CVaR𝛼 (−𝜓(𝑛2 , Δ) {𝐵−𝑋𝑇 <0} ), (16)
Applying the independence lemma [18, Lem.2.3.4], we have and
𝐺(𝑎, 𝐿R (Δ)) CVaR𝛼 (𝜓U (Δ)) ≤ CVaR𝛼 (𝜓(𝑛2 , Δ) {𝐵−𝑋𝑇 >0} )
[ [ ]]
1 + CVaR𝛼 (𝜓(𝑛1 , Δ)
= 𝔼 𝔼 𝑎− (𝑎 − 𝐿R (Δ)) {𝐿R (Δ)≥𝑎} ∣𝑁 {𝐵−𝑋𝑇 <0} ). (17)
1−𝛼
= 𝔼[𝑔(𝑎, 𝑁, Δ)]. (9) As a result, we have
CVaR𝛼 (𝐿R (Δ)) ≥ CVaR𝛼 (𝜓L (Δ)) ≥ 𝐶l (Δ), (18)
As 𝑔 is convex in its second argument, Jensen’s inequality
implies that 𝔼[𝑔(𝑎, 𝑁, Δ)] ≥ 𝑔(𝑎, 𝔼[𝑁 ], Δ). Hence, we have and
𝐺(𝑎, 𝐿R (Δ)) ≥ 𝐺(𝑎, 𝜓(𝔼[𝑁 ], Δ)), ∀Δ ∈ ℝ. (10) CVaR𝛼 (𝐿R (Δ)) ≤ CVaR𝛼 (𝜓U (Δ)) ≤ 𝐶u (Δ) (19)
Minimizing (10) over 𝑎 leads to where 𝐶l (⋅) and 𝐶u (⋅) represent the right hand sides of (16)
and (17), respectively. The functions 𝐶l and 𝐶u in (18)-
CVaR𝛼 (𝐿R (Δ)) ≥ CVaR𝛼 (𝜓(𝔼[𝑁 ], Δ)), ∀Δ ∈ ℝ. (11) (19) have expressions and can be computed analytically for
Note that the bounding function provided by the right hand a hedging strategy defined by Δ.
△
side of the inequality (11) can be easily computed using (8). To obtain yet another upper bounding function, let 𝜆1 =
𝑛2 −𝑁 △ 𝑁 −𝑛1
The convexity property of CVaR and the form of 𝜓(𝔼[𝑁 ], Δ)) 𝑛2 −𝑛1 and 𝜆2 = 𝑛2 −𝑛1 . Note that 𝜆1 + 𝜆2 = 1 and 𝑁 =
assures that the right hand side of (11) is convex in Δ. 𝜆2 𝑛2 + 𝜆1 𝑛1 . The loss 𝐿R (Δ) may be rewritten as 𝐿R (Δ) =
Next, we restrict ourselves to the special case where the 𝜆1 𝜓(𝑛1 , Δ)+𝜆2 𝜓(𝑛2 , Δ). Applying the Independence lemma
random cash flow 𝑁 is bounded, a priori. Let 𝑛1 , 𝑛2 ∈ ℝ be a [18, Lem.2.3.4], we have
lower and an upper bound on 𝑁 , respectively. Define the best
𝐺(𝑎, 𝐿R (Δ))
and the worst case loss variables as
△
= 𝔼[𝑔(𝑎, 𝑁, Δ)]
𝜓L (Δ) = = 𝔼[𝑔(𝑎, 𝜆1 𝑛1 + 𝜆2 𝑛2 , Δ)]
𝜓(𝑛1 , Δ) {𝐵−𝑋>0} + 𝜓(𝑛2 , Δ) {𝐵−𝑋<0} , (12) ≤ 𝔼[𝜆1 𝑔(𝑎, 𝑛1 , Δ) + 𝜆2 𝑔(𝑎, 𝑛2 , Δ)]
and = 𝔼[𝜆1 ]𝑔(𝑎, 𝑛1 , Δ) + 𝔼[𝜆2 ]𝑔(𝑎, 𝑛2 , Δ)
△ = 𝔼[𝜆1 ]𝐺(𝑎, 𝜓(𝑛1 , Δ)) + 𝔼[𝜆2 ]𝐺(𝑎, 𝜓(𝑛2 , Δ)). (20)
𝜓U (Δ) =
𝜓(𝑛2 , Δ) {𝐵−𝑋>0} + 𝜓(𝑛1 , Δ) {𝐵−𝑋<0} . (13) Minimizing over 𝑎 in (20) leads to

Observe that (12) combines scenarios where the exchange
rate falls (rises) with scenarios where the random cash flow
assumes its lowest (highest) values. The random variable (12)
thus represents the lowest possible value that the loss random
variable 𝐿R (Δ) can assume in any actual scenario for a
given Δ. Similarly, the random variable 𝜓U (Δ) represents the
highest possible value that the loss random variable 𝐿R (Δ)
can assume in any actual scenario for a given Δ. Thus we
have
𝜓L (Δ) ≤ 𝐿R (Δ) ≤ 𝜓U (Δ), ∀Δ ∈ ℝ. (14)
Now using the monotonicity property of CVaR, we have
CVaR𝛼 (𝜓L (Δ)) ≤ CVaR𝛼 (𝐿R (Δ)) ≤ CVaR𝛼 (𝜓U (Δ)) (15)
for each Δ ∈ ℝ. Equation (15) gives bounding functions for
CVaR𝛼 (𝐿R (Δ)). Unfortunately, it is difficult to find analyt-
ical expressions for CVaR𝛼 (𝜓L (Δ)) and CVaR𝛼 (𝜓U (Δ)).
CVaR𝛼 (𝐿R (Δ)) ≤ min𝑎 [𝔼[𝜆1 ]𝐺(𝑎, 𝜓(𝑛1 , Δ))
+𝔼[𝜆2 ]𝐺(𝑎, 𝜓(𝑛2 , Δ))] , ∀Δ ∈ ℝ.
(21)
While an analytical expression for the bounding function
provided by the right hand side of (21) is not available, the
bounding function can be computed numerically.
V. N UMERICAL R ESULT
We use the geometric Brownian model [19] to simulate
100, 000 paths of the FX rates 𝑋. The time to maturity was
set at 𝑇 = 152 days. The home and the foreign growth
rates are such that the difference between the two is 5%.
With 𝛼 = 0.99, CVaR𝛼 (𝑋) and CVaR𝛼 (−𝑋) are calculated
(using MC) to be 163.32 and −8.81 respectively. The forward
rate 𝐹 is chosen to be 46.24 and the budget rate 𝐵 is set
at 47. Note that 𝐹 ∈ (CVaR𝛼 (−𝑋), CVaR𝛼 (𝑋)). Figure
1 illustrates CVaR𝛼 (𝜓(𝑛, Δ)) as a function of position Δ

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with a deterministic cash flow 𝑛. In the unconstrained case, 1600

since 𝐹 ∈ (CVaR𝛼 (−𝑋), CVaR𝛼 (𝑋)), the minimum value 1400

CVaR(Psi(E[N],Delta))
CVaR(Psi (Delta))

𝑛(𝐵 − 𝐹0,𝑇 ) = 7.50 for CVaR𝛼 (𝜓(𝑛, Δ)) is achieved at

u
CVaR(Cu(Delta))
CVaR(Lu)

Δ = 𝑛 = 10 (refer Figure 1).

1200
CVaR(Psi (Delta))
l

Figure 2 illustrates how Proposition 2.1 can be used along 1000

with bounding functions (11) and (21) to obtain a range of

CVaR
800

Δ containing the solution to the minimum-risk static hedging 600

problem (7) in the case of an uncertain cash flow. To do this, 400

choose 𝑙 and 𝑢 in Proposition 2.1 to be the functions of Δ m

200
appearing on the right hand side of (11) and (21), respectively.
The function 𝑙 is convex. For our choice of parameters, the 0
70 75 80 85 90
n
1
95
d2
n
2
100 105 110

d1 Delta

horizontal dashed line in Figure 2 indicates the minimum

value 𝑚 = 369.8 of the upper bounding function 𝑢. This line
intersects the plot of the convex lower bounding function 𝑙 at
point Δ = 𝑑1 and Δ = 𝑑2 , where 𝑑1 = 87 and 𝑑2 = 97.5.
Proposition 2.1 now lets us conclude the solution of minimum-
risk static hedging problem (7) must lie in the interval [𝑑1 , 𝑑2 ].
VI. C ONCLUSION
In this paper, we addressed the currency risk hedging
problem for the future FC receivables which can be either
deterministic or uncertain in quantity. We considered a static
hedging strategy defined by the positions in a FX forward
contract only, and introduced the loss associated with this
strategy. We considered conditional value at risk (CVaR) to
capture the effect of the randomness of the risk factors on
profit and loss, and presented the minimum-risk static hedging
problem to determine an optimal hedging strategy that mini-
mizes CVaR due to the loss. For a deterministic cash flow, we
derived analytical expression of the CVaR and observed that it
is easier to solve the risk minimization problem analytically.
To solve the risk minimization problem for a random cash
flow, we considered bounding functions that bound the CVaR
due to the loss, above and below. We obtained different
bounding functions by assuming independence amongst the
two risk factors and by considering the random cash flow to be
bounded. The results in this paper make no assumptions about
the underlying probability distributions. Finally, we used these
bounds to obtain an outer estimate of the set of minimizers of
the minimum-risk static hedging problem.
The case of minimum-risk static hedging problem with other
hedging instruments will be considered in a future paper.
Furthermore, the current work will also be extended to the
dynamic hedging case.
Fig. 2: Plots of the bounding function given by (11), (15),
(19), and (21) as a function of Δ.
[8] J. Y. Campbell, K. S. Medeiros, and L. M. Viceira, “Global currency
hedging,” J. Finance, vol. 65, pp. 87–121, 2010.
[9] J. Glen and P. Jorion, “Currency hedging for international portfolios,”
vol. 48, pp. 1865–1886, 1993.
[10] N. Topaloglou, H. Vladimirou, and S. A. Zenios, “Cvar models with
selective hedging for international asset allocation,” Journal of Banking
and Finance, vol. 26, pp. 1535–1561, 2002.
[11] K. Volosov, G. Mitra, F. Spagnolo, and C. Lucas, “Treasury management
model with foreign exchange exposure,” Computational Optimization
and Applications, vol. 32, pp. 179–207, 2005.
[12] A. Bhatia, V. Chellaboina, and S. Bhat, “A monte carlo
approach to currency risk minimization,” in International
Simulation Conference of India, 2012. [Online]. Available:
http://www.ieor.iitb.ac.in/files/ieorweb/ISCI2012/index.html
[13] J. Kerkvliet and M. Moffett, “The hedging of an uncertain future foreign
currency cash flow,” The Journal of Financial and Quantitative Analysis,
vol. 26, pp. 565–578, 1991.
[14] M. R. Eaker and D. Grant, “Optimal hedging of uncertain and long-term
foreign exchange exposure,” Journal of Banking and Finance, vol. 9, pp.
221–231, 1985.
[15] Y. Oum and S. Oren, “Optimal static hedging of volumetric risk in a
competitive wholesale electricity market,” Decision Analysis, vol. 7, pp.
107–122, 2010.
[16] R. Rockafellar and S. Uryasev, “Optimization of conditional value-at-
risk,” Journal of Risk, vol. 2, pp. 21–41, 2000.
[17] G. Pflung, “Some remarks on the value-at-risk and the conditional value-
at-risk,” Probabilistic Constrained Optimization: Methodology and Ap-
plications (ed. S. Uryasev) Kluwer, 2000.
[18] S. E. Shreve, Stochastic Calculus for Finance II: Continuous-Time
Models. Springer, 2004.
[19] P. Glasserman, Monte Carlo Methods in Financial Engineering.
Springer, 2003.

R EFERENCES
[1] J. J. Stephens, Managing Currency Risk using Financial Derivatives.
England: Wiley, 2001.
[2] H. Xin, Currency Overlay: A Practical Guide. Risk Books, 2003.
[3] P. Wilmott, Paul Wilmott Introduces Quantitative Finance, 2nd ed.
Wiley, 2007.
[4] J. C. Hull, Options, Futures and Other Derivatives, 7th ed. Prentice
Hall, 2008.
[5] P. Artzner, F. Delbaen, J. Eber, and D. Heath, “Coherent measures of
risk,” Mathematical Finance, vol. 9, pp. 203–228, 1999.
[6] C. Alexander, Market Risk Analysis IV: Value-At-Risk Models. John
Wiley and Sons, 2009.
[7] K. Dowd, Measuring Market Risk. John Wiley and Sons, 2005.

121

A Neural Network Approach to the Operational Strategic Determinants of
Market Value in High-tech Oriented SMEs
Jooh Lee, William G. Rohrer College of Business,
Rowan University
201 Mullica Hill Rd., Glassboro, NJ 08028, USA,
lee@rowan.edu
Abstract - The purpose of this paper is to present an
adaptive performance model using backpropagation
neural network (BPNN) in scrutinizing impact of
strategic factors on firm performance, especially
within high-tech SMEs in U.S. The novel design
approach introduced in this paper segments SMEs
into high and low performance groups and captures
different impact patterns of strategic variables (e.g.
R&D). This paper explores both explanatory and
predictive capacity of a neural network and extends
its application to the measurement of relative
efficiency and subsequent prediction of potential
improvement. This paper demonstrates effectiveness
of a neural network for SME analysis and its
potential advancement toward performance modeling
as an adaptive decision support tool.
I. INTRODUCTION
SMEs, as compared to large enterprises, are more
stringent on their business performance due to lack of
capital and versatile resources. As a consequence,
SMEs, especially in the technology oriented industry,
strive to minimize slack in their operations. In other
words, those SMEs are more conscious on their
efficient and effective utilization of limited resources
for successful business outcomes (Blackwell et al.,
2006; Hsu et al., 2011). In this regard, prudent
performance management is a crucial managerial
imperative not only for short term profitability but
also for a long term sustainable operations. For these
efficiency motivated business entities, sound
methodology to support systematic performance
measurement has been a practical demand to support
decision making process (Ciampi and Gordini, 2013;
Garengo et al., 2005).
This paper presents an innovative
performance modeling approach using artificial
neural networks (ANNs) to fill the research gap.
ANN is an intelligent analytical method capable of
modeling complex and nonlinear patterns of data and
their associations (Fausett, 1994; Rumelhart et al.,
1986). The assumption free nature of the model and
adaptive learning capacity draws an increasing
interest on ANNs as an alternative to conventional
parametric methods with greater potential for further
association (Fausett, 1994; Rumelhart et al., 1986).
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He-Boong Kwon, Hasan School of Business,
Colorado State University-Pueblo
2200 Bonforte Blvd., Pueblo, CO 81001, USA,
heboong.kwon@csupueblo.edu
The assumption free nature of the model and adaptive
learning capacity draws an increasing interest on
ANNs as an alternative to conventional parametric
methods with greater potential for further
advancement for predictive and explorative analysis.
ANNs are a favorable choice especially in the
presence of unknown complex relationships between
variables. This paper capitalizes on these prominent
features of backpropagation neural network (BPNN),
a supervised ANN model, and presents a unique
empirical model to scrutinize impact of strategic
factors to the SME performance under differing
efficiency levels. This is a meaningful extension of
BPNN applications and a significant addition to the
existing literature. The model proved effective in
both explanatory and predictive analysis in capturing
differential impact of variables in each category and
predicting potential improvement for SMEs in Low
performance. In so doing, this paper provides
methodological breakthrough for performance
analysis through integrity of BPNN and enhances
managerial intuitions toward strategic management of
firm resources especially for SMEs.
II. DESIGN OF THE EMPIRICAL MODEL
The proposed empirical model involves three stages
of sequential BPNN processes as depicted in Figure 1.
In this empirical study, the model is designed to
investigate performance patterns of SMEs in high-
tech oriented industry. Especially, this paper intends
to explore varying patterns of SMEs in different
performance categories, High (above average) and
Low (below average) as differentiated by relative
efficiency. For this task, BPNN models are
implemented in a sequential manner.
The first step extracts average performance
pattern of all SMEs in consideration by exploiting
BPNN’s characteristics in learning central tendency.
In this stage, the performance of BPNN (BPNN 1) is
compared with MR before progressions to the next
stage. The 2nd stage is centered on refinement of
BPNN as a key process in this modeling. After
sophistication and verification of performance, the
model (BPNN 2) separates SMEs into two categories,
High and Low, based upon relative performance.
Indeed, BPNN outcomes provide significant means to
assess relative efficiency of each SME and its rank,

eventually enabling further extension of this study to
the analysis of different performance patterns in the
subsequent stage. Finally, the third stage includes
implementation of two separate BPNN models
(BPNN_H and BPNN_L) by taking inputs from two
previously separated stages. As a result, BPNN
models learn performance patterns of each category
and captures impact of strategic variables.
For this empirical study, seven variables
were used chosen: return on asset (ROA), R&D
intensity (RND), current ratio (CRatio), sales growth
(Growth), inventory turnover (InvTO), average
collection period (ACP), and market value in natural
log (LnMV). The first six variables were considered
key strategic factors which impact market
performance (LnMV).
As a preliminary step toward empirical
analysis, correlation analysis was used to find out
correlations between variables as summarized in
Table 1. The result shows significant relationship
between four independent variables (e.g. ROA, RND,
CRATIO, and Growth) and a single dependent
variable (LnMV).
Table 1 Correlation Analysis
---------------------------------------------------------------------
Variable 1 2 3 4 5 6
---------------------------------------------------------------------
1. ROA
2. RDINT .29***
3. CRatio -.05 .22**
4. Growth .02 .10 .03
5. InvTO .07 .02 -.15* -.01
6. ACP -.09 -.01 -.13 -.06 .02
7. LnMV .21** .39** .32** .66*** .09 -.03
---------------------------------------------------------------------
Note: *P < 0.05; **P < 0.01; ***P < 0.001
III. RESULTS OF EMPIRICAL ANALYSIS
Analysis of average performance.
As a first step to assess impact of strategic factors on
the market performance of SMEs, multiple regression
(MR) analysis was conducted first and compared
with BPNN outputs prior to exploring characteristics
of SMEs in two different categories, high and low
performance. The MR analysis is conducted to serve
as a basis to compare outputs of BPNN. Both models
generate valuable information on patterns of overall
SMEs in terms of average performance. For these
two different methods, six input variables (e.g., ROA,
RND, CRatio, Growth, InvTO, and ACP) were paired
with a single output LnMV. Table 2 summarizes the
results of the MR model. The model generated R2 of
0.638 and all variables except for ACP were
significant. Growth is the most significant variable
followed by CRatio, RDINT, ROA, InvTO, and ACP.
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Table 2. Results of Multiple Regression Analysis
----------------------------------------------------------------
Results β (Std. Error) V.I.F.
----------------------------------------------------------------
Constant 1.300 (0.273)
ROA 0.700 (0.268)* 1.127
RND 1.147 (0.302)** 1.182
CRatio 0.149 (0.028)*** 1.113
Growth 0.028 (0.002)*** 1.015
InvTO 0.021 (0.127)* 1.030
ACP 0.003 (0.003) 1.033
R2 = 0.6382; Adj. R2 = 0.6221; F-Ratio = 40.269***
----------------------------------------------------------------
Note: *P < 0.05; **P < 0.01; ***P < 0.001
Followed by MR, BPNN was employed by utilizing
the same data set. For this experiment, data set was
split into 7:3 ratio for training and test subsets where
test data was used to prevent over-fitting of the model
during the network training process. In so doing, both
BPNN and MR models were built on the same
number of decision making units (DMUs), 144 SMEs,
thus facilitating comparison of two different methods.
The resulting BPNN model has a 6-10-1 structure
with 6 (10, 1) input (hidden, output) neurons,
respectively. Then, a comparative prediction analysis
was conducted for both MR and BPNN models by
using various performance metrics such as
correlation between actual and predicted value
(Pearson R), mean absolute error (MAE), mean
absolute percentage error (MAPE), and number of
DMUs less than (LT) 25% prediction errors. Both
models show high prediction performance, however,
BPNN demonstrates superior outcomes across all
performance metrics.
Besides predictive analysis of both models,
impact of independent variables to the output was
assessed. In this measure, relative variations of
BPNN output in accordance with input changes were
measured as a partial derivative of an input to the out.
These results were then compared with MR output,
the normalized Beta (standardized coefficients).
Figure 1 visualizes comparative impact of each
variable in each method.
Figure 1. Impact of independent variables

Interestingly enough, relative impact of variables
shows similar patterns in both models. As in MR
experiment, BPNN identifies Growth as the most
impactful variable followed by Cratio and RND.
InvTO and ROA are less impactful and ACP shows
minimal impact, which is consistent with MR in that
ACP is the only insignificant variable. Overall,
besides superior predictive capacity, BPNN model
demonstrates sound explanatory power, thus
preserving its value for further progression of the
method for strategic performance analysis.
Categorization of SMEs (High vs. Low).
Superior predictive power of BPNN further prompted
refinement of the model for the prediction experiment
in exploring performance patterns of SMEs in
different performance categories. As a prediction
model to categorize SMEs into two performance
groups, input preprocessing function of the software
package (Neuralware, 2003) was utilized and the data
set was split into training (68%), test (17%), and
validation (15%) subsets.
BPNN2 plays a crucial role to differentiate SMEs
into two groups: High (above-average) and Low
(below-average) performers. By using multiple inputs
and output, the BPNN model forms a nonlinear
separation surface, which is an approximation of
central tendency or general pattern of the given data
set. Consequently, a positive prediction error between
actual and prediction value indicates High
performance while negative ones indicating Low
performance.
Modeling differential performance (High vs. Low)
BPNN 2 model produced meaningful outcomes on
the characteristics of SMEs in terms of average
performance and segmentation of SMEs based upon
efficiency. However, further elaboration needs to be
made to probe into patterns of SMEs in different
performance levels. In fact, this is a significant
research agenda to unveil dynamic impact of strategic
factors in varying performance levels. Literature
shows no evidence on this attempt, especially within
the SME context. Exploiting aforementioned features
of artificial neural networks, this pilot research
extends empirical experiment to further explore
performance patterns of High (Efficient) and Low
(Inefficient) SMEs, in particular. In this advancement,
ACP, which showed a minimal impact in BPNN and
was not significant in MR, was eliminated for the
parsimony of the model. For each group of 73 High
and 71 Low SMEs, subsequent BPNN model, BPNN
H and BPNN L, were. Indeed, the result shows R
above 0.94 and MAPE less than 8% with majority of
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DMUs (more than 95%) presenting less than 20%
error in both models.
By building models on subset of SMEs
(High or Low) separated by prior BPNN model
(BPNN 2), both of BPNN H and BPNN L models
take on inputs of less fluctuation. In other words, data
sets preserve better monotonicity which is an
important aspect for stable learning of BPNN and a
consequent robust model (Archer and Wang, 1993;
Pendharkar, 2005). In so doing, two subsequent
BPNN models learn central tendency of SMEs in
High and Low performance.
Figure 2. Prediction error
Figure 2 is a visual representation of improvement in
terms of prediction errors as compared to the result of
BPNN 2 built on all SMEs, High and Low. The
figure clearly shows centralized learning property of
BPNNs and far less error scales for both High and
Low SMEs with most of DMUs less than 20% error.
The empirical analysis presented so far can
be summarized as a sequential BPNN process which
analyzes average performance of SMEs and
subsequent advancement into hierarchical analysis of
two performance patterns. The promising outcomes
of sequential BPNN models indicate successful
estimation of production functions of SMEs which
capture nonlinear input-output relationships. In a
Blackbox type learning system of neural networks,
responses to the changing inputs can provide an
effective means to look into the functional behavior
of each input and output variable. Therefore, for the
analysis of impact of each input variable to the model
output, variations in BPNN outputs were observed in
accordance with sequential changes of each input.
Figure 3 visualizes relative importance of variables in
both models (BPNN H and BPNN L), which
represent output variations on a uniform change (e.g.
10% standard deviation) of each input. The result
clearly demonstrates fruitful outcomes of the
proposed neural network approach as evidenced by
differing impact of strategic variables in High and
Low SMEs.
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Figure 3. Relative importance of variables patterns of SMEs in different performance levels

using sequential BPNNs. This empirical progress is a
valuable addition to the extant literature which will
inspire further exploration of BPNN in the stream of
efficiency analysis. In addition, differential impact
patterns of RND according to a performance level in
SMEs is a significant empirical finding obtained in
this research. In sum, the contribution of this paper is
in its distinctive methodological advancement to
pioneer empirical performance model exploring
strategic factors in SMEs and beyond.

(References are available from the authors upon

request)
Admitting that Growth is the most impactful input in
both performance categories, notable distinction
between High and Low SMEs can be observed from
the relative importance of RND. In Low SMEs, RND
is the 3rd important variable after Growth and Cratio.
However, in High SMEs, RND is a crucial factor
comparable to Growth (94%) as contrasted to 32% in
Low SMEs. Furthermore, the result explicitly shows
increasing returns on RND in High SMEs over Low
SMEs (e.g. 1.93% vs. 1.32%) indicating more than
46% increase of output as compared to Low SMEs
upon increases of equitable input. It is a significant
finding obtained from this empirical study. RND has
a strategic importance positively impacting long term
performance and is considered a source of technology
advancement and scientific innovation leading to
sustaining competitive advantage of firms (Morby
and Reithner, 1990; Tubbs, 2007; Verma and Sinha,
2002; Wang et al., 2013). From this perspective,
higher impact of RND in High performing SMEs is
meaningful. As a pilot attempt to differentiate
variables impact on SMEs in different performance
levels, the result provides managerial insights on
managing strategic variables such as R&D. In
contrast, InvTO is the least impactful input followed
by ROA in both SMEs. However, the present
approach captures the opposite impact of the
variable; negative in Low SMEs but marginally
positive in High SMEs.

IV. CONCLUSION AND FOLLOW-UP

This paper presents a salient application of BPNNs to
model SME performance. Besides predictive capacity
of BPNNs, explanatory power of BPNN, commonly
noted as a Blackbox type system, was explored. As a
nonlinear model, BPNN successfully captures
implicit functional relationships of key input and
output vectors of SMEs and proves its superior
prediction accuracy to linear regression models (Das
and Datta, 2007; Sexton et al., 2003; Wong and Chan,
2015). The present approach uniquely explores

125

Green Banking: A proposed model for green housing
loan
Alexander V. Gutierrez
Our Lady of Fatima University
College of Business and Accountancy
alexv_gutierrez@yahoo.com
Abstract—Climate Change had become one of the most
critical factors that affect our environment. Every stakeholder
must initiate activities that will save our planet. For the banks
Green Banking Initiative (GBI) is a way for them to contribute to
the deteriorating environment. This study proposed a green
housing loan model for banks to be used for their proactive
contribution to save our environment and to encourage
borrowers to do their own share. It uses the content analysis in
the literature result to as a basis for the proposed model. The
study concluded that if more banks will offer green housing loans
in will widen the scope of its client based, for the borrowers it will
give them savings both on the cost of borrowings and energy
efficiency. It will also decrease the use of carbon emission.
Keywords—Green Banking; Green Loans; Climate Change;
Energy Efficiency
I. INTRODUCTION
In the recent 21st Session of the Conference of the
Parties (COP21) to the UN Framework Convention on
Climate Change (UNFCCC), world leaders hammered out an
agreement aimed at stabilizing the climate and avoiding the
worst impacts of climate change. A single typhoon alone in
2015 had an estimated damage of 11billion pesos. As losses
grew and environmental issue becomes a significant factor the
need for all the stakeholders to do their part in preserving the
environment to further deteriorating is inevitable. This
includes not only businesses, governments and consumers but
also includes the role the financial institutions such as banks is
very much critical. Thus the demand for the banks to adopt
Green Banking Initiatives is likewise important as it’s
contributions in the promotion of environmental friendly
undertakings depends on the failure or success of such
initiatives.
Green banking means promoting environmental-
friendly practices and reducing carbon footprint from banking
activities. In the Philippines several banks venture into IFC
(International Finance Corporation) the financial arm of the
United Nations to do sustainable energy financing. These
activities will help companies to adopt a more sustainable and
energy efficient use of electricity in their productions or
consumptions thus increasing profitability. The bank likewise
will expand its reach, specifically among small and medium
enterprises that need financial support to lower cost and
improve competitiveness. Wider reach of customers means
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more market opportunity for the banking sector. But despite
of the involvement of some of the commercial banks there is
still a greater need for other banks such as thrift banks and
rural banks to be more proactive in promulgating green
banking initiatives as this types of banks are the one within the
reach of small medium enterprises and home loan borrowers.
This study will try to answer the following questions. What
green financial product and services currently being offered by
the different financial institutions? What are the benefits of
green loans for both the banks and the borrowers.
The objectives of the study is to propose a model
green housing loan for lending that will be used to increase
the adoption of home loan borrowers to green banking
initiatives, such as investing in energy efficiency equipment
and constructions materials. It will also highlight the
important benefit that both the borrowers (companies) and
lenders (banks) will have in this undertaking.
II. RELATED LITERATURE
2.1 Green Banking
The effects of climate change increases rapidly which put
all the stakeholders to do their share of protecting our planet.
Banks plays a critical role as an intermediary between
economic development and environmental protection, for
promoting environmentally sustainable and socially
responsible investment [1]. According to World Bank, losses
from natural disasters account for more than .5 percent of the
Philippines gross domestic product annually, and climate
change is expected to increase these losses further. The need
for green banking initiatives in the Philippines is in critical
condition. Presently there have been several banks who
partnered with International Finance Corporation (IFC) to
finance projects that will extend credit to companies
promoting or adopting to energy efficiency. But despite of
this there is no clear cut policy that pertains to green banking.
Green loans and green deposits likewise is not widely offered.
2.2 Green Banking Initiatives
Green Banking Initiatives
There are several green banking initiatives that a bank
could do proactively it includes the following
• Paperless statements, bills and annual reports
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• Donations to conservation charities as an incentive
for choosing green products
• Special line of credit to homeowners for investment
in energy efficient upgrades
• Use of solar powered ATMs
• Energy-efficient branches and loans
• Providing recycable debit cards and credit cards
• Green Loans
• Green Mortgages
• Green Deposits
In 2011, China Development Bank had lent 658 billion Yuan
to energy-saving, emission-reducing projects, that accounts for
12.7% of the bank’s total outstanding loans.
(www.banktrack.org). Loans and leases overal in the
Philippines under the Sustainable Energy Finance (SEF)
program of the World Bank’s IFC grew 33% in 2013, the
Bank of the Philippines (BPI) said.[2]
2.3 Advantages of Green Banking Products and Services
The case for creating an efficient government interest
rate discount mechanism for green loans Also known as
discounted loan interest rates, interest rate discounts refer to
the government policy of offering subsidies on the interest
rates of loans in certain sectors by certain proportions (partial
or total) to support the development of these sectors. In the
present composition of fiscal spending on energy conservation
and fiscal spending, direct government subsidies for products
account for a significant share while fiscal spending of interest
rate discounts is still insignificant with a limited scope of
application.[3]
In general, green mortgages, or energy efficient
mortgages (EEMs), provide retail customers with considerably
lower interest rates than market level for clients who purchase
new energy efficient homes and/or invest in retrofits, energy
efficient appliances or green power. Similarly, banks can also
choose to provide green mortgages by covering the cost of
switching a house from conventional to green power, and
include this consumer benefit when marketing the product.
These retail products is in different designs, some of which
have been successful than others [3]
Some bank and financial institution have taken initiatives like
State Bank of India, Yes Bank and Financial Information
Network and Operations (FINO) while making their branches
and building environmental friendly and conscious on their
clients projects to whom they have given the loan. [3]
2.4 Green products and services
Green Design, an outstanding example is financing of the
construction of the first Green- Designed Building in the
province of Bulacan for Baliuag University 85 percent of this
building’s energy requirement comes from the sun and it also
boasts a rainwater harvesting facility.[4]
Energy Efficiency. To support commercialization of L-E-D
lighting systems in the country, our Bank backed the
renovation of the energy efficient offices as well as the
upgrade of machinery and equipment of UPSPI, a company
engaged in the manufacture and importation of L-E-D lighting
systems and one of the first to promote such energy saving
technology in the Philippines.[4]
The challenge of this emerging dynamic presents new
opportunities. New opportunities mean best possible solutions
which, in turn, give us new ideas; new ideas give rise to new
jobs, new companies, new industries, or old industries that are
ripe for reinvention.[4]
The benefit of using green credit card is it is design to
donate a portion of every transaction to an environmental
friendly non-profit organization thus contributes to the funds
that will definitely help save the deteriorating environment.
Green loans for home improvements is any person who is
purchasing eco-friendly product for home,
bank is providing finance for the equipment at very less
interest rate like 4% p.a. it is a very good deal for the person
who is purchasing solar equipment.
Business loan is a loan intended for business
purposes, your local bank extend small business loans to
would-be entrepreneurs, but only after they submitted a formal
business plan. The financial institutions typically require that
the individual personally guarantee loan, which means that
they probably have to put personal assets as collateral in case
of business fails.
Present requirements and criteria for Housing loans:
Fixing Period Interest Rate
1 year 5.5 %
2 year 6.5%
3 year 6.5%
4 year 6.88 %
5 year 6.88%
Annual Interest
Rates repricing for
existing Home
Loan Borrowers is
7% p.a. for fixed
year
Housing Loan
The minimum amount can borrow is PHP400.000
The loan terms available
• Maximum of 25 years for house and lot
• Maximum of 10 years for vacant lot, residential
condominium, business loan, refinancing,or multi-purpose
loans
The minimum total household income be to qualify for a loan
is PHP 40,000
Maximum loan
*Up to 80% of the appraised value of property
Mode of payment
Auto Debit Arrangement (ADA) or Post-Dated Checks
(PDC’s)
The loan is repaid in uniform monthly amortization payments,
paid in arrears (1 month after loan is booked)

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2.5 Conceptual Framework 50 % of the processing fee will be waived.

Independent Variable Dependent Variable How to qualify?
Requirements Increase Income of Banks Criteria 1
-Compliance with Increase savings of Your building or renovation must comply with the minimum
local government borrower environmental standard required in your city or municipality.
standards Decrease Carbon Criteria 2
- Double or Triple Emission You must be installing a minimum of two items from the
Glazing Conserve Energy following:
- Solar Hot Water Double or Triple Glazing Reduces heat loss and noise
Heater transmission through windows
- Solar Hot Water Solar Hot Water Heater Reduces your reliance on the
Heater or Heat Pump or Heat Pump power supply for the heating of
- Water Storage Tanks water and can result in financial
(minimum 2,500 litre savings through reduced energy
capacity) bills
- Roof and Wall Water Storage Tanks Reduces your reliance on water
Insulation (minimum 2,500 litre storages, resulting in financial
- LED lighting capacity) savings through reduced water
installed bills
Roof and Wall Insulation Helps prevent temperature
extremes within a dwelling.
III. METHODOLOGY Monetary savings through
The author uses the content analysis in the result in the reduced energy bills
literature to came up with the proposed model for green LED lighting installed Conserve energy
housing loans.
IV. RESULTS AND DISCUSSION
Proposed Model for Green Housing Loans The borrower has an estimated one year savings of
Interest Less 1% on the first 3 years of the almost P3,000.00 per annum for a minimum amount of
rates: current market lending rate P400,000.00 and a total savings of more than P71,000.00 for
Less 2% on the 4th to 5th year of the the whole duration of the loan
current market lending rate An automatic approval of 80% of the loanable amount based
Less 1% of the succeeding years of on appraised value of the property. The minimum amount the
repricing up to the end of the term. loan is the same with regular loans as in with the green loans.
For existing Home Loan: Less 1% on Loan terms was fixed to 25 years regardless of the purpose of
the repricing rate fixed for 1 year the loan. Mode of payment is ADA only. An additional month
is added before the loan payment starts, and additional
The PHP400.000 payment is available and unlimited. All of the possible
minimum features can be avail if only at least two of the following given
amount criteria is followed by the borrower. Half of the processing
Maximum Automatic 80% of the appraised fee will be waived.
loanable value of the property More and more banks starts to consider lending with
amount some tools by incorporating environmental concerns as part of
Loan Term Maximum of 25 years their requirements. The creation of a model to be used by
banks as part of their products, in this case green lending, will
Suitable Purchase of lot, house & lot, help the banks in promoting green loans but also will
for condominium unit or townhouse, encourage possible lenders to avail of environmental friendly
Takeout of existing housing loan, bank products.
Renovation of existing home, House The cost of borrowing will be lessen by a maximum of 23%,
construction. this means a good amount of savings for the borrowers, having
more money to spend or save. On the part of banks an
Mode of Auto Debit Arrangement (ADA) only opportunity to have a wider market reach as the lower the
payment interest rate is, the more it will attract borrowers resulting to
Payment Monthly (2 months after the loan is more client and more interest income as well. Household
options booked) adoption to any of the given criteria to avail of the green loans
Additional Available and unlimited will be an enormous help to preserve our environment.
Repayment Natural resources conservation is also one of the underlying

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principles in green bank while assessing capital/operating [4] Sharma, Sarika, Gopal (2012) A study on customer’s
loans to extracting/industrial business sector.[6] awareness on Green Banking Initiatives in selected public
and private sector banks with special reference to
Green loans will also become as a way of fulfilling an Mumbai.
institution Good Corporate Governance. This not only on the [5] PROGED (2013). Green Finance for Micro, Small and
part of the financial institution but also for the developer and Medium Enterprises (MSMEs) in the Philippines
constructions companies to be more environmental friendly by [6] Sudhalakshmi, Chinnadorai (2014) Green Banking
giving emphasis on renewable energy and energy efficiency. Practices In Indian Banks
It will give them a great sense of responsibility to adopt such
an initiative to be a part of those who wants to save our planet
from further deterioration.
Likewise, by increasing the maximum years for the loan to
pay from the normal 20 years maximum to 25 years will give
more leeway for the borrowers to pay their loans. The 50%
discount on the processing fee will not only encourage first
time borrowers but will also help them save money and can be
used as addition to their deposits that can be lend back by the
bank to other prospective borrowers.
The proposed ADA only way of paying the
amortization instead of issuing PDC will help save paper use.
Less paper use means lesser trees to be cut. Online banking
and mobile apps will be utilized for account inquiry,
transactions inquiry and other transactions.

V. CONCLUSION
Banks have become a very important part of our daily
lives and it’s contributions to the financial systems and to the
economy as whole is critical. Therefore, promoting and
adoption of some green banking initiatives by the banking
industry will greatly contribute to the purpose of helping save
our planet. If more banks will start offering green housing
loans it will definitely results in efficient energy used. If
borrowers will avail of the green housing loan they will incur
savings not only in the matter of interest rates but also in their
daily consumption of water and electricity as energy efficient
tools are in place.

VI. RECOMMENDATION
Green banking is still a major issue in the
Philippines, though some Universal Banks have already made
a collaboration with some International financing group there
still a wider market left untouched. Likewise government
should intensify its own initiatives to encourage banks to offer
more green products and services through offering some
incentives such as regulatory points to banks that will intensify
green banking. Consumers and businesses alike still lack
awareness of the term green banking, a massive promotional
campaign must be adapted by the banks to highlight the
benefits of going green.

REFERENCES

[1] Benedikter, R. (2011). Answers to the Economic Crisis:

Social Banking and Social Finance, Spice Digest New
York:Springer
[2] Gatdula (2014). BPI-IFC sustainable energy loans up
33%
[3] UNEP. (20070 Establishing China’s Green Financial
System. Detailed Recommendation 4: Strengthen
Discounted Green Loans

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A feasibility study and design of biogas plant via

improvement of waste management and treatment
in Ateneo de Manila University
S. Granada1, R. Preto2, T. Perez1,3, , C. Oppus1,4, G. Tangonan1, P.M Cabacungan1
1
Ateneo Innovation Center, Ateneo de Manila University, Quezon City, Philippines
12
Adjunct Professor at the DIII, Faculty of Engineering, University of Pavia, Via Ferrata 1, Pavia, (Italy)
roberto.preto@unipv.it
Department of Environmental Science, Ateneo de Manila University, Quezon City, Philippines
Department of ECCE, Ateneo de Manila University, Quezon City, Philippines

Abstract-- This paper reports the results of feasibility studies
on energy production by utilizing the waste produced by
Ateneo de Manila University. This approach is environment
friendly to reduce CO2 emissions as well as an interesting
support to the use local resources as well as reduce landfill
disposal. Biogas, as renewable energy form, can properly
substitute conventional sources of energy (fossil fuels, oil, etc.)
which are causing ecological problems in the fast increasing
of CO2 emissions in the atmosphere. The biogas consists
essentially of methane (CH4, 50 ÷ 75% by volume), carbon
dioxide (CO2, 25 ÷ 45%) and water vapor (H2O, 2 ÷ 7%), as
well as other gases in smaller concentrations, including
hydrogen sulfide (H2S). The heating value of the biogas is a
function of its content in CH4. On average the Net Heating
Value can be considered equal to 20,000 ÷ 24,000 kJ/Nm3.
The organic component of Municipal Solid Waste (MSW) can
be treated anaerobically to produce methane.
Index Terms — Municipal Solid Waste (MSW), combined
heat and power (CHP), Dry Matter (DM), Reactors. Ateneo de
Manila University (AdMU).
I. INTRODUCTION
Wastewater and solid Waste has been a major concern
that has great impact and continuously degraded the
status of the environment and human health in the
Philippines. Ateneo de Manila University with its
different sectors has been dealing with these issues.
Systems, programs and facilities have been reviewed and
upgraded to manage the wastewater and solid waste being
generated in the school.
In streamlining the sustainability of the campus, eco-
friendly and cost-effective methods were initiated and
implemented. Wastewater is collected and treated with
natural wastewater treatment system using plants, stones
and other locally available materials. The treated water is
being re-used for irrigation of the gardens. Solid waste is
being managed with combination of several programs
such as; (1) adoption of 3R concept of reduce, re-use and
recycle in the generation of solid waste (2) waste
segregations at point of source in which at least 5
different waste bins were deployed in strategic areas , (3)
Development of material recovery facility (MRF) to
house and further manage the recyclable waste, reusable
materials and residual waste, (4) setting out of Vermi-
composting facility with the deployment of African night
crawler worms to process organic waste into compost for
garden fertilizer. Figure 1 shows the summary of the
waste management scheme in Ateneo de Manila
University.
Fig. 1. Waste management scheme in Ateneo de Manila
University.
II. FEASIBILITY BIOGAS PRODUCTION
The above-mentioned initiatives have been found to be
successful since the time of major development in 2008,
but still have room for improvement. For wastewater,
around 26,000 cubic meters annually is managed with
treatment and system of reuse. This is equivalent to less
than 10% of wastewater being generated in Loyola
schools campus. The Average annual water withdrawal
and consumed by AdMU is a about 330,000 cubic
meters. All of the septic sludge in the building septic
tanks is disposed via syphoning services of utility
company or private service provider for offsite treatment.
For the solid waste, at least 83 tons annually of residual
waste is transported to the landfill, 23 tons annually of
food/kitchen waste is disposed, 73 tons of dry leaves has
not been processed in vermi-composting, 5 tons of used
cooking oil is collected from the canteen concessionaires,
and at least 3 tons of combined oil, fat and grease were
collected from the grease traps. Table 1 shows the
summary of organic waste available in Loyola Schools
with corresponding potentials for Biomethanation and
Biogas Production.
Table 1 presents the organic waste produced in AdMU in
2014 and the estimated potential biogas production.

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Table 1. – Estimated organic waste generated in Ateneo

de Manila University (Loyola Schools) in 2014 and
corresponding biogas production.
Fig. 1 – Technical Design of the DEWATS
According to this calculation, the biogas produced is able
to run a small CHP (spell out) plant that can produce
Inside the existing DEWATS system the proposed
electrical and thermal energy that can be utilized the
project is to install an anaerobic digester of 500 m3 of
campus.
reaction capacity that is able to manage more than three
There are also near to AdMU other college and
times the waste coming from the AdMU. This digester
University where is possible to bring other biomass to the
can run in mesophilic/thermophilic work condition a
plant that it can increase the production of three times
CHP (Spell out) plant till 100 kW electrical fed by
more.
organic parts of MSW.
Table 2 reports energy production from the biogas
production of Table 2.
III. DEVELOPMENT OF BIOGAS FACILITY (MODIFICATION As we can see the investment cost is covered in less
OF EXISTING AND PROPOSED ADDITION OF NEW SYSTEM)
than 6 years only from the AdMU waste production.
Vegetable oil for frying is sold to external companies
The situation of the existing treatment plant facilities (Table 1), but if it is used to feed the digester revenue
can be upgraded further to make use remaining organic resulting from the energy production is more than four
waste and to eliminate the cost for outside disposal or times the results of external sale.
treatment. This waste can be used in harmony with nature
and to produce energy in the process.

Existing Facilites

Marian Garden and the Matteo Ricci lawn are maintained

by the use of drip irrigation systems. Also known as
trickle irrigation, this system saves water by slowly
dripping water directly onto roots through a network of
valves, pipes, and piping. Water loss via evaporation is
prevented by this method. The water used to irrigate these
gardens is from the decentralized waste water treatment
systems found on-site. Excessive runoff from rainwater is
also collected in several catchment ponds. These also
provide irrigation water for the nearby fields and gardens.

Waste Water Treatment

The University has in place four decentralized

wastewater treatment systems.
The newest and largest working system is the
Decentralized Wastewater Treatment System (DEWATS)
Table 2.– Biogas Plant cost and simple payback
near the New Rizal Library. The DEWATS
calculation to install an anaerobic digester in the existing
accommodates 110 m3 of wastewater daily and treatment facilities
is conducted through a series of settling tanks,
underground aerobic and anaerobic reactors, polishing Integrated in the cost is a worker for the maintenance for
gravel filter and indicator ponds. the genset for one year .

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The existing waste available can generate an electrical
power of only 11.50 kW, there will be a corresponding
increase in power generation is of we can collect waste
from from the near colleges and University.
Moreover the biogas plant is a good opportunity for the
students that want to improve knowledge in chemical,
biology and environment sustainability.
recovery of recyclable materials, (4) Carbon foot print
contribution, (5) Working laboratory for student learning
system, and (6) Support and Compliance with both R.A.
9275 (Clean water act of 2004), R.A. 9003 (Ecological
Solid Waste Management Act) and R.A. 9513 (Clean
Energy Act).

ACKNOWLEDGMENT
IV. ANALISYS OF BIOGAS PLANT The team would like to thank the Philippine
Renewable energy help to reduce the greenhouse effect, Commission on Higher Education (CHED)-Philippine
methane emitted by the septic tanks the facilities is a Higher Education Research Network (PHERNET).
potent greenhouse gas.
The proposed biogas plant will not only be a source of
energy but will reduce environment impacts of the
existing facilities at the same time minimize on the cost REFERENCES
of disposal of waste.
ALTERNATIVE ENGINE INPUT (354,32 MJ as input fuel)
[1] Drapcho M. C., Nhuan P. N., Walker H. T. : Biofuels
a
b=a*1000/c'
biogas MJ
Sm3
354.32
15.80
Engineering Process Technology, 2008, pp. 334-335
c percentage methane contents % vol 65.00
c'=34500*c/100 (^) NHV biogas kJ/Sm3 22,425.00
NHVnatgas NHV natural gas MJ/Sm 3 34.40 [2] Petrecca, G. : Industrial Energy Management: principles
NHVoil
REFb
NHV fuel oil
reference boiler efficiency
MJ/kg
%
41.86
90.00
and application. Kluwer Academy Publishers, 2000, pp.
173-200.
ANAEROBIC DIGESTER [3] Petrecca, G. Preto, R. Organic solid slaughterhouse
x
y
organic part of MSW
percentage waste in the input mix of digester
kg
%
100.00
100.00
wastes: a resource of energy, 2012/IEEE/978-1-4673-
z total solids (SS) % 35.00 1301-8
z' potential biogas production Sm3/t wet 423.00
x'=a/(z' * c'/1000) organic waste to obtain 100 MJ t wet 0.037 [4] Preto, R.: “Biomasses and territory planning: the
ALTERNATIVE ENGINE OUTPUT development of chains for use with innovative technologies
d energy shaft MJ 112.50
e=d*1000/3600 kWh 31.25 for the production of energy”. Biomasse e pianificazione
f mass of smoke kg 101.60
g=f/1,29 (^^) volume of smoke Nm3 78.76
del territorio: lo sviluppo di filiere per l’utilizzo con
h
h'
smoke temperature °C
K
572.00
845.15
tecnologie innovative per la produzione di energia.
i
l=f*h*i/1000
smoke specific heat
smoke enthalpy
kJ/kg*K
MJ
1.068
62.07
Doctorate Thesis – University of Pavia, 2010, pp. 154.
m smoke circuit losses MJ 2.33
n typical smoke recovery heat MJ 59.74
o=l-m
p
maximum smoke recovery heat
heat recovery from cooling circuit
MJ
MJ
59.74
134.64
[5] George W. Huber, Sara Iborra, Avelino Corma: Synthesis
ELECTRIC GENERATOR of transportation fuels from biomass: Chemistry, Catalyst
q efficiency % 96.00
r=d*q/100 electrical energy output MJ 108.00 amd Engineering, American Chemical Society 2006 pp.
s=r*1000/3600 electrical energy output kWh 30.00
SPECIFIC CONSUMPTION 2.2-2.3
t=a/s input fuel MJ/kWh 11.81
u=b/s
u'=(a/NHVnatgas)/s
biogas
natural gas
Sm3/kWh
Sm3/kWh
0.53
0.34
[6] K. Stahl, L. Waldheim, M. Morris, U. Johnsson, L.
u''=(a/NHVoil)/s fuel oil kgoil/kWh 0.28 Gardmark, Biomass IGCC at Värnamo, Sweden – Past and
Future, GCEP Energy Workshop, April 2007, pp.3-4
Table 3. – Alternative engine 30 kW electrical and [7] U.S. Department of Energy National Renewable Energy
anaerobic digester 500 m3 of reaction volume Laboratory. Gas-Fired Distributed Energy resource
technology characterizations – NREL/TP pp. 1-8, pp. 2-31

V. CONCLUSIONS [8] George W. Huber, Sara Iborra, Avelino Corma: Synthesis

of transportation fuels from biomass: Chemistry, Catalyst
amd Engineering, American Chemical Society 2006 pp.
This study shows the feasibility and sustainability of 2.2-2.3
incorporating biogas technology in the approach for both
wastewater and solid waste management. Clean electrical
energy will be generated with biogas feed generator set,
while heat energy will be utilized with CHP system. The
design suggest that a good investment cost will have a 6
(6) years payback period for a system that will run for 25
years with minimal maintenance considerations. The
calculation is for the energy production only, but there
are other cost benefits and positive impacts such as: (1)
Elimination for the cost of disposal of residual waste,
sludge management and maintenance/repair of pipes due
to clogging with oil/grease, (2) Increase the available
treated water for re-use in irrigation which will result to
avoidance cost in using utility water, (3) Increase the

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Effective Data Collection and Analysis of Solar Radio

Burst Type II Event Using Automated CALLISTO
Network System
N. H. Zainol
S. N. U Sabri
Faculty of Applied Sciences Faculty of Applied Sciences
MARA Technology University MARA Technology University
Selangor, Malaysia Selangor, Malaysia
hidayahnur153@yahoo.com sitinurumairah@yahoo.com

Z. S. Hamidi M..O. Ali

Faculty of Applied Sciences
Faculty of Applied Sciences
MARA Technology University
MARA Technology University
Selangor, Malaysia
Selangor, Malaysia
marhanaomarali@gmail.com
zetysh@salam.uitm.edu.my

nurulhazwani husien
N.N.M.Shariff
Faculty of Applied Sciences
Academy of Contemporary Islamic Studies
MARA Technology University
MARA Technology University
Selangor, Malaysia
Selangor, Malaysia
hazwani_husien21@yahoo.com
nnmsza@salam.uitm.edu.my

M. S. Faid
C.Monstein
Academy of Contemporary Islamic Studies
Insitute of Astronomy, Wolfgang-Pauli-Str
MARA Technology University
27 8093 Zürich
Selangor, Malaysia
Switzerland
syazwaned@siswa.um.edu.my
monstein@astro.phys.ethz.ch

Abstract—The Callisto network systems are widely used for
continuous data collection of solar activities every day through
the internet connection and stored in the central database in
the computer. The system installation began in 2002 in Zurich,
and its network has spread all around the globe ever since,
benefiting researchers and individuals worldwide. This
research paper presents one of selected event using a radio
spectrometer the Callisto system from Ireland, which
demonstrates a solar radio burst event detected during the
13:23 (UT) to 13:26 (UT) on 30th March 2013 in Ireland.
Besides, data from Glasgow and Humain were compared to be
analyzed. Those installed Callisto in each country is called as
extendable the Callisto system (e-Callisto). The analysis being
carried out based on spectrogram data of the CALLISTO
system obtained from these three countries. Results showed
that all three sites observed the same Solar Radio Burst Type
II at the same time but different in locations. The e-
CALLISTO system has proven to be a new tool for monitoring
solar activity and for space weather research.
Keywords—e-Callisto system; data collection; analysis; solar
activity

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133

I. INTRODUCTION
Research and study of the Sun evolve rapidly and the
progress proves many new findings that can be prospered
into various field. These processes undergo observations
from space satellites, space probes in X-rays, extreme UV
and ground-based telescopes in the specific wavelength.
However, data collected from the instruments must be
stored and compiled for research used. Specifically, ground-
based telescopes at meter and decimeter wavelengths pose
many challenges and potential treasures after many decades
of study. Some Sun’s event can only be detected using
higher wavelength radio emission rather than lower
wavelength such X-ray. Only a few ground-based solar
radio instruments have a large part of the spectrum such as
in Europe which limited only during daylight. The Coronal
mass ejections (CMEs) and large flares happen several
hours which results in limited time for observation. In tens
of minutes, they can convert in excess of 1032 ergs of
magnetic energy into accelerated particles, heated plasma,
and ejected solar material [1]. Moreover, if the important
event occurs, only a few parts of the events can be observed
from entire duration. So, a network system called the
CALLISTO has been introduced into this field to overcome
the problems arise [2]. The system is particularly useful for
studying the large explosions in the Sun's atmosphere
known as solar flares [3]. The extendable CALLISTO (e-
CALLISTO) network has 24 hours coverage of the radio
emission of the Sun includes the instruments that have been
installed all over the world. The idea is to distribute
identical spectrographs in the meter wave region and low
decimeter radio band around the world by connecting them
through the internet. The e-CALLISTO project is provided
by ETH Zurich includes spectrometer unit, an antenna and a
PC connected to the internet. The Compact Astronomical
Low-cost Low-frequency Instrument for Spectroscopy and
Transportable Observatory (CALLISTO) spectrometer
operates between 45 to 870 MHz using a modern,
commercially available broadband cable-TV tuner [4]. It is
possible to obtain data from the whole frequency range
because different locations have different frequency range.
The stations observe independently at frequencies, which
are the most well suited for each location, for example
depending on such features as local radio frequency
interference (RFI) levels [5]. For that, it is utmost
importance to identify and continuously monitor the
unwanted signals which are emitted due to the massive
global increase in technology application [6]. The RFI
signal from the terrestrial surrounding may give inaccuracy
data of the ground observation [7]. To establish any radio
astronomical observation, it is important to initially identify
all possible RFI in the targeted site [8]. The hardware
(antenna) and software (CALLISTO system) have become
commercially available on the consumer electronics market.
Thus, the construction cost of radio spectrometer is
affordable and can be developed in a large quantity. This
creates new possibilities, concerning the ever increasing
interference. Identical spectrometers could be placed far
apart to observe the different interference-free signal.
Alternatively, a spectrometer can be brought temporarily
into a remote region with less interference [9]. Many
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researchers interested to pursue research in this field. This
involves solar activity associated with the technology we
used. It is also important to understand solar radio bursts
because these can disrupt wireless communications, damage
satellites, produce destructive surges on power grids, and
endanger astronauts [10].
Solar radio emission closely related to the Sun activities
during maximum and minimum cycle. It arises from several
different phenomena and can be divided into three (3) main
components (i) the quiet Sun component, which is always
present, (ii) the slowly varying component and (iii) the
active Sun component which is caused by sunspots and flare
activity [11]. It is possible to detect a large flare and
Coronal Mass Ejections (CMEs) at instance if we alert on it
[12]. The early phase of solar flares that are detected in the
solar coronal region [13]. Solar activity includes solar burst.
There are five types of solar burst; Type I, Type II, Type III,
Type IV, and Type V. Solar radio bursts at low frequencies
(< 15 MHz) are of particular interest because they are
associated with energetic CMEs that travel far into the
interplanetary (IP) medium and affect the Earth’s space
environment if Earth-directed [14]. Interplanetary (IP)
shocks driven by coronal mass ejections (CMEs) are
indication of powerful eruptions on the Sun that accelerate
particles to very high energies [15]. Coronal mass ejections
(CMEs) are regarded as main factor of heliospheric and
geomagnetic disturbances [16]. During CMEs, magnetic
arcades overlying magnetic neutral lines are hurled into the
corona and the interplanetary medium, which in turn drive
shocks by virtue of their speeds exceeding the local
characteristic wave speeds [17].
The shocks can be inferred as Type II as it produced in
IP medium. The type II solar radio bursts result from the
excitation of plasma waves in the ambient medium by a
shock wave propagating outward from the Sun [18]. The
current interpretation of the type II burst emission is as
follows: electrons accelerated in the MHD shock front
generate plasma waves, which then converts into
electromagnetic radiation at the fundamental and harmonic
of the local plasma frequency [19]. According to
wavelength regime in which they are observed, type II radio
burst are grouped into metric (m), decameter-hectometric
(DH), and kilometric (km) bands [20]. Here we present data
collection flow and analysis of data spectrograph collected
from the computer.
II. METHODOLOGY
A. CALLISTO spectrometer instrument
The CALLISTO spectrometer is composed of a handful
of standard electronic components. The system is designed
to measure the dynamic spectra of Solar Radio Burst Type
II and Type III produced by coronal shock waves, as well as
Type I, IV and V bursts due to other solar energetic
processes.

Figure 1: Bicone antenna used in Rosse Solar Terrestrial
Observatory (RSTO)
The lower receiver operates at 10 - 100 MHz and is fed
by a bicone antenna. The instrument observes automatically
and data are collected each day and stored at the Rosse Solar
Terrestrial Observatory (RSTO) and also in a central
database at ETH Zurich. The CALLISTO spectrometer is
composed of standard electronic components assembled on
a single PCB (printed circuit board). This PCB fits into a
standard aluminum box and has connectors for the antenna,
computer, power supply, focal plane unit (FPU). A complete
set of drawings, parts list, procedures, PCB-layout and also
the complete software is freely available on the internet (e-
CALLISTO websites). An important step is location
evaluation, where sometimes unexpected interference,
present by nearby radio transmitters. A spectral overview
was made using a special function of the CALLISTO for
every host site. It allows measuring the whole frequency
ranging from 45 to 870 MHz in steps of 62.5 KHz leading
to potentially 13,120 channels. This high-resolution
spectrum is then used to create a frequency program
avoiding channels with terrestrial interference. Such a
frequency program observes only those frequencies with
low radio frequency interference (RFI) and if needed, it
jumps over spectral ranges like the FM band between 80
and 110 MHz.
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OPTION DESCRIPTION
Frequency Range 45.0-870.0 MHz
Frequency Resolution 62.5 KHz
Radiometric 300 KHz at -3 dB
Bandwidth
Dynamic Range ~50 dB at -70 to -30 dBm
maximum rf level
Sensitivity 25 ± 1 mV/dB
Noise Figure <10 dB
The e-CALLISTO network system presents areas which
are covered by several solar radio telescopes. This network
behavior is known as geographic selection. The geographic
selection replicates systems between two geographically
distant stations so that the observed data are acquired from
several stations. That helps the observation of a possible the
event in case of failure of one of the stations. This
geographic selection is very reliable from the point of view
of both, solar science and space weather. During installation
of the system, the basic specifications were always
followed. However, it must be the complement to the
environment of the installed locations. Therefore, each
station of CALLISTO installation has their own
specifications regarding their environment, but still referred
to the general specification as a guide. In general, there is no
need for a permanent operator. Once the system is powered
and configured, it runs automatically, controlled by an
internal scheduler of the PC. This scheduler allows
automatic starting and stopping of observations as well as
controlling of an optional focal plane unit with up to 64
different configurations. It is realized by a 6-bit digital
output connected to a standard connector. This option is
needed for automatic calibration or antenna switching. An
operator is only needed in case of missing internet
connection to transfer data manually to an external data
server.
III. RESULTS
The system of e-CALLISTO, operating in Switzerland,
India and Siberia, covered more than 60% of the time.
Nowadays, this network coverage has expanded all over the
world as many new stations operated well in order to
produce the result of solar activity for 24 hours. Using this
system, the result comes out in the form of spectrogram and
being analyzed by researchers based on the pattern appeared
in the spectrogram.
A. Data Collected in Ireland from the e - CALLISTO system
 Back to Contents

Figure 2: Solar Radio Burst Type II event occurs during the

Figure 3: Observation of solar activity at the Glasgow
13:23 (UT) to 13:26 (UT) on 30 March 2013 in Ireland. (Credited
Observatory on 30 March 2013 (Credited to E-CALLISTO
to e-Callisto website)
website)
Figure 2 shows the solar flare radio emission of March Mid frequency observation at Glasgow Observatory
30, 2013, observed by the e-CALLISTO spectrometer (United Kingdom). It shows harmonics of the same type II
element in Ireland. The data are displayed as a spectrogram, burst with the split band due to the magnetic configuration
intense emission presented bright, no emission black or no of the Sun and also some herringbone structures.
color. The time progressing to the right. The three elements
in the spectrogram represent the time, frequency, and
intensity which produce an image that can be interpreted
more easily. The frequency is given in MHz, increasing
downwards.
B. Other Data Collected from Other Locations
This system allows observing and obtaining data from other
sites at the same time or any time. The figures below show
data collected at the different site but the same solar activity
event almost at the same time.

Figure 4: Solar activity detected in Humain Observatory on 30

March 2013 (Credited to e-CALLISTO spectrometer)

136

Similar observation at Humain observatory (Royal
Observatory of Belgium). It shows the same type II burst as
in figure 2 and 3.
IV. ANALYSIS
Based on Figure 2, 3 and 4, as the emission is
proportional to the density (plasma emission), the vertical
axis also represent altitude in the solar atmosphere,
comprising about one to two solar radii above the
photosphere. As density decreases with altitude, height
increases upward in the picture. The radio emission is tilted
towards the right, indicating that an exciter is moving
upwards. Assuming a density model of the corona, the
speed can be estimated. It amounts to about a third of the
speed of light. The emission is therefore interpreted as the
signature of an electron beam escaping from the Sun.
Moreover, the emission drifts again to the right,
indicating an exciter moving upwards. However, the speed
is much slower in this case and of the order of 595.5 km/s.
This is a typical velocity of a shock wave in the corona.
Such asradio emissions, called Type II radio bursts, are
often precursors of coronal mass ejections, which disturb the
whole heliosphere and are of great interest in near-Earth
space weather.
Based on the analysis above, this valuable system allows
the researcher to automatically obtain data via the internet
for 24 hours solar activity data at any installed CALLISTO
stations and at any time.
Acknowledgment
We are grateful to CALLISTO network; STEREO, LASCO,
SDO/AIA, NOAA and SWPC make their data available
online. This work was partially supported by the 600-
RMI/FRGS 5/3 (135/2014), UiTM grant, Universiti
Teknologi MARA and Kementerian Pendidikan Malaysia.
Special thanks to the National Space Agency and the
National Space Centre for giving us a site to set up this
project and support this project. Solar burst monitoring is a
project of cooperation between the Institute of Astronomy,
ETH Zurich, and FHNW Windisch, Switzerland, MARA
University of Technology and University of Malaya. The
research has made use of the National Space Centre Facility
and a part of an initiative of the International Space Weather
Initiative (ISWI) program.
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3. Z. S. Hamidi1, N.N.M.S., The Mechanism of Signal Processing
of Solar Radio Burst Data in E-CALLISTO Network (Malaysia).
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The Dependence of Log Periodic Dipole Antenna (LPDA) and
e-CALLISTO software to Determine The Type of Solar Radio
Burst (I -V)
S.N.U.Sabri, N.H Zainol, M.O Ali,
NurulHazwani Hussien, M.S.Faid
School of Physics and Material Science,
Universiti Teknologi MARA,
Selangor,Malaysia
sitinurumairah@yahoo.com.my
Z.S.Hamidi
School of Physics and Material Science,
Universiti Teknologi MARA,
Selangor, Malaysia
zetysh@salam.uitm.edu.my
Abstract---Solar radio burst originated at the
layer of the atmosphere where the Geo-effective
disturbance occurred which energy will be released in
solar flares and Coronal Mass Ejections (CMEs) will
be launched. Solar Radio Burst can be divided into 5
types and determined by using the Log Periodic
Dipole Antenna (LPDA) and e-CALLISTO system.
The LPDA was set up in a 45-870 MHz range in
frequency and has maximum boom length 5.45m.
Besides that, it has minimum scale factor, τ=0.76 and
maximum at τ=0.98. We put some effort to construct
suitable with designs, high specification and practical
enough with the size of boom length as the conclusion
the scale factor that suitable with this design is 0.8118
as a directivity of an antenna. LPDA has 19 elements
which using two (2) aluminium rod with 7.01dB gain.
The antenna has a function to receive the signals then
connected to the low noise amplifier and e-
CALLISTO spectrometer completes it as a system. A
CALLISTO (Compound Astronomical Low-Cost-
Low-Frequency Instrument for Spectroscopy
Transportable Observatory) spectrometer was used to
figure out the dynamic of solar corona which in
metric and decimetric wavelength radio observation
and the main objective of this study was to study how
the solar radio burst can be detected by using LPDA
(Malaysia) and e-CALLISTO (ETH Zurich,
Switzerland) which were set up in a different
location.In this paper, the potential of Malaysia be
one of the candidates to contribute a good data will be
highlighted and we will focus more on performance
evaluation and visualization data.
Keywords—Log Periodic Dipole Antenna(LPDA);
e-CALLISTO system; Solar Radio Burst (I-V)
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
138
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N.N.M.Shariff
Academy of Contemporary Islamic Studies,
Universiti Technologi MARA,
Selangor, Malaysia
nnmsza@salam.uitm.edu.my
C.Monstein
Institute of Astronomy, Wolfgang-Pauli-Str
278093 Zurich, Switzerland
I. INTRODUCTION.
Log Periodic Dipole Antenna (LPDA) is
instruments with variable application which can
be used to receive and transmit the
electromagnetic waves due to principle reciprocity
and has highly sensitivity in signal detection with
high possibility in handling noise issue[1].
Besides that,twisted balanced transmission lines is
important in fed especially for coplanar linear
array of unequal and unequally spaced parallel
linear dipoles. The advantages of LPDA was in
design because it has straightforward design by
Carrel and fulfills the criteria to produce
maximum range in frequency from 45MHz to
870MHz[2]. Thus, the different radiation
properties detected and used to monitor solar radio
flux due to solar flare phenomena [3]. This range
has been standardized for e-CALLISTO
networking. Monitor the solar activity in the radio
region is the main objectives in the International
Space Weather Initiative (ISWI) project and make
observation of Solar activity 24h/d in order to
support internationally with latest technology
of the instrument.

It was started in 2011 with the National Space
Agency (ANGKASA) and dealing with Malaya
University and MARA University of Technology.
The details of Log Periodic Dipole Antenna that
have been discussed [4]. e-CALLISTO networking
important in this project in order to determine the
signal that receive from LPDA and interpreted the
signal. From the interpretation, determination can be
made on the frequency that received and the
specification the signals came from. Furthermore,
from the signals received, the type of solar radio
burst can be detected and other phenomena such as
solar flare and Coronal Mass Ejection (CMEs) can
be detected if these events were occurs at that time.
CALLISTO has designed by electronics engineer,
Christian Monstein from Institute for Astronomy of
the Swiss Federal Institute of Technology Zurich
(ETH Zurich) developed the system so that solar
activity can be monitored from all over the world
and there are about 25 sites used this system to
monitor sun activity within 24 hours.
In this system, transfer and data management need
to be considered. Then, the signal processing deals
with operation so that it can analysed our data thus
gave the best results of the images will be discussed
and the range of frequency of the signals detected
will be stated. United Nations and NASA also
involved in this project as to support the countries
that have been participated[5]. This detection is
independently used if it connected with radio
telescope and tracking system and usually in the
form of solar radio burst type. It can be classified
into 5 types (I-V) and can be determined by different
phenomena. Solar Radio Burst Type I known as
solar storm or non- related phenomenon that has
continuum component and a burst component. It has
100-400 MHz range in frequency. Furthermore.
Type II burst usually related with Coronal Mass
Ejection (CMEs) which occurs when the soft X-Ray
at peak time in solar flare and identified by a slow
drift to lower frequency with duration of time. This
burst is in second-harmonic bands[6, 7]. Meanwhile,
Type III burst is fast drift burst which related with
solar flares caused by energetic particles escapes
from magnetic field lines because the electron
produced by ejection of energetic electrons out
along open magnetic field caused high drift in
frequency due the duration of electrons is very
short[8, 9].Solar Radio Burst Type IV is the location
where new active region will be born and occurs due
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to wave-wave and wave-particle interaction where
the magnetic trap in the solar corona. [10, 11]. It has
a frequency range between 20 MHz till 2 GHz
which usually followed by flares and has a
broadband continuum structure [12] . Type V is
known as combination of solar flares and solar
storm and the more details will discuss in results and
discussion.
I. EXPERIMENTAL SETUP AND
METHODOLOGY.
In this project, Compound Astronomical Low-
cost Low-Frequency Instrument for Spectroscopy
Transportable Observatory (CALLISTO) system has
been used. Basically the antenna will connect
directly to CALLISTO spectrometer, which housed
in a steel case through low loss of coaxial cable.
CALLISTO has been used to figure out the dynamic
of the solar corona and make an observations on the
meter and decimeter wavelength to determine the
progression of the solar atmosphere. Before that, the
unwanted signal or RFI sources need to be removed
during the observation. Log Periodic Dipole
Antenna (LPDA) at National Space Centre
(ANGKASA), Selangor at (3.0833333°N
101.5333333°E) was connected with CALLISTO
system and has minimum Radio Frequency
Interference (RFI) with average (85- 100) dBm and
45-870 MHZ range of frequency [11, 13].
II. SPECIFICATION OF THE LOG
PERIODIC DIPOLE ANTENNA (LPDA)
Log Periodic dipole Antenna (LPDA) was set
up at the National Space Centre (ANGKASA),
Selangor and it has 19 elements which represent
different frequencies received by two (2) boom
made up by aluminium rods which has non-
corrosive and lightweight properties. This
important point for array as we want to increase the
smoothness in dimension greater from previous
elements. The elements are more specified by
angles compared by distances as it follows the
principle of Rumsey. For wide bandwidth, the
longer log periodic dipole array needed so that the
accuracy will be optimized and dynamic of the
range achieved in continuous burst which it
divided into 15 minutes for each image thus gain
high resolution of the frequency. The

electromagnetic that have been received and
collected at the antenna will be converted to
electrical energy and feed to outdoor antennas.
The outdoor antenna used RG58 coaxial cables
for feeding and the radio frequency (RF)
transformers was used for transformation between
the antenna and the cable. The log Periodic Dipole
Antenna was set up with the range of frequency
from 45MHz till 870 MHz [14]. The antenna has
boomlength 5.45m with 7.01dB gain and 0.818
scale factor. CALLISTO software stored each
spectrum data file and tracking log file so that it
can transfer and process to the data acquisition
server, thus Space Weather Monitoring Laboratory
(SWML) can display the data and current tracking
status. The signal from the antenna will connect to
CALLISTO spectrometer, which housed in steel
case due low loss coaxial cable, LMR-240. Low
noise preamplifier was used to amplify the gain.
CALLISTO spectrometer can function as detector
and maximize the gain more than 10dB with
25mV/dB sensitivity supplied by ETH Zurich.
CALLISTO also divided into 3 sub bands which
consists 62.5 KHz channel, resolution comparable
radiometric bandwidth is 300 KHz approximately.
The sampling time is about 1.25 ms per frequency,
pixel, 1ms integration time and we decided to use
E plane polarized antenna so that it can respond to
the range of frequency. LPDA, CALLISTO
spectrometer and windows computer connected to
the internet so it is easier to transport the data or
information and be used in many observatories as
it known as frequency-agile spectrometer. In order
to control the sampling time of the spectrometer
and to control the antenna direction, GPS Clock
and tracking controller have been used. The daily
observation starts from 7.00 am till 7.00 pm [15]
Figure 2. Log Periodic Dipole Antenna (LPDA)
that have been set up at National Space
Centre,Banting,Malaysia.
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III. DISCUSSION
The frequency range 45- 870 MHz has been
chosen and it has longest boom length of 5.45m.
With the range of frequency, the scale factor which
used to control directivity of an antenna is between
0.76 till 0.98 and it has relative spacing about 0.148.
The total of the boom length was 5264m and has 19
number of elements which increased logarithmically
but decreased smoothly further from the feed point.
Besides that, two (2) boom lengths were used to
control the antenna balance and it quiet long thus
can help in terms of front-to-back ratio of the
antenna in signal direction. During the set up was
done, the low frequency-dependence of radiation
and the input impedance need to be considered by
making sure that all metal parts are connected
electrically to mast flags then can give high
protection from electrostatic charges. Radio Flux
Density data have been used from many countries to
determine the type of solar radio burst and make
comparisons using NOAA or Space Weather
Prediction Centre (SWPC) data.
A. Data collected from Angkasa station,
MALAYSIA
From the data, frequency and duration of the
burst will be determined and Figure 3 below shows a
Moving Solar Radio Burst Type III that received by
Pusat Angkasa Negara on 9th March 2012 which
detected using e-CALLISTO software. The Type III
burst event was detected started from 04:22 UT till
04:28 UT in 6 minutes duration of time.
Figure 3 . First data received from Angkasa
station showed Type III burst in Solar Radio Flux
Density (Credit to: e-CALLISTO software)

B. Data Collections from Others Sites
Figure 4 and Figure 5. Radio Flux Density for
Type II and Type III event from KRIM observatory
(Credit to: e-CALLISTO software)
Figure 6 and Figure 7. Radio Flux Density for
Type IV and Type V event from KRIM and
BLEN7M observatories
(Credit to: e-CALLISTO software)
Figure 4 showed solar radio burst Type II event
and usually associated with CMEs that occurred on
9th February 2015 from different sites which has
ranged frequency between 260MHz till 350 MHz
and duration of the burst was in 10 minutes due
electron accelerated propagating through the solar
corona and the electron intensity.
Meanwhile, Figure 5 showed Solar Radio Burst
Type III, 3rd February 2015 (KRIM Observatory)
from 250 MHZ to 340 MHz in frequency. It took
about approximately 1 minutes, which can be drift
rapidly due to difference in ambient coronal density
with time. Figure 6 showed it has broadband
continuum features and related to the development
of sunspots. This solar Type IV burst occurred on
2nd February 2015 and have been started from 04:36
UT till 04:44 UT and it took about 8 minutes. It has
a frequency range from 250 MHz till 345 MHz. The
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differences in the emission are due to changes in
electron density and known as moving burst while
Figure 7 showed that the Type V burst occurred on
9th August 2011 which also associated with solar
flares. The duration of burst took about 7 minutes
and has a frequency range from 180 MHz to 870
MHz .
IV. CONCLUSION
In this project, We also want to highlight that
Malaysia has potential to focus on solar monitoring
of solar radio emission to get good data and will
focus on optimization and performance evaluation
data. This show that the importance of LPDA and e-
CALLISTO software in determining the solar radio
burst types as the Radio Flux Density have been
used to determine the frequency, duration and
intensity of the burst. Moreover, for the next project,
we focus on finding the potentiality the dynamic
optimization of an array’s of antenna and increased
the power output under a non-fault conditions
instead only focusing on mitigations of fault
conditions. Lastly, to monitor the system such as the
accuracy of measurements, sampling rate and
protocols in communication system involve.We
hope this project will be sufficient in reducing the
additional cost for antenna’s set up and sensing
system thus become common in the future.
ACKNOWLEDGEMENT
We are grateful to CALLISTO network ,
NOAA and SWPC make their data available online.
Special thanks to the National Space Agency and the
National Space Centre for giving us a site to set up
this project and support this project. Solar Burst
monitoring is a project of cooperation between the
Institute of Astronomy, ETH Zurich, and FHNW
Windisch, Switzerland, MARA University of
Technology and University of Malaya. This paper
also used NOAA Space Weather Prediction Centre
(SWPC) for the solar radio flux data for comparison
purpose. The research is a part of an initiative of the
International Space Weather Initiative (ISWI)
Program.

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 Back to Contents

Monitoring the level of Light Pollution and its Impact

on Astronomical Bodies Naked-Eye Visibility Range
in Selected Areas in Malaysia using the Sky Quality
Meter

M. S. Faid
Academy of Contemporary Islamic Studies Nurulhazwani Husien
MARA Technology University Faculty of Applied Sciences
Selangor, Malaysia MARA Technology University
syazwaned@siswa.um.edu.my Selangor, Malaysia
hazwani_husien21@yahoo.com
N. N. M. Shariff
Academy of Contemporary Islamic Studies M..O. Ali
MARA Technology University Faculty of Applied Sciences
Selangor, Malaysia MARA Technology University
nnmsza@salam.uitm.edu.my Selangor, Malaysia
marhanaomarali@gmail.com
Z. S. Hamidi
Faculty of Applied Sciences N. H. Zainol
MARA Technology University Faculty of Applied Sciences
Selangor, Malaysia MARA Technology University
zetysh@salam.uitm.edu.my Selangor, Malaysia
hidayahnur153@yahoo.com

S. N. U Sabri
Faculty of Applied Sciences
MARA Technology University
Selangor, Malaysia
sitinurumairah@yahoo.com

Abstract— Light pollution is an anthropogenic by-product of
modern civilization and heavy economical activity, sourced from
artificial light. In addition of its detrimental impact on human, and
ecology, light pollution brightens the night sky, limiting the range
of visible astronomical bodies detected by naked-eye. Since it is
becoming a global concern for astronomers, the level of light
pollution needs to be monitored to study its mark on the
astronomical data. Using Sky Quality Meter in the period of 5
months, we investigated the links between city population and its
vicinity from the city center towards the profile of the night sky
and the limiting magnitude of the naked eye. We eliminate the data
factored by clouds and moon brightness on account of it has an
adverse effect on sky brightness that could disrupt research on
light pollution. From the result, we can see population and location
distance from the city as major variables of light pollution, as
Kuala Lumpur, a city center sky is 5 times brighter than Teluk
Kemang, a suburban sky. Some recommendations in reducing the
effect of light pollution will be also discussed.
Keywords— anthropogenic pollution, light pollution, population,
night sky brightness, limiting magnitude
I. Introduction
One of the massive downfalls of the modern civilization is
the alteration of the natural environment, which include
ambient light alteration in the night sky. The man-made light,
or artificial light produces a sky glow, that scattered vertically,
then returned back into our sky by the atmosphere, making the
sky brighter and disrupts the suppose night sky ambient. This
phenomenon classified as one the human pollution towards the
environment and it is called light pollution [1].
Increase in human population density in a certain location
parallels with growth in economic and social infrastructure.
However, this unstoppable economic growth and population
development crops a massive light output through their street

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light and giant building spotlight that is directly proportional to with population, courtesy of Jurij Stare1 which is from the night
the light pollution [2]. This trends keeps deteriorating, without time radiance composite images using Visible Infrared Imaging
people realizing it could damage the environment and the health Radiometer Suite (VIIRS) Day/Night Band (DNB) produced by
of living things [3]. The truth is people find other issue more
the Earth Observation Group, NOAA National Geophysical
important although they concerned about the environment [4] .
Data Centre. As you can see from the map, Kuala Lumpur is
In terms of astronomy, the ground-observable astronomical located at the center of the city, with a population of 1,674, 621
bodies in the sky are determined by the contrast of these bodies people in an area of 242.7 km2, meaning it has the density of
with the night sky brightness [5]. The human eye has a certain
6900 inh/km2. While Teluk Kemang is located just at the 24 km
contrast threshold in detecting a dim celestial object in the sky
[6]. The detection of celestial object on a certain night sky is from the city center Port Dickson, with a population of 115 361
quantified as Bortle scale. A highly polluted sky with low in an area of 575.76 km2, indicates it has the density of 200.4
magnitude of sky brightness will lower the amount of celestial inh/km2. To monitor the overall light pollution, the
object visible to both naked and optical aid observation. This measurement of night sky brightness is taken in the period of 5
make light pollution is the major concerns of astronomers months, from August to December.
considering its effect on ground based observation especially
on optical and radio observation [7]. Therefore, it is an utmost
importance to monitor the light pollution level to stress out its
mark on astronomical data. According to the Walker Law, the
night sky brightness varies from one location to another
location, depends on the element of population, economic
activity and location distance from the nucleus of the population
[2]. A lowly populated area has a high viewing chance of
multiple astronomical bodies compared to the heavily dense
area. Concerning about this problem, we examine the character
of night sky brightness in selected areas in Malaysia. The
purpose of the examination is to study the magnitude of sky
brightness from different location profiles and to determine the
amount of celestial objects in the spectrum of naked eye
visibility in respect to the locations. Since the zenith sky
brightness signify the level of light pollution at that particular Figure 1. Irradiance Mapping of Kuala Lumpur and
Teluk Kemang
location, we can see the pattern of light pollution from two
different location profile. Ten nights of hourly data are taken per month in
Kuala Lumpur as heavy population traffic and close proximity
II. METHODOLOGY
to city suggest an inconsistency in sky magnitude, thus longer
A. Instrument hours of monitoring are needed for calibration to yield the
In this study, we will use SQM to determine the sky actual night sky brightness data. On the other hand, single night
brightness of the night sky. The Sky Quality Meter (SQM) is a per month is enough to represent the night sky brightness in
pocket device, to evaluate the sky brightness in the unit of Teluk Kemang, since it has a far distance from the city nucleus
mag/sec2 developed by Unihedron. SQM use a light intensity of and dormant human activity.
frequency detector, which then convert the output in digital Besides site distance from the city and its population
LED reading. The sensor is covered by a near-infrared blocking density, there a few variables that could deviate the magnitude
filter to make sure the brightness reading is on the visible reading from the actual sky brightness. These variables occur
wavelength spectrum. naturally to in any place in the world, namely the amount of
cloud in the sky and the brightness of the Moon. Considering
B. Site Survey Malaysia climatology and the moon brightness, we expected the
data to be fluctuated throughout measurement period. However,
In this study, we stationed the SQM in two locations this data can be calibrated with a series of step.
that have a different site profile in terms of population density
and its vicinity from the city center. These locations are C. The Sky Brightness Fluctuation from Cloud Cover Amount
classified as urban and suburban site, named Kuala Lumpur and
Teluk Kemang respectively, and been pinpointed on the map by One of the important aspects that could affect the sky
white mark. Figure 1 demonstrates the radiance map layered brightness is the amount of cloud cover. In the case of Malaysia,

1
www.lightpollutionmap.info

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the magnitude inconsistency of sky brightness is the result of

the natural climatology of cloud in Malaysia which have a 65 -
III. RESULTS
95 percent amount of cloud cover in the sky throughout the
year [8]. An overcast sky has a massive impact on the brightness
of the night sky ranging from 3 to 18 times darker than clear A. Light Pollution Data
sky depending on the location profile. The high reflectivity of Table 1. Sky Brightness Throughout 5 Months
cloud reduces the amount of incoming solar radiation absorbed
by the Earth-atmosphere system by increasing the albedo. An
increase of cloud amount, will increase the albedo, in our cases
the sky brightness. We use the Okta Scale to study the effect of
the cloud amount to the brightness of the sky in Okta Scale in
8-point scale ranging from 0 (completely clear sky) to 8 (fully
covered sky). A study by Kocifaj and Solano Lamphar simulate
that distance plays an important part for night sky irradiance
due to cloud cover [9], and since Teluk Kemang is far from the The trends of the sky brightness in both stations throughout
city center for its night sky to be effected by the cloud, we do August until December are shown in Table 1. Cloud and
moonlight are the major factors for the fluctuation trend of the
not include the analysis of Teluk Kemang Okta Scale. graph. Malaysia was struck by a massive haze by November
and September but the effect of haze can be accounted as same
D. Effect of Moon Phase on Sky Brightness as the effect of cloud cover. Both suburban and urban sites
indicate a stable difference between both of them, with sky
After the effect of the cloud, the Moon is the highest natural brightness 2 to 4 magnitudes brighter relative to the suburban
site, under the same month and the same meteorological
contributor of the sky brightness. Jason formulated that the conditions. At a glance, we can agree that the population and
moon scattered radiation can influences the night sky brightness their artificial light play a major explanation of the difference
up to 7 magnitude difference [10] which when full moon at its in magnitude, evidently shows that it is the cause light
maximum brightness. A moon phases more than 0.5 in has a pollution.
long hour regime in the night sky while the full moon Table 2. Sky Brightness Data
(phases>0.9) is above the horizon all night. In this study, we
will examine the magnitude reading of the night sky that has the Location Raw Average Standard
(Name) Data Deviation
lowest yield of sky brightness from average magnitude reading
Urban (KL) 50 16.19 0.45
and eliminate the data that show a clear influence of moon Suburban 5 19.30 0.78
brightness, when moon phase > 0.5. (TK)
Total 55 16.20 0.91
E. Naked Eye Limiting Magnitude

By eliminating the data affected by cloud cover and moon
phases, we then can obtain to actual yield of night sky
brightness on that particular location. The difference pattern of
night sky brightness at both location is then determined and the
naked-eye range of visible astronomical bodies. The
determination of the visible celestial object by the naked eye is
expressed in the log of the night sky brightness magnitude (m)
with formula [11] derived from Knoll, where NELM is the
naked eye limiting magnitude.
Since August 2015 until December 2015, a total of 55 raw
data from Teluk Kemang and Kuala Lumpur. Of the Sky
Brightness data collected, 50 data came from urban station
Kuala Lumpur, while the rest is from suburban station Teluk
Kemang. Table 2 presents the combined statistic. The total data
average is 16.2. As mentioned before, the sky brightness at the
urban location show a lower average magnitude, therefore the
sky brightness is higher or brighter than suburban location. The
mean difference of magnitude from urban location Kuala
Lumpur, with average 16.19 and suburban location Teluk
Kemang, with average 19.30 is 3.10307.

NELM = 7.93-5 x log (104.316-(m/5) + 1 (1)

From this formula we can predict the visible object in the

sky theoretically in respect of the distinction of both site
profiles. The prediction is based on the Bortle Scale theory,
relevant to the location characteristic

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The altitude of the moon during night depends on the phases

of the moon. During the highest phases, or full moon, the moon
altitude is always above the horizon throughout the night,
making sky brightness data collection is not ideal. Table 4
exhibits that 4 of our data was clearly affected by the full moon,
bringing a massive 2 magnitude difference in brightness from
the lowest count of sky brightness, 17.78, or 6.5 times brighter.
In early September until mid-November, Malaysia climatology
is being stricken by the terrible haze that obstructs optical depth
of seeing. The aerosol particles contained in the haze scattered
and absorb the artificial light making our sky brighter. This
Figure 2. Relative Frequency of Brightness Magnitude
explains why data 5-10 have magnitude less than 16 even
This implies the urban location Kuala Lumpur is 17 times though it is not at the full moon. The effect of haze, at the
brighter than rural location Teluk Kemang.2 The combined maximum Air Pollution Index has contributed 3.52 differences
histogram of Night Sky Brightness recorded in Figure 2. Since of magnitude or 25 times brighter than the normal sky.
data from suburban location Teluk Kemang is a lot less than
data from urban location Kuala Lumpur, it is being scaled so
that it is comparable relative. The largest difference of sky Table 4. Sky Brightness & Moon Phases
brightness in magnitude from urban location and suburban is 6
mag /sec2 or 251 brighter in observed luminosity. The highest No Mag Moon Phases
frequency at urban location Kuala Lumpur is around 16 1
mag/sec2, while at the suburban location Teluk Kemang is 19 15.97 0.99
mag/sec2. Both of these values are affected by the natural 2 15.09 0.98
climatology of Malaysia that has a high amount of cloud cover 3 15.16 0.97
in the sky throughout the year.
4 15.97 0.94
5 15.78 0.27
B. Cloud Cover Effect 6 14.26 0.24
7 14.55 0.16
Table 3. Average Magnitude over Okta Scales 8 15.37 0.09
9 14.55 0.06
10 15.21 0.02

D. Naked-Eye Limiting Magnitude

The Okta relationship with night sky brightness is being
portrayed is Table 3. At lower magnitude, which less than 17,
the data is densely distributed at 6-8 Okta Scale, while at
magnitude higher than 17, we can see the data sparsely
dispersed in 2-5 Okta Scale. The lowest value of sky brightness
is 17.78 on the Okta Scale 2 or 31 percentage of cloud cover. A
full clouds cover in the sky will contribute around 1.62
difference in sky brightness or 4.4 brighter than cloudless sky.
From a total of 55 data of sky brightness, a few data with
magnitude less than 16 come to our attention.
By studying the natural phenomenon can that affect the sky
brightness, at a normal percentage of cloud cover and
neglecting the data at moon phases larger than 0.5, we can agree
that 17.59 is the average brightness of the normal sky at urban
location Kuala Lumpur and 19.30068649 is the average
brightness of the normal sky is suburban location Teluk
Kemang, portrayed in Table 5. This implies that the night sky
in Kuala Lumpur is 5 times brighter than the night sky in Teluk
Kemang. The brightness of the sky can affect the limiting
amount of celestial object brightness visible in that particular
sky, or Naked Eye Limiting Magnitude (NELM).

C. Moon Phase Effect

2
Magnitude in brightness operates in log by the base of 2.512.
Therefore, the difference in mag, x, refers to flux ration of
2.512

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Table 5. Magnitude of Brightness and NELM wavelengths shorter than 540, since smaller wavelength in that
spectrum has an inimical effect on human and animal health.
Magnitude Milky Astronomical ACKNOWLEDGMENT
and Way Object and
Standard Constellations This work was supported by 600-RMI/RAGS 5/3
Sites Deviation NELM (121/2014) and Kementerian Pengajian Tinggi Malaysia.
Not The Pleiades Special thanks to the Jurij Stare of www.lightpollutionmap.info
Visible Cluster is and the NOAA National Geophysical Data Center for providing
at all visible, but
very few other thematic map of night time irradiance. Also credit to Malaysia
objects can be Department of Statistic for population density data and Permata
detected. The Pintar Observatory UKM for atmospheric extinction
constellation is observation and moon brightness data.
dimmer and
Kuala lack of main REFERENCES
Lumpur 17.59/0.92 3.78 star
Not The Pleiades [1] T. W. Davies, J. Bennie, R. Inger, and K. J. Gaston, “Artificial light
Visible Cluster is the alters natural regimes of night-time sky brightness,” Sci. Rep., vol.
at all only object 3, p. 1722, 2013.
visible to all [2] M. F. Walker, “THE EFFECTS OF URBAN LIGHTING ON THE
except for BRIGHTNESS OF THE NIGHT SKY,” Publ. Astron. Soc. Pacific,
experience vol. 89, no. June, pp. 405–409, 1977.
observer. Only [3] P. Cinzano and C. D. Elvidge, “Night sky brightness at sites from
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constellation is 353, no. 4, pp. 1107–1116, 2004.
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Teluk and they are S. Faid, “Creating Awareness on Light Pollution’ (CALP) Project as
Kemang 19.288/0.70 4.98 missing star. a Platform in Advancing Secondary Science Education,” in
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Seville. Spain., 2015.
[5] Bradley E. Schaefer, “Astronomy and the limits of vision,” Vistas
IV. Discussion & Conclusion Astron., vol. 36, pp. 311–361, 1993.
[6] A. Crumey, “Human contrast threshold and astronomical visibility,”
After the elimination of natural contributors of night sky Mon. Not. R. Astron. Soc., vol. 442, no. 3, pp. 2600–2619, 2014.
brightness, we can see the toll of artificial light in observing [7] Z. S. Hamidi, Z. Z. Abidin, Z. A. Ibrahim, and N. N. M. Shariff,
celestial objects in the sky. Kuala Lumpur sky, the site that has “Effect of light pollution on night sky limiting magnitude and sky
quality in selected areas in Malaysia,” Sustain. Energy Environ.
denser population and located in the city center is heavily (ISESEE), 2011 3rd Int. Symp. Exhib., no. June, pp. 233–235, 2011.
polluted with a magnitude value of 17.59 mag⁄sec and 3.78 [8] J. A. Engel-Cox, N. L. Nair, and J. L. Ford, “Evaluation of Solar
naked-eye limiting magnitude, are 5 times brighter than Teluk and Meteorological Data Relevant to Solar Energy Technology
Kemang which has a brightness of 19.28 mag⁄sec and 4.98 Performance in Malaysia,” J. Sustain. Energy Environ., vol. 3, pp.
naked-eye limiting magnitude. 115–124, 2012.
[9] M. K. H. A. S. Lamphar, “Quantitative analysis of night skyglow
The light pollution level in Teluk Kemang starting to amplification under cloudy conditions,” Mon. Not. R. Astron. Soc.,
vol. 443, no. 4, pp. 3665–3674, 2014.
worrisome. Teluk Kemang has been a hot observation spot
[10] C. S. J. Pun, C. W. So, W. Y. Leung, and C. F. Wong,
since years back and numbers of new moon observation records “Contributions of artificial lighting sources on light pollution in
was achieved3. But with increasing human activity in its nearby Hong Kong measured through a night sky brightness monitoring
city Port Dickson and all over the world, this location will be network,” J. Quant. Spectrosc. Radiat. Transf., vol. 139, no. 2014,
example of many other locations that may someday no longer pp. 90–108, 2014.
viable for astronomical observation. The idea of maintaining [11] H. A. Knoll, R. Tousey, and E. O. Hulburt, “Visual Thresholds of
Steady Point Sources of Light in Fields of Brightness from Dark to
the night sculpture in the sky may not be well accepted by the Daylight,” J. Opt. Soc. Am., vol. 36, no. 8, pp. 480–482, 1946.
vast dimension of human society, since the impetus of humanity
is driven by industrial expedience and the economy, but we
regard the idea of conserving mortal well-being and ecosystem
stability is an idea shared by all. Attention concerning light
pollution regulation and policy should be put on the highest
priority since a rapid increase of artificial light every year
endangering all living things. Such simple initiative that can be
implemented is by introducing the dark sky location
specifically for astronomical observation and nocturnal animal
activity, with a minimum distance of 7 km is good enough to
conserve the night sky natural brightness. A more dramatic
action is by proposing a total ban of man-made light at

3
Youngest Moon Age and Smallest Elongation. For more
info, see http://www.icoproject.org/record.html

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Solar Radio Bursts Detected By CALLISTO System

And Their Related Events
Nurulhazwani Husien N.H. Zainol
Faculty of Applied Sciences Faculty of Applied Sciences
MARA Technology University MARA Technology University
Selangor, Malaysia Selangor, Malaysia
hazwani_husien21@yahoo.com hidayahnur153@yahoo.com

Z.S. Hamidi S.N.U. Sabri

Faculty of Applied Sciences Faculty of Applied Sciences
MARA Technology University MARA Technology University
Selangor, Malaysia Selangor, Malaysia
zetysh@salam.uitm.edu.my sitinurumairah@yahoo.com

N.N.M.Shariff M.S. Faid

Academy of Contemporary Islamic Studies Academy of Contemporary Islamic Studies
MARA Technology University MARA Technology University
Selangor, Malaysia Selangor, Malaysia
nnmsza@salam.uitm.edu.my syazwaned@siswa.um.edu.my

M.O. Ali C. Montsein

Faculty of Applied Sciences Institute of Astronomy, Wolfgang-Pauli-Str 27
MARA Technology University 8093 Zurich
Selangor, Malaysia Switzerland
marhanaomarali@gmail.com monstein@astro.phys.ethz.eh

Abstract --- The solar radio bursts are the results of solar flares Keywords---Sun, solar flares, solar radio bursts,
take place on the surface of the Sun. Some of them could reach CALLISTO
the surface of the Earth and can be detected by the ground
base antenna. The CALLISTO system is used to interpret the
radio bursts that have been detected by the antenna before the
results appeared on the computer’s screen. The CALLISTO
system consists of software and hardware with the aim to
observe the solar radio emission for astronomical science. I. INTRODUCTION
There are five types of solar radio bursts that have been The Sun can be considered as our nearest star which has
classified based on their characteristics since 1960s. However, distance 149.6 million km from our Earth. It acts as the
all these types of solar radio bursts have their own related
events due to different process before their formations. Based
center of our solar system which allowed all the planets to
on the result, it shows that all related events of the bursts such move around it on their orbits in anticlockwise direction.
as Coronal Mass Ejections, prominences and flares occurred The Sun consist of three types of major layers; core,
several minutes or hours before the bursts appeared on the radiative zone, convective zone and solar atmosphere which
computer’s screen.
include photosphere, chromosphere and corona.

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Fig. 1. The structure of the Sun.
Usually the all activities of the Sun such as solar flare,
prominence and coronal mass ejection taking place on the
corona. Unlike the Earth, the Sun contains all gaseous, there
is no solid surface of the Sun. The surface of the Sun also
covered by a magnetic field which are very complex. It is
reported that the magnetic reconnection on the Sun will lead
energy release that contributes to all activities on the surface
of the Sun.
The magnetic reconnection is the process in which the
magnetic lines of force break and re-join into a lower-
energy configuration, which magnetic energy is converted
to the plasma kinetic energy[1]. This process accelerates the
particles which initiated the solar activity. As the particles
accelerates, it will produce the solar flare which leads to
solar radio burst that can be detected on the surface of the
Earth by their frequencies using the antenna. The successful
launched Yohkoh satellite gives the evidence of the
magnetic reconnection take place on the Sun. Yohkoh
satellite is the Japan technology launched to the space on
August 30, 1991 by the Institute of Space and Astronautical
Science (ISAS) from Kagoshima Space Center and operated
until December 14, 2001 even the goal of this satellite was
only for three years. It has acquired about 6 thousand
snapshots of the soft X-ray images and about 2800 high
energy solar flares. This gives the advantages for the
astrophysicist and upcoming generations to do research and
publish journal based on these photos. The photos provide
indisputable proof of magnetic reconnection occurs on the
Surface of the Sun. Yohkoh satellite was design with the
specific instruments which are the Hard X-ray Telescope
(HXT), and Bent Crystal Spectrometer (BSC) [2].
During the flares, energy stored in magnetic fields within
active centers is rapidly converted into thermal, kinetic and
mechanical energies. Although Coronal Mass Ejections
(CMEs) and solar flares are two different events, it could
not be denied that CME occur during large flares. Energy
partition of both events at the same time also has been
studied. The CMEs is thought to explode just before the
eruption of solar flares. However, in some situation the
CMEs occurred after the production of solar flares. Both
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events are associated with high energy particles and depend
on the magnetic of the Sun. These activities emit the
plasma particles which propagating and produce solar radio
bursts that can be detected by antenna from the surface of
the Earth.
Fig. 2. The complex magnetic field of the Sun.
There are five types of solar flares below a few hundred
MHz that have been stated since 1960s [3] which are Solar
Radio Burst Type (SRBT) I, SRBT II, SRBT III, SRBT IV
and SRBT V. These SRBT differ in their shape on
spectroscopy, frequencies and duration of the burst. Usually
the SRBT I is associated with solar storm, type II is
correlated with Coronal Mass Ejections events. Type III and
IV caused by solar flare and formation of new sunspot.
Meanwhile type V, is very rare, but normally can be seen
after type III formation [4]. However, it is reported that
there are several types of solar radio burst which cannot be
classified due to the complexity of the activity of the Sun.
II. SOLAR RADIO BURST
The activity of the Sun usually emits the plasma from
the corona. This plasma may reach the surface of the Earth
that may cause the disturbance in the magnetic field of the
Earth. It is important to understand the solar radio bursts
because these can disrupt the wireless communications,
satellites damages, produce destructive surges on power
grids and endanger astronauts [5]. The activity of Sun
started after the process of the magnetic reconnection on the
surface of the Sun which leads to solar flares. Solar flare is a
brief eruption of intense high-energy radiation from the
Sun’s surface. It is more dangerous if it is directed towards
the Earth. The impact of solar flare that can be observed by
the naked eyes is aurora phenomenon which usually takes
place in the Southern and Northern hemisphere, causes by
the collisions between the electrically charged particle
normally plasma released by the Sun with the gases inside
the Earth’s atmosphere such as oxygen and nitrogen.
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During the solar flare event, the radio wave is produced and Table 1. The characteristics of solar radio burst (Credit to
some of them propagate toward the Earth. The radio waves IPS AUSTRALIA).
have the longest wavelength and the lowest frequency in the
electromagnetic spectrum. The wavelength of the radio
waves can be small as a football until larger than our planet.
It was first discovered by Heinrich Hertz late 1880s. It is
believed that all the astronomical objects like planets
produce radio waves if they have a changing magnetic field.
The radio astronomy instrument called WAVES on the
WIND spacecraft has recorded the data of radio waves from
the astronomical object, including the radio waves from the
Sun’s corona and other planets in our solar system.

The figure below shows the data recorded by the WIND

spacecraft in a day. The variation emission of waves was
obtained from the Sun’s radio burst, the Earth, and even
from Jupiter’s ionosphere whose wavelength measure about
fifteen meters in length. The right part of the graph shows
the radio burst from the Sun caused by electrons that ejected
into the space during the solar flare events which moving at
20% of the speed of light.

Fig. 4. The schematic diagram of solar radio burst in the

graph of frequency versus time.

Fig. 3. The data of radio emission recorded by WIND
spacecraft (Photo credit to NASA/GSFC Wind Waves
Michael L. Kaiser).
The radio waves of the Sun, also known as solar radio burst
has been classified into different classes for more than 40
years [6], [7], [8]. The main observational parameters of
these classified solar radio bursts are identified by their
bandwidth, frequency drift rate and duration of the
emissions [9]. The table 1 below shows the characteristics
of each type I, II, III, IV and V burst and the figure 4 below
shows the formation of each radio burst that could be obtain
in the computer screen.
III. METHODOLOGY
The radio wave of the burst can be detected by the
antenna on the ground base. Most of the data acquire in this
paper obtain from the CALLISTO website which is used the
antenna in the first stage. It is the worldwide network that
aims to observe the solar radio emission for astronomical
science with the antenna covers frequency range 45 – 870
MHz [10]. The idea of CALLISTO project is to construct a
simple and low-cost instrument, which can be sited in places
of low infrastructure or remote locations [11] with the aim
to monitor the 24 hours solar activity per day [10]. It is led
by the Swiss Federal Institute of Technology Zurich (ETH
Zurich) which work up collaborations with local host
institutions, which operates e-CALLISTO Solar Radio
Telescope with currently more than 166 instruments in more

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than 66 locations including Switzerland, Belgium, Egypt IV. RESULT AND DISCUSSION
and others.

The CALLISTO spectrometer [12] was built in the

framework of IHY2007(International Heliophysic Year) and
the ISWI by former Radio and Plasma Physics Group
(Principal Investigator Christian Monstein) at Institute for
Astronomy, ETH Zurich [13]. The system contains both
hardware and software. The radio burst detected by the
antenna before interpreted through the software which
provides several output files. The most important are the
data files, which use the Flexible Image Transport System
(FITS) file format [10]. The figure 6 below showed the
process of the CALLISTO started when the solar radio burst
detected by the antenna, then the data is interpreted in the
computer and appeared on the screen. The data then
gathered in the database through the internet and can be
reach through the website http://www.e-callisto.org/.

Fig. 7. The solar radio burst type I (a), II (b), III (c), IV (d)
and V (e).

All the above data are the different type of solar

Fig. 5. The antenna built in Finland (Photo credit to
CALLISTO website).
radio bursts that have different shapes, intensity and
frequency appeared on the spectrograph. The data in figure
7 (a) occurred on 1st July 2014 is the SRBT I. It has the
shortest period of occurrence compared the other events (b),
(c), (d), and (e). They also associated with different
phenomena occurred before they are started to appear on the
spectrograph. For example the SRBT II occurred on 24th
August 2014 observed in figure 7 (b), it was associated
with a Coronal Mass Ejections event (CMEs) which started
at 12:06 UT with perfect CMEs emerged at 12:14 UT on the
same day. This CMEs event (figure 8 (f)) recorded by
NASA’s Solar Dynamics Observatory. The burst on figure 7
(c), which is SRBT III occurred on 13th April 2015) also
associated with CMEs events (figure 8 (g)) recorded by
SOHO on the same day at 00:12 UT several hours before
complex SRBT III formed.

Fig. 6. The process takes place in CALLISTO framework.

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Fig. 8. The related events of solar radio bursts type II, III,
IV and V.
The event in figure 7 (d) appeared on 2nd April 2014 was
SRBT IV with strong ultraviolet blast recorded by NASA’s
Solar Dynamics Observatory. This extreme ultraviolet blast
(refer to figure 8 (h)) producing the huge M6-class solar
flare. This M class flare are medium sized that can cause
brief radio blackouts which affected the Earth’s polar
region. It is reported during the SRBT V on 15 th May 2015
(figure 7 (e)), the “hedgerow prominence” catches by the
space telescope with amazing things ; tadpole-shaped
plumes that float up from the base of the prominence,
narrow streams of plasma that descend from the top like
waterfalls and swirls and vortices that resemble van Gogh’s
Starry Night (refer to figure 8 (i)).
V. CONCLUSION
There are five types of solar radio burst that has been
classified based on their own characteristics. However, there
are several types that cannot be detected as the activity of
the Sun is not static or various. All these types of solar radio
burst is occurred due to magnetic reconnection process. All
the events have different related phenomena. The solar radio
burst is the effect of particles propagating during solar flare
which some of them may reach the Earth and can be
detected using an antenna.
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ACKNOWLEDGMENT
We are grateful to CALLISTO network, STEREO, LASCO,
SDO/AIA, NOAA, SOHO, SolarMonitor and SWPC make
their data available online. This work was partially
supported by the 600-RMI/FRGS 5/3 (135/2014) and 600-
RMI/RAGS 5/3 (121/2014) UiTM grants and Kementerian
Pengajian Tinggi Malaysia. Special thanks to the National
Space Agency and the National Space Centre for giving us a
site to set up this project and support this project. Solar
burst monitoring is a project of cooperation between the
Institute of Astronomy, ETH Zurich, and FHNW Windisch,
Switzerland, Universiti Teknologi MARA and University of
Malaya. This paper also used NOAA Space Weather
Prediction Centre (SWPC) for the sunspot, radio flux and
solar flare data for comparison purpose.
REFERENCES
[1] Hamidi, Z., et al. Magnetic Reconnection of Solar Flare
Detected by Solar Radio Burst Type III. in Journal of Physics:
Conference Series. 2014. IOP Publishing.
[2] Martens, P., Yohkoh-SXT Observations of reconnection.
Advances in Space Research, 2003. 32(6): p. 905-916.
[3] Wild, J., S. Smerd, and A. Weiss, Solar bursts. Annual Review
of Astronomy and Astrophysics, 1963. 1: p. 291.
[4] Hamidi, Z. and N. Shariff. Evaluation of signal to noise ratio
(SNR) of log periodic dipole antenna (LPDA). in Business
Engineering and Industrial Applications Colloquium (BEIAC),
2013 IEEE. 2013. IEEE.
[5] Zavvari, A., et al., CALLISTO Radio Spectrometer Construction
at Universiti Kebangsaan Malaysia. IEEE Antennas and
Propagation Magazine, 2014. 56(2): p. 278-288.
[6] Kundu, M.R., Solar radio astronomy. New York: Interscience
Publication, 1965, 1965. 1.
[7] McLean, D.J. and N.R. Labrum, Solar radiophysics: Studies of
emission from the sun at metre wavelengths. 1985.
[8] Benz, A.O., Plasma Astrophysics. Kinetic process in solar and
stellar coronae. 1993, Kluwer Academic Publishers, Dordrecht,
Holland.
[9] Raulin, J.-P. and A. Pacini, Solar radio emissions. Advances in
Space Research, 2005. 35(5): p. 739-754.
[10] Zavvari, A., et al., Analysis of radio astronomy bands using
CALLISTO spectrometer at Malaysia-UKM station.
Experimental Astronomy, 2015: p. 1-11.
[11] Kallunki, J., M. Uunila, and C. Monstein, Callisto radio
spectrometer for observing the sun—Metsähovi Radio
Observatory joins the worldwide observing network. Aerospace
and Electronic Systems Magazine, IEEE, 2013. 28(8): p. 5-9.
[12] Benz, A.O., C. Monstein, and H. Meyer, CALLISTO–a new
concept for solar radio spectrometers. Solar Physics, 2005.
226(1): p. 143-151.
[13] Russu, A., et al. A year of operation of Melibea e-Callisto Solar
Radio Telescope. in Journal of Physics: Conference Series.
2015. IOP Publishing.
 Back to Contents

Simulation Modeling of Sewing Process for

Evaluation of Production Schedule in Smart Factory
Sooyoung Moon, Sungjoo Kang, Jaeho Jeon, and Ingeol Chun*
CPS Research Section
Embedded SW Research Department
SW·Content Research Laboratory
Electronics and Telecommunications Research Institute
Daejeon, Korea
{symoon, sjkang, jeonjaeho11, igchun}@etri.re.kr

*Corresponding Author: igchun@etri.re.kr

Abstract— We should complete customized products in generate customized products. Other characteristics of a smart
specified time to implement smart factories. For this simulation factory are as follows [6-8].
can work as a tool for validating production schedule. We
propose in the manuscript a simulation model for sewing 1) Each product has a unique ID. 2) Each product passes a
machine and modeling tool for simulation of sewing process. different sequence of processes until all required processes are
completed. 3) Products and facilities communicate with each
Keywords—smart factory; industry 4.0; sewing process; other to determine each product’s production schedule.
modeling; simulation Therefore, facilities in the smart factories should be modeled
differently than facilities in existing factories.
I. INTRODUCTION
B. Sewing machine model (Structural model)
Industrie 4.0, proposed by DFKI [1], is defined as the 4th
industrial revolution based on Internet-of-Things (IoT) [2], We defined a sewing machine model for simulating sewing
cyber-physical systems (CPS) [3], and Internet-of-Services machine processes. Figure 1 shows the structure of the
(IoS) [4]. One of the characteristics of Industrie 4.0 is that it proposed sewing machine model.
includes smart factories capable of generating customized
products for customers. One of the important issues to
implement a smart factory is to complete and deliver
customized products to customers within specified time. For
this, we need an efficient scheduling algorithm [5].
It becomes more and more sophisticated work to validate a
production schedule in factories. Simulation is a tool for
validating a production schedule and changing it if needed. For
using simulation, we need appropriate simulation models. In
this paper, we propose a sewing machine model for simulating
sewing process. The proposed sewing machine model includes
sensing, sewing, forwarding and control functions as
submodels. Also, we propose a modeling tool that includes the
proposed model. The proposed modeling tool manages a model
library that can be continuously extended for sewing process
simulation. Further, it can automatically generate and build
source codes for simulation models. Therefore, users can easily
develop their own models and simulate them. Fig. 1. Sewing machine model (Structural model)

II. SIMULATION MODEL FOR SEWING PROCESS

A. Motivation The sewing machine model was defined as a structural

model consisting of four component models (Sensor / Work /
One of the distinguishing features of smart factories Forward / Control). Sensor model detects raw material or semi-
compared to existing factories is that the smart factories finished products arrived at the sewing machine. Work model

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performs sewing process for the arrived raw material or semi-

finished products. Forward model chooses the next forwarding
facility and passes the processed semi-finished product on the
selected next facility. Finally, Control model governs the
whole operations of the sewing machine.

C. Sensor model (Behavioral model)

Sensor model abstracts a sensor module that detects raw
material or semi-finished products arrived at the sewing
machine. Figure 2 illustrates the state transition diagram of the
sensor model.

Figure 3 Work model (Behavioral model)

Work model has 3 possible phases (Idle, Working,

Reporting). In Idle phase, it waits for a product to arrive at the
sewing machine. When an input is arrived through the port
In_Work_Command, the Work model moves to the Working
phase. It changes the properties of the arrived product in
Working phase and outputs the work result through the port
Out_Work_Report.

E. Forward model (Behavioral model)

Fig. 2. Sensor model (Behavioral model)
Forward model implements a variable process of a smart
factory by choosing the next forwarding facility for a semi-
finished product and delivers the product to the selected facility.
Figure 4 represents the state transition diagram of the Forward
Sensor model has 4 phases and moves from one phase to model.
another whenever state transition occurs. The Sensor model in
Init phase stores its current location and moves to the Sensing
phase. In Sensing phase the Sensor model periodically checks
whether semi-finished products has been arrived at the sewing
machine. If there is one, it goes to Detected phase. Otherwise,
it goes to Non-detected phase. In Detected phase the Sensor
model outputs the information of arrived product through the
port Out_Sensor_Detection and then returns to the Sensing
phase. In Non-detected phase it returns to the Sensing phase
after a predefined time.

D. Work model (Behavioral model)

Work model represents the sewing operation and changes
the properties of an arrived product. Figure 3 shows the state
transition diagram of the Work model.
Figure 4 Forward model (Behavioral model)

Forward model consists of 4 possible phases (Idle,

SelectNext, Forwarding, Reporting). It waits until the sewing
operation ends in Idle phase. When an input is arrived through
the port In_Forward_Command, the Forward model goes to the
SelectNext phase. In the SelectNext phase it chooses the next
forwarding facility based on the workload of candidate
facilities and then goes to the Forwarding phase. The
Forwarding model pass the semi-finished product to the
selected facility and moves to the Report phase. Finally, it
generates the output through the port Out_Forward_Report.

154

F. Control model (Behavioral model)
Control model manages the other submodels of the Sewing
machine model. Figure 5 shows the state transition diagram of
the Control model.
Figure 5 Control model (Behavioral model)
Control model has 4 possible phases (Sensing, Working,
Forwarding, Logging) that correspond to an operation cycle
(detection, sewing, sending, and recording) of a sewing
machine in a smart factory environment.
Control model in Sensing phase waits for an input from
Sensor model and goes to the Working phase when it receives
arrived product information through the port
In_Control_Detection. In Working phase it sends a work
command to the Work model through the port
Out_Control_WorkCommand. When the Control model
receives the forwarding result from the Forward model, it goes
to the Logging phase. In Logging phase, the Control model
records the processing result and returns to the Sensing phase.
III. MODELING TOOL FOR DEFINING SIMULATION MODELS
We have implemented a modeling tool that manages a
model library including the described Sewing machine model
[9]. Figure 6 shows a simulation scenario organized by using
the proposed modeling tool.
Figure 6 Simulation scenario by using modeling tool
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A user can easily add models such as sewing machine to a
simulation scenario by using the proposed modeling tool.
Further, the modeling tool automatically generate and build
source codes for the models to be executed by the simulator.
Therefore, the modeling tool support addition, deletion,
modification and reuse of simulation models in the model
library.
IV. CONCLUSION
We should complete and deliver personalized products to
customers within specified time to implement smart factories.
Whether we can complete the customized products in specified
time depends on the production schedule used. Simulation can
work as a tool for validating production schedule and changing
it if needed. In the manuscript we define a Sewing machine
model organizing a sewing process and a modeling tool. The
proposed model and modeling tool can be continuously
improved and extended.
ACKNOWLEDGMENT
This work was supported by the ICT R&D program of
MSIP/IITP. [R-20150505-000691, IoT-based CPS platform
technology for the integration of virtual-real manufacturing
facility]
REFERENCES
[1] DFKI - German Research Center for Artificial Intelligence.
http://www.dfki.de.
[2] J. Gubbi, R. Buyya, S. Marusic and M. Palaniswami, "Internet of Things
(IoT): A vision, architectural elements, and future directions," Future
Generation Comput. Syst., vol. 29, pp. 1645-1660, 2013.
[3] V. MAJSTOROVIĆ, J. MAČUŽIĆ, T. ŠIBALIJA and S. ŽIVKOVIĆ,
"CYBER-PHYSICAL MANUFACTURING SYSTEMS–
MANUFACTURING METROLOGY ASPECTS," Proceedings in
Manufacturing Systems, vol. 10, pp. 9-14, 2015.
[4] J. Cardoso, K. Voigt and M. Winkler, "Service engineering for the
internet of services," in Enterprise Information SystemsAnonymous
Springer, 2008, pp. 15-27.
[5] A. K. Gupta and A. I. Sivakumar, "Simulation based multiobjective
schedule optimization in semiconductor manufacturing," in Simulation
Conference, 2002. Proceedings of the Winter, 2002, pp. 1862-1870.
[6] A. Radziwon, A. Bilberg, M. Bogers and E. S. Madsen, "The Smart
Factory: Exploring adaptive and flexible manufacturing solutions,"
Procedia Engineering, vol. 69, pp. 1184-1190, 2014.
[7] Z. Detlef, "Smart Factory–Towards a Factory of Things, Technology
Initiative V Kaiserslautern, Germany, German Research Center for
Artificial Intelligence, DFKL. Kaiserslautern," Annual Reviews in
Control, vol. 34, pp. 129-138, 2010.
[8] D. Lucke, C. Constantinescu and E. Westkämper, "Smart Factory - A
Step towards the Next Generation of Manufacturing," pp. 115-118,
2008.
[9] H. Lee, I. Chun and W. Kim, "DVML: DEVS-Based Visual Modeling
Language for Hybrid Systems," vol. 256, pp. 122-127, 2011.

A Knowledge Management Framework for
Studying the Child Obesity
Raslapat Suteeca
College of Arts, Media and Technology
Chiang Mai University
Chiang Mai, Thailand 50200
Email: RASLAPATS@GMAIL.COM
Abstract—The problem of obesity in children is an important
problem because it could lead other disease. The major challenge
in the current childhood obesity prevention is the diversity
of information. Not all of the information is a valid medical
knowledge, such as some local belief. Therefore, applying the
invalid information to children often cause more harm than good.
In this work, we present a knowledge management framework
to collect and analyze the related knowledge about the children
obesity prevention. The process of this framework is based on
the knowledge creation theory.
I. I NTRODUCTION
Nowadays, obesity has become major regional and global
problems. World Health Organization (WHO) has explored the
world obesity state in 2006 and found that children under 5
years old or approximately 22 million children has weighted
over standard. In addition the study of Ladda Mausuwan
(2008) found that in Thailand children aged under 6 years
old has weight increased more than 40% from 5.8% between
1995 to 2001[1]. Obesity has become Thailand major problem.
There are several causes of childrens obesity both from chil-
dren themselves, namely, obesity at birth and external causes,
namely, parents nurturing condition. Apart from this, in some
area with local believes mentioning that obese children are
cuter or more adorable than those who are thinner. These are
several causes entailing childrens obesity which results in un-
healthy children. Solutions applied to solve obesity in children
have been collecting fostering procedures from experienced
parents or elderly and then propagating as appropriate.
Knowledge management is the process in collecting and
organizing data/information to create useful knowledge and
retain such knowledge in the organization. Disseminating
knowledge has shared similar methods as in distributing
knowledge on fostering children; therefore, it is reasonable
to apply knowledge management procedure in collecting and
organizing fostering procedures so it can be used to decrease
childrens obesity.
Saymore Paert has concluded constructionist learning as
follows: ”...inspired by the constructivist theory that individual
learners construct mental models in order to understand the
world around them”[2]. The concept of constructivism in
learning proposes that the student is the center of learning
where students use known information to acquire or discover
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Prompong Sugunnasil
College of Arts, Media and Technology
Chiang Mai University
Chiang Mai, Thailand 50200
Email: P.SUGUNNASIL@GMAIL.COM
more knowledge[3]. Students learn through participation in
project-based learning where they make connections between
different ideas and areas of knowledge facilitated by the
teacher through coaching rather than using lectures or step-
by-step guidance[3]. Furthermore, the constructionism holds
that learning can happen most effectively when people are
active in making tangible objects in the real world. In this
sense, constructionism is connected with experiential learning
and builds on Jean Piaget’s epistemological theory of construc-
tivism. The important aspects of constructionism theory is that
learning can occur anytime both in the classroom or outside
the classroom.
This research demonstrates knowledge management by us-
ing knowledge creation theory. Activities for each knowledge
base were determined. This research focuses on fostering pro-
cedures to prevent obesity in children and the study includes
local belief which can be either supported or argued. The
samples were parents- currently taking care of their children,
or experienced parents. In the next section literature reviews
will be presented in obesity in children and knowledge man-
agement to build up the ground comprehension and application
of knowledge management. Framework applied in this study
will also demonstrated afterward including details in each
activities to accomplish our purposes of study. Lastly, the
summary of research result and recommendations will be
presented.
II. L ITERATURE R EVIEW
This section mentions related research and other related
theory. Section II-A presents overall condition of obesity
including effects of obesity in children. Then, section II-B
provide the basic concept of the knowledge management
process applied in this study. Finally, in section II-C, the brief
detail of Bloom’s taxonomy is provided.
A. Obesity in Childhood
Obesity is a medical condition in wide range of gender and
age in which the body fat has accumulated to the level that
could have the negative effect on health[1][4]. The level of
obesity varies in different race. The criteria to determine the
obesity is body mass index (BMI)[5], a measurement obtained
by dividing a person’s weight by the square of the person’s

height. The Western people are considered to be obese when
their BMI is over 30 𝑘𝑔/𝑚2 . The BMI of within the range of
2530 𝑘𝑔/𝑚2 is defined as overweight. Obesity increases the
likelihood of other diseases such as heart disease, diabetes,
obstructive sleep apnea [4].
Normally, the obesity is caused by several reasons including
excessive food intake, lack of physical activity, and genetic
susceptibility. Despite the fact that there are a small number
of genetic, the evidence to support the view that some obese
people eat little yet gain weight due to a slow metabolism is
limited. Generally, the obese people have a higher degree of
energy expenditure compare to normal people, since they have
a large number of mass in the body[1]. Obesity can be caused
by genetic or external resulting from energy intakes is more
than energy outtakes. The rest energy has been transformed to
fat and retained in the body, if too much, one is facing with
obesity [1][4]
The common causes for childs obesity is the genetic factor
and environmental factors [6][7]. The environmental factors
can be economic and social condition[8], life style and cultural
environment [4], i.e., obese child is cuter and healthier [9], ef-
fects of advertisements on unhealthy products [10][7], mother
with obesity, inadequate exercise, consumption pattern [11],
parents educational level, i.e., less educated parents tend to
choose less appropriate food and activity suitable for children
than those of better educated parents [4]. The race also has
some influence over the status of obesity in children[12].
The Hispanic children has higher amount of obese children
then non-Hispanic children. Moreover, the Asian and Pacific
Islander children are the only group whose status is improved.
Advances in information technology has affected directly
to childrens behavior; for instance, behavior in television
watching and playing computer games and so on [10][13].
Based on Thai Children Health Report it is found that children
between 1-18 years old spend their times on watching televi-
sion everyday with the average number of hours of 2.35-5.51
hours per day. Based on Children and Youth Report (2004-
2005), it is found that elementary children takes 75.66 minutes
per day to be online and in 2006-2007, the number of minutes
online tends to increase to 108.89 minutes per day. In addition,
children between 6-10 years old play the Internet game the
most[8].
Puhl and Latners study found that 10-20 % of children with
obesity tend to be obese children and 40% of these children
would be obese teenagers. From these teenage group, 75-
80% would become obese adults, which can be concluded that
children with obesity tend to become adult with obesity[14].
Obesity can directly and indirectly affect children quality
of life, such as, study report, social adaptation as they can
be object of humiliation resulting in bad personality and
unhealthy emotions. Based on the studies mentioned, it can
be concluded that obesity is not adult sickness but starting
from childhood as there have been the accumulation of fat
continuously, adhering to blood vessel, heart, brain, lever, and
other organs all over the body. These cause several disease as
follows: hypertension, osteodystrophy, heart-related disease. In
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conclusion, obesity in children and adult is dangerous more
than perceived by the society [14][8][15].
B. Knowledge Management
Sustainable-successful organizations are organizations that
has continuously developed its efficient working process. One
factor of efficiency is knowledge, enhancing competitive ad-
vantage via building and maintaining intellectual capital and
efficient knowledge including applying systematic knowledge
management [16][17]; therefore, knowledge- imitable and
irreplaceable is the vital resource for the organization [18].
Nonaka has proposed dynamic model in building knowl-
edge, namely, knowledge feature created by socialization
process in individual level and organizational level[19]. In-
formation can be transformed to knowledge via individuals
interpretation [18]. Knowledge can be divided into 1) tacit
knowledge which is embedded in each individual by expe-
riencing, learning or talent. It is autonomous, cant be found
in manual, book, database or file [20][18] 2) explicit knowl-
edge refers to knowledge processed and stored systematically,
easy to attain/access and easy to use [21]. This knowledge
involves systematic database creation, reliable accessibility of
such database, easiness to use such information to present,
applicability of problem solving in case of similar incidents
[20].
Tacit knowledge and explicit knowledge can be changed
their status all the times which depends on situations requiring
new knowledge. Nonaka explains that knowledge is viral,
starting from individual, group, and organization consecu-
tively [19][22]. Knowledge can be created by socialization,
externalization, combination and internalization [19]. Social-
ization is the interaction between tacit knowledge and tacit
knowledge from individuals who have shared experiences or
activities. Learning in this step takes place by observation.
Externalization occurs when key knowledge from individual is
interpreted in the comprehensive format so it can be presented
to others; namely, documentation of such knowledge. Combi-
nation occurs when individual or group from different orga-
nizations -who own explicit knowledge- has participated in
activity together resulting more complex knowledge and more
systematized knowledge such as conferences, and seminars.
Internalization occurs when individual, group or organization
has adjusted and applied knowledge via learning by doing,
i.e., training, simulation, or experimentation [22].
C. Blooms Taxonomy
In the past academia and psychologists have tried to cre-
ate framework in prioritizing academic goals. The generally
accepted theory has been learning behavior by Bloom and
his associates. Taxonomy has divided brain working system
into 6 steps, from lowest to highest, as follows: 1)Remember-
ing 2)Understanding 3)Applying 4) Analyzing 5)Evaluating
6)Creating [23].
First, remembering refers to ability to recall, list, tell, and
name such as students can explain the meaning of theory.
Secondly, understanding refers to ability to interpret, provide

examples, conclude, refer such as students can explain the
theory. Third, applying refers to ability to put knowledge to
use, solve the problem such as students can use knowledge to
solve for certain problems. Fourth, analyzing refers to ability
to examine, critique, judge such as students can evaluate the
theory. Fifth, evaluation refers to ability to evaluate and lastly
creating refers to ability to design, plan, produce such as
students can create new theory which is different from the
old ones[24].
III. K NOWLEDGE MANAGEMENT FRAMEWORK TOWARD
OBESITY IN CHILDREN
This section would present architecture of knowledge man-
agement framework toward children with obesity by mention-
ing related activities in each knowledge base.
Based on literature review on knowledge management by
using knowledge creation theory found that transformation
of knowledge base must be equipped with adequate resource
in changing such knowledge[25]. Each knowledge base must
contain enough activities to be operated in order to entail
knowledge retention. In this study, the research team has
determined detailed activities in each base hoping to change
knowledge base by using Blooms technique. Keywords were
used in this research to stimulate learning and applying mul-
timedia to ensure fast and efficient communications, eliminate
the limitation of time and place. In addition, the application of
multimedia would stimulate remembering, and comprehension
in the long run; therefore, multimedia has been applied in
knowledge creation in each knowledge base.
The first step in knowledge creation is socialization. The
purpose of this step is to share and create tacit knowledge
via interactions among individual by exchanging experiences.
After exchanging, knowledge is created and developed to
be personal knowledge and then used to be personal pro-
cess. Therefore, to accomplish the activity goal on prevent-
ing obesity in children is to create comprehension on obe-
sity in children. In this regards, keywords in jogging the
memory, understanding like comprehends, converts, defends,
distinguishes, estimates, explains, extends, generalizes, gives
an example, infers, interprets, paraphrases, predicts, rewrites,
summarizes, translates were used via conversation, exchange
of knowledge, web board, live chat, community, and social
media. Fostering procedures were introduced including factors
involving fostering process hoping to develop to community
of practices (CoP) at last.
In the second step, externalization aims to create and
share tacit knowledge and disseminate to explicit knowledge-
from socialization stage. Externalization includes information
processing, and using information from valid source to create
database as per to related literature review. This involves
applying knowledge. Keywords comprises applies, changes,
computes, constructs, demonstrates, discovers, manipulates,
modifies, operates, predicts, prepares, produces, relates, shows,
solves, and uses as they reflect what have learned by the
learner. The key activities are creating media to publicize
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knowledge including efficient fostering procedures via web-
site, hyperlink, e-learning, movie clip, CAl, e-text and blog.
The third step- combination- aims to integrate knowledge
by re-examining knowledge from socialization and external-
ization stage to ensure the validity and reliability of effi-
cient fostering procedure. The analytical process must be
reasonable, and logical. Keyword used are analyzes, breaks
down, compares, contrasts, diagrams, deconstructs, differenti-
ates, discriminates, distinguishes, identifies, illustrates, infers,
outlines, relates, selects, and separates. It can be noted that
such keywords assisting in considering knowledge gained. In
addition, primary data collection via conversation were used to
construct statistical framework which can be used to analyze
obesity condition in children in selected area. Such statistical
data would connect each fostering procedure to childrens
characteristics. When accompanied together, this knowledge
would be used to be the content for media purpose which is
comprehensible by common locals. Each knowledge must be
either validated or argued by trusted data; if not, fundamental
statistical information must be presented as appropriate. Key
activities are info-graphic.
The last step -internalization- is the process by which
transforms explicit knowledge to tacit knowledge, namely,
utilizing knowledge and putting it to practice. Knowledge
user must create the new tacit knowledge which belongs
to himself/herself. Keywords used are categorizes, combines,
compiles, composes, creates, devises, designs, explains, gen-
erates, modifies, organizes, plans, rearranges, reconstructs,
relates, reorganizes, revises, rewrites, summarizes, tells, and
writes. This implies that this process involves making the
knowledge learned in to use whether it comes from reading
or watching from several sources, or via experimentation and
real practices which can be in the form of simulation or game.
IV. C ONCLUSION
This research has proposed knowledge management model
to collect and analyze knowledge on protection of children
obesity by determining activities for each knowledge base.
However, there are still several hindrances experienced in
accomplishing the process as follows:
∙ Knowledge categorizing: As knowledge gained from this
study are varied in terms of importance especially in
socialization process- experienced participants lack of
theoretical knowledge, categorizing knowledge is consid-
ered to be the vital process and should be conducted by
specialist.
∙ Persuasion process: Knowledge management seminar to
collect knowledge has been popular in collecting and
exchanging key knowledge; however, there has been the
risk of knowledge distortion of exchanger intentionally
and unintentionally; i.e., tone of voice, body language,
different level of education, which are hindrance for the
others to participate.
∙ Knowledge diffusion: This process requires creditwor-
thiness of diffuser; therefore, selecting of diffuser (of
 Back to Contents

knowledge) is vital process. He/she must be someone who [22] D. Finley and V. Sathe, “Nonakas seci framework: Case study evidence
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159

Hybrid Clustering System Applied In Patent Quality
Management-- Take Intelligient Car Industry For
Example
Chin-Yuan Fan
Science &Technology Policy Research and Information
Center,
National Applied Research Laboratories, Taiwan
* cyfan@narlabs.org.tw
Abstract—Intelligent Car has been the key area of our future
technology, In recent years, more and more competitors started
to invest one after another. Therefore, it is essential for the
researcher to track how to improve their technology and
research ability in intelligent car industry area. In this research,
the future development of Intelligent Car industry is discussed
using patent analytic tools. First of all, related patents are
searched and collated by the key words in order to determine
twenty key statistic indicators. Then, six are selected among these
twenty key statistic indicators by stepwise regression method for
SOM (Self-organizing map) clustering use later on. Finally,
according to the result from SOM clustering, the patent clusters
are defined as high, mid-high, middle, or low value patents.
Corresponding forecasting models are specifically designed for
each value type of patents in this research for industrial
researchers to evaluate strength and weakness of competitors
when developing competition strategies.
Keywords—Intelligient Car; SOM (Self-organizing map) ;
Patent; Cluster
I. INTRODUCTION
"Intelligent car" has gradually become the focus of R & D
direction in the automotive industry in recent years. Not like
traditional “Car” or “Auto Motive” area, intelligent car
combines electronic equipment, computer analysis and Data
base system, this Intelligent Car system seems the most popular
application in recent car industry.
However, when this research discuss about Intelligent Car,
first will Exploring about "Intelligent car" technology
development before, first think what is "Intelligent car"? What
is different from the conventional wisdom of cars and vehicles?
Wisdom is defined at this stage of the car, basically can be
divided into three facets to explain, this three facets are energy
systems, security systems, vehicle networking system of the
three dimensions, the three facets of the energy industry and
were machinery industry and ICT industry is closely related to:
technical performance were affected at this stage of the three
key industries of the operation, and therefore on the outline, the
smart car can be said is the most important field of technology
research development stage, how to effectively improve the
research in this area, and further focusing on key patents in this
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
160
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Shu-Hao Chang
Science &Technology Policy Research and Information
Center,
National Applied Research Laboratories, Taiwan
* shchang@narlabs.org.tw
field of analysis, providing manufacturers focus on
understanding the patent and technical information to help
manufacturers focus on patent judgment against the track,
strengthening the competitiveness of this industry, I believe
this is a topic of concern at this stage most of the investigators.
This research attempts to use patent indicators to judge the
value of patents, the first part of the first studies on the past,
select the appropriate value of the patent indicators Patent
judgment, then for this type of indicators, using principal
component analysis to find the best fit the parameters of this
model, proposed further use of self-organizing map network
clustering analysis carried out, and finally scale back use to
predict for the relevant priorities, identify the predicate, is
determined by this formula, further condition for a smarter
vehicle industry integration and analysis.
II. LITERATURE REVIEW
A. Patent Analysis
This study attempts to analyze Intelligent Car industry
using patent analytic tools. Generally, patent analysis can be
used to estimate opponents’ potential and predict their
progress. A corresponding strategy then can be planed. In early
nineties Mary Ellen Mogee (1991) included competitor
analysis, tracking and forecasting of the technologies, master
the important technological development, international patent
strategy, and international patent analysis into a complete
patent analysis. About ten years later, Thomas’ study (2002)
indicated a patent analysis should be helpful for a company in
three aspects: (1) Patent analysis can help a firm in sighting its
patent portfolio and selecting acquisition target. (2) Patent
analysis can give necessary information for stock market
valuation. (3) Data from patent analysis is valuable especially
in industries with high value patents. More scholars has given
statement on the value of patent analysis later on. (Chart 1.)
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Chart 1. Related Statement on Value of Patent Analysis B. Data mining and clustering.
Year of As mentioned above, the combination of data mining and
Author Statement
publication patent analysis can lead us to finding useful information. In
1987 Wilson Patent analysis has the potential to be a modern society, knowing how to filtering out useful
quantitative analysis which is valuable in information from the not so important ones efficiently is the
aspects such as acquisition, deprivation of key to success. Therefore, data mining is the technique
property, R & D planning and new product developed to meet the need. Several relatively important
development.
technique are briefly introduced as following: (Fayyad, 1996)
1997 Liu and Shyu Patent contains a lot of technical information,
and patent analysis is helpful for technology 1. Classification：
development
Classification is the separation of data elements into classes
2001 Abraham and Patent analysis can be used as a base for using models built based on a set of known attribute. That is,
Moita strategic planning, firm development,
competitor analysis, and oversea market finding a function of values of other attributes based on the
development. class attributes of the historical records or samples from a
2002 Breitzman Patent analysis can be used for acquisition in
complete database (training data), for the purpose of
and Thomas the following aspects: target selection, due categorical labels prediction of unclassified records.
diligence investigation, compatibility and
valuation. 2. Prediction：
2009 Lee, Yoon, Functions of patent analysis: Prediction is the estimation of future number of a certain
Lee and Park value. In order to predict the future number, the historical
Evaluating technology assets. Understanding
the business’s advantages and disadvantages attribute of this value are used as training data. In other words,
it’s the method for future number of a certain value based on
Knowing competitors’ patent activities.
the observation of the past.
Understanding the trend in global
competition. 3. Clustering：
Guiding managers to evaluate the R&D plan Clustering is putting data elements into clusters base on the
priorities.
characteristics of the data. After several training and learning
2011 Trappey, Wu, Patent analysis can be used for: phrases, characteristics of clusters starts to reveal. That is to
Dutta and say, the purpose of clustering is to identify the differences of
Trappey Comparison of industrial position
internationally. one cluster from another and to select similar samples within
one group.
Finding the leading countries in different
fields of technology by their number of Consequently, patent analysis and data mining are used in
patents and patent applications.
this study for discovering useful knowledge from Intelligent
Car patent-related information. Hopefully, the discovered
knowledge can provide a way to evaluate values of patents.
Huang and colleagues (2010) used data mining as a tool to
discover hidden information. During the process, related
economic and technical knowledge are organized through III. METHODS AND PROCEDURES
patent searching, patent information acquisition, and then, The very first step of this study is to determine the key
trying on various models step by step. The organized patent indicators using SPSS Statistics. Such determination is
knowledge can be used when making management decisions important since the dependent and independent valuables are
and innovating technology. The objects patent analysis set according to its result. Studying previous researches, the
performed on include content of patents, citation of patents, times of transaction and times of litigations of patents are
and patent numbers, etc. Four areas of patent analysis are found to be the most often used values when evaluating of the
covered in Huang’s study, and they are (1) Patent technology value a patent. Thus, times of transaction and times of litigation
activities monitoring, (2) industry analysis of a certain of patents are set to be the dependent valuables here as well.
technology, (3) life cycle analysis of a certain technology, and On the other hand, for the independent valuables
(4) trend analysis. The procedure practiced is list step by step determination, the possible key indicators are inventor, patent
as following: raw data processing, data cleaning up, data family, number of organizations own the patent, number of
transformation, key word determining, term frequency–inverse patent classification (IPC, CPC, and USPC), citations of the
document frequency (TF-IDF) processing, clustering patent, times the patent cited, and non-patent references. Each
analyzing, time series analyzing, association rules applying, time, six indicators among them are randomly picked to
result analyzing, model interpretation, evaluation, and finally practice stepwise recession. At the end, six indicators are kept
the knowledge revealing. Nowadays, patent value analysis with as the independent valuable for this study after six practices.
the aid of data mining is often used for key patent They are, number of IPC at the moment, DWPI patent family,
determination. number of days from application to approval, status on non-
patent references (thesis or journal articles), number of patent
inventors, and number of CPC. These independent valuables
and dependent valuables are later on be used in the analysis.

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After the determination of the indicators, the analytic

results then are used for Self-Organizing Map clustering
(SOM) in this study. The purpose of SOM clustering is to
further analyze the overall status of patents by understanding
the relations between each patent. This method can also apply
to analyzing similar types of patents in the future. The
algorithm of SOM patent clustering is as following:
Step 1: Compute parameters.
w
Step 2: Set the initial weight of patent value clustering ij .
The initial weight is usually the minimum value randomly
t
chosen. The radius of unit cluster ( R ) and learning rate ( a )
t

are assigned at this step, too.

Step 3: Select the prototype vector from input data set.
Step 4: Calculate the input vector of the patent value
training data set and the output distance (d) between each Figure1 Flow Chart of this Study
neuron using equation 1.
IV. USING THE TEMPLATE
d =  ( X i − Wij )
2
(1) In this study, Intelligent Car is used as a key word for
patent searching in Thomson Innovation database. As the
Step 5: The closest one (the one with minimum d) is then result, there are 5580 related patents in total. These patents are
winner unit which represents the center of the cluster as shown used as data set to practice several steps in this study- (1)
in formula 2. finding the values of patents based on the patent indicator, (2)
d j = min{d j }
determining the dependent valuables for evaluation of patents,
j
analyzing times of transaction and litigation, discovering the
(2) relationships between the dependent valuables using SOM
clustering, and setting the steps of evaluation using stepwise
wij recession.
Step 6: Adjust the weight ( ) between input vector and
output. j * is the center of the neighborhood, the winner unit. The purpose of clustering is to put similar units into the
same group for the discovery of new knowledge from
ΔWij = Wij + a t ( X i − Wij )× R _ factor j observing characteristics of each cluster and relationships
(3) between clusters. The optimal partitioning should give
t R _ factor j = f (R, r j ) minimum distance within and maximum between clusters.
( a is learning rate and : the From past experiences, setting large quantity of partitions
coefficient of j output unit. ) usually lead to bad result. To keep the balance between
samples for building model and number of prediction made is
Step 7: A learning cycle is the process of performing step 3 also important. An ideal RMSE cannot be lead to when too
to step 6 on all training data. The radius of neighborhood many samples are used to predict few cases, and vice versa.
clusters and the learning rate decreases after each time learning Hence the test number of cluster (C) is computed from C=2 to
cycle practiced. Learning stops when the settings reache a C=4. As a result, C=4 is the best choice because it shows
steady state. greater differences between clusters, takes fewer learning
cycles (52,000 cycles), and has smaller PMSE (0.0085).
a t = a t −1 × a _ rate (4)
Number of transactions plus litigations of a patent is used
R t = X R _ rate here for value evaluation. In this study, patents with 0~1, 2~3,
(5) 4~10, and 11 or more transactions and litigations are defined as
low, mid-low, mid-high, and high value patents respectively.
After completing patent clustering, this study attempts to
construct four prediction functions for high, mid-high, mid-
low, and low value separately. All this research model can been
seen as figure 2.

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Cluster group 4

Cluster group 3

Cluster group 2

Cluster group 1

Figure2. Illustration of the four clusters 4. Prediction function of high value patent:
Y4=0.4466+0.001X1+1.828X2-1.557X3-0.421X4-
Forecasting model design and strategy application.
0.059X5+0.265X6
1105 samples saved at beginning state are used for testing
the accuracy of resulting models at this point. The testing
In high-value patents, the three significant indicators are
outcome are listed below.
number of IPC at the moment, number of patent inventor, and
1. Prediction function of mid-low value patents:
number of CPC while the rest are not significant. That is,
Y1=-1.003+0.003X1+0.773X2-0.391X3-0.097X4-
changing in these three valuables in the function varies the
0.119X5+0.772X6
result most dramatically.
In mid-low value patents, the significant indicators are
the days from application to approval, number of IPC at the
As a conclusion, the only significant valuable is the
moment, the number of inventor, number of non-patent
number of inventor in the high value patent prediction
references, number of DWPI families. The rest indicators
function, both number of non-patent references and number of
show no significance.
patent family are important valuables in changing the result of
2. Prediction function of low value patent:
the mid-high value patent prediction function, no significant
Y2=0.1022+0.005X1+0.475X2-0.442X3-0.079X4-
valuable is find in mid-low patent prediction function, and
0.104X5+0.324X6
number of CPC and constant can differ the result of the low
In low value patents, just like in mid-low value patents,
value patent prediction function the most.
days from application to approval, number of IPC at the
moment, the number of inventor, number of non-patent
references, number of DWPI families show significance but V. CONCLUSION AND RECOMMENDATIONS
the rest are not.
First of all, the key indicators were selected through SOM
3. Prediction function of mid-high value patents:
clustering technique, namely, number of IPC at the moment,
Y3=0.6440+0.000X1+0.271X2-0.927X3-0.282X4- number of patent inventors, number of CPC, number of non-
0.003X5+0.224X6 patent references, number of DWPI patent families and number
In mid-high value patents, number of patent inventor is of transaction and litigation involved. Later, the data were
the only significant indicator ,while others are not. Variation of grouped into four significantly different partitions with features
this valuable has an impact on the prediction. that almost consistent with the actual situation. Accurate
prediction functions were then driven from the clustering
result. From the result, we conclude that the overall flow of this

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study was properly planned for reaching the goal of

constructing accurate and precise models for Intelligent Car
industry. The models built in this study can contribute in
understanding features of clusters by different variables,
guiding direction when decision making, stimulating the
development of high-tech green industry, and elevate the level
of Taiwan Intelligent Car industry level.
5.2 Recommendations.
When confronting competitions in the future, researchers in
Intelligent Car industry are recommend to compare
technological potential between oneself and the competitors
first. Then, the models built in this study can be used for the
future predictions. Finally, the corresponding strategies can be
planned and adjusted according to the prediction result.

REFERENCES
[1] A.J.C. Trappey, C.V. Trappey, C.Y. Wu, C.W. Lin..(2012).”A patent
quality analysis for innovative technology and product development.
Adv. Eng. Inf.26 (1).pp. 26–34.
[2] B.P. Abraham, S.D.(2001). Moitra Innovation assessment through patent
analysis.Technovation, 21 (4). pp. 245–252
[3] Chih-mei Chuang. The Performance and Risk Evaluation of Offshore
Wind Farm Power of Taiwan. Master thesis unpublished.
[4] Chin-Yuan Fan, M. F. Lai, T. Y. Huang, C. M. Huang.(2011). Applying
K-means clustering and technology map in Asia Pacific-semiconductors
industry analysis. IEEM 2011: 1043-1047
[5] Hsiao-Ju Chien. (2007).”Application of the Two-stage Cluster Analysis
on Employee Voluntary Turnover Intention”,.
[6] J. Thomas. (2002). The responsibility of the rulemaker: comparative
approaches to patent administration reform. Berkeley Tech. L. J., 17, pp.
728–761
[7] M. E. Mogee.(1991). “Using Patent Data for Technology Analysis and
Planning, ”Research Technology Management, vol. 34, no. 4, pp. 43-49.
[8] Min-Chi Wen, Kuei-Chao Chang, Pei-Chi Chang, Ray-Yeng Yang,
Hwung-Hweng Hwung.(2012). A Study on the Measures of Navigation
Safety for Offshore Wind Farm. Proceedings of the 34th Ocean
Engineering Conference in Taiwan National Cheng Kung University,
November 2012.
[9] R.M. Wilson.(1987). Patent analysis using online databases—I.
Technological trend analysis. World Patent Information Volume 9, Issue
1. Pages 18–26
[10] Tsung-han Tsai. (2012). “Using Patent Analysis to Forecast Technology
Trends and Firm's Competitive Strategy---A Case Study of AMOLED
Technology.”.
[11] U.M. Fayyad, G. Piatetsky-Shapiro, P. Smyth and R.
Uthurusamy.(1996). Advances in Knowledge Discovery and Data
Mining. AAAI/MIT Press,

164

An Integrated QFD and Kano’s Model to
Determine the Optimal Target
Specifications
Dian Retno Sari Dewi
Industrial Engineering Department
Widya Mandala Surabaya Catholic University
Surabaya, Indonesia
dianretnosd@yahoo.com
Abstract— The excellence of Quality Function
Deployment (QFD) methodology for translating customer
needs into target specifications had been broadly known.
However, a number of researches had revealed some
methodological flaws. Those stated that QFD did not have
a formal methodology to optimally allocate the resource
available for product development. QFD also employed
subjective technique in assessing the relationship between
customer need and engineering characteristics. In
addition, QFD implicitly assumed that the fulfillments of
customer needs linearly related to customer satisfaction.
However, Kano’s model notified that the fulfillment of a
customer need might have a nonlinear effect to the
customer satisfaction. With regard to those issues, this
paper presented an optimization model to allocate product
development resource. The relationship between
engineering characteristics and customer need was
assessed using regression technique. Kano’s model was
integrated in the model to represent the relationship
between customer needs and customer satisfaction. The
proposed model was then applied to determine the target
specifications of wooden single bed frame. The result
showed that by using the target specifications obtained, a
great customer satisfaction was created.
Keywords— customer satisfaction; Kano’s model;
optimization; product development; Quality
Function Deployment
I. INTRODUCTION
Quality Function Deployment (QFD) is a methodology that
has been commonly used to develop product which
conforms to customer needs. QFD’s structured tool, i.e.
House of Quality (HOQ) consists of matrices that have been
systematically arranged to help the development team
translates customer needs to the corresponding engineering
target specifications [1]. Despite of its benefit in
maximizing customer satisfaction through better product
design, several researches notified that the conventional
QFD suffered from some methodological flaws [2,3,4].
According to those researches, the conventional QFD did
not provide sufficient formal methodology to the decision
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Dini Endah Setyo Rahaju
Industrial Engineering Department
Widya Mandala Surabaya Catholic University
Surabaya, Indonesia
makers. HOQ contained lots of information necessary for
the decision making process, yet it did not equip the
development team with a formal way to optimally allocate
the product development resource to maximize customer
satisfaction. Furthermore, in the conventional QFD, the
decisions were made based on many subjective assessments.
One of those subjective judgments was used in the
evaluation of the relationship strength between customer
need and engineering characteristics. Dealing with those
issues, this paper presents a mathematical model to
maximize customer satisfaction by optimally allocating
product development resource. The relationship between
customer need and engineering characteristics was
established by using regression technique.
Moreover, in the conventional QFD, the fulfillment of
customer need was considered related linearly to customer
satisfaction. The customer satisfaction would increase
proportionally to its customer need’s importance weight as
the customer need met. On the other hand, Kano’s model
classifies the customer needs into several categories,
according to its impact on customer satisfaction [5,6]. One
of those categories, namely satisfier, contains customer
needs which have linear impact on customer satisfaction
when it is met. Though, there also exist customer needs
which are classified into attractive category and basic
category. Attractive category contains customer needs
which have non linear impact on customer satisfaction when
met. And the customer needs which have no or insignificant
impact on customer satisfaction, even when those are fully
met, are included in basic category. In this paper, Kano’s
model is integrated into the proposed mathematical model to
make better representation of the relationship of the
customer need fulfillment and customer satisfaction
improvement [7,9]. An application of the optimization
model for setting the target specifications of wooden single
bed frame is also presented.
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II. THE PROPOSED OPTIMIZATION MODEL for Kano’s attractive parameter, 1 for Kano’s satisfier
The proposed mathematical model is presented below. parameter, and 0.5 for Kano’s basic parameter.

Max
 
S P =   s 1j  S P max (1)
(
γ j ≤ p1j ≤ 5 γ j = r js ∀j ) (7)

 j  γ j is defined to ensure that the product developed has better

The objective function, as written in equation (1) is performance than competitor’s product in meeting customer
developed to maximize total customer satisfaction score, need j .
which value lies between 0 and 1.
Li ≤ x in ≤ U i ∀ i n = 0,1 (8)
Subject to For engineering chacteristic i , its values lie between upper
bound U i and lower bound Li .
Z i = xi1 − xi0 ∀ i (9)
(2)
The improvement made for engineering characteristics i is
Total maximum potential contribution of all customer presented by using equation (9) while the resource that may
limit the specifications improvements are showed by
needs ( S P max ) is considered as the sum of the maximum of
equation (10), (11) and (12).
all customer need’s contributions to customer satisfaction.
The maximum of contribution of customer need j is notated (
c D Zi + cp Zi ≤ B
i
i i
) (10)

as s max
j and represents a maximum satisfaction score that t Z
i
i i ≤ T (if the activities of improvements were
can be reached by customer need j . For the customer needs
carried in series manner) or (11)
max
that are considered as attractive needs, s j usually gets a max ti Zi ≤ T ( if the activities of improvements were
i
relative high score.
carried in parallel manner) (12)
SP > SS (3) where:
In the case of the development team is interested in creating
a better product than competitor’s, it is necessary to add S P = total customer satisfaction
equation (3). In this way, the product developed will deliver
a higher total customer satisfaction score than the
S P max = total maximum potential contribution of customer
competitor’s product. needs

xincc =
{x − ((U + L ) 2)} ∀j n = 0,1
n
i i i (4)
S S = competitor’s total customer satisfaction score
(U − L ) 2
i i s 0j = initial satisfaction score contributed by customer
The engineering characteristic values should be coded using
need j , per 100 units
equation (4) to eliminate the effect of different scaling of
different engineering characteristics. s 1j = satisfaction score gained by meeting the customer

p nj = β 0 + β ij xincc ∀j n = 0,1
i
(5) need j , per 100 units

In the conventional QFD, relationship strength of customer s max

need j and the engineering characteristics are denoted by
using subjective ratings, such as 1, 3, 9. To reduce the
subjectivity of the relationship evaluations, the regression
technique is applied. The regression function obtained is as
in equation (5). β ij represents the relationship strength
between engineering characteristics i and customer need j .
j = maximum contribution of customer need j to
customer satisfaction
k j = Kano’s parameter of customer need j
xi0 = initial natural value of engineering characteristic i
xi0 cc = initial value of engineering characteristic i ,
centered and coded

 p 1j 
kj x i1 = natural value of target of engineering characteristic i
s = s  0  ∀j
1 0
x i1cc = centered and coded value of target of engineering
j
p  j
 j characteristic i
1 ≤ p j ≤ 5,0 < s nj ≤ 100 n = 0,1
n
(6) Li = lower bound of engineering characteristic i values
Equation (6) is based on [8] and then was adjusted similar to
[9]. For practical reasons, the development team may use 2
U i = upper bound of engineering characteristic i values

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β ij = regression parameter
β0 = regression constant
p 0j = initial product performance in meeting customer need
j identified, i.e. head thickness ( EC1 ), distance between top
p 1j = current product performance in meeting customer
need j
γ j = the lowest performance allowed in meeting customer
need j
r js = competitor performance in meeting customer need j
Z i = the improvement of engineering characteristic i
c pi = production cost needed to make a unit improvement
of engineering characteristic i
c Di = R&D cost needed to make a unit improvement of
engineering characteristic i
B = the available budget for product development
t i = time needed to make a unit improvement of
engineering characteristic i
T = the available time for product development
III. AN ILLUSTRATIVE EXAMPLE
An application of the proposed model is presented in this
section. The target specifications of the wooden single bed
frame were determined using the optimization model.
Four customer needs were identified during
observations and lead user interviews. Those customer
needs were: facilitates user’s daily activity ( CN 1 ),
occupies minimum space ( CN 2 ), sturdy ( CN 3 ), large
storage space ( CN 4 ). CN 1 meant that the product should
support user’s additional activities on bed, such as reading,
typing on laptop, and writing. CN 2 meant that the frame
needed minimum space when used,CN 3 meant that the
frame was not easily broken, while CN 4 meant that
customers needed a bed frame that had an additional
function as storage space. By using Kano’s questionnaire,
Engineering Characteristics
those customer needs were classified into several categories.
CN 1 was classified into attractive category, CN 2 was a
satisfier, CN 3 was a basic, and CN 4 was an attractive.
Next, six related engineering characteristics were
of the head and top of the mattress ( EC 2 ), distance
between top of the mattress and floor ( EC3 ), leg cross
sectional area ( EC 4 ), slat board width ( EC5 ), distance
between slat boards ( EC6 ). Figure 1 shows a bed and a
bed frame images with the engineering characteristics.
The HOQ of the wooden bed frame is presented by
Figure 2. The roof part of the HOQ was not defined,
because the proposed model assumes that all engineering
characteristics are independent. In this way, the linear
regression function can be used to represent the relationship
between customer need and engineering characteristics. The
relative importance weights of customer needs are the
normalized values of the averages of customer needs
importance weights data. The importance weights data were
collected using a survey. See [10], to get the details of how
to do such survey. Three designs of competitor’s products
were selected as benchmarks, i.e. product B, product C,
product D, while product A is the base product to be
developed. The benchmarking result showed the product
performance in meeting certain customer need; the
performance was measured by customers as respondents in
a survey using the 1 to 5 rating scales. The average
performance of each product in meeting certain customer
need is presented in the right columns of HOQ matrix.
Figure 1. Engineering characteristics
Benchmark

Relative Product Product Product Product

Customer Importance EC1 EC2 EC3 EC4 EC5 EC6
A B C D
Needs Weight

CN1 0.214 9 9 3 2.05 3.98 2.98 3.07

CN2 0.291 9 4.03 3.00 3.03 2.92

CN3 0.290 9 9 3 3.00 3.95 3.01 4.01

CN4 0.204 9 9 9 2.08 3.04 3.72 3.86

Figure 2. House of Quality

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Product A
Product B Product C and D

Figure 3. Concept designs

TABLE 1. Product specifications

Engineering Product A Product B Product C Product D
Characteristics
EC1 (cm) 6 30 25 35
EC2 (cm) 20 27 22 30
EC3 (cm) 46 53 53 55
EC4 (cm2) 24 35 24 35
EC5 (cm) 10 15 15 15
EC6 (cm) 20 20 25 25

Figure 3 shows the 3D of the concept designs of product value in meeting CN 3 and CN 4 , in consecutive manner,
A, B, C and D, while Table 1 contains the specifications
details. The feasible range of engineering characteristics were 3.01 and 3.04.
In this case example, the resource constraint was the
were defined as follows: 6 to 37.4 cm for EC1 , 20 to 36.6 available budget for product improvement, i.e. IDR
cm for EC 2 , 46 to 55 cm for EC3 , 24 to 35 cm2 for 200,000. The incremental improvement costs for
engineering characteristics were IDR 4250 per cm for EC1 ,
EC 4 , 10 to 15 cm for EC5 , and 20 to 25 cm for EC 6 .
Those ranges might show the technically accepted and/or IDR 2716 per cm for EC 2 , IDR 2980 per cm for EC3 ,
technically feasible specifications. 2
IDR 377 per cm for EC 4 , IDR 1130 per cm for EC5 ,
The relationship between customer need and engineering
characteristics was assessed using regression technique. The and IDR 283 per cm for EC6 . The other resources, such as
engineering characteristics were the independent variables development time, were considered unbounded.
and the product performances were the dependent ones. The 0
The initial satisfaction score, denoted by s j per 100
regression results are as follows:
CN1 =1.93+9.36 EC1 -3.33 EC 2 -6.16 EC3 units, that was contributed by certain product performance
0
level in meeting customer need j , denoted by p j and
CN 2 =3.34 - 0.627 EC1
quantified in 1 to 5 rating scales, was obtain using focus
CN 3 =3.50+0.479 EC 4 -0.0034 EC5 +0.0274 EC 6 group discussions. For customer need indexes ( j ) 1 to 4,
CN 4 =3.05-3.89 EC1 +0.943 EC 2 +3.92 EC3 the corresponding s j
0 0
for certain p j , in consecutive
Using α = 5%, the significant predictors were those which P
manner, were as follows: s10 = 25 for p10 = 2.50 ,
value < 0.05.
The minimum product performance in meeting certain s 20 = 65 for p 20 = 4.03 , s 30 = 40 for p 30 = 3.00 ,and
customer need was defined to assure that the prk,oduct
would be able to perform its basic functions and also to s 40 = 25 for p 40 = 2.08 .
ensure that the performance was not below market In this case example, the maximum satisfaction score
expectation. Considering technical and market that was able to be reached by the basic need was 60 per
requirements, it was determined that the minimum product 100 units and 100 per 100 units for the other customer need
performance in meeting CN1 was 3.04, and in categories.
According to the input data, the complete mathematical
meeting CN 2 was 3.03; while the minimum performance model was described as follows.

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(
Max S P = s11 + s 12 + s31 + s 14 S P max ) (13)
Subject to References
[1] Cohen, L. , How to Make QFD Work for You, Addison-Wesley
S P max =100+100+100 + 60 (14)
Publishing Company, 1995.

ncc {x n
− ((37.4 + 6 ) 2 ) }; x 2ncc =
{x 2
n
− (36.6 + 20 2) ; } [2] Park, T., Kim, K. J., “Determination of an Optimal Set of Design
Requirements Using House of Quality,” Journal of Operations
x = 1
1
(37.4 − 6 ) 2 (36.6 − 20) 2 Management, vol. 16, pp. 569–581, 1998.

x 3ncc =
{x 3
n
− (55 + 46 2 ) ; ncc
x4 = 4
}
x − (35 + 24 2 )
;
{ n
} [3] Askin, R. G.., Dawson, D. W.., “Maximizing Customer Satisfaction
by Optimal Specification of Engineering Characteristics,” IIE
(55 − 46 ) 2 (35 − 24) 2 Transactions, vol. 32, pp. 9–20, 2000.

x 5ncc =
{x
− (15 + 10 ) 2 )
5
n
}
; x 6ncc = x 6 − (25 + 20) 2) { n
} [4] Vanegas, L. V., Labib, A. W., “A Fuzzy Quality Function
Deployment (FQFD) Model for Deriving Optimum Targets,”
International Journal of Production Research, vol. 39(1), pp. 99–120,
(15 − 10 ) 2 (25 − 20) 2 2001.
(15) [5] Sauerwein, E., et. al., “The Kano Model: How to Delight Your
ncc ncc ncc Customers,” in Preprints of the IX International Working Seminar on
p1n = 1.93 + 9.36 x1 − 3.33 x 2 − 6.16 x 3 ; Production Economics, paper vol. 1, pp. 313-327, 1996.
ncc
p 2n = 3 .34 − 0 .627 x1 ; [6] Matzler, K., Hinterhuber, H. H., “How to Make Product Development
n ncc ncc ncc Projects More Successful by Integrating Kano’s Model of Customer
p = 3.5 + 0.479 x 4
3 − 0.0034 x 5 + 0.0274 x 6 ; Satisfaction into Quality Function Deployment,” Technovation, vol.
n ncc ncc ncc 18(1), pp. 25-38, 1998.
p = 3.05 − 3.89 x1
4 + 0.943x 2 + 3.92 x 3 (16)
[7] Rahaju, D. E. S., Dewi, D. R. S, “Dealing with Dissatisfaction
2 Measure in QFD Model to Derive Target of Engineering
 p  ; 1 1 1

 s 2 = 65 p 2  ;
1
s11 = 25 
1
 
Characteristics, ” International Journal of Industrial Engineering,
vol. 18(12), pp. 634–644, 2011.
 2.05   4.03 
0.5 2 [8] Tan, K. C., Shen, X. X., “Integrating Kano’s Model in the Planning
 p1   p1  Matrix of Quality Function Deployment,” Total Quality Management,
s31 = 40 3  ; s 14 = 25 4  (17)
vol. 11(8), pp. 1141-1151, 2000.
 3.00   2.08  [9] Rahaju, D. E. S., Dewi, D. R. S, “An Approach to Dealing with
3.04 ≤ p11 ≤ 5 ; 3.03 ≤ p 12 ≤ 5 ; Importance Weights of Customer Needs and Customer Dissatisfaction
in Quality Function Deployment Optimization,” Advanced Material
3.01 ≤ p31 ≤ 5 ; 3.04 ≤ p14 ≤ 5 (18) Research, vol. 931-932, pp. 1636-1641, 2014.
6 ≤ x ≤ 37.4 ; 20 ≤ x ≤ 36 .6 ; 46 ≤ x ≤ 55 ;
n n n [10] Malhotra, N. K., Marketing Research: an Applied Orientation, 4th
1 2 3
ed., New Jersey: Pearson Education, Inc., 2004.
24 ≤ x4n ≤ 35 ; 10 ≤ x5n ≤ 15 ; 20 ≤ x6n ≤ 25 (19)
n n n
4520 (x1 – 6) + 2716 (x2 – 20) + 2980 (x3 – 46) + 2 ×
377 (x4n – 24) + 7 × 1130 (x5n – 10) + 283 (x6n – 20) ≤
200000 (20)

The result of this model are the score of engineering

characteristics. The result showed that model was able to
perform under constrain restriction. The engineering
characteristic for EC6 is the smaller the better, meanwhile
the others are the larger the better. We have run the
sensitivity analysis and the result is satisfied for all
engineering characteristics. For the larger the better
engineering characteristic, the output will increase, and will
decrease for the smaller the better criteria.

IV. CONCLUSION
Setting target specifications by using the proposed
mathematical model, the available development resource
was spent effectively to increase total customer satisfaction.
By integrating the Kano’s model into the optimization
model, the relationship between certain customer need
fulfillment and perceived customer satisfaction was better
represented.

Acknowledgment
This research was supported by the Directorate General of
Research, Technology and Higher Education Of The
Republic Indonesia

169

A Simultaneous Integrated Model With
Multiobjective For Continuous Berth Allocation
And Quay Crane Scheduling Problem
Nurhidayu Idris
Department of Mathematical Sciences, Faculty of Science
Universiti Teknologi Malaysia
Johor, Malaysia
nurhidayu5@live.utm.my
Abstract—This paper presents the simultaneous integration
model of berth allocation and quay crane scheduling. Berths and
quay cranes are both critical resources in port container
terminals. The mathematical model uses a mixed integer linear
programming with multiple objectives generated by considering
various practical constraints. Small data instances have been
taken to validate the integrated model. A numerical experiment
was conducted by using LINGO programming software to
evaluate the performance and to obtain the exact solution of the
suggested model.
Keywords— berth allocation; quay crane scheduling; multi
objectives; integration
I. INTRODUCTION
Because of the high capitalization and fierce competition
among container terminals, efficient processing in a container
terminal is vital as mentioned in [1]. As previously, Daganzo
[2] and Park and Kim [3] were both first presented the
integrated approaches. Both papers highlighted applying
monolithic model for crane assignment and crane scheduling as
in [2] and berth allocation with crane assignment as in [3].
Generally, the handling time of the ship is affected by the crane
schedule. A model of integration concept of Berth Allocation
Problem (BAP) and Quay Crane Scheduling Problem (QCSP)
was proposed by Park and Kim [3] with continuous berth
model. In formulating the mixed integer programming (MIP)
model, both time and space were discretized and a two phased
procedure was designed to arrive at solving the problem. The
first phase is to determine the berth allocation and rough quay
crane allocation while in the second phase, a detailed
individual crane scheduling was generated based on the
solution found in the first phase. The allocation of the two
resources which are berths and quay cranes as in [3] is
sequential, not simultaneous.
In addition, the simultaneous concept has been studied as in
[4] on the integration of berth allocation and quay crane
scheduling problem. This problem was designed where the
scheduling of cranes for each hold for all vessels occurred
simultaneously with the allocation of vessels to the berths. It
happened to be a continuous problem since it was more
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
170
Back to Contents
Zaitul Marlizawati Zainuddin
Department of Mathematical Sciences, Faculty of Science
and Universiti Teknologi Malaysia - Centre of Industrial
and Applied Mathematics
Universiti Teknologi Malaysia
Johor, Malaysia
zmarlizawati@utm.my
practical and less time consuming. A Tabu search heuristic has
been applied to solve the integration problem with the
objectives to minimize the handling time and weighted
tardiness of vessels. Wang, Cao, Wang and Li [5] applied the
same simultaneous concept for the integration problem of BAP
and QCSP. They built an integration optimization model
regarding berth allocation and quay crane scheduling with the
purpose of minimizing the operating costs of quay crane and
operating costs of the ships. A new genetic and ant colony
algorithm is developed where the partial allocation plan is
solved by genetic algorithm, then adjusted against berth
through ant colony algorithm to find an optimal solution. In
contrast to Aykagan [4], Wang, Cao, Wang and Li [5] focused
on a discrete type model rather than continuous approach.
However, both papers are concentrated of using an equal
temporal constraint which is dynamic concept for the arrival of
ships. Simultaneous concept for the integration of BAP and
QCSP also has been studied as in [1]. The integration of BAP
and QCSP problems are solved in a simultaneous way with
uncertainties of vessel arrival time and container handling time.
The spatial and temporal constraint applied in this research
paper is similar to [5] whereby discrete concept of berths with
dynamic arrival of vessels. A simulation based on Genetic
Algorithm (GA) search procedure is constructed in order to
generate robust berth and QC schedule proactively.
II. PROBLEM DESCRIPTION
This research focuses on simultaneous Integration
Continuous Berth Allocation Problem and Quay Crane
Scheduling Problem (IBAPCQCSP) while considering multiple
objectives. Berths and quay cranes are the two most important
resources and berth planning with quay crane scheduling are
vital operations in container terminal. Thus, the flow of the
operations has been presented in the mathematical model
throughout this paper. Berth allocation problem is a process of
assigning incoming ships to the berthing positions. Meanwhile,
Quay cranes (QCs) are utilized at the terminal for charging and
discharging containers from and onto vessels. The efficient
utilization of the resources results in short vessel turnaround
times and early departures. This research focuses on
continuous berth approach. This continuous berth concept is
 Back to Contents

described as when the ships are allowed to be served wherever
empty spaces are available along the quay to physically
accommodate the ships. A vessel in a waiting and servicing
line at a berth can be presented by a rectangle in a time-space
representation diagram or Gantt chart. The concept of
continuous berth approach system can be seen in Figure 1.
T : time period of vessels
V : a set of vessels with known arrival time
M : a large positive scalar
hi : number of holds of vessel i,
k
pri : processing time of hold k of vessel i,

pri max
: maximum hold processing time for vessel i

pri max : max i { prik }

Fig. 1. Ship arrangement for Continuous Berth Allocation : lateness penalty time of vessel i,
fi
Recently, more researchers studied integrated solution di : due time of vessel i ( where di , ai + pri∗ )
approaches for berth allocation and quay crane scheduling. The
following assumptions are imposed while formulating the multi ai : arrival time of vessel i,
objectives model of simultaneous IBAPCQCSP:
bpi : berthing position of vessel i,
1) Each vessel is divided along its length into holds 3 or 4
container rows where at most one quay crane can work bti : berthing time of vessel i,
on a hold in a time period.
ei : the earliest time that vessel i can depart.
2) Multiple vessels can moor at the berth and get service
immediately.
1 if vessel i berth after vessel j departs,
xij = 
3) Vessels can arrive at the port during the planning 0 otherwise;
horizon and each vessel cannot be served before its
arrival time. 1 if vessel i berth completely above vessel j on the

4) A vessel is considered processed once cranes have yij =  time-space diagram,
completed the work on a set of holds. 0 otherwise;

5) Once work started, cranes operated on vessels need to
1 if at least one quay crane is assigned on hold k
continue on a hold until completion. t
r =
iqk of vessel i at time t ,
6) Only one crane can work on a hold at a given time 0
period.  otherwise;

7) Quay cranes are on the same tracks and cannot cross 1 if at least one quay crane is assigned to vessel i
each other. 
wit =  at time t ,
8) A vessel can leave the port only after the process of 0 otherwise;

loading and unloading container is completed on every
hold. The simultaneous concept of IBAPCQCSP model with
9) Vessel processing time depends on the number of quay multi objectives and dynamic arrival of vessels is formulated as
cranes assigned to the vessel. follow:
n n n hi
10) A crane can be shifted from hold to hold both within
ships and between ships, as long as cranes do not cross
Min  ( e − a ) +  f ( e − d ) + r
i =1
i i
i =1
i i i
i =1 t∈T q∈Q k =1
t
iqk (1)
one another. subject to

III. MATHEMATICAL FORMULATION xij + x ji + yij + y ji ≥ 1 ∀i, j ∈ V and i < j (2)

In this section, a multiple objectives mathematical model is xij + x ji ≤1 ∀i, j ∈ V and i < j (3)
formulated with the simultaneous and integrated berth planning
and quay crane scheduling. The study focuses on the dynamic yij + y ji ≤1 ∀i, j ∈ V and i < j (4)
arrival of vessels where a set V of vessels with known arrival
times, whereby n = V . For each vessel i ∈ V , the parameter bt j ≥ ei + ( xij − 1) M ∀i, j ∈ V and i < j (5)
and formulation applied in this study is defines as below:
bp j ≥ bpi + hi + ( yij − 1) M ∀i, j ∈ V and i < j (6)
L : set of berths equal size sections
Q : a set of identical quay cranes operating on a single bti ≥ ai ∀i ∈ V (7)
set of rails.

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t
bti ≥ triqk t
+ (1 − riqk )T ∀i ∈ V , ∀k ∈ {1,….., hi } , Simple Numerical Example
(8)
∀t ∈ T The model formulation presented before was validated by
using commercial programming software, LINGO 15.0 for
t
ei ≥ tr + pri
iqk
k
∀i ∈ V , ∀k ∈ {1,….., hi } , small problem which can be seen in Table 1. For the model on
(9)
∀t ∈ T , ∀q ∈ Q small problem with length of berth, L = 7 and quay cranes, Q =
4 are used .
ei ≥ bti + pri max ∀i ∈ V (10)
TABLE I. A SMALL INSTANCE FOR SIMULTANEOUS
wimin ≤  riqk
t
≤ wimax ∀q∈ Q, ∀k ∈ {1,….., hi } , IBAPCQCSP
i∈V (11)
i 1 2 3 4 5
∀t ∈ T
ai 2 1 3 1 4
hi

 r t
iqk ≤Q ∀t ∈ T (12)
di 8 4 9 5 11
i∈V q∈Q k =1 fi 3 4 3 3 4

r t
iqk =w t
i ∀ i ∈ V , ∀k ∈ {1,..., hi } ,
hi
pr 1
2
3
3
2
3
2
4
3
4
3
q∈Q (13) i

∀t ∈T pri2 4 2 4 1 2
pri3 - 2 1 0 2

t∈T
wit = ei − bti ∀i ∈ V (14)
pri 4
- - - 1 4

bpi ≤ L − hi + 1 ∀i ∈ V
bpi ≥ 1 ∀i ∈ V
xij ∈ {0,1} , yij ∈ {0,1} ∀ i, j ∈ V and i ≠ j
t
riqk ∈{0,1} , wit ∈{0,1} ∀ i ∈ V , ∀ k ∈ {1,..., hi } ,
∀t ∈ T , ∀q ∈ Q
According to the mathematical formulation above, the first
objective that needs to be minimized is the duration of vessels
at port and second objective is to minimize the penalty charged
for the tardiness of vessels. The last objective is to reduce the
operation time of quay cranes. Constraints (2) through (4) are
to guarantee that no vessel rectangles overlapped. Constraint
(5) and (6) ensure that the selected berthing times and berthing
positions are consistent with the definitions of xij and x ji ,
where M is a large positive scalar. Constraint (7) forces the
vessel to berth after the arrival time and constraint (8) forces
the processing of hold on vessels by quay cranes to begin
immediately after berthing. Constraint (9) ensures that after all
holds are processed by quay cranes, vessels can depart.
Constraint (10) is a valid inequality which provides the lower
bound on the ei given berthing time, bti . Constraint (11)
ensures that the number of quay cranes serving a vessel at the
same time can meet the requirements which cannot exceed four
quay cranes and less than one quay crane at the same time.
Constraint (12) ensures that number of quay cranes utilized at
any time period not exceeded Q, and constraint (13) ensures
the consistency between wit and riqkt
where the number of quay
cranes operated on vessel i at time t are equal. Constraint (14)
sets the starting and finishing time of quay cranes for serving
vessels. Constraint (15) and (16) are to make sure that all
vessels fit on the berth.
(15)
Each vessel in this problem is divided into equal size
(16) sections of holds whereby, each hold consists of 2, 3 or 4
container rows section on the vessel. For the length of each
(17) vessel at the berth section, it can be represented through the
number of holds from each vessel. In addition, the assumption
has been made where the total length of berth is L holds. For
(18) this problem, the vessels can moor at the berth and obtain
service simultaneously which in a given time period, only one
crane can serve on a hold. Each hold has been assigned a
known processing time to be served by quay cranes The
servicing time of each vessel is considered completed once the
quay cranes finished processing each hold in a vessel.
To obtain the initial solutions for this model, the First
Come First Serve (FCFS) rule and Large Vessel First (LVF)
rule are considered. Basically, the vessel that arrived earlier
will get a tendency to be chosen first since this FCFS rule is
applied while for the LVF rule, the priority is set to be the
large vessel will be served first. Every vessel is given only one
opportunity to work in the operations. After the arrival and
being chosen, a vessel is being served on holds by the quay
cranes allocated. The quay crane is allowed to shift form one
hold of a vessel to another only if a quay crane finished
processing initially assigned hold.
After works on the holds of vessels are completed and
satisfied, two feasible solutions are produced for simultaneous
IBAPCQCSP with multi objectives for two different rules.
The feasible solutions are presented in Table 2 for FCFS rule
and Table 3 for LVF rule where the riqk denoted at least one
crane is assigned on hold k of vessel i which means the start
time of works. In the diagrams, the horizontal axis is used to
measure time while vertical axis for representing the berth
sections. The time space diagrams for two feasible solutions
can be seen in Figure 2 for FCFS rule and Figure 3 for LVF
rule. From the diagrams, a vessel is designed as rectangle
which the length is the handling time taken of vessel at port

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and the height is the length of vessel along the quay. The Based on the two feasible solutions diagrams above, the
position of cranes in any holds depicted by using solid and total optimal objective value obtained by applying FCFS rule
empty squares. Solid squares mean the quay cranes are being was 70 with the idle cranes of 8 while LVF rule with total
operated on the holds for loading and discharging process and optimal objective value of 63 and 8 idle cranes. It shows that
empty squares show idle quay cranes. the performance of the integrated operation regarding BAP
TABLE II. A FEASIBLE SOLUTION FOR SIMULTANEOUS and QCSP by using the LVF rule is more optimal compared to
IBAPCQCSP (FCFS RULE) FCFS rule. Therefore, the LVF rule is more applicable and
i 1 2 3 4 5 effective for the model to be used in further research. From the
results, LVF rule gives more optimal results since the
bpi 1 1 5 4 1
solutions are nearer to the optimal solutions.
bti 3 1 6 1 7
ei 7 3 11 6 12 IV. CONCLUSION
riq1 3 1 6 1 7 This paper proposes a mathematical formulation for the
simultaneous IBAPCQSP with several objectives which are
riq2 3 1 6 4 7
important operations in port container terminals. This
riq3 - 1 10 - 9 integrated model of continuous berth allocation and quay
cranes schedules are developed through a simultaneous process
riq4 - - - 5 8 by satisfying the restrictions given with two different rules
tested namely, FCFS and LVF. This study also performs
simple numerical experiments by comparing two different rules
to validate the simultaneous integrated model by using LINGO
15.0. The research on the IBAPCQSP should be enhanced in
order to improve the level of understanding on integration
concept and knowledge on this field which will surely increase
the efficiency of port operations compared to optimize berth
allocation or quay crane scheduling individually. Future study
in this integration problem looks certainly very beneficial and it
is expected from researchers to explore more in this field. Here,
we highlight that the main contribution in this paper is the
Fig. 2. A feasible solution of simultaneous IBAPCQCSP on time space integration on operating both resources which are berths and
diagram (FCFS rule). quay cranes at the port terminal simultaneously. Integration of
BAPC and QCSP also increase the operations efficiency at
TABLE III. A FEASIBLE SOLUTION FOR SIMULTANEOUS container terminal. For future studies, metaheuristic approach
IBAPCQCSP (LVF RULE) will be considered for the simultaneous integrated model with
i 1 2 3 4 5 real life data.
bpi 1 5 5 1 1
bti 8 2 4 1 4 ACKNOWLEDGMENT

ei 12 4 10 4 8 The authors would like to thank the Malaysian Ministry of

riq1
Higher Education for their financial funding through
8 2 8 1 4
Fundamental Research Grant Scheme (FRGS) vote number
riq2 8 2 4 1 4 R.J130000.7809.4F470. This support is gratefully
r 3
- 2 8 - 6 acknowledged. The author would also like to thank UTM
iq

4
Centre for Industrial and Applied Mathematics and
r iq - - - 1 4 Department of Mathematical Sciences, Faculty of Science,
UTM for the support in conducting this research work.
References
[1] X. L. Han, Z. Q. Lu, and L. F. Xi, "A proactive approach for
simultaneous berth and quay crane scheduling problem with stochastic
arrival and handling time." European Journal of Operational Research
vol. 207.3, pp. 1327-1340, December 2010.
[2] C. F. Daganzo, "The crane scheduling problem." Transportation
Research Part B: Methodological vol. 23.3, pp. 159-175, June 1989.
[3] Y.M.Park, and K.H.Kim, "A scheduling method for berth and quay
cranes." Container Terminals and Automated Transport Systems.
Springer Berlin Heidelberg, pp. 159-181, 2005.
Fig. 3. A feasible solution of simultaneous IBAPCQCSP on time space [4] A. Aykagan, Berth and quay crane scheduling: problems, models and
solution methods. ProQuest, 2008.
diagram (LVF rule).

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[5] R. D. Wang, J. X. Cao, Y. Wang, and X. X. Li, "An integration

optimization for berth allocation and quay crane scheduling method
based on the genetic and ant colony algorithm." Applied Mechanics and
Materials. vol. 505-506, pp. 940-944, January 2014.

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A Multi Objective Mixed Integer Programming

Approach for Sustainable Production System
Ma. Teodora E. Gutierrez
Technological Institute of the Philippines
Industrial Engineering Department
dhorieg@gmail.com

Abstract—This study aims to develop a model for sustainable

production system with optimization approach. Hence, Multi
objective Mixed Integer Programming was identified as an
appropriate method. A proposed model was formulated
considering two objective functions which are to minimize the
economic cost and to minimize the carbon footprint of the
production system. A case study company was conducted to have
numerical example of the model and also to test the feasibility and
effectiveness of the proposed model. The results showed a Pareto
optimal solution for the case study company.
Keywords—Multi Objective Mixed Integer Programming;
Sustainable Production System
I. INTRODUCTION
There is a strong concern for implementing sustainable
development in all business activities and human activities.
Sustainable development is defined as “development that
meets the needs of the present without compromising the
ability of future generations to meet their own needs” [1].There
are several papers that investigate the impact of sustainable
development to the company, for instance a multiobjective
optimization model for supply chain was formulated and found
that the model is feasible [2]. Also, a multi objective model
that optimizes simultaneously the product’s life cycle cost,
environmental impacts and performance values were evaluated
and tested in real assembly line[3].
C. Decision Variables
Xki = Quantity of product k to produce in production facility i
Pki= 1 if product k is produced at production facility i;
= 0 otherwise
D. Objective Function
The objective is to minimize the economic cost and carbon
footprint the firm.
D.1 Economic Objective
The economic objective is to minimize the cost within the
production. The production costs are assumed to be fixed
production cost and variable cost. That is,
Minimize Total Cost (Z1) = Fixed Cost + Variable Cost
D.2 Environmental Objective
The environmental objective is to optimize by minimizing
the carbon footprint within the production. The carbon
footprint considered is production carbon footprint. That is,
Minimize Carbon Footprint (Z2) =Production Carbon
Footprint

II. MATHEMATICAL MODEL FORMULATION

A. Indices and Notations E. Multi-objective Optimization

i represents production facility Since there are two (2) different objectives with different
k represents product m units of magnitude, a multi-objective optimization technique
represents carbon footprint was used. The weighted-sum approach was used. The general
form of this technique is,
B. Input Parameters

Aik = Fixed production cost for product k at

production facility i
Bik = Variable cost for product k at production facility i
Fki= Carbon Footprint of production facility i per unit Applying the technique to the model:
of product k Weights should be set for each objective function to solve
Gik = Production Capacity of production facility the optimization simultaneously.
ito produce product k
Ok = Total demand of product k

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Since the objectives have different magnitude, the objective

function should be normalized. Hence, the sum of percentage Table 3. Production facility carbon footprint
per unit product (kg)
(%) deviations will be used:
Production Production Production
Min: W1 [actual z1 – target z1)/target z1] +W2 [actual z2 Facility 1 Facility 2 Facility 3
– target z2)/target z2] (5) Product 1 3.14 3.1 3.2
Product 2 3.4 3.45 3.4
The equation (5) becomes a single objective function. Product 3 2.9 3.0 2.7
The weights are set from the Analytical Hierarchy
Procedure. , the weights are determined using the
assumption that the economic performance (Z1) is slightly Table 4. Production Capacity of the facilities ( units)
more important than the environmental performance (Z2).
Production Production Production
With this assumption, the weights of the objectives were
Facility 1 Facility 2 Facility 3
derived though calculating the eigenvector of the evaluation
matrix. The results give the weights of 0.67 for the economic Product 1 700 650 650
objective (Z1) and 0.33 for the environmental objective (Z2). Product 2 400 500 450
Product 3 500 450 425
E. Constraints
Table5. Product Demand (units)
1.
2. TOTAL
3. Product 1 1100
4. is binary (either 0 or 1) Product 2 900
Product 3 950
The first constraint (1) is about the number of units of
product k to be produce should not exceed the capacity of
each production facilities i. The second constraint (2) is
about the number of units of product k to produce should be IV. OPTIMIZATION RESULTS
greater than or equal to the total product demand.
Constraints (3) is integer variables while constraint (4) is a Using the input parameters as coefficient of the
binary variables. decision variables and all constraints mentioned, the
model was coded in LINDO software to compute for the
decision variables and the objective functions.
III. NUMERICAL EXAMPLE: CASE STUDY
COMPANY Table 6 shows the result of the mathematical
formulation. The optimal solution is solution 2, which
The company is vertically integrated and they have three identifies the quantity of product i to be produced at
major products that can produce in any of their three production facility/plant j. In this case, 450 units of
production facilities. The company wants to minimize the product 1 should be produced at plant 1 (i.e. X11 = 450).
production costs and the carbon footprint. The production Product 1 should not be produced in plant 2 (X12 = 0).
costs and carbon footprint parameters were gathered from Plant 3 should produce 650 units of product 1(X13 = 650).
the company. To test its effectiveness, the proposed And so on and so forth.
mathematical model is used to this steel works company. With the given units of product i to be produced
The input parameters for the proposed model were shown at plant j, the overall total production cost of the company
on Tables 1 to 5. considering the resulted production plan is 52, 120 Php.
This is for the monthly basis. At the same time, the carbon
footprint is 9,378 kgs.
Table 1. Fixed cost of the product if produced in The single function value of this multiobjective
production facility (Php)
problem was computed below where equation 5 was used.
Production Production Production This objective function was set to minimize the percentage
Facility 1 Facility 2 Facility 3 deviation from the target. Hence, it was validated that
Product 1 500 550 525 solution 2 is the optimal solution with 0 deviations. Or the
Product 2 525 500 575 achievement of having a sustainable production has been
Product 3 550 525 500 met.
Objective Function of Solution 1
Min.z = (Sum of the weighted % deviation) = .67
Table 2. Variable Costs per Unit of product if [(55,588.50-52,120) / 52,120)] + .33[(10038.50-
produced in production facility (Php) 9378.00)/9378.00] = 0.07
Production Production Production Objective Function of Solution 2
Facility 1 Facility 2 Facility 3 Min.z = (Sum of the weighted % deviation) = .67 [(52,120
Product 1 15.0 15.7 15.3 - 52,120) / 52,120)] + .33[(9378.0-9378.00)/9378.00] =
0.00
Product 2 19.0 18.7 19.3
Product 3 15.3 16.0 15.3

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Table 6 – Optimization Results

Decision
Variables Solution 1 Solution 2
x11 700 450
x12 0 0

x13 650 650

x21 400 400
x22 500 500
x23 0 0
x31 500 500
x32 26 450
x33 425 0

Z1( Cost ) 55,588.50 52,120.00

Z2( Carbon
Footprint) 10038.50 9378.00

V. CONCLUSION

The proposed model for sustainable production system

was formulated and tested in a case study company. The
results show a Pareto optimal which validate the feasibility
of the model and its effectiveness in achieving the desired
goal of a firm. This also reinforced the need to adopt
initiatives for sustainable development.

REFERENCES

[1] Drexhage,J., Murphy.(2010)” Sustainable Development: From

Brundtland to Rhio 2012
http://www.un.org/wcm/webdav/site/climatechange/shared/gsp
/docs/GSP1-6_Background/Sustainable_Development.pdf
[2] Zhixiang Chen and Svenja Andresen (2014)“A Multiobjective
Optimization Model of Production-Sourcing for Sustainable Supply Chain
with Consideration of Social, Environmental, and Economic Factors,”
Mathematical Problems in Engineering, Vol. 2014, 11 pages.
[3] Cocco,M.;Cerri,D.;Taisch,M,;Terzi,S.(2014).”Development and
implementation of a Product Life Cycle Optimization model”.
International Conference on Engineering, Technology and Innovation

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The Determining Factors in Prescribing
Anti-Hypertensive Drugs
to First-Ever Ischemic Stroke Patients
Rasvini Rajendran
Department of Mathematical Sciences, Faculty of Science
Universiti Teknologi Malaysia
Johor Bahru, Johor, Malaysia
rasvinirajen@gmail.com
Abstract— Prescription of drugs plays a vital role not only in
patient care but also to the health care industry for the many
consequences it is entangled with. With the advanced use of
mathematical models in healthcare today, it has become possible
for healthcare personnel to practice evidence-based-decision
making. This paper attempts to aid in the prescription of anti-
hypertensive drugs for first ever ischemic stroke patients by
conducting sensitivity and post-optimality analysis of a
previously proposed multi-objective mixed-integer nonlinear
integer programming model. Determining factors that contribute
to the optimal drug prescription will be identified, enabling
decision makers to make informed decisions on how a patient’s
drug therapy needs to be adjusted when the need arises.
Keywords— anti-hypertensive drug, ischemic stroke, drug
prescription, sensitivity analysis, post-optimality analysis
I. A NEW PERSPECTIVE IN DRUG PRESCRIPTION
Prescription of drugs by doctors is not just an intuitive call
or a decision based on medical expertise alone. It is a reflection
of experience gained from the various cases a doctor has heard
or witnessed in his years of practicing. When dealing with
critical cases like strokes, drug prescription is extremely
important. Apart from the possibilities of causing serious if not
fatal complications, wastage is a vital issue to be addressed
here. Different patients require varying strengths of drugs
depending on many aspects to be taken into consideration.
Some patients require stronger medicines while for some others
milder ones will do. Prescribing otherwise will, in both cases,
lead to wastage of valuable resources that could have been
easily avoided.
To optimize the cost and effectiveness associated with and
a drug therapy, competing alternatives should be assessed.
Cost-Effectiveness Analysis (CEA) compares medical
intervention strategies, which in our case is the different drug
combinations, through the calculation of the incremental cost-
effective ratio, a measure of the cost of changes in health
outcomes. These analyses can be performed on clinical trial
data where information on both costs and effectiveness is
available, or more commonly through the use of decision
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Zaitul Marlizawati Zainuddin
Department of Mathematical Sciences, Faculty of Science
The UTM Centre for Industrial & Applied Mathematics
(UTM-CIAM)
Universiti Teknologi Malaysia
Johor Bahru, Johor, Malaysia
zmarlizawati@utm.my
analysis models (DAM) to synthesize data from many sources
[1].
Decision analysis can be described as the process of
making an optimal choice among competing alternatives under
conditions of uncertainty. In the case of CEA, the competing
alternatives are the different medical interventions we are
studying [2]. The most important aspect of the decision
modelling process is that it must represent the choice that is
being made. When constructing a model of a clinical or
pharmacological decision, a series of characteristics of the
actual problem must be represented in the model structure and
method [1].
There are a number of types of DAMs which have been
used in CEAs depending on the nature of the problem. The
most basic is a simple decision analysis tree which is usually
employed to examine events that will occur in the near future.
They are therefore best suited to evaluate interventions to
prevent or treat illness of a short duration such as acute
infectious diseases. Besides that, they may also be used to
evaluate chronic diseases that can be cure, for instance, by
surgical intervention. However, when these trees are used to
evaluate diseases that changes over time, they sometimes
become too unruly to be useful [2].
When the disease in question is chronic or complex,
Markov models is a good approach as these models allow
researchers to incorporate changes in health states over time
into the analysis. These models which are called state transition
models allow researchers to track changes in the quality of life
and the cost of a disease over time when alternative health
interventions are applied [2]. Apart from these two common
approaches, a modeller can also use simulation models or
deterministic models which are sometimes termed as
mechanistic models. There are many methodologies and
modelling types that can be used to create and evaluate
decision models. The modeller, however, should use the
method most appropriate to the particular problem being
addressed [1].

As mentioned earlier, the choice is dependent upon the
complexity of the problem in addition to the need to model
outcomes over extended periods of time and whether resource
constraints and interactions of various elements in the model
are required. To make an appropriate decision regarding what
consequences and outcomes to include, the modeller must
make decision regarding four characteristics [1] namely: (1) the
perspective of analysis (2) the setting or context of the analysis
(3) the appropriate level of detail or granularity (4) the
appropriate time horizon.
A broad range of mathematical modelling types are
available to the modeller to represent disease, treatments and
costs. There is undoubtedly a trade-off between complexity of
the process being modelled and the type of model that should
be used to represent the problem. In general, the simplest
modelling technique that accurately represents the components
of the problem according to a clinical expert is sufficient. As a
matter of fact, most problems can be addressed with either
simple branch and node decision trees or Markov process-
based state transition models. However, it is to be noted here
that there are also a small portion of problems that do require
more complex approaches where simulation models and
deterministic models have to be utilized to effectively
comprehend the problem.
Another aspect to be taken into consideration is that current
DAMs tend not to address the actual decisions that need to be
made. Instead of contrasting various realistic potential
scenarios of use of a new intervention, they engage in the very
artificial comparison of all patients using the new intervention
versus all using some alternative and the assumption that all are
starting at the same time. The models are typically
conceptualized in terms of health states even though they do
not correspond to what the clinicians are seeing in practice. The
biggest problem is however is that they set up in terms of the
population as a whole – “cohort” models. This in return creates
awkward problems as populations are not homogenous and
applying probabilities based on the average profile yields
incorrect results [1].
In attempting to address this shortcoming, the use of linear
programming (LP) in formulating mathematical models to
optimally prescribe anti-hypertensive drugs to first ever
ischemic stroke patients was explored. Accordingly, a multi-
objective mixed-integer nonlinear integer programming
(MOMINLP) model was formulated [3]. Although not
exhaustive in detail, the model is capable of determining the
anti-hypertensive drug(s) (ACE inhibitors, beta-blockers,
calcium channel blockers) that should be prescribed to a patient
subject to the desired in-patient days as well as the allowable
range of mean arterial pressure (MAP) reading based on the
patient’s initial MAP (MAP0). This paper will thus further
discuss the factors that affect the outcome of the formulated
model in [3].
II. MODEL SOLUTION
Since the model is a multi-objective model, it is practical
that goal programming (GP) approach is opted for as it is
known to allow for deviations. Deviations here refer to the
possibility of not fulfilling a given objective fully which is the
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more practical approach in healthcare as human-drug
interaction is never exact. Acknowledging this, we attempt to
minimize the deviations instead. The model can then be solved
using either weighted, preemptive or prioritized GP. As the
model is used to conduct CEA of the drug(s) prescribed, the
goals are thus to minimize cost (G1) and maximize
effectiveness which is measured in terms of maximum (G2)
and minimum (G3) allowable MAP. A total of three case
studies were conducted as follows:
TABLE I. COMPARISON OF MODEL SOLUTION METHOD
Solution
Case
Study Method Description
G1 is assigned higher weight than G2 and G3
I Weighted as the goal pertaining to cost should be more
important in a CEA
G1 is set to be at priority level 1 and thus
solved first before addressing G2 and G3. A
goal with lower priority (the goals pertaining
II Preemptive
to effectiveness, G2 and G3) should not be
attained at the cost of a higher priority goal
(the goal pertaining to cost, G1).
An extension of Case II, the goals at priority
III Prioritized
level 2, G2 and G3, are further assigned
weightage to show importance of different
goals at the same priority level.
The model was tested for a patient admitted with
MAP0=150 mm hg to validate the results. As a whole, it was
concluded that in all three scenarios, the models gave the same
set of solutions. In addition, all the goals were also fully
achieved. The only difference being in term of their simplicity.
While Case I was run easily using LINGO 15.0, the other two
cases were a little more tedious as two levels of problems had
to be solved depending on the priority of the goals. Despite the
extra work, the solution generated was nevertheless exactly
the same which suggests the consideration of preemptive and
prioritize GP is unnecessary.
III. SENSITIVITY AND POST-OPTIMALITY ANALYSIS
Formulating a mathematical model to cater to a particular
purpose is one thing but to be able to analyze how the
different variables of the model will affect the outcome if they
were to change is totally another. It is therefore vital to also
understand the behavior of the model. This is utterly important
when questions arise such as: (1) what would be the effect of
the course of treatment if a different weightage was assigned
to the goals? (2) at what range of the MAP0 would the course
of treatment change from mono drug to combination drug
therapy? (3) how will the course of treatment differ if the
minimum length of stay (LOS) is reduced or increased from
the current value?
The answer to these queries can be obtained by conducting
sensitivity analysis (SA) and post-optimality analysis (POA).
Although often used interchangeably, these two analyses have
a clear distinction between them. While the former deals with
the range of the parameter value that will keep the solution
optimal, the later analyses how the optimal solution changes
when the parameters of the original model are changed. In the
context of this model, SA and POA can be done by analyzing
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the effect on the solution when changes occur in (1) the three case studies with different MAP0 values to determine the
weightage assigned to the goals (2) the patient’s MAP0 (3) the range of MAP0 that will keep the obtained optimum basic
minimum LOS of patient (4) the minimum allowable MAP (5) solution unchanged. Beginning with 110 mm hg, a few MAP0
the maximum allowable MAP. values at a constant interval of 10 mm hg is implemented.
Again, in all scenarios the solution obtained is the same and is
These analyses are imperative for a few reasons. An as summarized in Table III.
obvious one is that the range of values of a model’s parameter
are bound to change over time. The efficacy of drugs in TABLE III. SOLUTION COMPARISON FOR VARIOUS MAP0
question, for instance, may improve with the advancement of
pharmaceutical-related researches and this will lead to the Case MAP0 (mm hg)
need to solve the model yet again with the new efficacy Study 110 120 130 140 150 160 170
coefficient in order to determine the most cost-effective course I
of treatment. However, with SA the decision maker can easily
determine from the current solution how the change in the II A A A AC ABC ABC ABC
drug efficacy will affect the optimal solution. III
Avoiding the need to solve the model every time there is a
change not only saves time but also the resources, as in some Next, the range of MAP0 for which the course of treatment
cases, to do the data collection all over again could be both remains the same is analyzed. The results from Table III aid in
manpower and cost consuming. The values of parameters in a narrowing the values that need to be tested for as it is clearly
model may change over time to cater to the current situation depicted here that the drug therapy changes from mono drug
and by conducting SA and POA, the decision maker will be to combination drug therapy when MAP0 is between 130 and
pre-informed on how much changes are allowable for the 150 mm hg. By running the model again for each MAP0
current optimal solution to remain the same. within this range, the results reveal that a patient requires only
mono drug therapy if MAP0 is 131 mm hg and below which
means only when MAP0 increases, the need for combination
A. Changes in the Weightage Assigned to the Goals drug therapy emerges.
Despite justifying the assignment of more weightage to the
goal pertaining to cost, it remains a question if the weightage Thus, for patients who are admitted with MAP0 greater
did play such a big role in the solution. Thus, the significance than 131 mm hg, mono drug alone would be insufficient for a
of the weightage assigned to the goals are tested by running cost-effective treatment. Again, this raises another question.
various combinations of weightage. The other parameters in Which combinations of drugs should be chosen? In reference
the model are fixed to be the same. The summary of the results to the Malaysian Clinical Practice Guideline for Management
obtained is as tabulated in Table II. of Hypertension (4th Edition) [4] and Management of
Ischaemic Stroke (2nd Edition) [5], it is known that ACE
The results clearly suggest that regardless of the weightage inhibitors should be prioritized over the three anti-
assigned, the same choice of treatment is obtained in all hypertensive while calcium channel blockers should be
scenarios for the various MAP0. Thus, it can be concluded that preferred over beta-blockers.
weightage does not play any significant role when the model Summarizing the results, a guideline based on the
was run for the current set of constraints. However, it is feasibility range is obtained and tabulated in Table IV. The
possible that with additional constraints, the weightage may results here further verified this as the drug choice complies to
play a big role in the solution obtained. [4,5]. However, it is to be remembered here that the suggested
drug therapy guideline is subject to changes depending on the
TABLE II. TREATMENT CHOICE FOR VARYING WEIGHTAGE OF GOALS constraints imposed. Consideration of more constraints may
MAP0 (mm hg) result in a more cost effective model and therefore a more
Scenario
120 130 140 150 160
cost-effective guideline.
Varying G1 weightage TABLE IV. SUGGESTED DRUG THERAPY GUIDELINE
Varying G2 weightage A A AC ABC ABC MAP0 Range
Drug Combination
(mm hg)
Varying G3 weightage
≤ 131 ACE Inhibitors
Key : A = ACE Inhibitors
B = Beta – Blockers 132 - 148 ACE Inhibitors + Calcium Channel Blockers
C = Calcium Channel Blockers
149 ACE Inhibitors + Beta Blockers
B. Changes in the Initial MAP of Patients ACE Inhibitors + Beta Blockers + Calcium Channel
≥ 150
Blockers
To validate the formulated model, it was tested for a
patient with MAP0 of 150 mm hg in all three case studies.
While this is good to ensure an accurate comparison between C. Changes in the LOS Benchmark
the solution methods, this alone is insufficient to generalize
the choice of treatment. Hence, the model is run again for the The benchmark of the patients’ LOS in the formulated
model was set to be four days as recommended by [4]. Here,

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as cost is directly proportional to a patient’s LOS, the selected change in the original optimal solution is similar the change
value may be questionable as a lower value can be chosen to on the maximum allowable MAP. That is to say, an increase
cut cost. While a longer duration may impose additional cost, of 10 mm hg in the maximum allowable MAP to 120 mm hg
a shorter duration means reducing a vast amount of MAP per gives a new feasibility range of the solutions whereby the
day which can only be attained by giving patient stronger change from mono drug to combination drug therapy no
drug(s) or higher dose. In both cases, this is definitely a longer occurs at 132 mm hg but at 142 mm hg. Table VI
dangerous practice as it may subject patients to other medical depicts the pattern of the change in drug therapy.
complications.
TABLE VI. SOLUTION COMPARISON FOR VARIOUS MAXIMUM
When the model is run for a LOS shorter by a day, mono ALLOWABLE MAP
drug therapy is no longer an optimal treatment choice even
Maximum MAP0 (mm hg)
when MAP0 is merely 110 mm hg. However, for LOS longer Allowable
than 4 days, the optimal solution remains the same. The results MAP 110 120 130 140 150 160 170
obtained for varying LOS are as tabulated in Table 5. 100 A A AC ABC ABC ABC ABC

TABLE V. SOLUTION COMPARISON FOR VARIOUS LOS 110 A A A AC ABC ABC ABC

MAP0 (mm hg) 120 A A A A AC ABC ABC

LOS
110 120 130 140 150 160 170 130 A A A A A AC ABC
2 AC AC ABC ABC ABC ABC ABC
It is clear that when the minimal allowable MAP level is
3 AC AC AC ABC ABC ABC ABC adjusted, the optimal solution generated remains the same
4 A A A AC ABC ABC ABC while changes in the maximum allowable MAP level causes
similar changes to the original guideline. This is unsurprising
5 A A A AC ABC ABC ABC
as changes in the maximum allowable MAP level changes the
6 A A A AC ABC ABC ABC reduction level per day which is closely connected to the
choice of drug therapy to be administered.
It can be concluded, thus, that the feasibility range of this
constraint is [4,∞) whereby when the LOS is less than 4, even IV. CONCLUSION
patients who are just slightly over the allowable range are to
be administered with both ACE inhibitors and calcium Based on the conducted SA and POA, it is concluded that
channel blocker which is definitely a strong combination for a a patient’s initial MAP, the benchmarking LOS as well as the
slightly elevated MAP0. However, when the LOS is four days maximum allowable MAP level affect the solution derived
or more, the treatment choice remains the same. This indicates from the model. Whereas the weightage of the goals and the
a more reasonable choice of treatment can be administered to patient’s minimum allowable MAP level does not play a role
a patient if a shorter LOS alone is not the aim of the attending and therefore, any changes pertaining to these two constraints
physician. will not affect a physician’s decision in determining the drug
therapy to be administered.
D. Changes in the Minimum Allowable MAP
ACKNOWLEDGMENT
In the original model, the minimum allowable MAP was
The authors would like to thank the Malaysian Ministry of
set to be 70 mm hg as the normal MAP is 70-110mm hg.
Since an MAP of at least 60 mm hg is required to keep blood Higher Education for their financial funding through
flowing through the vasculature in humans [6], the Fundamental Research Grant Scheme (FRGS) vote number
significance of lowering the minimum allowable MAP is also R.J130000.7809.4F470. This support is gratefully
checked by running the model for varying minimum MAP acknowledged. The authors would also like to thank UTM
value between 60 and 70 mm hg. The results evidently shows Centre for Industrial and Applied Mathematics and
the solution remains unchanged and thus the feasibility range Department of Mathematical Sciences, Faculty of Science,
of this constraint is [60,70]. UTM for the support in conducting this research work.
This is a clear indication that the minimum allowable MAP
level does not play a role in determining the drug therapy REFERENCES
choice in an ischemic stroke patient. A possible reason here [1] R.J.G. Arnold (Ed.). Pharmacoeconomics From Theory to Practice.
could be the rarity of patients’ MAP level dropping to this level Fluorida:CRC Press, Taylor & Francis Group, LLC, 2010.
despite the strength of the anti-hypertensive administered due [2] P. Muening,P. Cost-Effectiveness Analysis in Health A Practical
to the elevated blood pressure during the stroke attack. Approach. San Fransisco:John Wiley & Sons, 2008.
[3] R. Rajendran, Z.M. Zainuddin and B. Idris, “Cost-effectiveness analysis
E. Changes in the Maximum Allowable MAP of the antiplatelet treatment administered on ischemic stroke patients
using goal programming approach”, in STATISTICS AND
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analyzed to observe the change in the original optimal solution
with various maximum allowable MAP level. In this case, the

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[4] Malaysian Clinical Practice Guidelines Development Group, “Clinical P. Team, "Mean Arterial Pressure Calculator - PhysiologyWeb",
Practice Guidelines on Management of Ischaemic Stroke (2nd Edition)”, Physiologyweb.com, 2016. [Online]. Available:
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Location Routing Inventory Problem with
Transshipment points using p-center
S.Sarifah Radiah Shariff
Centre for Statistical and Decision Science Studies,
Faculty of Computer and Mathematical Sciences,
UniversitiTeknologi MARA, 40450 Shah Alam, Selangor,
MALAYSIA
shari990@salam.uitm.edu.my
Abstract—Location Routing Inventory Problem with
Transshipment (LRIP-T) is a collaboration of the three
components in the supply chain which are location-allocation,
vehicle routing and inventory management problems that allows
transshipment process, in a way that the total system cost and the
total operational time are minimized. This study is to determine a
set of customer points to act as the transshipment point as and
when it is necessary, based on the surplus quantities it has, the
quantities to ship to the needing customers and the sequence in
which customers are replenished by homogeneous fleet of
vehicles. This LRIP-T is modified by making one or more of the
customer points in the distribution system as the transshipment
points with the selection of the points are done using p-center.
Sensitivity analysis for two cases: 1) unlimited supply, 2) limited
supply are presented. Results show important savings achieved
when compared to the existing model in solving the supply chain
problem.
Keywords- Location Inventory Routing Problem with
Transshipment, p-center
I. INTRODUCTION
This Location routing inventory problem (LRIP) is an
integration of three keys logistics decision problems which are
location-allocation, vehicle routing and inventory
management. LRIP arises when decisions on the three
problems must be taken simultaneously. According to [1],
LRIP in the distribution systems is to allocate depots from
several potential locations to schedule the routes for vehicle in
meeting the customer’s demand and to determine the
inventory policy based on the information of customer’s
demands in order to minimize the system’s total costs.
Location inventory routing problem (LRIP) is a branch of
logistic study that is not widely explores by the researchers
due to the interrelated decision areas. However, excellent
integration consequently presents significant saving costs as
simultaneous decisions imposed in solving the problems.
Not having enough stock to fulfill the customer’s demand
or stock out is one of issues in the supply chain distribution.
This unexpected situation occurred when there is an excess
demand that lead to falling of inventories. When this
happened, customers tend to purchase goods at another store
or does not purchase at all. In addition, when a substitution is
made, the retailer and supplier lose their potential sale as
customers start to switch to another substitute and they may
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Mohd Omar and Noor Hasnah Moin
Institute of Mathematical Sciences,
Faculty of Science, University of Malaya,
Kuala Lumpur, MALAYSIA
mohd@um.edu.my, noor_hasnah@um.edu.my
experience customer’s dissatisfaction, worst outcome is losing
a customer. It is vice versa of surplus where surplus is
described as a situation to retain excess inventory. Surplus can
cause profit loss to a company. When there is a surplus, it
takes up space and increased holding costs. We have seen the
impact of both issues in supply chain, thus we consider
incorporating the transshipment process in order to prevent it
from happening.
Transshipment has important role in the supply chain
as it allows the goods to be shipped from depot to a customer
or from a customer with excess stock to be shipped to another
customer. It is profitable to the supplier as they can save the
transportation cost in terms of delivering goods to the
respective customer and at the same time, customer can also
save cost in terms of storage space and obsolete the access
stock. Several studies implemented transshipment and proved
that it is effective compared with the LRIP without
transshipment. Researchers tend to integrate transshipment
with inventory routing problem (IRP) such as researcher [4]
and [5]. IRP is the combination of two problems in operation
research; vehicle routing and inventory and IRPT is the
extension of IRP with insertion of transshipment. In both
studies they used the customers as the transshipment points and
we also implemented the similar technique. The transshipment
is only allowed when the location of transshipment point with
retailer are nearer compared to the location of supplier. It is
profitable to the supplier as they can save the transportation
cost because of the short distance of travel to the customers.
Other than IRPT, some researchers also has
incorporated vehicle routing problem (VRP) with
transshipment. This compatible extension of VRP is called the
vehicle routing problem with transshipment (VRPT). There
are only a few studies that focused on VRPT as it is NP-hard
problem which is difficult to solve by using normal
optimization method. Researchers [6] developed a mixed
integer programming model and algorithm for VRPT but the
study only obtained a satisfied solution due to NP-hardness.
However, the [6] study has been improved by [7] using the
control variables that are able to determine the routes. Their
models are based on dynamic programming, combination of
two-phase method and branch-and-bound method. These
methods are found to be efficient in improving the efficiency
 Back to Contents

of the program running and increase the satisfaction level of Where

solutions. In this study, we consider LRIP-T or Location N : number of customer points
Routing Inventory Problem with Transshipment by applying M : number of logistics centers
p-center and p-median to select the transshipment center.
h : index of customer point or logistic centers
II. RESEARCH METHODS (1 ≤ h ≤ N + M )
A. Model g : index of customer point or logistic
centers (1 ≤ g ≤ N + M )
The following model is adapted: i : index of customer point (1 ≤ i ≤ N )
j : index of logistics center (N +1 ≤ j ≤ N + M )
Minimize Total Cost k : index of vehicles or routes (1 ≤ k ≤ K )
t : index of time periods of planning horizon ( p )(1 ≤ t ≤ p)
N +M
 l P l  

j = N +1
( E j +   ( B j + Y j ) H j (t ) + q j ⋅ ⋅  (V j (t ) + α j γ j (t )) + B j  ⋅ A j 
 t =1 l i =1  
E j : cost to establish the logistics center j
l K N +M N +M
 Dhg : distance between point h and point g
+    Dhg ⋅ Whgkt 

t =1 k =1 h =1 g =1  P : length of the planning horizon
CK : capacity of vehicles
Subject to: c : unit cost of vehicles
B j : cost of dispatching the product from factory to logistics
 
K N +M
k =1 h =1
Wgikt = 1 , for all i , t (1)
center j
 W −  g =1 Whgki = 0 , for all h , k , and I
N +M N +M
g =1 ghki α j : probability of being reused after a circulation
(2) qj : holding cost of products (in unit) at logistics center j

 
N +M N +M
h =1 g =1
W ghki ≤ 1 , for all k , and t (3) Yj : ordering cost of every time in logistics center j
β kt (i ) ≤ CK , where i ∈ {0,1,2,, N } (4)
L j : lead time in logistics center j where, L j ≤ P / p
τ i (t ) ≤ U ( f i (t )) , for all I (5) V j (t ) : logistics center’s j inventory level start at period t,
where V j (t = 0) = 0 stands for inventory is zero at the
 Wihkt − h =1 W jhkt − S ij ≤ 1 ,for all i , j , k and
N +M N +M
h =1
initial stage of planning horizon
t (6)
Wghkt ∈ {0,1}, for all g , h , k and t (7) And the decision variables are:
A j ∈ {0,1} , for all j (8) W hgkt : 1, if point h immediately go to point g on route k in
period t ; 0, otherwise
S ij ∈ {0,1} , for all i and j (9)
S ij : 1, if customer i is allocated to logistics center j ; 0,
O jkt ∈ {0,1} , for all j , k , and t (10) otherwise
O j ∈ {0,1}, for all j (11) Aj : 1, if logistics center j is opened; 0, otherwise
O jkt : 1, if route k is served by logistics center j in period
The objective function is to minimize the total system cost
expressed by the summation of logistics center’s set up cost,
t ; 0, otherwise
transportation cost and inventory cost. Constraint (1) ensures H j (t ) : 1, if there exists an order for new product at logistics
that each customer appears in only one route during period t. center j ; 0, otherwise
Constraint (2) states that every point entered should be the
same point the vehicle leaves. Constraint (3) insures that each Ri (t ) : actual collection volume from customer i in period t
route only served by one logistics center. Constraint (4) and
(5) are the statement for any period, in any point the total load
is less than the vehicle capacity and the actual volume is equal B. Insertion of Transhipment Parameters
or less than expected volume. Constraint (6) states that a In this study, the transshipment cost is incorporated into
customer can be allocated to a logistics center if there is a total system cost of existing model adapted from [8]. p-center
route passed by the customer. Constraint (7)-(11) insures the model is used to select the best transshipment point. In p-
decision variable’s integrality. center problem the maximum distance between the

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distribution point and customer’s node is minimized. Hence,

the formulation of the objective function is as below: TABLE III. DEMAND OF CUSTOMER POINTS

Minimize Customer Demand Customer Demand Customer Demand

MaxD C1 42 C6 61 C11 32
N+M
l P l 
+  (Ej +(Bj +Yj )Hj (t) +qj ⋅ ⋅ (Vj (t) +αjγ j (t))+ Bj ⋅ Aj C2 56 C7 37 C12 69
j=N+1  t=1 l i=1  C3 53 C8 45 C13 45
where C4 34 C9 48 C14 62
rij : the cost (unit) of transshipping product from i to j C5 48 C10 68 C15 47
Qvij : the quantity transshipped from customer i in period t Total demand =747 units
MaxD : the total cost at the maximum distance,
l K N +M N +M
Maximize    D hg ⋅ Whgkt IV. RESULTS
t =1 k =1 h =1 g =1 In Phase I, a sensitivity analysis is done by dividing into
two cases, to analyze the stability of data. First case is the
III. DATA ANALYSIS
unlimited total supply restricted to only one logistics center
A. Data preparation open and the second case is to analyze limited total supply
Data are adapted based on [8] and used based on the also with one logistics center open. For Case 1, the total
following assumptions. First, there are 5 candidates of logistics demand is 747 units. In this case, we consider a balanced
centers and 15 customers, the capacity of vehicles (CK) is 125 transportation problem where total demand equals to total
units, the unit cost of vehicles (c) is 1/unit distance and the supply. However the total supply for Case 2 is set to be 900
probability of being reused after a circulation (αj) is 0.9. In units. The entire inventories are distributed by identical fleet
addition, we assume the expected distribution demand is of vehicles and similar in capacity. Each vehicle only can visit
randomly populated and obey the Poisson distribution with = one customer. The vehicle needs to return to logistics center
2 and = 1. Table I and II present the parameter values of when the inventory capacities in the vehicle are unable to
logistics centers and customer points. cover the next customer demand. The leftover inventory is
defined as a waste. There are 10 trials to determine the
TABLE I. LOGISTICS CENTERS
customer to visit and also the route for each logistics center.
Logistics Coordinates αj Setup The decisions are made by considering the total waste and
centers cost total distance travelled.
D1 (43,49) 25 10,000 In Phase II, the transshipment point is determined based on
p-center. In the actual scenario, the total system cost is the
D2 (1,12) 20 12,000 summation of establishing cost of logistics centers,
D3 (41,30) 30 14,000 transportation cost and inventory cost. There are some
D4 (5,58) 10 13,000 modified costs for LRIP-T in this study.
i. Logistics Center Establishment Cost- No
D5 (24,19) 15 12,000
establishment cost needed as the transshipment center
will be selected among the customers.
ii. Transportation cost- Transportation cost covers the
TABLE II. CUSTOMER POINTS from the distribution centers and from the
transshipment centers.
Customer Coordinates Customer Coordinates iii. Inventory cost- The inventory level at the
points points transshipment center is assumed to be zero, or the
C1 (15,3) C9 (3,35) center is assumed not to keep any stock.
C2 (18,24) C10 (33,21)
A. Phase I
C3 (2,59) C11 (45,27)
This shows the results on the sensitivity analysis that
C4 (9,6) C12 (46,6)
determines the logistics centre that has the lowest average
C5 (49,54) C13 (24,32) distance travelled.
C6 (33,10) C14 (28,33) In Case I, as shown in Table IV, the logistics center D1 is
C7 (30,50) C15 (2,0) determined to be the best center with the lowest average
travelled distance of 96.67 km.
C8 (24,59)

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TABLE IV. CASE I:UNLIMITED SUPPLY C3 2276.4 C5 336.0

C4 1867.6 C9 700.0
Logistics Vehicle Total Average Average C6 1554.0 C14 400.4
Center Used Distance Distance Waste
(km) (km) (unit) C7 2632.0 C15 532.0
D1 7 676.7 96.67 18 C8 1920.8
D2 8 778.51 97.31 31 C10 1103.2
D3 8 1135.62 141.95 31 C12 2105.6
D4 8 1055.43 131.925 31 C13 1265.6
D5 8 850.51 106.3125 27 Total cost =19756.8

For Case II, where the supply is limited, the logistics center Fig.1 shows the possible distribution network generated by
D1 also appear to be eth best logistics center with average the proposed result in Table VI.
travelled distance is 46.05 km only.
.

TABLE V. CASE II: LIMITED SUPPLY

Logistics Total Average Average Average

Center distance Distance Distance/Vehicle Waste
(km) (km) (km) (unit)
D1 690.69 46.05 230.23 51
D2 725.91 48.39 241.97 51
D3 1022.31 68.15 340.77 51
D4 956.7 63.78 318.9 51
D5 749.79 49.99 249.93 51

B. Phase II

Fig.1: Possible Distribution Network of Proposed result

Originated from Phase I, D1 is selected as the best logistics
center. In this phase, a transshipment point is determined based
on the notion of p-center.
Initial sets of routes are chosen and MaxD is calculated and
minimized. Each customer from C1 up till C15 has equal
chance of being chosen as the transshipment point. Total
transportation system cost is calculated and the best result is
based on the set that produces the lowest cost. Details of each
customer being the chosen transshipment point are summarized
in Table VII and shows that C11 produces the lowest cost.
Table VI shows the final answer that lists the customers
that being covered by D1 as the logistics center and those that
being covered by C11 as the transshipment point. This also
shows the lowest cost of 19, 756.8.
TABLE VI. COVERAGE OF LOGISTICS CENTER AND THE TRANSSHIPMENT
POINT
V. DISCUSSIONS
Based on the results from Case 1 and Case 2 (sensitivity
analysis), we identified that the smallest distance and efficient
logistics center to be assigned for transshipment process is D1,
676.70 km for Case 1 (unlimited supply) and 690.69 km for
Case 2 (limited supply). As D1 entered the selection process by
using p-center, C11 is selected as the transshipment point and
yields a better performance on distance travelled (658.56 km)
with small total cost 19756.80 compared to LRIP in Case 1
when only one logistics center is opened. This means that
LRIP-T model has performed tremendously well in order to
save the total costs for all the three systems; location, inventory
and routing.
Table VII presents the comparisons between the LRIP and
LRIP-T.
TABLE VII. COMPARISON OF MODELS

D1 Coverage C11 Coverage Model LRIP LRIP-T

Customer Cost Customer Cost Distance

676.7 658.6
points points (km)
C2 2287.6 C1 775.6

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In this paper, we have proposed a new way of determining
the transshipment point among the customers for location
routing inventory problem. We present a sensitivity analysis on
LRIP model as a preparation for the transshipment process.
The selection of routes in this analysis are randomly picked and
tested in order to achieve the maximum distance that has the
minimum total system cost. The total system cost has
considered the new technique of choosing the transshipment
point using p-center. This technique has excluded some costs
and only has the total distance travelled in the formulation. In
future research, we will further consider using the heuristic
method called genetic algorithm for a better route’s selection.
Another area of possible research involves LRIP-T together
with development of new algorithm is the stochastic demand.
In real life, fluctuation of customer’s demand can affect the
supply chain distribution.
ACKNOWLEDGMENT
We would like to acknowledge Ministry of Higher
Education Malaysia for funding this research through the
Research Management Institute (RMI) of Universiti Teknologi
MARA, Malaysia, Grant No: 600-RMI/FRGS 5/3(9/2013)).
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REFERENCES
[1] W. Xuefeng, “An integrated multi-depot location-inventory-routing
problem for logistics distribution system planning of a chain enterprise”
in Logistics Systems and Intelligent Management, 2010 International
Conference on 3, Nanchang China: IEEE, 2010, pp. 1427 – 1431.
[2] M.G. Granada, and C. W. Silva, “Inventory location routing problem: a
column generation approach.” in Proceedings of the 2012 International
Conference on Industrial Engineering and Operations Management,
Istanbul, Turkey, 2012, pp. 482-491
[3] L. Bertazzi, G. Paletta, and M.G. Speranza, Transportation Science,
36(1), 119-132 (2002).
[4] A. J. Kleywegt, V.S. Nori, and M.W.P. Savelsbergh, Transportation
Science, 36(1), 94-118 (2002). [5] Q.H. Zhao, “Study on logistics
optimization models”, PhD thesis, Beihang University, 2003.
[6] F.M. Yang, and H.J. Xiao, Systems Engineering, Theory & Practice,
27(3), 28-35 (2007).
[7] B. Zhang, Z. Ma and S. Jiang , “Location routing inventory problem with
stochastic demand in logistics distribution systems”, In Proceeding of:
Wireless Communications, Networking and Mobile Computing, IEEE
Xplore, 2008, pp.1-4.
[8] H. Ahmad, P. Hamzah, Z.A.M Md Yasin and S.S.R. Shariff, “Location
Routing Inventory Problem with Transshipment (LRIP-T)” in
Proceedings of the 2014 International Conference on Industrial
Engineering and Operations Management, Bali, Indonesia,(January 7 – 9,
2014), pp. 1595-1605.
 Back to Contents

Optimal Worker Assignment under Limited-Cycled

Model with Mutiple Periods
- Consecutive Delay Times is Limited -

Xianda Kong, Hisashi Yamamoto, Shiro Masuda

Department of System Design, Tokyo Metropolitan University
6-6, Asahigaoka, Hino, Tokyo, 191-0065, Japan
{kong-xianda, yamamoto, smasuda}@tmu.ac.jp

Abstract— strictly keep delivery date is the life of the
manufacturing enterprise indefinitely. Especially in the
developing countries such as China, labor-intensive enterprise is
still the mainstay industry. As a result, assembly line is widely
used as a manufacturing process for reducing costs and
production time. However, laborer is the main factor of
production speed in such a labor-intensive enterprise. So because
of the various working capacity of worker, one work process may
delay or idle, and this will influence the rear several processes.
This unforeseeable consecutive delay of process may influence the
whole manufacturing production. So we build a model, called as
limited-cycled model with multiple periods (LCMwMP), to
assume evaluating the influence risk. In order to minimize the
risk, the assignment of the workers, especially untrained worker
is focused on. In previous researches, rules of optimal worker
assignment with two kinds of workers were proposed in which
one, two and three untrained workers exist. As it is, the non-
limited consecutive delay time is not allowed in the fact world. In
this paper, we deal with an assembly line as LCMwMP model
when there are two kinds of workers, who are distinguished by
worker’s efficiency. We consider an optimization problem with
three untrained workers, specially consider limited consecutive
delay times as twice or three times, for comparing with the
previous research in which consecutive delay times is not limited.
And, by some numeral experiments, we will conclude several
rules of optimal assignment.
Keywords—optimal worker assignment; multiple periods;
consecutive delay times; line balancing; wave phenomenon.
I. INTRODUCTION
Even the assembly line has been widely used for several
decades, till now, we can still benefit from it is also commonly
used in the labor-intensive enterprise for reducing processing
costs and production time. However, no matter how increased
the reliability of the machine on the assembly line is by the
developing of technology, human error of the worker,
appearing as mistake or failure, is inescapable. And it will lead
to a delay of whole production processes. Also, because of the
variability of ability of workers, the time of the same
processing is different from people to people. Especially, the
new recruit is not skillful, so they are considered with a higher
probability of delay. As a result, there is no important thing
than arranging these new recruits, which is called as untrained-
workers in the essay.
The first mathematical formalization of assembly line
balancing is established by Salveson [1] 60 years ago,
assembly line balancing problem is popularly researched and
developed [2]. It assumes a homogeneous skill set to solve the
problem of worker assignment in the above literature, that is to
say, the skill of workers is not distinguished. And during
assembly line balancing problem develops, Yamamoto et al.
[3] produce the limit-cycle model with multiple periods
(LCMwMP). This model is set with constraint condition, (e.g.,
processing time with a target) which is repeated in every
multiple periods. If the constraint condition is broken through,
an expected risk (e.g., penalty cost) will be occurred.
And according whether the constraint condition (target
processing time) reset or not, The LCMwMP is divided into
reset model and non-reset model. In the field of reset model, a
recursive formula for the total expected risk and an algorithm
for optimal assignments based on the branch and bound
method are proposed by Yamamoto et al. [4].
Recently, Yamamoto et al. [5] and Kong et al. [6] proposed
properties of optimal worker assignment with two kinds of
workers in which one special worker exists. Then, Kong et al.
[7] [8] proposed rules of optimal worker assignment with two
special workers when special workers are less than 3.
After that Song et al. [9] [10] continued the research and
expanded the rules of optimal assignment with the number of
workers in minority group being 3, but only situation when
untrained worker is minority is discussed. It finally
demonstrates that when 3 untrained workers exist, it is the
optimal assignment when and only when the first process on
the assembly line is set by untrained worker.
In this paper, based on the researches above, especially
according to the rules which found by Kong et al. [7] and Song
et al. [10], we try to expand the rules of optimal assignment of
workers under this LCMwMP models when the allowed
consecutive delay times is limited. This paper is written as the
following prescribed order. First, reset model as a simple
model of LCMwMP is introduced. Then, some assumptions are
proposed according to the previous researches and some

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numerical experiments are researched assuming the processing
time as Erlang distribution. Finally, the other rules on other
certain conditions are discussed.
II. MODEL EXPLANATION
In this section, we consider a ‘Reset model’ which is a
simple model of the LCMwMP. Then, we define the optimal
assignment problem in reset model.
2.1 Reset Model of LCMwMP
The model is considered based on the following
definitions by Song et al. [11] in Fig. 1:
(1) In an assembly line system, n is the number of
processes. The production (we can it job in the following
article) is processed in a rotation of process 1, process 2, ...,
and process n. One production will be processed by all n
processes.
(2) Z is the cycle time of all of the processes, which can be
also considered as target processing time. All of the jobs
should be accomplished in current process and moved to next
process by time Z.
(3) Because of the various processing abilities of workers,
the actual processing time cannot always obey the limit of
target processing time Z. Idle and delay should be also
concerned in this model. For 1 ≤ w ≤ n , processing time of
process m is donated by Tw.
In this model, a regular processing cost Ct (> 0) per unit
time will permanently occur during target processing time Z,
regardless whether it is idle or delay. It is for the reason that
although the job is accomplished prematurely in current
process, the next process may be occupied by another job. So,
the job must wait for its start. And as a result, the idle cost per
unit time, C s (≥ 0) will occur. On the other hand, if the
processing time is longer than Z, it is supposed that the delay
of process time can be recovered by the overtime work or
spare workers in this process, and as a result overtime work or
additional resources will be requested in order to meet the
target time Z. So the delay cost per unit time, C P( k ) (≥ 0) , will
occur (that is why we call the model a ‘Reset Model’).
As a summary of above, we get:
(4) The processing cost per unit time, Ct (> 0) , for the
target processing time limit occurs in each process.
(5) When Tw ≤ Z , the idle cost per unit time, C s (≥ 0)
occurs.
Fig. 1. Description of idle and delay cost in reset model of LCMwMP
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(6) When Tw > Z , the delay cost per unit time, C P(i ) ( > 0) ,
occurs in the process if delay occurs in consecutive i processes
before its process, for i = 1,2,..., n . If the delay continues for
several processes, it can be considered that it will cost more for
recover the delay. So it is supposed that C P(i ) is increasing in i,
which can be expressed as 0 < C P(1) ... < C P( n ) .
2.2 Assumptions of Processing Ability of Workers
The aim of this paper is to search the optimal assignment
of workers when 3 untrained minority worker exists, so the
reasonable assumption of the property of worker is
particularly important. And the assumption is the followings.
(1) Only one worker can be assigned to each process. And
each process must be assigned with one worker.
(2) The processing time of workers is self-dependent. The
processing ability is decided by the property of worker own
and is not influenced from the processing status such as idle or
delay.
(3) In this paper, the workers are distinguished into two
types of workers by the processing ability, marking as A and B.
Although the processing abilities are various from each other,
it is difficult to calculate the optimal assignment and explain
the rules clearly and briefly without using such marks. Worker
A represents for untrained worker whose processing ability is
lower than others, and A represents untrained worker. The
number of A is less than B, which means untrained worker A is
minority. It can be considered that one day, three workers are
out of work. In this case, new recruits are needed to help. They
are untrained. It can be assumed as a reasonable situation in
the real factory.
(4) These two kinds of workers have different probability
of idle or delay. If the processing time of worker is marked as
Tl, where l ∈ {A, B} ,
Pl : The probability of worker l becoming idle, which is
Pr{ Tl ≤ Z} ,
Ql : The probability of the worker l becoming delayed,
which is Pr{ Tl >Z},
TSl : The expected idle time of the worker l , which is
E[(Z－Tl) I(Tl ≤ Z)] ,
TLl : The expected delay time of the worker l , which is
E[(Tl－Z) I(Tl >Z)] ,
where I(O) is an index function and given as follows:
1 (O is true)
I (O ) = 
0 (O is not true).
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In this paper, we call π * the optimal assignment.

2.3 Optimal Assignment Problem under Reset Model
However, it is easily known from (1) that if the target
We consider that three well-trained workers are allocated processing time Z is constant, the target production cost,
in this reset model. One of the most important problems is nC t Z , is also constant, so we can simplify (2) to
how to allocate workers to processes for minimizing the
expected cost in n processes. We call such a problem the
optimal assignment problem. For describing the optimal
( )
f n; π * = min
1≤i < j < k ≤ n
f (n; π (i, j, k ) ) (3)
assignment problem, we define the following notations [6]:
For 1 ≤ i < j < k ≤ n ,
π (i, j , k ) : 3 well-trained workers are assigned to process i, III. NUMERAL EXPERIMENT
j, and k, and the other n-3 untrained-workers are assigned to The processing time of these two kinds of workers
the other processes . follows Erlang distribution. In other word, Ql, the probability
TC (n; π (i , j , k ) ) : The total costs of processes 1 to n when of the worker l becoming delayed is
workers are allocated by assignment π (i, j , k ) .which can be m −1
( μ l Z ) k − μl Z
expressed as Ql = 
k =0 k!
e (4)

TC (n; π (i, j , k ) ) = nCt Z + f (n; π (i, j , k ) ) (1) where l ∈ {A, B} .

And Pl, the probability of the worker l becoming idle, is
where, 1-Ql.
f (n; π (i, j , k ) ) : The sum of the expected idle cost and the Here is the description of the parameter of Erlang
expected delay cost caused in process n. distribution.
By using these notations, the optimal assignment problem (1) μl is the processing rate. And when μl is bigger, it means
with multiple periods becomes the problem of obtaining processing speed is higher and lower possibility of delay
assignment in the following equation: of processing.
(2) m is the shape parameter. As mentioned in the introduction
( )
TC n; π * = min TC (n; π (i, j, k ) )
1≤i < j < k ≤ n
(2) above. m can be considered as the quantity of tasks in one
process. If the shape parameter m=1, Erlang distribution
simplifies to the exponential distribution.
Table 1. Boundary of centralized and transition optimal assignment when n=7, m=2, consecutive delay cost set 1

μA
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 …
μB
… … … … … … … … … …
0.5 AAABBBB AAABBBB AAABBBB AAABBBB × × × × …
0.6 AAABBBB AAABBBB AAABBBB
CENTRALIZED AAABBBB AAABBBB × × × …
0.7 AAABBBB AAABBBB AAABBBB AAABBBB AAABBBB AAABBBB × × …
0.8 AAABBBB AAABBBB AAABBBB AAABBBB AABBBBA AABBBBA AABBBBA × …
0.9 AAABBBB AAABBBB AAABBBB AABBBBA AABBBBA TRANSITIO
AABBBBA N AABBBBA AABBBBA …
1.0 AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA …
… … … … … … … … … …

Table 2. Boundary of transition and decentralized optimal assignment when n=7, m=2, consecutive delay cost set 1

μA
0.1 … 1.0 1.1 1.2 1.3 1.4 1.5 1.6 …
μB
… … … … … … … … … …
1.4 ABABBBA … ABABBBA TRANSITIO
AABBBB N A
A AABBBB AABBBBA …
× × ×
1.5 ABBABBA … ABBABBA ABABBBA AABBBBA AABBBBA AABBBBA × × …
1.6 ABBABBA … ABBABBA ABBABBA ABBABBA ABABBBA ABABBBA AABBBBA × …
1.7 ABBABBA … ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA AABBBBA AABBBBA …
DECENTRALIZED
1.8 ABBABBA … ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABABBBA …
1.9 ABBABBA … ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA …
… … … … … … … … … …

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Table 3. Boundary of transition optimal assignment when n=7, m=2, consecutive delay cost set 2

μA
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 …
μB
… … … … … … … … … …
0.5 AABBBBA AABBBBA AABBBBA AABBBBA × × × × …
0.6 AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA × × × …
0.7 AABBBBA AABBBBATRANSITIO
AABBBBAN AABBBBA AABBBBA AABBBBA × × …
0.8 AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA × …
0.9 AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA ABABBBA ABABBBA ABABBBA …
… … … … … … … … … …

Table 4. Boundary of transition and decentralized optimal assignment when n=7, m=2, consecutive delay cost set 2

μA 0.1
… 1.0 1.1 1.2 1.3 1.4 1.5 1.6 …
μB
… … … … … … … … … …
1.4 ABABBBA … ABABBBA AABBBBA AABBBBA AABBBBA × × × …
1.5 ABBABBA … ABBABBA ABABBBA AABBBBA AABBBBA AABBBBA × × …
1.6 ABBABBA … ABBABBA ABABBBA ABABBB A ABABBB
TRANSITIONA ABABBBA AABBBBA × …
1.7 ABBABBA … ABBABBA ABABBBA ABABBBA ABABBBA ABABBBA AABBBBA AABBBBA …
1.8 ABBABBA … ABBABBA ABBABBA ABBABBA ABABBBA ABABBBA ABABBBA ABABBBA …
DECENTRALIZED
1.9 ABBABBA … ABBABBA ABBABBA ABBABBA ABABBBA ABABBBA ABABBBA ABABBBA …
2.0 ABBABBA … ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA …
… … … … … … … … … …

Table 5. Boundary of centralized and transition optimal assignment when n=7, m=2, consecutive delay cost set 3

μA
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 …
μB
… … … … … … … … … …
0.5 AAABBBB AAABBBBLIZED
CENTRA AAABBBB AAABBBB × × × × …
0.6 AAABBBB AAABBBB AAABBBB AABBBBA AABBBBA × × × …
0.7 AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA × × …
0.8 AABBBBA AABBBBA AABBBBA AATRANSITIO
BBBBA AANBBBBA AABBBBA AABBBBA × …
0.9 AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA AABBBBA …
… … … … … … … … … …

Table 6. Boundary of transition and decentralized optimal assignment when n=7, m=2, consecutive delay cost set 3

μA
0.1 … 1.0 1.1 1.2 1.3 1.4 1.5 1.6 …
μB
… … … … … … … … … …
1.4 ABABBBA … ABABBBA AABBBBA AABBBBA AABBBBA × × × …
1.5 ABBABBA … ABBABBA ABABBBA AABBBBA AABBBBA AABBBBA × × …
1.6 ABBABBA … ABBABBA ABBABBA ABBABBA ABABBBA ABABBBA AABBBBA × …
1.7 ABBABBA … ABBABBA ABBABBA ABBABBA ABABBBA ABABBBA AABBBBA AABBBBA …
1.8 ABBABBA DECENTRALIZED
… ABBABBA ABBABBA ABBABBA ABABBBA TRANSITIO
ABABBB N A
A ABABBB ABABBBA …
1.9 ABBABBA … ABBABBA ABBABBA ABBABBA ABABBBA ABABBBA ABABBBA ABABBBA …
2.0 ABBABBA … ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA ABBABBA …
… … … … … … … … … …

191

And other parameters are assumed as follows,
Consecutive Delay Cost C P(i ) :
Set 1: C P(1) = 40, C P( 2) = 80, C P(3) = 160, C P( 4) = 320,
C P(5) = 640, C P(6) = 1280, C P(7) = 2560
Set 2: C P(1) = 40, C P( 2) = 80,
C P(3) = C P( 4) = C P(5) = C P( 6) = C P(7 ) = 38219
Set 3: C P(1) = 40, C P( 2) = 80, C P(3) = 160,
C P( 4) = C P(5) = C P(6) = C P( 7) = 38219
Processes n = 7 ; Shape Parameter m=2; Target Processing
Time Z = 2 ; Idle Cost C S = 20 .
Tables 1~6 are the results of the numerical experiments
with deferent consecutive delay cost set and the other
parameters are the same. Different consecutive delay cost
means the allowed consecutive delay times is different.
Tables 1 and 2 are from Song et al. [11]. There are three
types of assignment. They are centralized, transition and
decentralized optimal assignments.
Tables 3 and 4 are the results of optimal assignment with
consecutive delay cost set 2. It means the allowed consecutive
delay times is twice. We get a different range of each optimal
assignment type from Tables 1 and 2. Specially, in this case,
the centralized optimal assignment is not exist.
Tables 5 and 6 are the results of optimal assignment with
consecutive delay cost set 3. It means the allowed consecutive
delay times is three times. We get a different range of each
optimal assignment type from Tables 1 and 2, also, Tables 3
and 4.
From the numerical experiments, we can say, when the
allowed consecutive delay times is limited, the optimal
assignment is different.
IV. CONCLUSION
In this paper, we deal with an assembly line as LCMwMP
model when there are two kinds of workers, who are
distinguished by worker’s efficiency. We consider an
optimization problem with three untrained workers, specially
consider allowed consecutive delay times as twice or three
times, for comparing with the previous research which no
allowed consecutive delay times. And, by some numeral
experiments, we will conclude several rules of optimal
assignment. From the numerical experiments, we can say,
when the allowed consecutive delay times is limited, the
optimal assignment is different.
192
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And as a future research, we will try to demonstrate these
rules and propose rules commonly applying to all cases
without concerning the number of untrained workers and
whether untrained workers are minority or not.
REFERENCES
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[3] H. Yamamoto, M. Matsui and J. Liu. A basic study on a limited-cycle
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[4] H. Yamamoto, M. Matsui and X. Bai. A branch and bound method for
the optimal assignment during a Limit-cycle problem with multiple
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[5] H. Yamamoto, J. Sun, M. Matsui and X. Kong. A study of the optimal
arrangement in the reset limited-cycle problem with multiple periods:
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[6] X. Kong, J. Sun, H. Yamamoto and M. Matsui. A study of an optimal
arrangement of a processing system with two kinds of workers in a
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(APIEMS2010), Melaka, Malaysia, 2010. (on CD-ROM)
[7] X. Kong, J. Sun, H. Yamamoto and M. Matsui. Two special Workers’
optimal assignment with two kinds of workers under a limited-cycle
problem with multiple periods. Proceedings of the 21st International
Conference of Production Research (ICPR2011), Stuttgart, Germany,
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[8] X. Kong, J. Sun, H. Yamamoto and M. Matsui. Optimal Worker
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Periods, Asian Journal of Management Science and Applications, Vol.
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Systems, Vol. 14, No. 4, pp. 372-378. Dec. 2015.

Method for an Energy-Cost-Oriented
Manufacturing Control to Reduce Energy Costs
Energy Cost Reduction by Using a New Sequencing Method
IPH – Institut für Integrierte Produktion Hannover gGmbH
Abstract— Rising electricity prices for industrial companies
result in increasing energy costs and thus lower international
competitiveness. Due to increasing electricity price fluctuations,
savings in energy costs without capital-intensive investments are
possible by implementing specific organizational methods to
process energy-intensive orders at times of low prices and ener-
gy-low orders at times of high prices.
KEYWORDS — ENERGY COSTS; ENERGY PRICE; MANUFACTURING
CONTROL; SEQUENCING.
I. INTRODUCTION
Since the turn of the millennium, in almost every industrial
nation, electricity prices for manufacturing companies have
been rising continuously (Fig. 1) [1]. This is mainly a result of
taxes and duties to support the integration of renewable ener-
gies and the turning away from low-cost electricity generated
by nuclear power. As a result, the share of the energy costs
relative to the production costs increases, resulting in a lower
competitiveness compared to countries with lower or more
slowly increasing electricity prices [2].
30
25
Electricity Price [€cent/kWh]
20
15
10
5 USA
0 that sequencing has a significant impact on the schedules relia-
2000 2002 2004 2006 2008
Year
2010
Fig. 1 Growth of global industrial electricity prices [1]
Renewable energy sources (such as solar or wind energy
sources) have a fluctuating characteristic and only a partially
predictable feed behavior. As a result, in the medium-term, the
electricity demand must be adapted to the electricity supply.
This demand control (also named demand response) offers, for
example by adjustment of prices, an incentive to shift or
The IGF project 17900 N of the research association BVL is funded via
the German Federation of Industrial Research Associations (AiF) in the
program of Industrial Collective Research (IGF) by the Federal Ministry for
Economic Affairs and Energy (BMWi) based on a decision of the German
Parliament.
Back to Contents
M. Sc. Stefan Willeke
Dr.-Ing. Georg Ullmann
Prof. Dr.-Ing. habil. Peter Nyhuis
Hannover, Germany
willeke@iph-hannover.de
change the electrical load [3, 4]. The European Union (EU)
already asks the European energy suppliers to provide time or
load variable electricity tariffs [5]. The highest electricity price
volatility arises during the trading that occurs in the power
exchanges (for example, the European Energy Exchange in
Germany or the Korean Power Exchange in South Korea),
where, depending on the traded product, the price changes
every 15 minutes. Within a day, it can change up to 8
€cent/kWh. Even negative electricity prices are possible [6].
II. MANUFACTURING CONTROL AND ITS EFFECT
ON ENERGY COSTS
Manufacturing control, as a part of the production planning
and control (PPC), has the ability to enforce the production
plan despite often unavoidable disturbances, as well as to
ensure the compliance of the logistic objectives, such as work
in process (WIP), throughput time, schedule reliability and
utilization [7]. The first subtask of the manufacturing control is
the order generation, which generates concrete work orders out
of customer and stock orders. In addition, planned appoint-
ments to the production program are determined. The order
release specifies the time the order is physically pushed into the
production. Thus, this subtask affects the actual input to the
production. The capacity control decides in the short-term on
France
Germany the reduction of working times and overtimes, and thus on the
Ireland actual output [8]. The fourth and last subtask of manufacturing
Italy
U.K.
control is sequencing. Sequencing determines the processing
Canada sequence of order queuing in front the work stations. The man-
Japan ufacturing control model of LÖDDING is shown in Fig. 2, which
Korea
describes the cause-effect relationships between subtasks of
manufacturing control and the logistic objectives. It is evident
2012 2014
bility, which is the most important logistic objective [8].
The energy consumption of a work station, which ultimate-
ly determines the cost of energy, depends on physical con-
straints, such as the characteristics of work orders of the manu-
factured product variation (for example, revolution speed, press
force, heating power due to size, weight, or geometry). Thus,
the manufacturing control indirectly affects the temporal ener-
gy consumption by defining when each order is processed at a
given work station and thus when the amount of energy con-
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
193
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ConWIP to obtain higher energy efficiency by reducing ener-

Fig. 2 Advanced Manufacturing Control Model
sumption accrues. If a time-variable electricity tariff is taken as
a basis, the manufacturing control affects the resulting energy
costs and opens up a new field of action [9]. Because of the
rapidly changing electricity prices, a fast reaction of the energy
consumption is required. For this reason, an approach for ener-
gy cost-oriented sequencing as a part of the manufacturing
control will be presented in this paper.
III. OVERVIEW OF PREVIOUS WORK
RAGER [11] developed an energy-oriented hybrid evolutionary
scheduling algorithm to reduce energy consumption via high
system utilization, thereby affecting the energy costs in a job
gy consumption and utilizing volatile electricity prices.
SHROUF ET AL. [21] proposed a mathematical model to mini-
mize the energy consumption costs for a single machine pro-
duction planning problem. Scheduling is performed using a
genetic algorithm that utilizes variable energy prices and de-
termines launch times for order processing.
An approach for energy-oriented production control by utiliz-
ing the energy flexibility of a production system was presented
by SCHULTZ ET AL. [22]. The authors developed an energy-
oriented order release, which decontrols orders into the pro-
duction as a function of self-produced energy available. Dis-
ruptions in the scheduled amount of energy available are being
considered. This approach is able to increase a company’s
share of energy-self supply and adapt to volatile energy prices
by providing a better synchronization of energy demand with a
limited energy supply.
GONG ET AL. [23] proposed a method to minimize energy costs
and improve energy efficiency of manufacturing unit process-
es. In this method, energy-cost-aware job order scheduling on
a single machine is performed by a generic algorithm imple-
mented in a mixed-integer linear programming mathematical
model. This algorithm searches for energy-cost-effective
schedules at volatile energy prices.
Reference

Eberspächer et al. 2013 [17]

Pechmann et al. 2012 [14]

Fernandez et al. 2013 [18]

Artigues et al. 2013 [16]
Weinert et al. 2011 [12]
shop with parallel identical work stations. The benefits of this

Schultz et al. 2015 [22]

Langer et al. 2014 [20]
Shrouf et al. 2014 [21]

Gong et al. 2015 [23]

Haag et al. 2012 [13]

Bruzzone 2012 [15]

Böning 2013 [19]

algorithm are higher energy efficiency, reduced number of

Rager 2008 [11]

Junge 2007 [10]

Present Paper
stations in operation, and reduced CO2 emissions.
A PPS Software for increasing the energy efficiency by opti-
Calculating the Lot Size X
mizing the production schedule was presented by PECHMANN In-House
Production Finite Scheduling and Sequence Planning X X X X X X X X X X
et al. [14]. In this approach, scheduling is performed by con- Planning Verifying Availabilty
Topic

Generating Orders X
sidering energy consumption during production steps and load Manufacturing
Control
Order Release X X
Capacity Control X
balancing to avoid high energy demands during peak periods. Sequencing X

The result is reduced overall energy consumption and an ener- Command Variable /
Energy Costs
Energy Comsumption/Efficiency
X X X
X X X X X X X X X
X X X
X X X X
Control Varibale
gy-efficient production schedule with routing alternatives for Energy Self-Generation Efficiency X
Load reducing X X X X
each production step. In addition, a 24-hour power load profile Manipulated Variable
Load shifting X X X X X X X X X X X X X X
Load buffering X X
forecast is calculated to provide to energy providers. Load increasing
FERNANDEZ ET AL. [18] presented a buffer inventory method- Energy Price
Electrical Power
X X X X X
X X X X X X X X X X X X X X X
Model Characteristics
ology for manufacturing systems to reduce power demand Energy Production X
Environmental Conditions X X
during peak periods. Buffers are built up during off-peak peri-
ods, and the methodology called "Just-for-Peak" is utilized Fig. 3 Overview of previous work
during high-peak periods to turn-off upstream machines. The It can be observed that the aim of most of the previous
results obtained in a case study based on an automotive as- work is to reduce energy consumption and to increase the
sembly line are lower energy costs and reduced energy con- energy efficiency by load shifting (Fig. 3). In recent years,
sumption without sacrificing system throughput. energy prices have been considered in the PPC to reduce the
BÖNING [19] developed a method for energy-cost-oriented energy costs. However, some work does not refer to the unit
resource scheduling. A genetic algorithm schedules orders on rate for energy consumption (price per kilowatt-hour) but
the corresponding machines to minimize the total logistic and considers the contracting rate for power peaks (price per kilo-
energy costs. Peak-loads can be reduced significantly without watt). In particular, the sequencing, which makes a decision
resulting in a disproportionate increase in logistic costs. shortly and operative in front of the work station, determines
LANGER ET AL. [20] presented a framework for energy- directly the temporal energy consumption and can unlock
sensitive production control in mixed model manufacturing. potential that has not been considered in any work.
Energy-sensitive order scheduling, energy-sensitive control of
material flow and energy-sensitive control of operating states IV. ENERGY COST-ORIENTED MANUFACTURING CONTROL
are being integrated in a Manufacturing Execution System As part of the research project "Integration of time-variable
(MES) called eniMES. These approaches employ energy- energy costs in existing methods of manufacturing control"
sensitive production control strategies based on Kanban and ("EnKoFer") the energy cost-oriented sequencing (ECO-S) has

194

been developed. ECO-S is geared to the least slack sequencing
rule and is applied after each completion of an order at a work
station i. In this context, slack [h] is the remaining time of the
regarded order n based on planning time point TPL0 [h] until
the planned end of order processing EDOplan,n [h], which is not
required for the operation TOPi,n [h] (processing and setup) or
minimum inter-operation times TIOmin,i,n [h] such as transport:
= , − 0 − ,
= =
Therefore, COP [-] represents the dimensionless index of
the current work station, and NOP [-] represents the total
number of work stations for this order. In this rule, the order
with the least slack, and thus with the shortest inter-operation
or waiting time, it is assigned with the highest priority and will
be processed first.
For the ECO-S for every order n in the queue of the work
station i, the slack and the maximum possible slack slackmax
[h] must be identified out of the remaining planned inter-
operation times TIOplan,n,i [h] of all orders to generate priorities
between 0 and 1:
, =
= higher average electrical power receives a lower priority value
Furthermore, the average electrical power of the order n at
work station i Pn,i [kW], the average (order-specific) energy
price for the regarded order EPn,i [€cent/kWh] and the average
energy price EPm [€cent/kWh] in the interval EPI should be
known. The average order-specific energy price EPn,i results
based on the energy prices EP(t) [€cent/kWh] weighted over
the processing time TPn,i [h], in which the order uses electrical
power (3). Tstart,n,i [h] is the starting time of the order at the
regarded work station. Ideally, Tstart,n,i correlates with the plan-
ning time point TPL0 that is enlarged for the specific setup
time TPrn,i [h] (4). The finish time of the order Tend,n,i [h] is the
starting time Tstart,n,i that is enlarged for the processing time
TPn,i (5).
, ,
=
, ,
,
, ergy costs and slack and represents a logistical positioning. If
= +
, ,
, , = , , + ,
If an order is processed for 1 hour during an energy price
of 5 €cent/kWh and 3 hours during an energy price of 6
€cent/kWh, the order-specific energy price is (1 h × 5
€cent/kWh + 3 h × 6 €cent/kWh) / 4 h = 5.75 €cent/kWh.
The average energy price EPm is the median value of the
future energy prices, which applies during the interval length
Back to Contents
EPI from planning time point TPL0. Consciously, the median
instead of the average value was chosen to not follow single
electricity price peaks. The EEX-day-ahead-trade electricity
prices for the next 7 days are available. If the reality differs
from the forecast, then the intra-day-trade can balance this
difference.
To realize priority values PRn,i [-] between 0 and 1, the
numerator is normalized over the maximum average electrical
− ,, (1) power at the regarded work station Pi,max [kW] and the maxi-
+1
mum energy price difference EPm − EPmin or EPmax − EPm,
depending on the average energy price in the considered inter-
val EPI. The same applies for the slack, which is unified about
the maximum possible slack, slackmax. Thus, the priority value
of an order PRn,i is based on (6). The order with the lowest
priority value is assigned the highest priority.
The first part of the equation weighs the average electrical
power of an order at a price difference, whereby the relative
energy costs are generated (in €cent/h). A distinction should
be made whether the order-specific energy price is inexpen-
sive (EPn, i < EPm) or expensive (EPn,i ≥ EPm) in relation to the
median value of the energy prices. Due to the design of the
equation in the case of a low order-specific energy price com-
, , (2) pared to the median value of the energy prices, an order with a
and is processed preferentially. In the case of a high order-
specific energy price compared to the average energy price, an
order with lower average electrical power receives a lower
priority value and is processed preferentially. Thus, orders
with small electrical power are prioritized at times of high
energy prices and vice versa.
To ensure the schedules reliability, a slack priority be-
tween 0 and 1 is integrated in the second part of (6). If an
order has much slack, then the priority value increases, and the
order is less prioritized. A slack smaller than –slackmax, will
result in negative priority values. As a result, negative slack is
limited to –slackmax:
=− ≤− (7)
(3) The factor ς (sigma) affects a weighting factor between en-
sigma is selected as 0, then the priority is determined by only
, (4)
considering energy costs. If sigma is 1, then the result is the
(5) sequence rule least slack. A sigma between 0 and 1 induces a
prioritization over both energy costs and slack.
Basically, the ECO-S is only suited for the use of volatile
energy prices and differences in the electrical power of orders.
In addition, the processing time for each order and work sta-
tion should be short; otherwise, electricity price fluctuations
cannot be exploited effectively. Similarly, the average electri-
cal power, the slack of the orders and the electricity price
(6)
195

a) b)
Fig. 4 Impact of the sigma of ECO-S on the logistic objectives
forecasts (at least for the interval length EPI) must be known.
A high WIP increases the impact on the logistic objectives of
any sequencing rule.
V. SIMULATION STUDY OF ECO-S
To validate the developed sequencing method ECO-S, a
simulation model was created by using the software Tecno-
matix Plant Simulation. In addition, the method of ECO-S and
the reference method FIFO were implemented in the simula-
tion model. The integrated shop-floor persists out of the four
work stations on which six product variants are being manu-
factured. The product variants differ in regard to their se-
quence of operation, electrical power consumption and indi-
vidual processing times. The lot sizes are determined by an
Erlang distribution to generate a high variation coefficient
(0.65) with a mean-value of 13, while the mix of product vari-
ants follows a predetermined pattern. Every 12 hours, the
order release decontrols orders by the use of their planned start
of order processing. In addition, a high WIP (60 h) was creat-
ed, and a real volatile electricity price was integrated (intraday
spot price of the EEX from 1st January to 4th November 2015).
After a transient phase of 10 days, all orders completed in the
following 90 days are being evaluated. Basically, 10 observa-
a) b)
d) e)
Fig. 5 Impact of simulation model parameters on the energy cost savings of ECO-S towards FIFO
196
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c)
tions with different starting values of the underlying random
distributions for each experiment were realized to avoid ran-
dom influences.
As shown in Fig. 4a, the punctuality increases up to 100
percent with an increasing sigma. The energy costs increases
with an increasing sigma as well, but the effect occurs later.
This results from an uneven variation in the components of
(5). At a sigma of 0, 14.15 percent of energy costs could be
saved. At the same time, at a sigma of 0, extremely high
throughput times and a high standard deviation (SD) of the
throughput time arise, which decrease with an increasing sig-
ma (Fig. 4 b). In addition, at a sigma of 0, the positive sched-
ule deviation (the time delayed orders are tardy) is extremely
high. With a rising sigma, this deviation decreases. The nega-
tive schedule deviation is consistently negative, i.e., on aver-
age, all orders are completed too early (Fig. 4c).
For a company that has decided to select a sigma of 0.5 at
ECO-S, compared to FIFO, the punctuality is 12.1 percent
higher and 13.9 percent energy costs could be saved. Howev-
er, this selection of a sigma of 0.5 results in a 3 percent (4.78
h) increased throughput time and a double standard deviation
of the throughput time. The average negative schedule devia-
tion of orders is 13 percent; accordingly, it is seven hours less
c)
f)

than in FIFO.
To validate the conditions of application, several model
parameters have been varied. First, the volatile electricity
prices have been linearly discounted relative to the median
value of the population to reduce the standard deviation of the
electricity price. Fig. 5a shows that the energy cost savings are
highest by taking a highly volatile electricity price as a basis.
If all prices are fully discounted, and thus a constant price is
assumed, no energy costs can be saved by using this method.
If the mean lot size of the Erlang distribution is increased
linearly in the simulation model, whereby, under constant
individual processing times, longer mean processing times for
each order and work station result. As a result, the energy cost
savings decrease (Fig. 5b). If an order has processing times
that exceeds 24 hours per work station, only a small amount of
the energy costs can be saved because a displacement of the
orders cannot account for the systematic daily electricity price
variations.
An increase of the mean WIP in front of each work station
causes the highest resulting effect compared to any priority
rule [7]. With an increasing WIP, the energy cost savings
increase and converge to a maximum (Fig. 5c).
If the fluctuation of the average order-specific electrical power
is discounted similar to the electricity price, the savings de-
crease. If all orders processed at a work station do not differ in
their electrical power (discounting of 100 percent), then no
energy costs can be saved (Fig. 5d).
The interval length to calculate the current electricity price
median should be selected to typify a representative period on
the basis of the mean and the maximum processing times for
each order and work station. Excessively long intervals do not
consider high and low electricity price periods sufficiently
(Fig. 5e). In contrast, excessively short intervals may end
before the finish time of the regarded order.
Fig. 5f demonstrates that, with an increasing portion of fixed
energy consumption at all work stations, the energy cost sav-
ings decrease and approach a minimum level.
VI. SUMMARY
In this paper, the future importance of considering fluctuating
energy prices in production via the manufacturing control was
highlighted. In the demonstrated simulations model, the de-
veloped sequencing method affords energy cost savings of up
to 14 percent towards FIFO without endangering the schedule
reliability or schedule deviation. By using a simulation model,
the energy cost savings were identified, and the conditions of
application and potentials were demonstrated. Thus, the ECO-
S is particularly suitable for short processing times for each
order and work station, as well as for highly fluctuating elec-
trical power consumption. Using ECO-S, the case of highly
volatile electricity prices result in the highest energy cost sav-
ings.
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[3] P. Siano, “Demand response and smart grids - A survey”, Renewable
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[5] European Parliament and Council of the european Union, “Directive
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[6] European Energy Exchange – European Power Exchange (EPEX)
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[7] H.-P. Wiendahl, “Fertigungsregelung. Logistische Beherrschung von
Fertigungsabläufen aus Basis des Trichtermodells”, Munich, Vienna,
Carl Hanser, 1997.
[8] H. Lödding, “Handbook of Manufacturing Control”, Berlin, New York,
Springer, 2013.
[9] S. Willeke, S, Wesebaum, G. Ullmann, P. Nyhuis, „Energiekosten-
effiziente Fertigungssteuerung“, ZWF, vol. 109, no. 5, pp. 328-331,
2014.
[10] M. Junge, „Simulationsgestützte Entwicklung und Optimierung einer
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university press GmbH, 2007.
[11] M. Rager, „Energieorientierte Produktionsplanung“, Ph.D. Thesis,
Wiesbaden, Betriebswirtschaftlicher Verlag Dr. Th. Gabler, 2008.
[12] N. Weinert, S. Chiotellis, G. Seliger, „Methodology for planning and
operating energy-efficient production systems”, CIRP Annals – Manu-
facturing Technology 2011, vol. 60, pp. 41-44, 2011.
[13] H. Haag, J. Siegert, T. Bauernhansl, E. Westkämper, „An Approach for
the Planning and Optimization of Energy Consumption”, CIRP Interna-
tional Conference on Life Cycle Engineering, vol. 19, pp. 335-339,
2012.
[14] A. Pechmann, I. Schöler, R. Hackmann, „Energy efficient and intelligent
production scheduling: Evaluation of new production planning and
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gineering, vol. 19, pp. 491-496, 2012.
[15] A. Bruzzone, D. Anghinolfi, M. Paolucci, F. Tonelli, „Energy-aware
scheduling for improving manufacturing process sustainability: A math-
ematical model for flexible flow shops“, CIRP Annals – Manufacturing
Technology, vol. 61, pp. 459-462, 2012.
[16] C. Artigues, P. Lopez, A. Hait, “The energy scheduling problem: Indus-
trial case-study and contraint propagation techniques”, International
Journal of Production Economics, vol. 143, pp. 13-23, 2013.
[17] P. Eberspärcher, A. Verl, „Realizing energy reduction of machine tools
through a control-integrated consumption graph-based optimization
method“, Procedia CIRP 2013, vol. 7, pp. 640-645, 2013.
[18] M. Fernandez, L. Li, Z. Sun, „“Just-for-Peak“ buffer inventory for peak
electricity demand reduction of manufacturing systems“, International
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[19] C. Böning, “Stromintensive Fertigung – Energiekostenorientierte
Belegungsplanung”, IT&Produktion, vol. 14, pp. 88-89, 2013.
[20] T. Langer, A. Schlegel, J. Stoldt, M. Putz, „A model-based approach to
energy-saving manufacturing control strategies“, Procedia CIRP 2014,
vol. 15, pp. 123-128, 2014.
[21] F. Shrouf, J. Ordieres-Meré, A. García-Sánchez, M. Ortega-Mier, „Op-
timizing the production scheduling of a single machine to minimize total
energy consumption costs”, Journal of Cleaner Production, vol. 67,
pp. 197-207, 2014.
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production control using energy flexibility“, Procedia CIRP 29 (2015),
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Economic Production Quantity with Imperfect
Quality, Imperfect Inspections, Sales Return, and
Allowable Shortages
Muhammad Al-Salamah
Mechanical and Industrial Engineering Department, Majmaah University, Saudi Arabia
m.alsalamah@mu.edu.sa
Abstract - This paper builds on the model of Yoo, Kim, and
Park (S. H. Yoo, D.S. Kim, and M.-S. Park, “Economic
production quantity model with imperfect-quality items, two-
way imperfect inspection and sales return,” International
Journal of Production Economics, vol. 121 (1), pp. 255-65,
2009) and extend their model by considering the possibility
that the producer can permit shortages which the producer
can utilize to reduce the costs of inventory. The coverage of the
model offers alternative and simplified modeling approach to
the model. The concavity of the expected total profit function is
proved under certain conditions. The concept is illustrated
through a numerical example. It has been illustrated that the
EPQ model with shortages is effective for certain ranges of the
defective proportion and the probability of the Type 1 error;
outside these ranges, the model with unpermitted shortages
must be implemented.
Keywords – EPQ, imperfect quality, imperfect inspection,
shortage
I. INTRODUCTION
The Economic Order Quantity / Economic Production
Quantity (EOQ/EPQ) models have long evolved from their
basic assumptions to address important issues in inventory
control, such as item’s imperfect quality and quality
assessment plans. In this direction, inventory models with
the possibility of imperfect quality have been developed to
determine the optimal lot size that either minimizes a cost
function or maximizes a profit function. There have been
recent advances in the literature on this topic. Ref. [1]
assumes imperfect items in an inventory model where these
imperfect items can be sold in a single batch at the end of a
screening process, and it has been found that the economic
lot size reacts positively to the increase in the average
percentage of imperfect quality items. The inventory model
in [2] allows for shortages to be backordered in a case
where items can be of imperfect quality. In extending the
model in [1], [3] allows for shortages which are
backordered. Ref. [4] propose a profit maximizing inventory
model to find the optimal lot size when the quality is
imperfect, the inspection is influenced by two types of
errors, and defective items are returned; the proposed model
does not permit shortages. The model in [5] is an extension
of an earlier model to include the possibility of increasing
rate of inspection due to learning. Ref. [6] assign costs to
Type 1 and Type 2 errors associated with the inspection. In
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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a attempt to examine the key factors of the manufacturing
process’s instability and the defective item inventory, [7]
develop EPQ models to determine the lot size and the
backorder under the conditions of fixed vs. probabilistic
fraction of defective items and the timing of defective
items’ withdrawal from inventory. Recently, [8] has
determined the optimal lot sizes in the batch manufacturing
setting with imperfect quality items when the producer
implements acceptance sampling with destructive and non-
destructive testing, implemented separately, to determine if
the lot can be accepted or rejected. The EOQ model in [9]
takes on the assumption of fixed screening rate, and the
model considers the possibility of shortages occurring
during the screening stage, and hence the screening rate is
treated as a decision variable. The EOQ model developed in
[10] considers misclassifications in inspection and
shortages.
The paper extends the model of [4] by assuming the
possibility of shortages which are backordered. This paper
is organized as follows. Notations are introduced in the
Section II. In Section III, the model is formulated and
optimal solutions of the decision variables are obtained. In
Section IV, a numerical example is presented along with the
sensitivity analysis.
II. NOTATIONS
The notations in [4] will be maintained, with some
notations being redefined, and new notations are introduced:
max Maximum allowable shortage level
Shortage cost per item short
Shortage cost per item short per unit of time
Production time duration during the positive
inventory
Beginning of cycle shortage time duration
Time duration of inventory depletion of serviceable
items
Time duration of shortage buildup
III. MODEL FORMULATION
The objective is to find optimal quantity ∗ and optimal
∗
shortage level max that maximize the total profit (total profit
per unit time), which is the total revenues minus the total
 Back to Contents

cost ( = − ). The total revenues value is given by

(3) in [4]. =
(1)
The total cost is defined by [4] as of all costs in a cycle;
and these costs include the production setup and variable =
costs, inspection, return, penalty, and rework costs in (2)
addition to total inventory holding cost. In this article, the δ ( + )
=
shortage is added to objective function. After adding
(3)
shortage to the model, the inventory curves are
δ ( + )
illustrated in Fig. 1. Now the model has both positive and =
negative inventory; this situation affects the different time (4)
segments in the cycle as well as the cycle length. From the
inventory curves, it can be observed that:

Fig. 1: Inventory curves: (a) serviceable and reworked items, (b) screened items, (c) returned items, and (d) items being reworked

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At the end of , the number of items in the inventory is ( ) (

+ + )
equal to the number of serviceable items ( ) minus = = ( + )
2 2 (12)
number of sales items ( ) during , − =
The remaining inventory areas are:
− . Therefore, the fraction − represents the
( + ) α( + )
portion of the lot sizes and which is stacked up = =
before the production ends and before the production starts, 2 2 (13)
respectively. Therefore, it can be written: ( + ) δ ( + )
= =
2 2 (14)
− 1
= = − max max
(5) = =
2 2 (15)
− 1 max
= = − ==
(6) 2 2 (16)
The cycle length is: Based on the definitions of inventory costs in [4], the
total inventory holding cost can be expressed as:
( + )
=
(7) Total inventory holding cost = ( + + +
From [4], defective and screened nondefective fraction )+ + + + ( + )+ max
= + (1 − ) , serviceable fraction = + (1 − (17)
)(1 − ), and sales fraction = + . From (5) and The inventory holding costs per item per unit of time ,
, , and are defined in [4]. The shortage cost is
(6), the pace − represents the time between arrivals of shortage cost per item short per unit of time; is the
items to the inventory; it has a unit of items per unit of time. shortage cost per item short.
To simplify the model, let = − . Define the sales fraction = (1 − ) (1 – ) + ,
The inventory curves are shown in Fig. 1. The inventory salvage fraction = (1 − ), and unscreened defective
area of serviceable items during the manufacturing fraction = . The total profit in a cycle is:
period is given by:
= ( + )+ ( + )−
−( + +( + ) + )(
− − + )− ( + + + )
= = =
2 2 2 − − −
(8) − ( + ) − max
The inventory area of serviceable items during (18)
rework period is:
1 In the definition of the inventory problem, the
− ( + )
probabilities , , , and are random variables with
= − =
know distribution function. After substituting the values of
= ( + ) (9) , , , and , the expected total profit per unit of time
The inventory area is given by: is:

−
= =
2 2 (10)
At the end of the rework period , the number of
reworked units accumulated is δ ( + )− =
( )
δ ( + )− = 1− δ ( + ).
Hence, the inventory area is:

1− ( + )
=
2
1− ( + )
=
2 (11)
Define the screened items fraction = (1 − ) +
(1 − ). The inventory area is given by:

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( , )
+ 1
= − +( + ) +
( + )
1 + ℎ( + )
−
2 ( + )
1 + ℎ( + )
−
2 ( + )
1
− ℎ( + )( + ) − ℎ( + )
2
ℎ( + + )( + )
− [ ]−
2
−( + )
ℎ ( + ) 1 1
− + − ( + + ) (
2
ℎ
+ ) − ( + ) +
2 (19)
The function represents the return value to the
producer, which aims to maximize it. Therefore, the
optimality conditions for need to be checked at the
critical points. The components of the Hessian of
( , ) are:

1
+ ( ℎ+ ℎ + ) +2 ( − )
=−
( + ) (20)
1
+ ( ℎ( + ) + ) + ( ( − )−2 )
=
( + ) (21)
1
2 ( + )+ + ( ℎ( + ) + )
=−
( + ) (22)

It can be observed that < 0. In order for <

0, it is required that:

+ ( ℎ+ ℎ + )
< +
1
2
(23)

The determinant of is given by:

1 1
2 ℎ ( + ) + + 2 +2 −
| |=
( + ) (24)

Hence, | | > 0 if satisfies another condition on

that:

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2 + ( ℎ( + ) + )
<
1
(25)

Therefore, is positive definite, and as a result

( , ) is concave, only if meets the conditions = $100 per cycle
in (23) and (25). = $0.0925 per unit
= $0.001 per unit per year
To find the optimal values of and , the partial
derivatives of ( , ) are set to zero and solved for
and ; and the results are:

1
+ ( ℎ( + ) + ) +2 ( − )
= −
ℎ ( + ) + + [ ] + + [ ] + + + ℎ 1−

(26)

1
2 ( + )+ + ( ℎ( + ) + )
= −
ℎ ( + ) + + +2 + + [ ] + + [ ] + ℎ( − )

(27)

It can be observed that if is set to zero, then the The probability distribution function of the fraction
value of in (27) is reduced to the lot size without shortage defective is:
case in [4]. From (26) and (27), prior near optimal values
for and are needed to calculate the optimal values. If 25 0 ≤ ≤ 0.04
( )= (28)
these starting values are absent, a recursive procedure can 0 otherwise
be implemented, in which an initial value for either or The probability distribution function of the Type 1 error
is assumed and used to start a procedure to refine the is:
initial values until convergence is reached. It is proposed in
this article that a starting value for is the optimal lot size 50 0.01 ≤ ≤ 0.03
( )= (29)
from the model without shortage in [4]. 0 otherwise
The probability distribution function of the Type 2 error
IV. NUMERICAL EXAMPLE AND SENSITIVITY is:
ANALYSIS
25 0.03 ≤ ≤ 0.07
In the model implementation and sensitivity analysis, the ( )= (30)
parameter values in [4] are adopted with additional values 0 otherwise
for and : The rework proportion is a random variable; in [4],
has been fixed at = 0.4 due to the computational
ℎ = 0.2 per year difficulty. In this article, is not fixed; rather is assumed
= $ 25 per unit to have the probability distribution function:
= $ 0.5 per unit
( ) = 10 0.35 ≤ ≤ 0.45 (31)
= $ 3 per unit 0 otherwise
= $ 15 per unit Based on the definitions of the probability distribution
= $5 per unit functions, the expected values in (26) and (27) are
calculated as follows: [ / ] = 9.44163 × 10 , [ /
= $50 per unit
] = 8.71711 × 10 , [1/ ] = 1.02335, [ / ]=
= $20 per unit 0.0395912, [ / ] = 2.85582 × 10 , [ ] = 0.001,
= 50,000 units per year [ / ] = 7.62983 × 10 , [ / ] = 1.48631 ×
= 100,000 units per year 10 , [ / ] = 0.998973, and [ / ] = 0.0243725,
= 80,000 units per year [ / ] = 0.0162458, and [ / ] = 0.00102703.
To find the optimal lot size and maximum allowed
shortage, the recursive procedure is applied as it has been

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proposed in the previous section. The recursive procedure is 0.0577432

started with = 2023.51, which is the lot size in the case
of shortage not allowed. Then, ( ) is calculated from
(26). Then, is calculated from (27). The steps of the 0.0516174

recursive procedure are shown in Table I. Convergence is

reached after 6 steps; the optimal lot size ∗ = 2006.99
units, optimal maximum allowed shortage ( )∗ = 0.0445066
270.17 units, the optimal expected total profit per year 1207020
( ∗, ( )∗ ) = $1.207 × 10 per year, and the
∗
expected cycle length is = 0.0445067 years. In
evaluating the two conditions in (23) and (25), = 1207010
0.0925 < min(0.0952324,0.0951298). The plot of
( , ) is shown in Figure 2.
1207000

999.184
Table I: Recursive Procedure to find the optimal and
Steps
( ) 660.39

1 2023.51 249.147
2 2008.22 268.512
3 2007.09 270.039 270.17
4 2007.00 270.159
5 2006.99 270.169 2005.99
6 2006.99 270.17

In the analysis of the model, Fig. 3 illustrates how the
variation in the value of the shortage cost per unit changes
the optimal values of the lot size, the maximum shortage,
the expected total profit per year, and the expected cycle
length. When the value of is increased, the lot size
increases at a rate of around 3 items per 1 cent increase in
the value of the shortage cost. The maximum shortage
shows to be more sensitive to the changes in the shortage
cost ; declines at a rate of 40 units per 1 cent increase
in the value of . The expected total profit per year shows to
decline with increase in ; the annual expected profit falls at
rate of $ 1 per per 1 cent increase in . The expected cycle
length exhibits a decline with the increase in the shortage
cost per unit. If increases, decreases at a rate of 0.00072
years (0.26 days) per 1 cent increase in the value of .
Therefore, it can be concluded from this analysis that is
an influential factor to the producer’s profit as well as to the
production process in terms of the optimal lot size and the
production cycle length.
Fig. 2: Plot of the expected total profit per unit of time around the optimal
solution
1980.59
1955.22
0.09065925 0.091575 0.0925
Fig. 3: Sensitivity analysis of the shortage cost per item short
The sensitivity analysis of is illustrated in Fig. 4. The
value of the shortage cost per unit per year has been
varied until a value at which noticeable changes are
observed for the decision variables. When the value of is
increased from $ 0.001 to $ 10 per unit per year, the lot size,
the maximum allowable shortage, and the cycle length
change only slightly; whereas the expected total profit per
year does not change. Based on these observations, the
producer can ignore the shortage cost per unit per year
and rely instead only on the shortage cost per unit .
In conducting the sensitivity analysis on the fractions ,
, , and , corresponding expected values are substituted
into the recursive procedure consisting of (26) and (27).
After calculating the expected values, the fixed values for
the proportions are = 0.4, = 0.02, = 0.02, and =
0.05. The range of variations in the values of these
proportions is restricted between 0.005 and 0.022; this is
because for values greater than 0.22 for either or , the
optimal value for is negative. Fig. 5 plots the optimal
lots, the maximum allowable shortages, the total profit, and
the cycle lengths as the values of , , and are varied.
The defect proportion and the Type 2 error show a
significant effect on the decision variables. As increases,
increases, drops to about 80 items, declines,
and settles down to about 0.0411 years. The effects of

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have similar patterns as . The probability of Type 2 error

has a subtle effect on the lot size, maximum shortage,
total profit per year, and the cycle length. Thus, it can be
concluded that, order to maximize its total profit in a year,
the producer is advised to increase the lot size, avoid
backorders, and reduced the cycle lengths when the the
producer is faced with large values of the defect proportion
or the Type 1 error. The probability of Type 2 error has 0.0710235
minimal effect on the inventory decision. It is additionally
noted that there are thresholds for the defect proportion and 0.0660235

the Type 1 error probability beyond which the backorder 0.0610235

option is not a profit maximizer to the producer; therefore,
the no-shortage model must be used in these cases. 0.0560235

The sensitivity analysis of the rework proportion is 0.0510235

shown in Fig. 6. The variation of is set between 0.1 and 0.0460235

0.5. If is increased, the lot size drops, while the maximum
allowable shortage, the total profit per year, and the cycle 0.0410235

length increase. The producer is therefore advised to have

higher lot sizes, smaller backorders, and shorter cycle 1212270

lengths when the rework proportion is at the lower end; and 1211270
the producer should lower the lot size, increase the
backorders, and increase the cycle length for higher values 1210270
of .
1209270

1208270

1207270

1206270

1880

1680
0.0445066

1480

1280

1080
0.0445025
880

680

1207000 480

280

80
270.17

2012

1992

269.938
1972
2007.01

1952

1932

2006.99
0.001 10
1912
0.005 0.01 0.015 0.02 0.022
Fig. 4: Sensitivity analysis of the shortage cost per item short per unit of
time
Fig. 5: Sensitivity analysis of the defect proportion, probability of Type 1
error, and probability of Type 2 error

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0.0447
while the probability of Type 2 error demonstrates its
0.0446
insignificance in effecting the lot size and the shortage level.
0.0445
The rework proportion influences inversely the lot size; on
0.0444 the other hand, the shortage level and the cycle length
0.0443 increase with the increase in the rework proportion.
0.0442

0.0441
VI. REFERENCES
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[10] Y. Zhou, C. Chen, C. Li, and Y. Zhong, “A synergic economic order
proved to be concave under certain conditions; and the
quantity model with trade credit, shortages, imperfect quality and
formulas for the optimal lot size and shortage are derived. In
inspection errors,” Applied Mathematical Modelling, vol. 40 (2), pp.
the analysis of the model parameters, it has been found that 1012–1028, 2016
the lot size increases with the increase the shortage cost per doi:10.1016/j.apm.2015.06.020
unit; the maximum shortage, the total profit per period, and
the cycle length declines with the increase in the shortage
cost per unit. It has been shown also that the shortage cost
per item per unit of time has no noticeable effect on the
decision variable; hence, this cost can be ignored in the
model. In addition, it has been observed that the defect
proportion and the probability of Type 1 error exhibit
noticeable effects on the lot size and the shortage level;

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Analysis and Prediction Cost of Manufacturing
Process Based on Process Mining
Thi Bich Hong Tu
School of Business Administration
Ulsan National Institute of Science and Technology
Ulsan, South Korea
hong91@unist.ac.kr
Abstract—Analysis and prediction of manufacturing cost play
a decisive role in manufacturing process management; however,
they face a challenge to be conducted due to the complexity of
manufacturing process. Process mining has demonstrated to be a
valuable tool for observing and diagnosing inefficiencies of a
business process based on event logs. Nevertheless, significantly
less attention has been done on investigating cost perspective.
Therefore, this paper suggests a framework to analyze and
predict manufacturing cost by utilizing and extending existing
process mining techniques. In this study, new techniques such as
process model-enhanced cost, and cost prediction based on
production volume and time prediction using working progress
of manufacturing processes are presented.
Keywords—manufacturing process; manufacturing cost;
processmining; cost analysis; cost prediction
I. INTRODUCTION
The pressure from globalization and rapid technological
change have motivated manufacturing enterprise moving
towards three primarily competitive factors, i.e. time, cost, and
quality. Among them, cost is a more critical factor for gaining
competitive advantages. Therefore, manufacturing enterprises
have attempted to analyze manufacturing cost. However, they
face a challenge to analyze due to the complexity of
manufacturing process. For instance, cost execution of a
particular task or an individual resource whenever
organization requires is hard to be conducted. The questions
regarding cost consuming or remaining cost can be accurately
answered until the end of the process. The complexity of
manufacturing process refers to the variety of products and
employed work centers [1]. Therefore, there is a necessity of a
proper method to handle the entire cost mining in the
manufacturing sector.
Process mining has demonstrated to be a valuable tool for
analyzing the operational process and tracking down its
problems or inefficiencies using event logs [2]. In literature,
very few approaches exist towards cost perspective [3]. Such
Nauta’s (2011) proposed a way towards-cost awareness in
process mining and its first implementation [4]. However, it
had not fully supported cost mining of manufacturing process
where cost depends on not only duration but also production
volume. This paper addresses a method for analyzing and
predicting cost of manufacturing process. To do this, news
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
206
Back to Contents
Minseok Song
Department of Industrial & Management Engineering
POSTECH (Pohang Univ. of Sci. Tech)
Pohang, South Korea
mssong@postech.ac.kr
techniques such as process model-enhanced cost, and cost
prediction are presented. Process model-enhanced cost is a
systematic plug-in that allows users to execute detail cost of a
particular task or an individual resource of a manufacturing
process. The purpose of cost prediction is to predict the cost of
running instances based on production volume and time
prediction using working progress of manufacturing processes.
The remainder of this paper is organized as follows.
Related works are explained in section 2. Section 3 introduces
manufacturing cost. Section 4 presents a methodology to
analyze and predict cost. A validation of proposed method is
showed in section 5. Finally, section 6 concludes the paper.
II. RELATED WORKS
The initial point for process mining is an event log that can
be derived from Process Awareness Information Systems
(PAISs) [5]. This study distinguishes three different
perspectives, namely, the process perspective, the
organizational perspective and the performance perspective.
The process perspective focuses on control-flow which are the
ordering activities aiming to find a good characterization of all
possible path [6]. The organizational perspective focuses on
resource fields and their relationships. The performance
perspective focuses on discovering bottlenecks, measuring
service levels and monitoring the utilization of resources [7].
Each of three perspectives includes three types of process
mining that are discovery, conformance, and enhancement.
Many fields have applied process mining such as healthcare,
port and so forth. Given manufacturing area, there have been
few studies introduced. In addition to a shortage application,
most of the previous studies have just investigated time
perspectives. Few studies towards examine cost perspective [3,
4].
III. MANUFACTURING COST
Manufacturing process concerns all efforts of an
organization to add values to the inputs transforming into the
outputs [8]. Each activity includes attributes of actuality as well
as plan data such as timestamps, work progress and so on.
Thus, a total cost of a manufacturing process is likely a
summation of cost of individual activities included in that
process. Organization can use various costing techniques such
as job-order costing and activity based costing (ABC) to set

and manage manufacturing cost per activity. Job-order costing
identifies and assigns production cost to the particular job [9].
ABC allocates overhead cost to a product using activities
required to produce the product [10].
Previous studies have shown that manufacturing cost are
all essential costs for converting the inputs into the products
[9]. Also, they mentioned that manufacturing cost is typically
divided into three categories such as direct labor cost (DL),
direct material cost (DM), and manufacturing overhead cost
(OH). For instance, DM is the cost of materials which become
part of finished product. DL is the cost workers who add value
to a product. OH includes cost of all activities that support a
manufacturing process but often are not directly related to any
particular product. The basic concept for calculating those cost
types has been employed elsewhere [9]. This study extends the
original ideas above by extra a simplification step on
calculating it per activity or job of manufacturing process for
application.
The DM of task k can be expressed as:
M M
DM k =  (MRj * Qj) =  (Con j * t j * P j * Qj) (1)
j=1 j=1
Where, MR j : material rate; Conj: unit of net consumption;
t j : ratio of waste materials allowance; Pj : standard price of
material; Q j : production volume; M: the number of difference
materials used for task.
The DL of task k can be express as:
E the case ID of 1 consists of sequence of events and activities:
DL k =  (LR a * Ta ) (2)
a =1
Where, LRa : labor rate; Ta: time for task k completion; E:
the number of different employees concerned task.
Moreover, this study separates OH cost of the indirect material
cost, indirect labor cost, machinery cost, and other overhead
costs for the purpose of detail extracting them.
The OH of task k can be express as:
OHk = IDMk + ILk + MCk + OtherOHk (3)
Where, IDM: indirect material cost; IL: indirect labor cost;
MC: machinery cost
P Pur - Tr
MC k =  (w b * ( ) * Tb ) (3.1)
b =1 l b
Where, Ti : duration; wb : percentage of value added;
Purb : purchase cost of machine; Trb : tradeoff price of
machine; lb: expected life span of machine (hours); P: the
number of difference machines used for task.
IV. MANUFACTURING COST ANALYSIS BASED ON
PROCESS MINING
To analyze and predict cost of manufacturing process, we
need event log-enhanced cost as the input. The detailed step to
enhance event log with cost well described elsewhere [5, 6].
This study focuses on formalizing it in manufacturing process
context as follow.
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Definition 1: (Event, Case, Trace of manufacturing
processes) Let K be the event universe, i.e., the set of possible
event identifiers. Let denote A is set of activities. Let set
attributes of an activity for plan and actual data as follow: S
and S’ be a set of start timestamps, C and C’ be a set of
complete timestamps, R and R’ be a set of resources, Q and Q’
be a set of production volumes, W and W’ be a set of working
progresses, (0 ≤ W ≤ 1) , lr be a set of direct labor cost, ilr be
a set of indirect labor cost, mr be a set of direct material cost,
imr be a set of indirect material cost, ma be a set of
machinery cost, oh be a set of other cost. An event E is a tuple
of (A, S, C, R, Q, W, S’, C’, Q’, W’, lr , ilr , ma, mr , imr , oh ). For
any event e ∈ E , π (e) is the value of attribute n for event e.
Case. A case C is set of events, have attributes. Cases
always have a trace, denoted as σ ∈ E * is a finite sequence of
events such that each event appears only once, i.e., for
1 ≤ i ≤ j ≤ / jσ / : σ (i ) ≠ σ ( j ) and time is non–descending
denoted σ (i ) ≤ σ ( j ) (if i occurs before j).
Definition 2: (Event log -enhanced cost of manufacturing
processes) L ∈ β (C ) is an event log and β (C ) is the set of all
bags (multi – set) over C.
TABLE I shows a fraction of event log-enhanced cost
which consists of cases, events, timestamps, working progress,
resources, and production volume. For instance, the case with
E01 (A01), E02 (A02), and E03 (A03); the event E01 (A01)
has the attributes such as start timestamps for plan and actual
(S = {03.10.15}, S’ = {03.14.15}), complete timestamps
(C={03.20.15}, C’ = {03.30.15}), resources (R ={R01}, R’ =
{R01}), working progress (W = {100%},W’ = {100%}),
production volume (Q ={5565}, Q’= {5565}), direct labor cost
( lr ={0.71}), indirect labor cost ( ilr ={3.49}), direct material
( mr ={14.15}), indirect material ( imr = {0.04}), machinery
cost (ma = {0.5}), other overhead cost (oh = {0.02}).
This study presents process model-enhanced cost and cost
prediction as techniques for analyzing and predicting cost of
manufacturing process. Process model-enhanced cost attempts
to understand the detailed cost of each task or resource in the
process. Cost prediction is not only describes the cumulative
cost of each task or resource in timely manner but also predict
cost of running instances based on time prediction and
production volume using working progress.
A. Process model-enhanced cost
The process model-enhanced cost is defined in the form of
a frequent sequence graph-enhanced cost. A frequent sequence
graph has been retrieved from event log using frequent
sequence mining [11,12]. The following definitions formalize
frequent sequence graph and frequent sequence graph-
enhanced cost.
 Back to Contents

TABLE I. Event log -enhanced cost of manufacturing process

Case Event
A S C R Q W S' C' R' Q' W' lr ilr mr imr ma oh
ID Id
1 E01 A01 03.10.15 03.20.15 R01 5565 100% 03.14.15 03.30.15 R01 5565 100% 0.71 3.49 14.15 0.04 0.50 0.02
1 E02 A02 03.21.15 04.15.15 R02 5565 100% 03.30.15 04.15.15 R02 5565 100% 0.86 14.15 1.17 0.41 0.70 0.02
1 E03 A03 04.17.15 04.23.15 R03 5565 100% 04.17.15 - R05 4174 75% 0.18 0.04 0.00 0.01 0.78 0.01
2 E11 A01 03.19.15 03.30.15 R01 500 100% 03.19.15 03.20.15 R01 500 100% 0.25 1.17 0.00 0.50 1.04 0.03
2 E12 A02 03.29.15 04.03.15 R02 500 100% 03.29.15 04.03.15 R02 500 100% 0.30 0.00 4.08 0.70 0.95 0.04
2 E13 A03 04.03.15 04.11.15 R03 500 100% 04.03.15 - R03 500 35% 0.27 0.00 0.00 0.78 0.36 0.01
2 E14 A04 04.07.15 04.14.15 R04 500 100% - - R04 175 0% 0.04 4.08 3.49 1.04 0.41 0.02

Definition 3: (Frequent sequence graph) A frequent sequence B. Cost prediction

graph, denoted G, is a directed graph of tuple
( N , a s , ae , E, L N , LE , f n , f e , l ) , where:
― N is a finite set of nodes represent an event ei ; therefore
all node has all attributes of event that it presents for
denoted #n (ei ) =#n (ni ), ni ∈ N ,
― as ∈ N , is the start node such that as ≠ φ ,
― ae ∈ N , is the start node such that ae ≠ φ ,
― E = {(ni , n j ) | (ni , n j ) ∈ N × N , and (ni , n j ) ∈ E} is a set of
edges represent the frequent sequence among nodes,
― LN ∈ N is a set of node labels,
― LE ∈ N is a set of edge labels, f n ∈ N is a set of frequency
such that f: ni → n j , denoted (nij ) which represent the total
flow occurring from ni to n j .
Definition 4: (Cost measurement function) A cost
measurement function is a function that, given a bag a
measurements produces some cost value, e.g., the sum,
average, min, max. Formally, measure ∈ P( M ) → M , i.e, for
some bag of measurements p, cos tmeasure( p ) returns some
cost value.
Let us assume that p = [ pi ]in=1 , i.e., then measurements are
taken as a sample. The sample total is defined as follow:
measuretotal ( p ) = sum {[ pi ]in=1}. Then the sample mean is

n
p complete event em ; duptodate(em ) = Euptodate(em ) − S actual (em ) : the
defined as follow p = i =1
. Other prediction functions can
n actual execution time until reporting date.
be used for the measurements, for example measure min( p) =
min {[ pi ]in=1} or measure max( p) = max {[ pi ]in=1}.
Definition 5: Frequent sequence graph-enhanced Cost) Let
G ( L) = ( N , as , ae , E , LN , LE , F , l ) a frequent sequence
graph of event log L. A frequent sequence graph –enhanced
cost is a tuple C ( L) = (G ( L), O, P ) where:
― O: E → N is a function that associates an event [e] with
cost its event label occurs in the event log, and
corresponds with the equivalence switched measurement,
i.e. O([e]) = P([e]),
― P: is a set of aggregate functions to measure cost in graph
a Definition 4, ∀i, j ∈ P, i ≠ j.
Assume that there is a close relationship between time,
cost, and production volume. Therefore, cost prediction should
be based on time prediction and production volume. Whenever
organization requires predicting the completion time of
process instance, we can take a partial trace and consider its
working progress. Working progress of an event denoted by
“W” refers to the percentage completion of that event
(0 ≤ W ≤ 100%) . In case an event started but not complete
(0 < W < 100%) , we can easily track back the consumed time,
also calculate the remaining time using working progress.
Otherwise, we can learn from its plan timestamps. Definition 6
gives a formal definition of time prediction for an event in an
event log.
Definition 6: (Event, time prediction) Let σ be the Trace in
event log L ⊆ C , given event em in a trace such that
em ∈ σ i ,1 ≤ m ≤ n : n = length(σ i ), denoted the remaining time
until completion event em d remaining (em )
 d plan( em ) if wuptodate( em ) = 0

= (1− wuptodate (em ))
 d uptodate ∗ w if 0 < wuptodate (em ) ≤1
 uptodate ( e m )
In which:
d plan(em ) = E plan(em ) − S plan(em ) : the budget execution time to
The partial trace has fully filled timestamps according to
Definition 6. Subsequently, we can calculate cost for events in
the trace. Given a trace σ i in an event log, a cumulative cost
of an event em in the trace refers to a sum of cost of all event
follow em from start event, and em cost itself. Thus, the last
event of trace has maximum cumulative cost. Chosen any
event em in a trace, we suppose that remaining cost refers to
the abstraction of maximum cumulative cost and its
cumulative cost.
Definition 7: ( Trace, Event, Cost measurement) Let σ be a
Trace in Event log L ⊆ C , given event em in a trace such that
em ∈ σ i for m is the order of event in trace,

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1 ≤ m ≤ n : n = length(σ i ),1 ≤ i ≤ / σ /, produces
measurment ACost (em ) : cumulative cost and RCost (em ) :
remaining cost.
 Cost ( em ) if m =1
ACost (em ) =  ACost ( e ) + Cost ( e ) if m ≠1
 m −1 m
Where:
ACost (em −1 ) = Cost (e1 ) + Cost (e2 ) + ... + Cost (em −1 )
em −1 > σem : event em −1 directly follows event em
 0 if m = n
RCost (em ) =  max σ ( ACost )− ACost ( e ) if m≠ n
 i m
Note that these are not really estimators for the whole event
log, but only for the trace in a log. We supposed that cost of an
event in a log refers to a set of cost of that event in traces
denoted [
Cost(em)L = Cost(em)σi ]
n
1≤i=a≤n
[ ]
= Cost(em )σi , Cost(em )σi+1 ,....
Therefore, we also have cumulative cost of event in log =
ACost (em ) L = [ACost (em )σ i n] and remaining
1≤ i = a ≤ n
cost of
event in log = RCost (em ) L = [RCost (e )σ ]m . n
i 1≤ i = a ≤ n
As a running example, we use the event log shown in Fig. 2.
Each line correspond to a process instance, e.g., the first trace <
A10, B20, C30, D10, E15, F30, G10 > refers to a process instance
where activity A has a cost 10, activity B has a cost 20, activity
C has a cost 30. Similarity, we can execute cost of activity D, E,
F, G. This trace starts at A and end at G. So the cumulative cost
is at A and max at G. Now we are ready to calculate the
cumulative cost of each activity. A is the start activity, so
cumulative cost of A is itself 10. Therefore, we add 10 to state
{A}. Next, B is followed directly by A. Therefore, cumulative
cost at B refers to cost of B 20 plus cumulative cost of A 10,
and equal to 30. Then we add 30 to state {B}. Similarity, we
add 60 (=30+30) to {C}, 70 (=60+10) to {D}, 85 to {E}, 115
to {F}, 125 to {G}. Consider example the second trace < A10,
H25, B20, C30, E30, F10, G10 >. We add 10 to {A}, 35 to {H}, 45
to {B}, 75 to {C}, 105 to {E}, 115 to {F}, 125 to {G}. These
steps are repeated for all other traces. Consequently, state{A}
is annotated with a bag containing four elements:[10, 10, 10,
10]. State{B} is annotated with a bag containing four elements:
[30, 55, 30, 30]. State{C} is also annotated with a bag
containing four elements: [60, 85, 60, 55], so on. Now cost
Fig.1. Cumulative cost showing per activity
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some
Fig.2. Remaining cost showing per activity
measurement functions are applied to calculate cost as demand
quickly. For instance, cost of activity B is defined as follow: total =
sum (30, 55, 30, 30)= 145, mean = 145g/4 = 36.25, max = max (30,
55, 30, 30) = 55, min = min (30, 55, 30, 30) =30.
Now we calculate the remaining cost. Coming back to the
first trace, the cumulative maximum cost of this trace is 125.
Using Definition 7, we can quickly know the remaining cost of
each activity in a trace. For example, activity A has cumulative
cost 10. Therefore, the remaining cost of A is 115 (= 125-10).
Then we add 115 to state {A}. Activity B has cumulative cost
30. So remaining cost of B is 95 (= 125-30). We add 95 to state
{B}. Using the same way, we have the remaining cost of C 65,
D 55, E 40, F 10, G 0. Next, these steps are repeated for all
other traces and same with calculating cumulative cost.
Consequently, we have the remaining cost showing per activity
as Fig.2.
V. TEST CASE STUDY
In this section, a test case example is used to illustrate the way
the methodology defined in section 4. This test case is a jean
manufacturing process and cost information was defined for
the process. For the analysis, an event log was extracted and
enhanced with cost information. The event log-enhanced cost
included information about activity, resources, detailed cost,
etc. The summary information was as follows: 11 cases, • 80
events and 8 tasks (e.g. DP01, DP02, DP03, etc.)
A. Manufacturing process model-enhanced cost
Fig.3 Illustrates the conceptual idea of the process model-
enhanced cost. Each event in the graph is represented as a
node, i,e. start event as = {DP01}, end event ae = {DP08}. The
graph shows the occurrence of nodes, e.g. N DP 01 = 11, N DP 04
=3, and flow between nodes, e.g. N DP 01, DP 04 = 3. Based on
the result, we can know the detail cost of execution time of
each activity or resource in the process.
By comparing them, we can know which the cheapest or
the most expensive activity is. For instance, total cost of DP02
is 2406.12 USD and execution time is 85 days. The cheapest
one is activity DP04 with 384.64 USD; the most expensive one
is activity DP05 with 6716.84 USD.
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Fig.3. Process model -enhanced cost
B. Manufacturing Cost prediction
Fig.4 is a screen shot of cost prediction of process.
Accumulated cost was denoted as “a”, and remaining cost was
denoted as “r” of each activity or resource. The process
includes 8 tasks. DP01 is the start task, and DP08 is the end
task. DP01 had consumed 498237.68 USD and required
276692.57 USD to complete the process. Based on the result,
we can figure out the highest remaining cost at the start event
and zero remaining cost at the end event. Users also can use
measurement such as total, max, min, AVG, median to
customize their demands.
VI. CONCLUSION
This paper proposed a method to analyze and predict
cost of manufacturing process. To approach this method,
process model-enhanced cost and cost prediction technique
were presented. Process model-enhanced cost executed the
detail cost of each activity in a process; whereas, cost
prediction showed not only the consumed cost but also cost
Fig.4.An example of cost prediction
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remaining to complete the process. A case study approaching
a method of this research with real life data should be a future
work.
ACKNOWLEDGMENT
This work was supported by Basic Science Research
Program through the National Research Foundation of Korea
(NRF) funded by the Ministry of Education (No. 2011-
0010561) and Institute for Information & communications
Technology Promotion (IITP) grant funded by the Korea
government (MSIP) (No. R0190-15-2012, High Performance
Big Data Analytics Platform Performance Acceleration
Technologies Development)
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Application of TPM in Production Process of
Aluminium Stranded Conductors
Orapadee Joochim
Institute of Field Robotics
King Mongkut’s University of Technology Thonburi
Bangkok, Thailand
orapadee.joo@kmutt.ac.th
Abstract—This paper presents the application of a total
productive maintenance (TPM) technique to increase the
effectiveness in producing aluminium stranded conductors in
order to reduce waste problems of the machine and improve the
quality of the production. Two pillars of TPM activities for
autonomous maintenance and focused improvement are
established. Machines which have low overall equipment
efficiency (OEE) are selected as prototype machines. Employee
training program about the production work, cleaning activities to
discover abnormal conditions, corrective actions during abnormal
operations and a one point lesson (OPL) to educate operators for
the production process are implemented. Autonomous
maintenance standards are also created. Pareto analysis is used to
identify the critical equipment in the factory. A corrective action
team is chosen to improve the operation of the process. The
research is evaluated by comparing the OEE of prototype
machines based on production problems occurred before and after
the improvement. The results demonstrate that the TPM
implementation decreases the downtime from 7,730.80 minutes
per month to 4,942.20 minutes per month, the loss of the scrap
from 4,570.00 kilograms per month to 2,236.67 kilograms per
month. The OEE is increased from 67.21 percent to 72.14 percent.
Keywords—overall equipment efficiency; one point lesson;
total productive maintenance
I. INTRODUCTION
Thailand’s electricity consumption continues to increase due
to the economic growth of the country. The rapid growth in
Thailand’s electricity demand requires a substantial amount of
electric wires and cables. Bangkok Cable Company Limited is a
leader in manufacturing electric wires and cables in Thailand. Its
first factory is located in Samutprakan Province, and its second
factory is situated in Chachoengsao Province. The company
offers covering all types of bare and insulated conductors.
Fig. 1 illustrates the electric cable production process. The
production process starts by feeding aluminium rods into the
melting process to produce aluminium conductors. In the next
step, the conductors are extruded. The conductors are stranded
after the extrusion. Then, the conductors are packaged into the
coils and reels. Insulated conductors must be made before
packaging, if the conductors are required to be insulated or
covered. Three main types of insulating materials used are
polyvinyl chloride (PVC), polyethylene (PE) and cross-linked
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
211
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Jumnong Meekaew
Aluminium Conductor Department
Bangkok Cable Co., Ltd. (Chachoengsao Factory)
Chachoengsao, Thailand
jumnong.m@bangkokcable.com
polyethylene (XLPE). Production quality control is strictly
executed on every step of production for the highest quality.
However, it was found from the production data collection
of aluminium conductors between July to December 2014 that
the overall equipment efficiency (OEE) is equal to 80.96
percent. OEE of the production of aluminium stranded
conductors is equal to 70.46 percent which is the lowest
comparing with other stages of the production. By increasing
OEE, time and waste losses will be decreased. Therefore, it is
possible to expand the production in the future. The purpose of
this paper is to study the effectiveness and implementation of
TPM program for the production process of aluminium stranded
conductors of an electric wire and cable manufacturer (i.e.,
Chachoengsao Factory of Bangkok Cable).
II. STUDY METHODOLOGY
A. Total Productive Maintenance (TPM)
TPM has been depicted as a manufacturing strategy for
helping to increase the productivity and overall equipment
effectiveness. The concepts of TPM has been introduced and
developed by in M/S Nippon Denso Co., Ltd of Japan in 1971.
TPM has been widely used, and there are a number of case
studies of TPM applications in the literature [1].
The principal activities of TPM are often called the pillars
or elements of TPM. The core TPM is categorized into eight
TPM pillars or activities for accomplishing the manufacturing
performance improvements. The eight pillars are autonomous
maintenance, focused improvement (Kobetsu Kaizen), planned
maintenance, quality maintenance, education and training,
office TPM, development management, as well as safety, health
and environment [2]. In order to increase the overall
effectiveness and reduce times and wastes during the production
of aluminium stranded conductors, autonomous maintenance
and focused improvement which are the main TPM pillars are
implemented in this paper.
Autonomous maintenance means maintain one’s own
equipment in good condition by one self. The aim of this pillar
is to prepare the operators to be able to take care of small
maintenance tasks, hence allowing the skilled maintenance
operators for spending time on more value added activity and
technical repairs. The operators are therefore responsible for
 Back to Contents

upkeep of their equipment on daily basis to prevent it from by the operators. Hence, the operators are becoming more
deteriorating or break down [2,3]. skillful [7].
III. CASE STUDY
A. Aluminium Conductor Stranding Process

Fig. 1. Electric Cable Production Process

Focused Improvement is aimed at decreasing losses in the

work place in order to improve operational efficiency. The goals
of the improvement are zero losses (identify and eliminate
losses), remove unsafe conditions, improve effectiveness of all
equipment and reduce operation and maintenance costs. The
principle of this pillar is that “a very large number of small
improvement is more effective in an organization than a few
improvement of large value” [3,4].
B. Overall Equipment Efficiency (OEE)
OEE is a crucial measure in TPM used as a quantitative
metric to measure the performance of a productive system. OEE
is used for measuring the success of TPM implementation
program. The principle goal of TPM is to increase the overall
equipment efficiency. The three main components of OEE are
equipment availability (A), performance efficiency (P), and
quality rate (Q). OEE can be calculated as follows [5,6].
= × × (1)
Fig. 2. Aluminium Conductor Stranding Process
The aluminium conductor stranding process as in Fig. 2
begins with passing extruded aluminium conductors into each
layer of the stranders. The conductors are stranded according to
the standard of the strand length. Each conductor is pulled by
using a capstan and the stranders are rotated at the same time so
that the conductors are twisted. The aluminium stranded
conductors are then sent to be stored.
B. Problem Definition
The data from the stranding process were collected in six
months (from July to December 2014). Table I shows the
production data of the aluminium conductor stranding process.
TABLE I. THE PRODUCTION DATA OF THE STRANDING PROCESS

− (2) Production Plans Good Products Wastes Loading Time Downtime

= × 100% Machine

(Tons) (Tons) (Tons) (Hours) (Hours)

S T01 288.62 276.12 12.50 2,879.46 353.76

× (3)
= × 100% S T04 635.27 617.87 17.40 2,808.54 462.38

S T06 558.47 533.72 24.75 3,097.18 646.67

S T08 196.22 192.09 4.13 2,327.04 366.65

− (4)
= 561.07 535.75 25.32 2,597.45 430.77
S T09

S T11 273.04 254.54 18.50 2,690.00 440.75

C. One Point Lesson (OPL)
S T02 205.20 204.80 0.40 2,298.25 155.62
The OPL form is a tool which helps to communicate TPM
training concepts to participants and employees. This form is S T03 1,392.00 1,388.60 3.40 2,976.81 306.27
structured for motivating the trainer to establish all substantial 1,560.55 1,553.35 7.20 3,188.47 521.00
S T05
activities onto one simple and easy to use [6]. OPL is the lessons
learnt by operators after carrying out the autonomous S T13 251.45 250.05 1.40 2,278.43 131.50
maintenance or focused improvement activities. A small-group- Total 5,921.89 5,806.89 115.00 27,141.63 3,815.37
activity leader marks the activities into the OPL report. The
enhancing of OPL allows the increase of the improvements done Using the data of Table I, the sample of the OEE calculation
for the ST09 strander machine is as below.

212
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demonstrate the abnormality. The equipment used for the

2,597.45 − 430.77 primary cleaning, protection and others is prepared. The
= × 100% = 83.42%
2597.45 maintenance is defined to do together every Wednesday.
0.0011 . × 2,400 .
= × 100%
3.17
P is calculated from each type of conductors before
calculating for the average of the machine. For example, the idle
cycle time is equal to 0.001 hours per meter, the length of
produced conductors is equivalent to 2,400 meters, and the
operating time is equal to 3.17 hours. The following is the
calculation of P.
After the average of all conductor types is calculated, P is
then equal to 76.83%.
561.07 × 25.32
= × 100% = 95.49%
561.07

= 0.832 × 0.763 × 0.9549 × 100% = 61.20%

Fig. 4. Pareto of the Downtime Problems of ST03 before the Improvement
= 84.12%
OEE of strander machines are illustrated in Fig. 3. The
strander machines can be divided into two groups; (1) machines
that loading the extruded conductors into steel wheels (i.e.,
ST01, ST04, ST06, ST08, ST09 and ST11), and (2) machines
that loading the extruded conductors into baskets (ST02, ST03,
ST05 and ST13). The ST03 and ST09 machines which have the
lowest OEE compared with other machines of their group are
chosen as the prototype machines. The data of the problems of
the downtime that do not include the preparation time of ST03
are collected. As in Fig. 4 and 6, the problems are arranged
depending on the priority of the downtimes and represented by
the pareto graph for data analysis. The collection of the data of
quality loss problems is implemented. The arrangement of the
problems is done according to the priority of the wastes. The
data are demonstrated as the pareto graph, see Fig. 5 and 7.
Fig. 5. Pareto of the Quality Problems of ST03 before the Improvement

The cleaning and finding of the abnormality are

Fig. 3. Electric OEE of Strander Machines
C. Implementation of Autonomous Maintainance
Autonomous maintenance is implemented by training the
operators of the strander departments 1 and 2 about how to
maintain the strander machines (self-maintenance). The
operators are divided into two teams for the self-maintenance
works for the ST03 and ST09 machines. The procedure begins
by cleaning the machines, finding the abnormality, labeling to
simultaneously performed. The labels are attached at the
abnormal parts. The discovery dates and priorities are specified.
The abnormality and correctional solution are defined. The list
of the abnormality is made and recorded. The abnormality is
corrected. The before and after maintenance data about the
problems, solutions and benefits of the maintenance are list.
The learning about the finding of the problems and solutions are
shared to the related operators by using OPL. The training using
OPL is classified according to the topic, basic knowledge,
improvement work or problem. The area for the lubrication is
defined. The standard of the lubrication is implemented. The
self-inspection of the machines is performed. The self-
inspection standard is created. The information about the
machine components, lubrication standard, inspection of the
operations of the equipment and observation method is used to
create the inspection sheet for daily maintenance. Table II
shows the amount of maintenance works.

213

Fig. 6. Pareto of the Downtime Problems of ST09 before the Improvement
Fig. 7. Pareto of the Quality Problems of ST09 before the Improvement
D. Implementation of Focused Improvement
From Fig. 4 to 7, a large majority of the problems (80
percent) are selected for the improvement according to pareto
analysis. The related workers are defined for the problems
consisted of representatives from engineering, quality
assurance and planning departments. The meeting is set for the
related workers in order to solve the problems using the 5W 1H
principle for inspecting the data of the problem characteristics.
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TABLE II. AUTONOMOUS MAINTENANCE WORKS
Finished Operations
Procedures Topics Amount
Solved (%)
1 Correction of Abnormality 60 53 88.33
2 Training Using OPL 25 20 80.00
3 Lubrication Standard 8 8 100.00
4 Self-Inspection Standard 4 3 75.00
Total 97 84 86.60
The improvement is done related to the defined plan. As a
result, the downtimes and wastes are reduced. Focused
Improvement starts with solving the problem of bows that
cannot be rotated. The take up system doesn’t work. The slip
rings are electrocuted. The machines are shut down for fixing.
The bows and slip rings are changed. The downtime problem is
solved. During the stranding process, the conductors are teared.
The cause of tearing is investigated, and the factors of tearing
and standard of the inspection are defined. The frequency of
inspection and responsible persons are specified. Subsequently,
the losses are decreased. The problems of Coupling Cage 12
and 18 are occurred due to eroding of shafts. The shafts and
couplings are changed. The data of the problems after the
improvement are collected between January to March 2015, see
Fig. 8 to 11.
IV. CONCLUSION
It is found from this paper that TPM successfully gives the
improvement. The wastes are reduced and also the downtimes
are decreased. Additionally, the aluminium stranded conductors
have higher quality than before the improvement resulting in
higher overall efficiency of the machines. These machines can
be used to be the prototypes for operations of other machines of
the company. The results before and after the improvement can
be concluded as follows.
1) ST03 Prototype Machine: The downtime is reduced from
3,495.60 minutes per month to 1667.20 minutes per month. The
waste is decreased from 413.33 kilograms per month to 20
kilograms per month. Before the improvement, OEE is 70.97
percent. OEE after the improvement is 76.89 percent.
2) ST09 Prototype Machine: The downtime is reduced from
4,235.20 minutes per month to 3,275.00 minutes per month.
The waste is decreased from 4,156.67 kilograms per month to
2,216.67 kilograms per month. Before the improvement, OEE
is 63.44 percent. OEE after the improvement is 67.38 percent.
3) Total of ST03 and ST09 Prototype Machines: The
downtime is reduced from 7,730,80 minutes per month to
4,942.20 minutes per month. The waste is decreased from
4,570.00 kilograms per month to 2,236.67 kilograms per month.
Before the improvement, OEE is 67.21 percent. OEE after the
improvement is 72.14 percent.
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Fig. 8. Pareto of the Downtime Problems of ST03 after the Improvement

Fig. 11. Pareto of the Quality Problems of ST09 after the Improvement

REFERENCES
[1] Chetan S. Sethia, Prof. P.N. Shende, and Swapnil S. Dange, “Total
Productive Maintenance-A Systematic Review,” International Journal for
Scientific Research and Development, vol. 2, issue 8, pp. 124-127, 2014.
[2] Andrea Sütőová, Štefan Markulik, and Marek Šolc, “Kobetsu Kaizen – its
value and application”, in Electronics International Interdisciplinary
Conference., 2012, pp.108-110.
[3] R. Gulati, Maintenance and Reliability Best Practice, 2nd ed. New York:
Industrial Press Inc., 2013.
[4] Chetan S Sethia, Prof. P.N. Shende, and Swapnil S Dange, “A Case Study
on Total Productive Maintenance in Rolling Mill,” Journal of Emerging
Technologies and Innovative Research (JETIR), vol. 1, issue 5, pp. 283-
289, 2014.
[5] Harsha G. Hegde, N.S. Mahesh, and Kishan Doss “Overall Equipment
Effectiveness Improvement by TPM and 5S Techniques in a CNC
Fig. 9. Pareto of the Quality Problems of ST03 after the Improvement Machine Shop,” SASTECH, vol. 8, issue 2, 2009, pp. 25-32.
[6] Ravikant V. Paropate1, and Dr. Rajeshkumar U. Sambh, “The
Implementation and Evaluation of Total Productive Maintenance –A Case
Study of midsized Indian Enterprise,” International Journal of Application
or Innovation in Engineering&Management (IJAIEM), vol. 2, issue 10,
2013, 120-125..
[7] Sia Soon Siong, and Shamsuddin Ahmed, “TPM Implementation Can
Promote Development of TQM Culture: Experience from a Case Study in
a Malaysian Manufacturing Plant,” in Proceedings of the International
Conference on Mechanical Engineering, Dhaka, Bangladesh, 2007.

Fig. 10. Pareto of the Downtime Problems of ST09 after the Improvement

215
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‘Creating Awareness on Light Pollution’ (CALP)

Project: Essential requirement for school-university
collaboration

NNM Shariff, MR Osman, MS Faid ZS Hamidi, SNU Sabri, NH Zainol, MO

Academy of Contemporary Islamic Studies Ali, Nurulhazwani Husien
Universiti Teknologi MARA Faculty of Applied Sciences
Shah Alam, Malaysia Universiti Teknologi MARA
nur.nafhatun.ms@gmail.com Shah Alam, Malaysia
zsharizat@yahoo.co.uk

Abstract—Managing a project involves a process of

synchronizing two different organizations with two different
cultures. In doing so, mutual agreement on certain things and
levels is a must for that project to be run smoothly. Therefore, the
objective of this paper is to identify the essential requirement for
school-university collaboration specifically for ‘Creating
Awareness on Light Pollution’ (CALP) Project. With the aim of
educating the society about light pollution, the University has
taken an advance step together with selected schools to monitor
light pollution by utilizing Sky Quality Meter. In total, this
project has nine stations in peninsular Malaysia. It is hope that
by outlining the essential requirement, this project can be
replicated to others countries.
Lieberman [5] depicted the collaboration as Figure 1 – it is
the effort of two organizations, moving towards the same goals,
same direction and sharing the same values. This inter-
organizational collaboration effectively influences education
the community. The government of Malaysia has targeted
students’ enrolment in higher learning institution in the ratio
60: 40 (science/technical: literature). Unfortunately, to this
point, it never reached the targeted 60 percent [6]. Therefore,
we hope through university involvement – temporary and
unique project – is able to enhance student interest in science.

Keywords— project management; university; school;

collaboration; light pollution; astronomy

I. INTRODUCTION
According to Project Management Institute [1], a project
has two important characteristics that are temporary and
unique. Temporary means it has specific beginning and ending
time, making it has its own particular resources and scope.
Meanwhile, a project is unique because it is has a specific sets
of operations for specific objectives not a routine operation.
Therefore, project management is the effort to meet the project
requirement by applying knowledge, skills, tools and
techniques onto project activities. Project management has
five (5) processes namely: 1) initiating; 2) planning; 3)
executing; 4) monitoring and controlling; and 5) closing.
Establishing school-university collaboration is not an easy
task but it is doable. Among the important elements of school-
university collaborations are 1) shared goals with a short-term
focus; 2) common planning or in other words put emphasize on
the existence or persistence of the partnership; and 3) mutual Figure 1 Caricature depicting collaboration of school-
respect with expectation to participate in an adaptable and university (Lieberman, 1992)
dynamic inter-organization collaboration [2-4].
The aim of this paper is to highlight the essential
In Malaysia, one of the initiatives by Ministry of Education
requirement for school-university collaboration in ‘Creating
is to provide research seed grant namely Knowledge Transfer
Awareness on Light Pollution’ (CALP) Project. Section 2
Program (KTP). There are two types of it: 1) collaboration with
briefly elaborates on light pollution and its importance.
industry; and 2) collaboration with community. Other than that,
Followed by Section 3 describes the details of the CALP
collaboration with national agency such as ANGKASA
Project. Section 4 will touch about four important elements in
(National Space Agency) or MOSTI (Ministry of Science,
making the project successful i.e. 1) project management; 2)
Technology and Innovation) can possibly happen.
equipment; 3) observation; and 4) software. As for summary,
conclusion is at the last section.

978-1-5090-1671-6/16/$31.00 ©2016 IEEE

216

II. THE IMPORTANCE OF MONITORING LIGHT
POLLUTION
Monitoring light pollution can be two common ways. First
is from satellite measurement [7]. Second is from ground
measurement [8-10]. The importance of monitoring light
pollution is because light pollution does have impacts towards
nocturnal creatures, night sky heritage and especially human
health [6]. United Nations [11] emphasized the importance of
increasing education and enhancing global awareness in
science and technologies of light through their 2015
International Year of Light Resolution. The awareness on light
pollution and astronomy can be through: 1) proper curriculum
in formal education; and 2) through informal education such as
CALP Project [12].
III. ‘CREATING AWARENESS ON LIGHT POLLUTION’ PROJECT
CALP Project is a pilot project between Universiti
Teknologi MARA (comprises two faculties - Academy of
Contemporary Islamic Studies and Faculty of Applied
Sciences) and selected secondary schools in peninsular
Malaysia. Up to this point, there are eight participating
schools plus one fixed station. In order to get a fair
distribution of light pollution data, the schools were roughly
selected based on cardinal point i.e. east, west, north and
south of peninsular Malaysia – Figure 2.
Figure 2 CALP stations
There are two goals of the project: 1) creating a chance to
secondary students to experienced hands-on measurement of
light pollution or the brightness of the sky; which eventually
2) encourage awareness on light pollution among secondary
students [6]. We can say that this project is in line with
national aspiration in promoting science among school
students [13].
For that purpose, we choose to utilize Sky Quality Meter
(SQM). This meter measure the brightness of the sky in
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magnitudes per square arc second [14]. The SQM used light-
to-frequency silicon photodiode; TSL237S1 as its sensor. The
sensor is covered with a HOYA CM-500 filter to block near-
infrared light. It is calibrated using a NIST light meter and
the absolute precision is ±10% (±0.10 mag/arcsec2) [15].
Figure 3 Sky Quality Meter (SQM) to
measure the brightness of the sky
IV. THE ESSENTIAL REQUIREMENT OF CALP PROJECT
Several essential requirements were identified and
assessed in order to ensure the project is successful. It can be
divided into four main interrelated categories such as 1)
project management; 2) equipment; 3) observation; and 4)
software. Figure 4 below illustrates all the four categories.
Project management element covers collaborators (the
University & the schools), cost, schedule/synchronization and
documentation/reporting. Ninety percent of the cost is borne
by the University through research grant and another ten
percent is from the schools. Due to that, we have to have a
proper agreement especially when involving financial and
data ownership. Documentation from the beginning is very
crucial for reporting purpose. In this case, we have to report to
the grantor.
The most vital equipment is the SQM. Without SQM,
nothing can be achieved. There are three type of SQM been
used which depends on the school facility (internet, PC etc.).
Most schools we supplied with basic SQM – better for hands
on purpose – as Figure 2. Other than that as listed in Figure 4,
are accessories. It would be good if they have those. For
instance, compass to learn about cardinal point. This project
also tries to advance secondary science education – further
explanation can be found in Shariff, Hamidi, Musa, Osman
and Faid [6].
1
TSL237 has been temperature compensated for the ultraviolet-to-visible
range of 320 nm to 700 nm and responds over the light range of 320 nm to
1050 nm. Although it is very close to human eye response, the designer
deposits the Hoya CM-500 filter to cuts off the entire infrared part of the
spectrum. From web
https://ams.com/chi/content/.../TSL237_Datasheet_EN_v1.pdf accessed on 22
Dec 2015. TSL237 is manufactured by TAOS Inc. (Texas Advanced
Optoelectronic Solutions) and now known as ams AG (Austria).

Figure 4 Overview of CALP Project
As for observation, simple testing will be done because
they embark on the observation. This element of observation
will be taught during training – a special module. One-page
checklist is provided for the teachers for pre-observation,
during the observation and post-observation – in making sure
that nothing is missed out for the data to be valid. Two
options of SQM inclination angle i.e. 45 degrees or 90
degrees. To be synchronized, 90 degrees angle was opt for the
whole system. Furthermore, it is easier to point SQM at 90
degrees rather than 45 degrees.
Observation shift depends on local weather. If the
observation is done during weekdays, normally they choose
from 9pm to 12am (some earlier than that as astronomical
twilight gone). During the weekends, the observation begins
at 12am till 6am depending on their preferences. As we
described at the previous section, we choose the school based
on cardinal points. Other criteria for site selection are: 1) high
density/low density; 2) urban/sub-urban/rural; 3) willingness
of the teacher (voluntary or non-voluntary); 4) willingness of
the students; and 5) basic facilities [6].
Software is supplied by the University. In order to collect
data, Knightware or SQM Reader will be used. The previous
mentioned softwares can be paired with Stellarium2.
Stellarium is 3D planetarium software which is a free open
source. Therefore, it can be a medium for students to learn
more about astronomy. To analyse the data, we import data
from SQM Reader/Knightware to Microsoft Excel.
ArcGIS/MatLab is used to map the light pollution.
Among all these principles in this project which are the
requirement of ensuring a clear sense of shared ownership and
the maintenance of ‘open communication’ between all
partners. A set of document was drafted by project
coordinator then discussed, modified and agreed upon by the
teacher research coordinators and principal from each school.
Among other things discussed in the document are planning,
MoU, installation, configuration, operating, maintenance and
data analysis [6].
Since the selected of the school is from bottom-up – go for
voluntary school rather than being mandate by the Ministry of
Education – this is the measure we take in order to avoid
2
www.stellarium.org
218
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climate of distrust [4, 5]. Thus, we try our best to share the
same values (listen to each other) because these two
organizations have two different cultures that should be
celebrate and respect. Understanding towards each other is
very vital as we ourselves have our own duty and task.
Lieberman [5] stated that in order to forge a culture of
collaboration several aspects must be clear i.e.: 1) creating a
vision; 2) structuring after the activities to grow innovative; 3)
authentic opportunities to fail; 4) different group, same vision;
and last but not least 5) numerous opportunities for
leadership.
V. CONCLUSION
To conclude, this project has potential to be expanded in
terms of duration and schools participation. Each and every
project that involves two or more parties/organizations will
have its own ebb and flow. Making clear about essential
requirement is important as it is acts like a first step towards
mutual understanding. And this of course will be depending
much on communication. This essential requirement serves as
a basic guide that open to any suggestion for improvement.
ACKNOWLEDGMENT
The authors wish to thank the referee for comments and
suggestions to improve the paper. This work was partially
supported by RAGS/1/2014/SSI03UITM//2,
FRGS/2/2014/ST02/UITM/02/1 and 600-RMI/RACE
16/6/2(4/2014). Special thanks to the selected schools (KPM)
and all the volunteers.
REFERENCES
[1] Project Management Institute, What is Project
Management?, in, Project Management Institute, Pennsylvania,
2015.
[2] M.E. Kersh, N.B. Masztal, An analysis of studies of
collaboration between universities and K-12 schools, The
Educational Forum, 62 (1998) 218-225.
[3] R. Thorkildsen, M.R.S. Stein, Fundamental characteristics
of successful university-school partnership, The School
Community Journal, 6 (1996) 79-92.
[4] A.C. Borthwick, T. Stirling, A.D. Nauman, D.L. Cook,
Achieving Successful School-University Collaboration, Urban
Education, 38 (2003) 330-371.
[5] A. Lieberman, School/University Collaboration: A View
from the Inside, The Phi Delta Kappan, 74 (1992) 147-152.
[6] N.N.M. Shariff, Z.S. Hamidi, A.H. Musa, M.R. Osman,
M.S. Faid, ‘Creating Awareness on Light Pollution’ (CALP)
Project as a Platform in Advancing Secondary Science
Education, in: International Conference of Education,
Research and Innovation, International Academy of
Technology, Education and Development, Seville. Spain, 2015.
[7] P. Cinzano, F. Falchi, C.D. Elvidge, Global monitoring of
light pollution and night sky brightness from satellite
measurements, (2003).
[8] C.S.J. Pun, C.W. So, Night-sky brightness monitoring in
Hong Kong - a city-wide light pollution assessment,
Environmental Monitoring and Assessment 184 (2012) 2537-
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2557.
[9] C.S.J. Pun, C.W. So, W.Y. Leung, C.F. Wong,
Contributions of artificial lighting sources on light pollution in
Hong Kong measured through a night sky brightness
monitoring network, Journal of Quantitative Spectroscopy &
Radiative Transfer, 139 (2013) 90-108.
[10] Z.S. Hamidi, Z.Z. Abidin, Z.A. Ibrahim, N.N.M. Shariff,
Effect of Light Pollution on Night Sky Limiting Magnitude and
Sky Quality in Selected Areas in Malaysia, in: 2011 3rd
International Symposium & Exhibition in Sustainable Energy
& Environment, IEEE, Melaka, Malaysia, 2011, pp. 233-235.
[11] United Nations, International Year of Light and Light-
based Technologies, 2015, in, United Nations, New York,
2014.
[12] J.R. Percy, Light Pollution: Education of Students,
Teachers and the Public, Preserving the Astronomical Sky:
IAU Symposium, 196 (2001).
[13] Government of Malaysia, Laporan Strategi Mencapai
Dasar 60: 40 Aliran Sains/Teknikal: Sastera, in, Government of
Malaysia, Kuala Lumpur, 2013.
[14] N.N.M. Shariff, A. Muhammad, M.Z. Zainuddin, Z.S.
Hamid, The Application of Sky Quality Meter at Twilight for
Islamic Prayer Time, Internation Journal of Applied Physics
and Mathematics, 2 (2012) 143-145.
[15] N.N.M. Shariff, Sky Brightness at Twilight: Detectors
Comparison between Human Eyes and Electronic Device For
Isha' and Subh from Islamic and Astronomical Considerations,
in: Science and Technology Studies, University of Malaya,
Kuala Lumpur, 2008.

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Signal Detection of the Solar Radio Burst Type III

Based on the CALLISTO System Project
Management
NNM Shariff, MS Faid
Academy of Contemporary Islamic Studies
Z.S.Hamidi, NH Zainol, MO Ali, SNU Sabri, Universiti Teknologi MARA
Nurulhazwani Husien Shah Alam, Malaysia
School of Physics and Material Sciences, Faculty of nur.nafhatun.ms@gmail.com
Sciences,
Universiti Teknologi MARA, C. Monstein
40450, Shah Alam , Malaysia Institute of Astronomy, Wolfgang-Pauli-Strasse 27,
zetysh@salam.uitm.edu.my Building HIT,
Floor J, CH-8093 Zurich, Switzerland

Abstract —The E-CALLISTO (Compact Astronomical Low heating, particle acceleration and particle transport in solar
Cost Frequency Instrument for Spectroscopy and Transportable magnetized plasma [2, 3]. However, the dynamics of the solar
Observatory) network is a worldwide system in order to observe corona is still not understood, and new phenomena are
the Sun’s activity in the radio region. At present, more than 80 unveiled every year. This region covers from 15 - 30 GHz [4].
instruments have been installed at more than 43 locations, with
users from more than 113 countries in the e-CALLISTO
Thus, the radio spectrum is limited at the low frequency side
network. At present, more than 80 instruments have been of the ionosphere and at the high frequency region of the
installed at more than 43 locations, with users from more than troposphere [5]. The E-CALLISTO is an acronym stands for
113 countries in the e-CALLISTO network. In this paper, we extended Compact Astronomical Low Cost Frequency
make use of the e-CALLISTO data that shows a sign of solar Instrument for Spectroscopy and Transportable Observatory,
activity. On 9th May, the Solar Radio Burst Type III (SRBT III) is a worldwide network of frequency-agile solar spectrometer
happens for two times. The first detection of SRBT III occurred [6]. This network has a receiving instrument named
less than 1 minute within 05:31UT and 05:32 UT as illustrated in CALLISTO spectrometer, which is inspired from the name of
Figure 3. The second SRBT III seems to be occurred within 05:41 one of the Jupiter’s larger moons [7].
UT to 05:42 UT for approximately 1 minute. The Coronal mass
ejection which was ejected from the active region AR2339, was
detected at 05:42UT has the ‘beta-gamma’ magnetic field that
harbors energy for strong solar flares. From the results, the point
we wish to make here is that at least some of these type III bursts
with low starting frequencies are consistent with front-side flares,
which indicates to us that the low starting frequencies observed
for many of these bursts are intrinsic to the type III emissions
and do not result from occulting of the high-frequency emissions
from any plasma structures.

Keywords— Solar burst; CALLISTO system; project

management

I. INTRODUCTION
An extensive experimental and theoretical work has
succeeded in elucidating many observational and
characteristics of radio bursts in understanding their physical Figure 1 Map of current distribution of Callisto
nature. Solar radio observations have been carried out since instruments in May 2015 ( Credicted to: http://www.e-
1944 when J.S Hey discovered that the Sun emits radio waves callisto.org/)
[1] . This method reveals us to study energy release, plasma

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220

The goal of the e-Callisto network is to provide a
worldwide system in order to observe the Sun’s activity in the
radio region [8]. In specific, the solar radio burst can be
detected due to the solar flare and Coronal Mass Ejections
phenomena. In this project, the observation can be done within
for 24 hours per day [9]. This is based on the period of
observation at different sites all over the world. At present,
more than 80 instruments have been installed at more than 43
locations, with users from more than 113 countries in the e-
CALLISTO network. With higher temporal resolution, radio
apparatus with a complex, interrelated analysis could offer a
high quality data concerning small and short scale physical
processes as well as the main properties of the area involved
[10, 11].
Figure 2 Simulation of solar burst data from different sites
in CALLISTO network (Credicted to: http://www.e-
callisto.org/)
A very important feature of the CALLISTO spectrometer
is to detect the intensity of electromagnetic radiation at radio
frequencies between 45 - 870 MHz. It consists three main
components which are the receiver, a linear polarized antenna
and control/logging software. Due to the development of the
technology, more advanced system was implemented in the
system includes a tower-mounted preamplifier or low noise
amplifier, additional antennas and a focal plane unit (FPU)
with antenna polarization switching and noise calibration
capabilities. In assessing the existing and planned space
weather observing systems, the signal from the feed will be
fed into the receivers. Subsequently, the signal will be
converted to a first intermediate frequency of 37.7 MHz by
two local oscillators. For filtering and amplification purposes,
the signal is down converted to 10.7 MHz, it is detected by
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logarithmic device and low pass filtered. The logarithmic
domain is more than 45 dB.
Data acquisition for both receivers and the interface to the
PC are on a separate board. Two step process measurements
are made. In the first step a receiver is tuned to a frequency, in
the second step the signal is measured. However, the receivers
can also be configured to measure the same polarization and to
alternate: while one is measuring, the other is tuned to a new
frequency.
II. RESULTS AND DISCUSSION
We now make use of the e-CALLISTO data that shows a
sign solar activity. There were flares reported and solar bursts
are drifted from 80MHz to 20MHz. However, their intensity
and burst duration is different.
On 9th May, the Solar Radio Burst Type III (SRBT III)
happens for two times. The first detection of SRBT III
occurred less than 1 minute within 05:31UT and 05:32 UT as
illustrated in Figure 3. The second SRBT III seems to be
occurred within 05:41 UT to 05:42 UT for approximately 1
minute. The table below shows the current condition of the sun
during the observation. It was found that the second SRBT III
duration is long and it can be observed the first radio burst has
a faster drift rate compared to the second SRB. The intensity is
of the second SRB is higher than the first SRBT III. One might
attempt to explain the solar parameters. Table 1 shows the
current condition of the Sun on 9th May 2015.
TABLE I. THE CURRENT CONDITION OF THE SUN ON 9TH OF MAY 2015
Solar Wind Value
Speed
Solar Wind 367.5 km/s
Speed
Solar Wind 4.1 protons/cm3
Density
Interplanetary 7.5 nT
Magnetic Field
Based on the X-Ray flux data in Figure 3 and Figure 4,
there are several flare occurred classified a s C1.0, C2.0, C3.0
and C5.0 solar flare suddenly ejected from the active region
AR2339. While this eruption, a magnetic field filament
connected to the active region AR2339 also erupted. The two
wild filaments combined to produce a bright Coronal Mass
Ejections. This event can be considered as an active solar
activity.

Figure 3 A signal detection of solar flares (Credited to
NOAA website)
Figure 4 Solar radio burst III on 9th May 2015
(http://www.e-callisto.org/)
The Coronal Mass Ejections which were ejected from the
active region AR2339, was detected at 5:42UT which is
appearing within the duration of the second SRBT III. It is also
observed that on the AR2339 has ‘beta-gamma’ magnetic field
that harbors energy for strong solar flares.
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Figure 5 Active region 12339 (Credited to: Solar Monitor)
Figure 6 Image of the CMEs (Credited to CACTUS)
The data from CACTUS in Figure 6 shows that the height
of the CME quite high whereby it reaches 6.8 Rs. Based on the
observation the CME occur 2 hours before the SRB detection.
The CME is believed to produce a geomagnetic storm and will
affect the magnetic field on the Earth and it will cause pressure
when on the Earth when it hit.

Figure 7 Velocity of CMEs on 9th of May 2015(Credited to
CACTUS)
Hence, Fig. 7 shows the graph of velocity of CME versus
angle from the north. This graph shows the distribution of
CME velocity on the 9th of May 2015. It can be observed that
there are 52 CMEs occurring on that day with the velocities
that ranging from 100 ms-1 to 2000 m/s. The average velocity
of CME is 2000 ms-1. This speed used to classify the CMEs on
9th of May is an ‘impulsive CME’.
Based on the calculations that have been made, it was
found that the electron density of the burst is 3.554 x 1012 4 e
m-3 and the drift rate for both solar radio burst are 2MHz s-1
and 0.6MHz s-1. The CME originates with high temperature,
which is 28019 K. Besides, the photon energy are ranging from
3.309 ×10-7 eV and 8.272 ×10-8 eV. The high temperature of
the CME confirmed that the CME is impulsive CME. We
propose that the low-frequency termination can be intrinsically
explained by the maser instability model.
III. CONCLUSIONS
In general, this project encompasses many science,
engineering and mathematical disciplines. The e-CALLISTO
system has already proven to be a valuable new tool for
monitoring solar activity and for space weather research. From
the results, the point we wish to make here is that at least some
of these type III bursts with low starting frequencies are
consistent with front-side flares, which indicates to us that the
low starting frequencies observed for many of these bursts are
223
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intrinsic to the type III emissions and do not result from
occulting of the high-frequency emissions from any plasma
structures.
ACKNOWLEDGMENT
We are grateful to CALLISTO network; STEREO,
LASCO, SDO/AIA, NOAA and SWPC make their data
available online. This work was partially supported by the 600-
RMI/FRGS 5/3 (135/2014), 600-RMI/RACE 16/6/2(4/2014and
600- RMI/RAGS 5/3 (121/2014) UiTM grants, Universiti
Teknologi MARA and Kementerian Pendidikan Malaysia.
Special thanks to the National Space Agency and the National
Space Centre for giving us a site to set up this project and
support this project. Solar burst monitoring is a project of
cooperation between the Institute of Astronomy, ETH Zurich,
and FHNW Windisch, Switzerland, MARA University of
Technology and University of Malaya. The research has made
use of the National Space Centre Facility and a part of an
initiative of the International Space Weather Initiative (ISWI)
program.
REFERENCES
[1] Hey, J.S., S.J. Parsons, and J.W. Phillips, Some characteristics of
solar radio emission. Monthly Notices of the Royal Astronomical
Society, 1948. 108: p. 354-371.
[2] Gary, D.E.K., C. U., Solar and Space Weather Radiophysics {
Current Status and Future Developments 2004, Dordrecht:
Kluwer.
[3] Aschwanden, M.J., Particle Acceleration and Kinematics in Solar
Flares: A Synthesis of Recent Observations and Theoretical
Concepts. Space Science Reviews, 2002. 101(2).
[4] Kundu, M.R., Solar Radio Astronomy. 1965: John Wiley.
[5] Gopalswamy, N., Radio-rich Solar Eruptive Events. Geophys. Res.
Lett, 2000. 27(1427).
[6] Benz, A.O., et al., A broadband spectrometer for decimetric and
microwave radio bursts first results. Sol. Phys., 1991. 133: p. 385-
393.
[7] Benz, A.O., et al., The background corona near solar minimum.
Solar Phys., 2004. 55: p. 121-134.
[8] Benz, A.O., et al., A World-Wide Net of Solar Radio
Spectrometers: e-CALLISTO. Earth Moon and Planets 2009. 104:
p. 277 – 285.
[9] Hamidi, Z., et al., Coverage of Solar Radio Spectrum in Malaysia
and Spectral Overview of Radio Frequency Interference (RFI) by
Using CALLISTO Spectrometer from 1MHz to 900 MHz. Middle-
East Journal of Scientific Research, 2012. 12(6): p. 893-898.
[10] Robinson, P.A., Sol. Phys., 1991. 134.
[11] Aschwanden, M.J., Physics of the Solar Corona, an Introduction.
2004, Berlin: Springer.

A risk management approach for collaborative NPD
project
Ioana Filipas Deniaud François Marmier
Strasbourg University Toulouse Univ., Mines Albi
BETA
& Strasbourg Univ., BETA
Strasbourg, France
France
deniaud@unistra.fr marmier@mines-albi.fr
Abstract—To be competitive, a new product should present an
innovative advantage while being achievable. To ensure the
success of a New Product Development (NPD) project, specific
skills and resources are required. Most often, if a product is
complex, a unique company doesn’t have all the competences to
provide the complete product. In this case alliances must be
formed to create a collaborative network that work on the new
project. Depending on the selected partners, different possible
innovation level can be reached. This decision also influences the
uncertainty and the risk of the project. It is difficult to assess the
risk level of a NPD project especially when the collaborative
network is new. In this paper we address the topic of alliance
making in NPD and we present a reading frame of the projects
by taking into account the type of innovative projects, the
possible network and the risk that are obviously inherent. The
originality of the paper is to consider correlate decisions focused
on the collaborative network and on the risk management in
innovation context. The objective of the paper is to establish the
process making the ling between network design, NPD project
planning and risk management in order to have an overview of
the repercussion of the network design on NPD project.
Keywords—new product development; project management;
collaborative network; risk management; innovation.
I. INTRODUCTION
Future success of a company often requires that firms offer
regularly new products. In order to reach fundamentally better
products, lower costs, and basically new product features,
technological innovations are needed [1]. Higher requirements
for the products lead to the need for constant innovation for
company’s competitive advantage. In the same time the
complexity of technology needed to innovate has increased
and NPD costs are exploding [2]. Firms with diversified
networks usually hold major advantages through access to a
rich knowledge base. Ritala and al [3] show that the external
knowledge sharing increased firm-level innovation
performance. External knowledge sharing appeared in
collaborative network and forms an open innovation system
[4] with advantage and difficulties.
Nightingale [5] point out that NPD simultaneously implies
defining the product to be created (What do we do?), defining
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
224
Back to Contents
Didier Gourc Sophie Bougaret
Pharmaceutical R&D
Toulouse University
Mines Albi Management Consulting
Albi, France Company - Manageos,
Francarville, France
gourc@mines-albi.fr
sophie.bougaret@wanadoo.fr
the project to implement (How do we do it?) and the actors in
charge of different activities (Who does what?). The NPD
project contains a set of activities that must be carried out to
meet design objectives. The innovation level of the future
product involves a creative capital [6]. The NPD is the result
of a collaborative process between resources belonging to
different functions of the same company (internal
development) or between different companies working
networked [7]. Both innovation level and collaborative
network are sources of risks.
To identify the risks and propose a risk management plan,
the objective of this work is to propose a reading frame for
collaborative NPD project. The originality of this work is to
consider the type of project, the type of collaboration and the
type of risk in order to help choosing the risk treatment
strategies.
The paper is structured as follow: first, we present of short
literature review on NPD Project and its characteristics,
second we propose a process and a reading grid helping to
define a risk management plan and then finally, we present our
conclusions
II. NEW PRODUCT DEVELOPMENT PROJECT
A NPD project is characterized by an innovation level,
most often the time by distributed skilled resources between
partners and by a high level of risk. Therefore, in this section,
we define these particular notions.
A. The innovation and its effect on the project
NPD collaborative project has four main steps:
Requirements specification (including idea genesis), Product
design, Product implementation, and Commercialization. This
steps are formalized as a sequential process (stage-gate
process), or a concurrent, iterative one (Vee cycle) [8]. Several
authors distinguish three NPD project types according to the
initial innovation level. In the Gero’s classification [9] defined
the design output can be creative, innovative or routine. In the
Evbuomwan et al.’s [10] classification the level of originality
is obtained by routine design, to redesign and non-routine
design. In reality, it is often not possible to define precisely the

boundaries between theses types of design. For example, a
complex product is composed by different sub-systems [11].
One of sub-systems maybe corresponds to innovative design,
while another is routine design. Therefore, this should be
considered to be only a broad classification. In reality it is a
continuum.
Du to the innovation, NPD project are risky. Innovation
demands coordination and cooperation between partners in
NPD. The types of collaborations are described in the next
section.
B. Collaborative network and partners election
To realize a collaborative work a form of cooperative
arrangement, named “strategic alliance”, must to be done
between partners [12].
1) Definition
NPD project may imply a “co-development alliance “[13]
or “Technology development alliances” [14], with the purpose
of improvement in technology and know-how, for example
agreements for joint R&D, simultaneous engineering,
licensing, joint design and/or technology commercialization. It
can be done in particular bi-lateral relations or in clusters and
during each step of the project, alliances can by done. Those
involve the sustained joint creation of property and knowledge
for the partners, requiring them to bring in resource and work
together on a constant basis [15]. Depending on project time
(moment) the company that initiates the collaborative process
may seeks partners with a strong creative potential (in initial
phases) towards simple subcontractors (at the end of the
project).
Many theoretical frameworks dealing with strategic
alliances with very different perspective of innovations; in
neo-classical theories, technology or innovations are simply
assumed to appear, from time to time, resulting from
economically exogenous processes. Schumpeter [16], contrary
to the standard neo-classical theory, point out the endogenous
character of technology and innovation (mainly in-house
R&D). Gnyawali and Srivastava [17] discus about network
orientation and they identified two possibilities: acquisition
and co-development. In acquisition, network is viewed as
means to get specific resources of the other firm to enable to
pursue its own innovation in NPD. In co-development
orientation network is viewed as a way of pursuing innovation
together with its partners in joint NPD. Several typology of
collaboration was proposed in literature [15; 18; 19]. Figure 1
we present our synthesis of those typologies.

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2) Innovation in network
Firms pursuing innovation must maintain a balance
between learning from external (exploration) and internal
sources (exploitation). Too much exploitation is unlikely to
lead to higher-order learning, whereas too much exploration is
expensive and may produce many underdeveloped concepts
and ideas [20]. This supposes the capability to make alliances
with other firms with it’s risk-taking propensity to devote
resources to projects. Since 1960, in the R&D alliances, firm
increasingly prefer contractual partnership to joint venture
[21]. To encourage innovation in NPD, two types of non-
equity alliances (figure 1): unilateral alliance (R&D
contract…), bilateral alliance (joint R&D…).
• In unilateral alliance one partner provides founds to
another partner for specified R&D development. In this
case there are no knowledge sharing between partners
and innovation level tends to be low;
• In bilateral alliance, partners combine their knowledge.
“Novelty gain” increases with cognitive distance
between partners [22]. Innovation level is directly
proportional with novelty gain.
3) Strategy of alliance selection
Emden et al [13] identified three conditions for the
creation of value in co-development network:
• Strategic alignment focuses on selecting partners with
maximum potential to collaborate. This implies
motivation correspondence and goal correspondence
between all network partners.
• Technological alignment focuses on selecting partners
with maximum potential for creating technological
synergy. Partners must have either an innovative
technology or expertise in certain domain.
• Relational alignment focuses on selecting partners with
maximum potential to sustain the relation-ship.
In NPD, few firm’s specific resources may lead to firm’s
competitive advantage [23]. However, “the ‘do it yourself’
mentality in technology and R&D management is outdated”
[24]. A network is realized by pooling the various resources/
competences of the partners. Das and Bing-Sheng Teng [12]
propose an integrated resource based view of strategic
alliances, identifying four types of resources that the partners
bring to an alliance: Financial, Technological, Physical and
Managerial.
C. Risk management in Network
Firms trying to be innovative develop new ways of doing
business. R&D activities usually connote higher risks for
"









 
'
firms. However, depending on the partners and on the

" 
different resources shared in an alliance (financial,

 

" 


"%




technological, physical, managerial) different risks are
" 


possible. Two types of risks in alliances have been identified





 

in the literature: relational risk end performance risk [26; 12;
'

15]:
$"

• Relational risks are those regarding cooperation (eg.
Fig. 1. Alliances typology partners opportunistic behaviour).

225

• Performance risks are those regarding future states of
the alliance objectives (eg. objectives are not achieved).
In NPD alliances, both relational risk end performance risk
tend to be high [25]. The two sets of risks present an inverse
evolution of level with the increase of the number of partners.
The performance risk is usually shared by making alliances
but the relational risk appears only if an alliance is made [27].
The greater the number of previous alliances between the
same partners, the lower will be the perceived relational risk.
The collaborative experience also has an influence on the risk
level. The greater the asymmetries between partners, the
higher will be the perceived relational risk [15].
The technology knowledge helps solving technical problems.
This point is a key factor of the risk level in NPD project.
However, other factors exist. Tornatzky and Fleischer [28]
framework highlights the three main elements of a firm’s
context influencing the process by which it adopts and
implements technological innovation: Organization,
Technology, and External Task Environment. In the same
ideas Wohlfeil and Terzidis [1] identified different critical
success factors in technological innovation splited in three
categories: Target market, organization and Technology. All
this factors generate risks.
Other kind of risks, exogenous of network, are possible.
They are mentioned below but are not considered in this work.
These external risks depend on target market:
• Market barriers: high capital demand, patent situation,
image requirements, lack of appropriate location,
resources or suppliers, economy of scale.
• Environmental context: technology support
infrastructure, social, political (government regulation),
economic, legal, etc.
D. Finding
Depending on the innovation level of the project and on
the collaboration involved in the development, different risks
are possible. The strategies needed to manage risk and to
Back to Contents
possible risks and associated treatment strategies to define risk
management plan.
A. Risk management in collaborative project design
During the NPD project is designed, risks are studied.
Figure 2 presents the macro process leading to the risk
management plan design. This one starts from the
specifications. The first constituting process consists in
defining the deliverable and a macro vision of the project
planning. The level of innovation drives the manager to
develop incrementally the new product based on existing
products or a radically different one. Since the knowledge
capitalisation helps to be efficient, incremental innovation can
be quickest than radical ones. It has a huge influence on the
result of this process.
The second process consists in selecting the different
partners, if needed, to achieve the project. In innovative
product development presenting research the three main types
of collaboration are the crowdsourcing, the joint R&D and the
R&D contract to develop products. Mainly due to the skills of
the selected partners the product design can change. The
planning of the project and the associated project can have to
be reviewed.
The third process aimed to develop a risk management
plan. After having identified the different risks, strategies of
treatment are proposed for each one of them. These strategies
induce modification of the planning to prevent risks and or
correct the effect of possible occurrences. [29] proposes a
project management approach based on a synchronized
process of project schedule and risk management. This
synchronized process has been used for decision-making
support in variant of project selection [30] and for product
selection in [31]. These works do not considered the effect of
the alliance selection on the planning and on the risk.
Therefore, risk treatment strategies generally conduct to
review the product design or the project planning as well as to
modify the collaborative network.





success the project different on the type of the considered 









risks.
Consequently, to make the project robust to the possible
risk, strategies of risk management have to be anticipated. To
 




  





identify risks and propose adapted risk treatment strategies, is
necessary to be able to characterize a project following the
three dimensions presented in the literature review (Innovation
level, collaborative network and type of risks).



III. A DECISION SUPPORT APPROACH
To help in designing risk management plan, we take into
account innovation and risks aspects in collaborative NPD
project. First we formalized the process to build the risk
management plan. This process uses the characteristics of the
project to achieve efficient plan. Second, to categorized
projects, we propose a structured frame of these
characteristics. Third, based on the identified project category,
we propose a table making the correspondence with their
226
   





Fig. 2. The macro process of risk management plan design
This macro-process conducts then to position the project or
a phase of the project in the structure proposed in the next
section.
B. A structuring frame
Three characteristics are therefore considered here. The
innovation level with the incremental or radical innovation.
The network, with the Crowdsourcing, the Joint R&D project.
 Back to Contents

The type of risk with the relational and the performance risk. Understanding
8 Increm Joint Rela Accidental knowledge Placement of Managers
The cube obtained presented in figure 3 show in each cells the ental R& t. leakage in alliance key positions
intersection of this decomposition. Each cell represent D Intentional knowledge Long term Contracts
leakage Partners integration
contexts where the project will be carried on and for which Core competency lose
risk treatment strategies have to be proposed. 9 Increm R& Rela Non –equity Share Financial Control
ental D t. Lose of control Long term Contracts
Cont


 .


 

!






1 Radica Cro Rela No efficiency Short term, recurrent


 
 0 l wd t. Unstable collaboration contracts (conditioned by




 S. previous performances)



1 Radica Joint Rela Accidental knowledge Improve managerial



1 l R& t. leakage efficiency

 

D Intentional knowledge
"
#
$
leakage
Core competency lose


1 Radica R& Rela Non –equity Share Improve managerial


2 l D t. Lose of control efficiency



Cont Short term, recurrent

%
&
'
. contracts (conditioned by
previous performances)






 

 


IV. ILLUSTRATION
 



To illustrate our proposal, we develop the case of the new
Fig. 3. The macro process of risk management plan design drug development. NPD projects in pharmaceutical laboratory
consist in developing new medicine for the treatment of
human diseases. The attrition level is exceptionally high; less
C. Risk management
than one-in-ten projects launched in development is a
For each cell of the cube the literature identify different technical success. The nine others are sacrificed in the no-go
risks and possible treatment strategies. The table 1 presents for process [32]. These projects are innovative, costly but very
each cell of the cube examples of risks and associated risky. The development of a new product in the
treatment strategies. These sets are provided in order to drive pharmaceutical industry has to go through a precise succession
the decision maker in the identification of the risks and in the of phases, which take between 7 and 12 years depending on
risk treatment strategies to provide a risk management plan. the level of innovation and the disease targeted. Paul et al.
indicate that the cost of a new drug development is average
TABLE I. Risk example and strategies for each cell of the cube
873 M$.
Ce Characteristics of Risks Strategies Pharmaceutical companies establish alliances to develop
ll the project new medicine. The type of alliance depends on the level of
Innov. Net. Risk
1 Radica Cro Perf Non lead users integration Users integration
innovation, the availability of competences and the type of the
l wd o. Intellectual propriety company (big pharma, middle pharma, start up). When a
S. rights sharing laboratory starts a new development, decisions on strategic
(Hagedoorn, 2003)
Patenting alliances have to be taken. In this context, strategic alliance is
2 Radica Joint Perf Low resources flexibility Joint-Patenting a relationship where two laboratories contribute. They bring
l R& o. Difficulty to adopt
D technology by partners
different but complementary resources and capabilities to
(Feasibility & Maturity) achieve a common objective. One of the most common
3 Radica R& Perf Financial shortfall Enhance profit likelihood bilateral alliances observed in the pharmaceutical sector is
l D o. Non profit Improve managerial
Cont No appropriate Time-to- efficiency made by a small laboratory, or start up that own a patent and
. market System engineering the first proof of effeicience. A collaboration with a big
No appropriate Time-to- implementation
launch
compagny will provide the budget to go deeply in the tests and
4 Increm Cro Perf Non –equity Share Non Disclosure development. The risks are shared and the project is
ental wd o. Imitation Agreement contractualised [33]. Therefore, in this collaborative situation,
S. Incomplete contracts Licensing
Patents the height following cells of the cube can be observed: 2, 3, 5,
5 Increm Joint Perf Not sufficient use in Enhance utility by license 6, 8, 9, 11, 12. One of the main identified risks is therefore the
ental R& o. alliance (by partners/by the used in network
D firm itself) Physical resources
absorption of the startup by the big company.
Low utility (low flexibility
benefit/cost) V. CONCLUSIONS AND PERSPECTIVES
6 Increm R& Perf Financial shortfall Improve managerial
ental D o. Non profit efficiency When designing a NPD Project, the decision maker goes
Cont No appropriate Time-to- Enhance profit through different and successive decision to make innovative
. market SWOT analyse
No appropriate Time-to- product. In this paper we consider the innovation type, the
launch collaboration and the risk management. The problematic
7 Increm Cro Rela Low authority Non Disclosure
ental wd t. Imitation Agreement
addressed in this paper is to help the manager building a risk
S. No trust Memorandum of management plan to make the project robust to the risks.

227

In this work we formalize the macro-process leading to the
project risk management plan. We propose a reading frame of
the project characteristics and a table allowing identifying
possible risks and associated strategies.
This work gives a macroscopic vision of the influence of the
innovation and alliance on the project risk level. This
approach helps the decision maker establishing the project risk
management plan.
One of the main biases of this approach is the fact that
project considered are categorized in cells. In reality each
criteria is a kind of continuum. Moreover, for one project,
regarding the different macro-phases, the position can be in
different cells and not only range in one cell for a project.
The main perspective is to take into account the effect of
the alliance selection combined with the risk management on
the project planning.
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[3] P. Ritala, Olander, H., Michailova, S., Husted, K.: Knowledge sharing,
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[4] H. W. Chesbrough, Open Innovation: The New Imperative for Creating
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[5] P. Nightingale, The product-process-organisation relationship in
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[6] P. Badke-Schaub, Neumann, A., Lauche K, and Mohammed, S.: Mental
models in design teams: a valid approach to performance in design
collaboration? CoDesign, 3, 2007, 5-20.
[7] B. Townley, Beech, N., and McKinlay, A.: Managing in the creative
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[8] G. Pahl, Beitz W., Feldhusen J., Grote K.H.: Engineering Design, A
Systematic Approach, 3rd Edition, Springer (2007)
[9] J.S. Gero, Design prototypes: a knowledge representation schema for
design. AI magazine, 11 (4), 26-36 (1990)
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 Back to Contents

e-CALLISTO Network System and The Observation

of Structure of Solar Radio Burst Type III

M.O. Ali S. N. U Sabri

Faculty of Applied Sciences
Faculty of Applied Sciences MARA Technology University
Universiti Teknologi MARA Selangor, Malaysia
Selangor, Malaysia
sitinurumairah@yahoo.com
marhanaomarali@gmail.com

Z. S. Hamidi Nurulhazwani Husien

Faculty of Applied Sciences Faculty of Applied Sciences
Universiti Teknologi MARA MARA Technology University
Selangor, Malaysia Selangor, Malaysia
zetysh@salam.uitm.edu.my hazwani_husien21@yahoo.com

N.N.M.Shariff N. H. Zainol
Academy of Contemporary Islamic Studies Faculty of Applied Sciences
Universiti Teknologi MARA MARA Technology University
Selangor, Malaysia Selangor, Malaysia
nnmsza@salam.uitm.edu.my hidayahnur153@yahoo.com

C.Monstein
M. S. Faid Insitute of Astronomy, Wolfgang-Pauli-Str
Academy of Contemporary Islamic Studies 27 8093 Zürich
MARA Technology University Switzerland
Selangor, Malaysia monstein@astro.phys.ethz.ch
syazwaned@siswa.um.edu.my

Abstract-- This paper highlighted on the unique occurrence of
the Solar Radio Burst Type III (SRBT III) during the high
activities of the Sun. e-CALLISTO network is the system that
responsible for the observation of the Sun 24 hours per day,
which is a program under IHY/UNBSSI and ISWI instrument
deployment program. The data was taken from one of the part
of e-CALLISTO network which is Bleien, Switzerland. The
event that had been selected was on 27th August 2015 since
there was two subtypes of SRBT III can be obviously observed
during the day within 12:00 UT till 12:05 UT. The current
condition of solar wind speed is 348 km/s with density 8.4
protons/cm3. Besides the magnetic flux also quite high which is
13.4 nT. Regarding the detection of SRBT III, the x-ray flux
data from Solar Monitor shows there is strong class m-flare
also occur. The strong flare is also believed to have high
temperature due to the high magnetic field. A geo-effective
explosion was occur even though the sunspot no longer directly
facing on the earth. The active region AR2403 was predicted
can potentially cause radio blackout and radiation storm as
long as the sunspot remains visible.
Keywords— CALLISTO network system; Solar Radio Burst;
Solar Flare,
I. INTRODUCTION
The CALLISTO spectrometer is a programmable
heterodyne receiver built in the framework of IHY2007 and
ISWI by former Radio and Plasma Physics Group (PI
Christian Monstein) at ETH Zurich, Switzerland [1].
CALLISTO is a network that able to continuously observe
the solar radio spectrum which is a program under
IHY/UNBSSI and ISWI instrument deployment program
[2]. All Calisto spectrometer all over the world form the e-
Callisto network. e-CALLISTO is an acronym stands for
extended Compact Astronomical Low Cost Frequency
Instrument for Spectroscopy and Transportable Observatory
that is a worldwide network of frequency-agile solar
spectrometer [3]. This network has a receiver instrument
named CALLISTO which is inspired from one of the name
Jupiter’s larger moons.

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229

Figure 1: World CALLISTO Spectrometer network
This device was designed by Christian Monstein from
Institute of Astrophysics, ETH Zurich, Switzerland. The
goal of e-Callisto is to provide worldwide network that can
monitored solar radio burst for 24 hours per day [4] At
present, more than 66 instruments have been installed at
more than 35 locations, with users from more than 92
countries in the e-CALLISTO network. In this project,
instrument deployment including education and training of
observers was financially supported by SNF, SSAA, and
NASA, institute for Astronomy and North South Center of
ETH Zurich and few private sponsors. Figure 1 shows the
distribution of e-CALLISTO instruments around the world
[5].
Figure 2: The schematic diagram of connection of CALLISTO
system (credit to: ROOPA Nandita PIRTHEE Sagar Girish Kumar
Beeharry)
CALLISTO is completed by two systems which are indoor
and outdoor system. For outdoor, it has CALLISTO antenna
and low-noise preamplifier. Meanwhile, indoor consist of
indoor amplifier, CALLISTO Receiver, and PC. Figure 2
shows the schematic diagram of connection of CALLISTO
system. The total frequency range of CALLISTO is from 45
MHZ to 870MHz [6]. The CALLISTO system has proven to
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be valuable new tool for monitoring solar activity. Besides,
it has become an instrument for identifying the nature of
solar radio emission from solar eruptions [7]. One of the
uniqueness of the CALLISTO spectrometer network is,
because of the collaboration of many countries, the Sun can
be monitored 24 hours per day and all the data available
online.
Nowadays, the interaction between the Sun and the Earth is
clearly of particular interest. A wealth of solar phenomena
has been found through the Sun atmosphere such solar flare
and Coronal Mass Ejections (CMEs) [8]. It is also believed
that there is possibility that erratic solar effects on the
Earth’s climate could be very important [9]. The sun
interacts with the earth through its particle emission as well
as its electromagnetic radiation. During the high solar
activity, the solar wind increase caused the magnetosphere
of the earth disturbed thus the magnetic storm and aurora
will be formed [10]. Solar wind is the situation where the
charged particle, primarily electrons and protons flow out
from the surface of the Sun. Space radio instrument have
been designed to provide at least some information on the
location of the radio source [11].
The Sun produces five different types of solar radio burst (I-
IV). Type III burst one of the best indicators of release
electron beams near the Sun along open magnetic field lines
[12]. A solar type III radio burst is a transient burst of radio
emission that starts at higher frequencies and drifts to lower
frequencies as a function of time [13]. Noted that some of
these type III radio bursts at kilometric wavelengths,
associated with major flares, were unusually intense and had
very complex and long-lasting intensity – time profiles near
1 MHz [14]. It should also be theoretically possible to
observe hard X-rays associated with the type III producing
electron beams in the upper corona [15].
As mention earlier, solar flare is one of the phenomena of
the Sun. Observation of solar flare in all region of
electromagnetic spectrum from visible to gamma ray
provides a wealth of information. Solar flare produce
copious amount of coherent radio wave, which have been
classified for more than 40 years into different classes [16].
Type IIIs are among the more studied solar coherent burst
and generally occur at the beginning of the impulsive phase
of a solar flare [17]. The x-ray and ultraviolet radiation
provide evidence that locally very high temperature during
flare outburst [18].
Solar flare that has the most significant effect on earth is the
largest solar flare named X-class flares [19]. Some of the
effects are long lasting radiation storms in the upper
atmosphere and trigger blackouts. There are also another
type of flare which is Medium size M-class flares which can
cause brief radio blackouts in the polar region and the
occasional minor radiation storms [20]. Meanwhile, C-class

flares have few noticeable consequences. Since X-class flare
is the largest solar flare, absorbing it will affects the
atmosphere. It will results in increase in heat and an
expansion of the Earth ionosphere [21].
It is believed that solar activities such as and solar flare have
a very close connection and significant impact of the climate
changes and Earth’s environment [5]. The value of solar
radio bursts at low frequencies lies in the fact that they
originate in the same layers of the solar atmosphere in which
geo–effective disturbances probably originate: the layers
where energy is released in solar flares, where energetic
particles are accelerated, and where coronal mass ejections
(CMEs) are launched [22]. The dynamical behaviour of the
Sun exhibits a variety of physical phenomena, some of
which are still not at all or only barely understood due to the
complexity of the structure of the Sun [23].
II. METHODOLOGY
In this study, the data were taken from Bleien’s Callisto
Spectrometer since the data taken was really clear with less
noise as compared to the other spectrometer and the
maintenance of the spectrometer is really good. Besides,
some information were also taken from space agency such
National Astronomical Space Agency (NASA), Solar
Monitor, Space Weather Prediction Centre and SOHO
Observatory that make their data available online so that the
observation can be made more detail.
Figure 3: Antenna Disk and Callisto Coverage of Blein
Switzerland
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Figure 4 shows the antenna disk in Bleien and it Callisto
coverage. This antenna disk telescope has the diameter of 7
meter in frequency range 45 till 870 MHz that provide a
very good data of Solar Radio Burst. The maximum
coverage that Bleien has is within May to Jun which the
data of Solar Radio Burst available start from 03:00 UT to
19:00 UT. Basically, he signal from the feed will be fed into
the receivers and it will be converted to a first intermediate
frequency of 37.7 MHz by two local oscillators. The event
that had been selected was on 27th August 2015 since there
was two subtypes of SRBT III can be obviously observed
during the day within 12:00 UT till 12:05 UT.
III. RESULT AND ANALYSIS
Figure 5 shows complex and single type III Solar Radio
Burst were observed on 27th August 2015 which both of
them occur within 12:00 UT to 12:05 UT and the sunspot
active region (AR) is AR2403. It is unique because two
types of subtypes SRBT III occur continuously after one
another. For the complex SRBT III it was drifted from
20MHz to 80MHz. meanwhile for the single SRBT III it
was drifted from 35MHz to 80MHz. The duration for the
first SRBT III is approximately one minute and the second
SRB only about 30 seconds.
Complex
SRBT III
Single SRBT
III
Figure 5: Solar Radio Burst Type III on 27th August 2015
During the day, the space weather were show in table 1
below.

Table 1: Table of condition of space weather on 27th August
2015
Solar wind’s speed 348 km/s
Proton density 8.4 protons/cm3
Interplanetary Mag. Field 13.4 nT
It was observed that the interplanetary magnetic field really
high which is 13.4 nT. Since magnetic reconnection was the
primary energy release mechanism in solar phenomena thus
the higher the magnetic field the higher the temperature of
the flare. This relationship can be confirmed by the relation
(1). Whereby B is magnetic field, is proton density, and L
height of flare.
= 3 × 10 ( )( ) ×( ) (1)
th th
Figure 6: X-ray flux Data for 25 till 28 August 2015
Figure 6 shows the x-ray flux data for 25th August till 28th
August 2015. It can be observed that the highest class of
flare was on 27th August 2015. The day before, 26th August
the x-ray flux data shows the flare on that day C9 class flare.
It indicates that the flare can be even bigger.
Space Weather predicted that there might be a huge flare on
27th August 2015 due to the high interplanetary magnetic
field and high flare temperature. The x-ray flux data from
solar monitor shows that M2 class of flare occurred during
the day. M class flare was considered as a strong flare after
X class flare which also can caused impact to the earth.
Sunspot AR403 was observed approaching the limb of sun.
A geo-effective explosion was happen even though the
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sunspot no longer directly facing on the earth. AR2403 was
predicted can potentially cause radio blackout and radiation
storm as long as the sunspot remains visible.
IV. CONCLUSION
Solar Radio Burst Type III is one of the best indicator for
the solar flare event that occurred during the high solar
activities. The powerful of the explosion or the flare are
related to the magnetic field of the active region of the Sun
through the process of magnetic reconnection. The stronger
the magnetic field of the active region, the higher the
temperature of the flare thus resulting in high class of flare.
A continuous observation on the Sun is critical since it
affect the condition of the earth and sometimes will affect
the high technology activities. If the impact of the flare is
only minor impact it will caused the beautiful aurora.
ACKNOWLEDGMENT
We are grateful to CALLISTO network, STEREO, LASCO,
SDO/AIA, NOAA and SWPC make their data available
online. This work was partially supported by the 600-
RMI/FRGS 5/3 (135/2014) and 600-RMI/RAGS 5/3
(121/2014) UiTM grants and Kementerian Pengajian Tinggi
Malaysia. Special thanks to the National Space Agency and
the National Space Centre for giving us a site to set up this
project and support this project. Solar burst monitoring is a
project of cooperation between the Institute of Astronomy,
ETH Zurich, and FHNW Windisch, Switzerland, Universiti
Teknologi MARA and University of Malaya. This paper
also used NOAA Space Weather Prediction Centre (SWPC)
for the sunspot, radio flux and solar flare data for
comparison purpose. The research has made use of the
National Space Centre Facility and a part of an initiative of
the International Space Weather Initiative (ISWI) program.
REFERENCES
[1] A.O. Benz, C. Monstein, H. Meyers, CALLISTO, A New
Concept for Solar Radio Spectrometer, Kluwer Academic
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[6] Benz, A. O., Monstein, C., & Meyer, H. (2005). CALLISTO–a [15] N. Gopalswamy, Radio-rich Solar Eruptive Events, Geophys.
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Highlights in Astronomy 12 (2002).

233

Use of Earned Value Management in the UAE
Construction Industry
Mohamed Morad, M.Sc.
Graduate: Engineering Systems Management
American University of Sharjah
Sharjah, United Arab Emirates
Abstract— the use of Earned Value Management (EVM) is of
paramount importance for the successful delivery of construction
projects. This paper evaluates the use of EVM in the United Arab
Emirates (UAE) construction industry and identifies the key
factors for its successful implementation. The success factors are
identified through literature review. The paper is based on the
assessment of survey responses from project managers and cost
engineers in the UAE construction industry. The results were
assessed based on 53 responses. The analysis revealed that
several companies are using EVM in their cost control systems.
However, big portion of UAE’s construction companies are not
using EVM. Although many companies are not implementing
EVM, the project showed that 87% of responses agreed on the
necessity of EVM implementation as cost control tool.
Keywords— Earned value management; construction industry;
United Arab Emirates; project management
I. INTRODUCTION
Eared Value Management (EVM) is widely accepted as a
valuable management tool used for the purpose of performance
and project control. It is the core of management systems that
is used by many private, public, and governmental sectors [1].
EVM consists of a framework which integrates project’s scope,
cost, and schedule together. It provides variance and indexes
that allow project managers to detect project’s cost overruns
and delays [2]. EVM is based on the concept that a project can
be broken into definable and measureable tasks and it
effectively provides a realistic status of the various projects
within the program [3]. EVM is considered as a crucial method
for project management that can facilitates project control and
forecasts the expected final project cost and duration [4].
The initiation of Earned Value Management concept is
attributed to the United States industrial engineers. They
developed it by employing “three-dimension” approach, which
measures performance against “planned standards”, and then
measures the “earned standards” achieved against “actual
expenses” [5]. “The fundamental ideas that have come from the
earned value approach to project control stem from two distinct
lines of thought: those that originated with industrial engineers
and those that come from project managers” [6].
For decades, new methods and standards have been
established and entered into the project management field to
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Sameh M. El-Sayegh, Ph.D., PMP
Associate Professor: Civil Engineering Department
American University of Sharjah
Sharjah, United Arab Emirates
selsayegh@aus.edu
ensure effective management measures across all projects.
With time, project management sector has recognized the need
to improve such methods and standards. EVM does not
interfere in how the project must be managed; however, it
provides very precise organizational and reporting
requirements. There are several reasons behind implementing
EV. The internal management in an organization would like the
control and track earned value in their ongoing projects [7].
Earned value has been used in many fields. One advantage of
this method is that it is designed to accommodate any field [8].
EVM has been widely accepted and used in construction
companies across the world. Construction companies in the
UAE have been controlling their projects through different
control systems. EVM was first developed in the United States.
The United States has different conditions than gulf region in
general. Using EVM has several benefits, and acknowledging
these benefits in the UAE construction industry is essential to
study the understanding and awareness of regional contractors.
As some contractors are using EVM in UAE, EVM users can
identify what are the critical success factors that support the
usage of EVM in the UAE. The main objective of this paper is
to evaluate the status of Earned Value Management in the UAE
including its success factors.
II. EARNED VALUE MANAGEMENT METHOD
Earned Value Management (EVM) allows project
managers to evaluate the project status at any point in time,
develop trends in cost and schedule performance and take
corrective actions as necessary. EVM is based on determining
three parameters. The first parameter is the Budgeted Cost of
Work Performed (BCWP) or Earned Value (EV). This is
calculated for each activity by multiplying the actual percent
completion by the Budget at Completion (BAC) for that
activity. For example, if activity A has a budget of $10,000 and
after one month, it is observed that the progress on activity A is
30%, then the Earned Value is $3,000. The second parameter is
the Budgeted Cost of Work Scheduled (BCWS). This is
calculated based on the scheduled completion of the activity. If
the activity duration is 2 months, then after one month, the
planned completion is 50% and the BCWS is $5,000. The third
parameter is the Actual Cost of Work Performed (ACWP).
This value comes from the accountant based on the actual cost
 Back to Contents

that is spent on the activity at that point in time. Let’s assume it 150 surveys were distributed to several construction
is $4,000 for activity A. companies in Dubai, via site visits. The survey targeted only
engineers who normally work with EVM method such as
Once the three parameters are determined, it is necessary to project managers and cost engineers. The responses were
calculate the Schedule Variance (SV) and the Cost Variance solicited using Likert scale, with level of measurement;
(CV). The schedule variance measures the deviation from the strongly agree, agree, neither agree nor disagree, disagree, and
schedule. It is calculated by subtracting the BCWS from the strongly disagree. The weighted average of responses is
BCWP. For example, the SV for activity A is $ - 2,000. A calculated from completed surveys. Out of 150 distributed
negative value indicates that the project is behind schedule. A surveys, 53 surveys were collected from 29 construction
positive value indicates that the project is ahead of schedule. companies.
The cost variance is calculated by subtracting the ACWP from
the BCWP. For example, the CV for activity A is $-1,000. A
negative value indicates that the project is over budget while a IV. EVM USAGE
positive value indicates that the project is under budget. In this Respondents were asked to state the level of usage of EVM
example, activity A is both behind schedule and over budget. in their organization. Figure 1 shows the usage percentages.
The Schedule Performance Index (SPI) can also be Approximately half of EVM implementers are always using
calculated by dividing the BCWP by the BCWS. For activity EVM in their projects.
A, the SPI is 0.6. A value less than 1 indicates that the activity
is behind schedule. The Cost Performance Index (CPI) can also
be calculated by dividing the BCWP by the ACWP. The CPI
for activity A is 0.75. A value less than 1 indicates that the
activity is over budget. The analysis can be extended to
estimate the cost at completion. The Estimate at Completion
(EAC) is calculated by dividing the BAC by the CPI. In the
case of activity A, the EAC is $13,334. This means that if we
continue at this rate, the actual cost, when activity A is
completed, will be $13,334 causing a negative cost variance of
$3,334. Seeing this forecast, the project manager needs to find
ways to improve the performance. The same analysis can be
performed at the project level. Fig. 1. Level of EVM usage

III. RESPONDENTS’PROFILE As for the use of EVM as a forecasting tool for cost at
completion, the analysis shows that 76% use it often or always.
Table I summarizes the respondents’ profile. On the other hand, 73% use it to forecast the project duration.
79% of the respondents often or always use the EVM indexes
TABLE I. RESPONDENTS’ PROFILE to measure performance. Figure 2 demonstrates the usage of
EVM’s outcomes for decision making purposes. It is shown
Category Respondents
Number %
clearly that 29% of respondents are using EVM’s outcomes for
Usage of EVM their decision making process, while only 3 % are not really
Companies Implement EVM 35 66 using EVM’s outcomes for decision purposes.
Companies do not implement EVM 18 34
Years of experience
>20 years 15 28
10–20 years 21 40
5–10 years 12 23
<5 years 5 9
Project Type
Housing 4 7.5
Building 37 70
Industrial 5 9.5
Infrastructure/Heavy 7 13
Project Size
less than 10 M 2 4
10-50 M 3 6
50-100 M 8 15
above 100 M 40 75
Company Business
Local 16 55
International 13 45 Fig. 2. Use of EVM for decision making

The overall results indicate that EVM usage in terms of

implementation, forecasting, alarming, and making decisions

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are preferable. Employees signify that EVM is implemented TABLE III. RANKED BENEFITS OF EVM
across their companies’ projects. This gives EVM creditability Benefits of EVM Rank Average
to be implemented across UAE construction industry. In terms
of forecasting, EVM proved reliability for construction EVM provides early warning signals of performance 1 4.25
companies, where engineers agreed on using EVM for problems
forecasting at completion project cost and forecasting at EVM contributes to achieving project cost objectives 2 4.23
completion project duration. Likewise, construction project
EVM enables the integration of work, schedule, and cost 3 4.23
managers depend on EVM’s indexes as alarm in case of
performance slippage. Some engineers depend on their own EVM establishes a single management control system 4 4.20
experience to take the suitable decisions regardless on EVM providing reliable data
outcome. EVM provides a database of completed projects useful 5 4.18
for comparative analysis
V. BENEFITS OF USING EVM The Cost Performance Index (CPI) can be used as a 6 4.14
predictor for the final cost of the project
There are several benefits of using Earned Value The periodic (e.g., weekly or monthly) Cost 7 4.02
Management in the construction industry. EVM users can Performance Index is used as a benchmark
experience these benefits while implementing this method. Allows better communication among the project team 8 3.95
Table II identifies several EVM benefits and the corresponding
reference. Helps identifying and documenting project risk 9 3.93

Provides one database of information (Multi-disciplinary 10 3.93

TABLE II. BENEFITS OF EVM capability)
The management by exception principle can reduce 11 3.42
No EVM Benefits Reference information overload
EVM contributes to improving project scope definition 12 3.34
1 EVM establishes a single management control 1,7,9,10,11,12
system providing reliable data. EVM contributes to achieving project time objectives 13 3. 31
2 Provides one database of information (Multi- 13
disciplinary capability)
3 EVM enables the integration of work, schedule, 2,3,6,7,9,10,14-19
and cost.
4 EVM provides a database of completed projects 3,7,9,10,14 VI. SUCCESS FACTORS
useful for comparative analysis
5 EVM provides early warning signals of 1,3,5,6,7,9,10,13, Table IV presents several factors to ensure proper
performance problems 20-26 implementation of EVM in any organization.
6 The Cost Performance Index (CPI) can be used 5,7,9,10,17,20
as predictor for the final cost of the project
TABLE IV. SUCCESS FACTORS FOR EVM IMPLEMENTATION (SOURCES)
7 The periodic (weekly or monthly) Cost 3,5,7,9,10,26
Performance Index is used as benchmark No Success Factors Reference
1 High level of acceptance among project managers 11,13,14,18
8 The management by exception principle can 5,7,9,10
reduce information overload 2 Open communications among project team members 11,13,14
9 Allows better communication among the project 5,23,11,17
3 Strong support from top management 11,13,23,24
team
10 EVM helps identifying and document project 6,13 4 Extensive training on EVM implementation 7,11,13,24
risk
11 EVM contributes to achieving project cost 13,24-26 5 Strong administrative and technical capabilities of 11,14,20
objectives project managers
12 EVM contributes to achieving project time 6, 7, 13,14 6 Adequate computer & software infrastructure 23
objectives
7 The use of electronic data interchange 11,13,23
13 EVM contributes to achieving project scope 5, 13, 24,27,28
definition 8 Efficient procedures & processes for EVM 13,28
implementation
9 Motivation of team members to use EVM 11,23
The weighted average of the responses is calculated. The
benefits are then ranked as shown in Table III. 10 Sufficient organization’s resources for EVM 6,28
implementation
There is a general level of agreement on all these benefits
as the weighted average is greater than 3. It is clear that the
cost benefits are more than the time benefit. EVM contribution The data presents the weighted average of these success
to achieve the cost objective is ranked 2nd with a weight of 4.23 factors and ranks them accordingly. Table V expresses the
while the EVM contribution to achieving the time objective managers’ views for EVM to be implemented in any
was ranked 13th with a weight of 3.31. organization. It is obvious that the responses have high
agreement on these factors.

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TABLE V. SUCCESS FACTORS FOR EVM IMPLEMENTATION
Success Factors of EVM Average
Strong support from top management 4.32
High level of acceptance among project managers 4.29
Strong administrative and technical capabilities of project 4.24
managers
Open communications among project team members 4.18
Sufficient organization’s resources for EVM implementation 4.18
Efficient procedures & processes for EVM implementation 4.18
Motivation of team members to use EVM 4.15
Adequate computer & software infrastructure 4.12
Extensive training on EVM implementation 4.09
The use of electronic data interchange 3.85
The senior management support and project managers’
acceptance are the most critical issues to ensure successful
implementation of EVM. These two factors play big role in
changing employees’ perceptions and make them think
positively toward EVM.
VII. SUMMARY & CONCLUSION
Earned Value Management is a cost control tool was
developed in 1960s. EVM integrates the projects’ triangle of
scope, schedule, and cost together to measure project’s
performance. The objective of this paper is to investigate the
use of Earned Value Management in the UAE construction
industry. The project identified the benefits of EVM for
construction companies that use EVM and clarified critical
success factors of EVM across the organization.
In conclusion, Earned Value Management is wildly used
across the UAE construction industry. There are good numbers
of companies implement EVM. The project targeted many
large construction companies in UAE. Many companies
depend on their own systems to evaluate project performance.
There are huge construction companies in the UAE do not use
EVM because they have their own systems – house made
systems. While conducting the survey some engineers refused
to contribute in this project because their organization does not
implement EVM as cost control technique. Strong support
from top management is a key to the successful EVM
implementation. It is recommended that top management in
construction companies adopt and actively support the
implementation of EVM in their projects.
REFERENCES
[1] A. Czarnigowska, P. Jaskowski, S. Biruk, “Project performance
reporting and prediction: Extension of Earned Value Management,”
International Journal of Business and management Studies, Vol 3, no.1,
pp.11-20, 2011.
[2] J. Pajares and A. Lopes-Paredes, “An Extension of the EVM analysis for
project monitoring: The Cost Index and the Schedule Control Index,”
International Journal of Project Management, Vol. 29, no. 5, pp. 615-
621, 2011.
[3] K. Storms, “Earned Value Management Implementation in an Agency
Capital Improvement Program,” Cost Engineering ,Vol. 50, no. 12, pp.
17-20, December 2008.
[4] W. Lipke, O. Zwikael, K.Henderson, and F.Anbari, “Prediction of
project outcome, the application of statistical methods to earned value
management and earned schedule performance indexes,” international
Journal of Project Management, Vol. 27, no.4, pp. 400-407, 2009.
[5] Q. W. Fleming and J.M. Kopperlman, Earned Value Project
Management, Third Edition , 2005
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Publishing limited, 2003.
[7] C. Budd and C. I. Budd, A Practical Guide to Earned Value Project
Management, Management Concepts, 2005.
[8] J.H. Cable, J. F. Ordonez, G.Chintalapani and C. Plaisant, “Project
Portfolio Earned Value Management Using Treemaps,” PMI Research
Conference. London, England, 2004,
http://www.cs.umd.edu/hcil/treemap/PROJECT%20MANAGEMENT-
ASPUBLISHED.pdf
[9] D. Christensen, “The Cost and Benefits of the Earned Value
Management Process,” Acquisition Review Quarterly, 1998.
[10] D. Christensen, “The Costs Benefits of Earned Value Management
Process,” Acquisition Review Quarterly, pp. 373-386. 1998
[11] E. Kim, W. Wells, and M. Duffey, "A Model for Effective
Implementation of Earend Value Managemnt Methodology,"
International Journal of Project Management, vol. 21, no. 5, pp. 375-
382, July 2003.
[12] J. G., Kerby, & S.M. Counts, “The benefits of earned value management
from a project manager’s “perspective. Retrieved from
http://www.nasa.gov/pdf/293270main_
63777main_kerby_counts_forum9.pdf. 2008
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Earned Value - Management Practice and Future Trends, university of
Houston, May 2009.
[14] J. Angelo Valle and C. Soares, “The Use of Earned Value Analysis
(EVA) in the Cost Management of Construction Projects,” p.1-11, 2001
http://icec.dreamhosters.com/ICMJ%20Papers/Valle%20-%20EVA.pdf
[15] PMBOK, Guide to the Project Management Body of Knowledge, Project
Management Institute, 5th Ed., 2013.
[16] O. Moselhi, "The Use of Eraned Value in Forcasting Project Durations,"
International association for Automation and Robotic in Construction
Conference, Seoul, South Korea, 2011.
[17] D. Fullwood & K. Samuels, "Putting Earned Value Management (EVM)
in Perspective," ARMY AL&T, October 2008.
[18] A. Naderpour & M. Mofid, "Improving Construction Management of an
Educational Center byApplying Earned Value Technique," Procedia
Engineering, vol. 14, pp. 1945-1952, 2011.
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Management, vol. 23, no. 3, pp. 41-47, May/Jun 2011.
[20] S. Russell, "Eraned Value Management Uses and Misuses," pp. 157-
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Projects," International Journal of Project Management, vol. 29, no. 8,
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National Contract Management Journal, no. 1, pp. 17-25, 1992.
[23] H. Jarnagan, “Lessons Learned in Using Earned Value Systems, a Case
Study”, AACE Transaction, p.EVM.01.1-EVM.01.20, 2009.
[24] R. V. Vargas, "Earned Value Analysis in the Control of Projects:
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[25] H. Sparrow, ”EVM = Earned value Management Results in Early
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Project Management Institute Seminars & Symposium, 2000.
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Management," January 2006.
[27] R. Viana Vargas, “Earned Value Analysis in the Control of Projects:
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International Transactions, EVM.01, pp. 1-10, 2008.

237

Significant factors affecting the size and structure of
project organizations
Sameh M. El-Sayegh, Ph.D., PMP
Associate Professor: Civil Engineering Department
American University of Sharjah
Sharjah, United Arab Emirates
selsayegh@aus.edu
Mohammed Al Sharqawi
Civil Engineering Department
American University of Sharjah
Sharjah, United Arab Emirates
Abstract— construction projects are temporary, unique and
challenging. The management of construction projects requires
the coordination of a large number of people. The design and
implementation of an effective project organization structure is
vital for project success. Project success involves delivering the
scope on time, within budget in addition to meeting or exceeding
customer’s expectations. The objective of this paper is to identify
and assess the key factors affecting the size and structure of the
project organization. Sixteen factors affecting the project
organization structure were identified based on the review of
related literature. These factors were grouped in four categories:
project, company, stakeholders, and environment factors. A
questionnaire was then developed and distributed to construction
professionals in the United Arab Emirates (UAE). To ensure
completeness of the survey, interviews were conducted with the
professionals. Fifty six professionals completed the survey. The
staff availability and skills appear to be the most important
factors followed by the project size and the owner’s
requirements. Keywords— Project organization structure;
effective organization; construction industry; project
management
I. INTRODUCTION
A project is defined as a temporary endeavor undertaken to
create a unique product, service or result [1]. Projects are
temporary in nature which means that they have a definite start
and end. Projects are also unique and involve doing something
that has not been done before. Projects have distinctive
attributes, which distinguish them from ongoing work or
business operations [2]. Projects have a purpose, temporary,
unique, complex and challenging [2]. Construction projects, in
particular, are more challenging due to the involvement of
several contracting parties such as the owner, designer,
contractors, sub-contractors, material suppliers and others.
These attributes necessitate the use of project management
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
238
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Mustafa Kashif
Civil Engineering Department
American University of Sharjah
Sharjah, United Arab Emirates
Nilli Nikoula
Civil Engineering Department
American University of Sharjah
Sharjah, United Arab Emirates
Mei Alhimairee
Civil Engineering Department
American University of Sharjah
Sharjah, United Arab Emirates
techniques for the successful delivery of construction projects.
Project management is defined as the application of
knowledge, tools, techniques and skills to deliver the project
successfully. The objective of construction project
management is to complete the scope of work on time, within
budget while meeting or exceeding customer expectations.
Successful delivery of construction projects requires proper
management techniques on the part of all project participants.
The contractor is responsible for the physical construction of
the project. To appropriately manage the construction project,
the contractor needs to setup a temporary project organization
that will stay for the duration of the project. A project
organization is a structure that facilitates the coordination and
implementation of project activities [3]. Its purpose is to assist
interaction and develop collaboration among individual team
members to complete their duties perfectly and achieve project
goals [3]. An organizational chart is a diagram that shows the
structure of an organization. It shows the relationships between
project manager and the project team members in a hierarchal
structure depending on the authority relationships.
Organizational Structure is simply the manner in which an
organization arranges (or rearranges) itself [4]. When designing
an organizational structure, managers must consider the
distribution of authority. The structure defines the authority by
means of a graphical illustration called an organization chart.
An organization can be structured in many different ways,
depending on their objectives. A properly designed project
organization chart is essential to project success [3].
Although the organizational chart shows the hierarchical
relationship among the team members, it does not show how
the project organization will work. There are two distinctly
different types of organizations: the centralized and
decentralized multidivisional forms of organization. In the
centralized organization, decisions are directed to the top

management. It consists of functional managers, each manager
reports to a project manager. The project manager is
responsible for coordinating the activities of the project.
Conversely, decentralized multidivisional forms organization
tends to push the decisions down to the lowest levels. It means
that an organization member has the right to make a decision
without obtaining approval from a higher-level manager. This
property encourages individuals to develop decision-making
skills and increases motivation and that will increase project
organization profitability.
The span of control refers to the number of people who
report to one manager or supervisor [5]. Organizational chart
has two dimensions: the vertical dimension, in which the
organization is considered to be either a tall or a narrow
structure; and the horizontal dimension, in which an
organization is considered to be either flat or wide [6]. In the
tall organizational structure there are so many levels (twelve,
fourteen, sixteen or more), thus managers tend to have a
narrow span of control, which means there are no more than
five or six people reporting to any individual manager or
supervisor. However, in the flat organizational structure there
are fewer levels (five or six levels at the maximum), therefore,
managers tend to have a wide span of control, there could be as
many as ten or twelve people reporting to any individual
manager or supervisor, depending upon the tasks involved [6].
An organization should choose the minimum number of
management levels consistent with its goals and the
environment in which it exists. Each hierarchical level created
should add value since it provides additional decision making
level in the organization [7].
Designing an effective organization includes developing an
organizational structure in order to improve the overall
efficiency and maximize performance. Defining an effective
structure can increase the organization’s overall performance,
improve efficiency and enhance growth. However, lacking of
defined roles, responsibilities and clear workflows leaves
organizations with redundant roles and complex reporting
structures which, in turn, bring down the employee
productivity and increases the overall operations cost [8]. The
project organization structure may have a significant impact on
the success of the project. It has influence on the project
performance from inception to completion [9]. Defining the
responsibilities of each role will help maximize the use of
resources, increase efficiency, and ensure the quality of the
completed project [10]. The objective of this study is to
identify the factors affecting the size and structure of the
project organization.
II. RESEARCH METHODOLOGY
The methodology used in this research follows the
qualitative research method. The research started with literature
review to identify the factors affecting the size and structure of
project organization. A questionnaire was then developed and
distributed to construction professionals in the United Arab
Emirates (UAE). To ensure completeness of the survey,
interviews were conducted with the professionals. Fifty six
professionals completed the survey. Figure 1 shows the
respondents’ profile in terms of their years of experience and
the average project size.
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Fig. 1. Respondents’ Profile
More than 67% of the respondents have more than 10 years
of experience in the construction industry. More than 71% of
the respondents work on projects greater than 50 million UAE
Dirhams (1 US$ = 3.67 Dirhams). Thirty seven respondents
work in international companies operating in the UAE while 19
respondents work in local companies. All respondents agreed
or strongly agreed that the project organization structure affects
project’s success.
The respondents were asked to determine the importance of
the several factors affecting the project organization structures
by using Likert scale of 1 to 5 (5 being very important and 1
being not important). The weighted average of all respondents
was calculated to determine the most important factors.
III. FACTORS AFFECTING THE PROJECT ORGANIZATION
STRUCTURE
Sixteen factors affecting the project organization structure
were identified based on the review of related literature. These
factors were grouped in four categories: project, company,
stakeholders, and environment factors. There are four factors
listed in each category.
A. Project Factors
The project category includes those factors that are related
to the project. This category includes the project size,
complexity, uniqueness and importance. The project size refers
to how big the project is. The larger a project becomes, the
more complicated its organization structure [11]. For instance,
building a small villa project or a warehouse needs a simple
organization structure. On the other hand, constructing a high
rise building requires complex organization structure. Actually,
a formal structure doesn’t exist when the project is very small.
In this case, the people responsible for the project will make
decisions based on their experience, abilities, and requirements.
The second factor is project complexity. A project is called
complex when it consists of various interrelated parts. This
definition can be relevant to the project management process.
The organization, technology, environment, information,
decision making and systems can be part of the project
complexity [12]. The project uniqueness is another factor. If
the project activities are different from the normal business of

the firm, or if the project encompasses many unique phases,
then the project management organization structure should tend
to be partially projectized or decentralized. When the project is
critical and significant in terms of the importance, urgency,
priority, and financial risk, then a proper project organization
structure should be developed. As a result, when the project has
high significance to the company portfolio, the organizations
structure leans to become more compound.
B. Company Factors
The company category includes those factors that are
related to the company. This category includes availability of
staff, available technology, market strategy and desired level of
control. The number of staff available in the company affects
the size of the project organization structure. Changes in
technology affect the project organization structure as the
changes may require additional specialized staff and/or the
removal of redundant positions. The advances in technology
are one of the most important causes of project organization
changes.
The market strategy is another factor. When a company
wants to position itself in the market, it should choose proper
organization structures for its projects. For instance, a company
that newly enters the market has simple project organization
structures to reduce the cost of overheads. However, a
company that is old in the market will have more complex
organization structure with more levels of management. So, the
project organization structure should fit the market strategy of
the company. The fourth factor is the desired level of control.
Each company sets a desired level of control for its projects,
and this level of control will have an effect on the shape of the
project organization structure. For example, a high level of
control project needs more management levels which will
make the structure of the organization a tall structure. On the
other hand, lower level of control projects require less
management levels and wider span of control. As a result, the
project structure will be flatter.
C. Stakeholders’ Factors
The stakeholders’ category includes those factors that are
related to the project key stakeholders. Stakeholders can be
defined as any person or organization that can affect or get
affected by the project. This category includes owner’s
requirements, skills of staff, internal power and external power.
The structure of the project organization can be affected by
the demands and requirements from the owner’s side.
Furthermore, the size of the project organization structure may
be increased with the increase of the owner requirements. More
people may possibly be added when the owner requires
something that is not done before or requires a very short time
for project completion. The level of skills and experience of the
staff working on the project have an effect on the design of the
project organization structure. When there is a shortage of the
in-house technical expertise, the choice of the project
organization structure will be restricted. However, having
plenty of skilled staff working in the project will increase the
flexibility of designing the structure.
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The project organization structure is also affected by the
internal and external powers. Internal power refers to the power
within the project staff. When some of the people working in
the project have more power in decision making than other
employees in the project that will affect the organization
structure of the project and it may centralize it. External power
refers to the power by outside stakeholders. Usually, the
consultant or owner representative may have power over the
people in the organization, and this has an effect on the size or
the structure of the organization. It can also affect the decision
making in the project organization structure by either making it
centralized or decentralized.
D. Environment Factors
The environment category includes those factors that are
related to the environment. This category includes location,
stability of the external environment, financial uncertainty and
technological uncertainty. One of the environment factors that
affect the size and the structure of the project organization
structure is the location of the project. For example, when the
location of the project is far from the head office of the
company, a larger organization structure is needed for the
project. The project organization structure should fit the
external environment of the project because the environment
affects the structure of the project. When the external
environment of the project is stable, the organization structure
of the project is somehow rigid. However, the organization is
more flexible when there are many changes in the environment.
As a result, reaction to those changes is faster.
When there is no financial certainty in the environment
surrounding the project, the shape and size of the project
organization structure is affected. In addition, the shape of the
organization structure leans toward flat organization with less
management levels. The extent of the technological uncertainty
has an effect on the size and structure of the project
organization structure. For example, when the technological
development is stable, the design of the project organization
structure is simple and there is no need for complex structures.
However, when there is a rapid change in the technology
development, the project organization structure is more
complicated.
IV. DATA ANALYSIS AND RESULTS
Fifty six percent of the respondents agree or strongly agree
that the project organization structure affects projects success.
Respondents were asked to state how the Project Organization
Structure (POS) was developed. Figure 2 shows the responses.
The majority (50%) of the respondents stated that they use
formal organization design while 30% use rational decisions
based on experience and 14% use adaptation of a structure used
on a previous project. Table I shows the assessment of the
factors by category.
 Back to Contents

stakeholders’ factors. Conversely, the least important

stakeholders’ factors were internal and external powers. The
major factor out of the environment was financial uncertainty.

Fig. 2. How was the POS developed?

TABLE I. Assessment of the Factors by Category

Fig. 3. Ranked Factors

No. Category Factor Description Average Rank
After looking at the most important factors in each
F1 Project Size 4.45 3 category, the most important factors were ranked. As in shown
Project Factors

F2 Project Complexity 4.14 7 Figure 3, the most important factor came to be the availability
of staff under the company’s category followed by the factor of
F3 Project Uniqueness 3.61 14
having skilled staff working on the project under the
F4 Project Importance 3.75 11 stakeholders’ category.
F5 Availability of Staff 4.55 1
Company Factors

F6 Available Technology 4.18 5

F7 Market Strategy 3.48 15 V. SUMMARY & CONCLUSION

F8 Desired Level of Control 3.86 10

Designing an effective and efficient organization structure
is important for the successful delivery of construction projects.
F9 Owner’s Requirements 4.34 4 There are several factors that affect the size and structure of
Stakeholders'

F10 Skills of Staff working on the Project 4.54 2 project organizations. Sixteen factors were identified from the
Factors

review of related literature. A questionnaire was then

F11 Internal Power (within staff) 3.75 12
developed and distributed to construction professionals in the
F12 External Power 3.45 16 UAE.
F13 Location 3.88 8 The results indicate that the most important factors include
Environment

F14 External Environment Stability 3.71 13 the availability of staff, the skills of staff working on the
Factors

project, project size and owner’s requirements. It is

F15 Financial Uncertainty 4.18 6 recommended that project managers pay special attention to
F16 Technological Uncertainty 3.88 9 these factors when designing their organization structure for
their projects as it has a great impact on project success.

There are four categories for the factors that affect the size
and the structure of the project organization, which are project,
company, stakeholders, and environment factors. In each
category there are four factors. Construction professionals were
asked to rank the importance of each factor. For the project
factors, the most important factors are the size and complexity
of the project. However, the least important are the project
uniqueness and project importance, respectively.
For the company factors, staff availability and available
technology were the most important. On the other hand,
desired level of control was less important and the least
important was market strategy. Skills of staff working on the
project and owner’s requirements were the most important
REFERENCES
[1] PMBOK 2013, A Guide to the Project Management Body of
Knowledge, Project Management Institute, PMI, 2013.
[2] J. Davidson Frame, Managing Projects in Organizations, Wiley, New
York, 1995.
[3] PM4DEV, Project Management Organizational Structures, Project
Management for Development Organization, 2007.
[4] F. Fontaine, A Critical Factor for Organizational Effectiveness and
Employee Satisfaction, Northeastern University, 2007.
[5] H. Richardson, N. McDaniel, and B. Thomsen, Span of Control, Report
No. 941, 2006.
[6] C. Fontaine, How Organizational Structure Impacts Organizations. First
Annual Conference on Organizational Effectiveness, Chicago, IL 2006

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[7] F. Gould & N. Joyce, Construction Project Management, 3rd ed., United [10] Delivering Project Success, 2010.
States of America: Pearson Prentice Hall, 2009. http://www.infrastructureapp.mei.gov.on.ca/.../Delivering_Project%20S
[8] [Online document], uccess_An%20Owner's%20Guide_Guide.pdf
http://www.neuterrain.com/optimal_organization_structure_and_design. [11] R. Ledbetter, Organizational Structure: Influencing Factors and Impact
html in the Grand Prairie Fire Department, 2003.
[9] S. Mensah, The Effect Of Project Management Practices On Bulding [12] D. Baccarini, The concept of project complexity, International Journal of
Project Performance: The Case Of Three Organizations, 2007. Project Management, vol. 14, no. 4, pp. 201-204. 1996.

242
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Real-World Software Projects as Tools for the

Improvement of Student Motivation and University-
Industry Collaboration

Zsolt Csaba Johanyák

Department of Information Technology
Kecskemét College
Kecskemét, Hungary
johanyak.csaba@gamf.kefo.hu

Abstract—Software engineering education has to deal with
different challenges nowadays in Hungary. While the number of
job offers in this field is continuously increasing the students’
interest in programming shows a declining trend. The
recognition of the problem led to several initiatives trying to
address the existing lack of software engineers and student
motivation in programming.
This paper reports some of our successful attempts to reverse
the unfavorable process. While some short-scale solutions like the
usage of Lego mobile robots or team-based laboratory class
assignments provided only short term lasting improvements the
break-through was achieved by the help of a strong University-
Industry collaboration. Real-world software projects as team-
work assignments brought benefits for the students as well as for
the university and the involved companies. As a large-scale
modification of the study program towards the enhancement of
the industry readiness of our graduates the key features of the
cooperative education are outlined at the end of the paper as well.
Keywords—software project; student motivation; programming;
real-world problems
I. INTRODUCTION
Software engineering education faces several challenges in
Hungary. The industry is growing rapidly, the needed
technologies and tools change frequently and the potential
employers demand a high number of graduates having up-to-
date skills and knowledge. In contrast to the requirements of
the labor market the popularity of software engineer career and
particularly the attractiveness of programming has a clear
decreasing trend. Even students enrolled in computer science
and other IT related study programs show less interest in
programming than their counterparts showed 15 years ago.
There are several initiatives addressing the problem. Some
of them are based only on university resources and ideas while
others try to get help from concerned companies. Classical
industry contributions in an education related University-
Industry collaboration would cover one or more of the
following topics [8].
• Supporting the acquisition of hardware and software by
donations or discount offers.
• Encouraging employees to take part in the education.
• Providing scholarships and internships for students.
• Sponsoring students’ participation at competitions.
Although all of them provide great help for students and
universities they do not contribute directly to the solution of the
current problem. Therefore new ideas and initiatives have to be
found out in order to renew the toolkit of the education and to
exploit with the biggest efficiency the potentials available in
University-Industry collaboration.
In this paper we report our experiences regarding some
difficulties of software engineering education focusing on the
phenomena of decreasing student interest in programming as
well as the approaches we have applied so far to stop and
reverse the unfavorable process. In the last 15 years several
ideas have been tried and our projects have improved the
situation for shorter or longer periods of time in most of the
cases.
The problem itself and the most successful past projects
aiming its solution are shortly presented in Section II. Section
III introduces in details a recent attempt, which proved to be
the most successful one so far and is based in University-
Industry (U-I) collaboration. Thinking about U-I linkage on a
bigger scale, the idea of cooperative education is outlined in
Section IV as the newest approach that affects the whole study
program. The conclusions are drawn in Section V.
II. PRELIMINARIES
The software industry has an increasing need for well-
trained and talented software engineers [11]. For example
solely in Hungary there are available more than ten thousand
open jobs for programmers [4]. The industry is growing so
rapidly that the output of the colleges and universities, i.e. the
number of graduating students in this field is not enough
anymore. As a side effect of the increasing number of job
offers for BSc graduates and relatively high salaries the number
of students enrolling in master programs has decreased

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significantly. Moreover, recently several software companies
have been offering jobs for BSc students in their second or
third year of studies and so several students start their
professional career without even finishing their bachelor
studies.
Surprisingly, in spite of the favorable position on the job
market, i.e. software engineer is among the twenty best paying
professions in Hungary [2], the number of young people having
interest in a career in this field has continuously decreased
since the early 2000s. Not only the number of students
enrolling in the related study programs has fallen but also the
students who are majoring in information technology has
shown less and less interest in software development.
Recognizing the seriousness of the situation several
experimental projects were initiated at Kecskemét College
(KC) aiming to arouse the students’ interests in programming.
Some of them have led to positive changes in the attitude of the
students while others not. However, the successful ones were
usually having only a short time effect. Therefore we have
been looking continuously for new methods and pedagogical
approaches.
Surprisingly, the introduction of Microsoft’s Visual Studio
and C# based visual programming methods and tools for which
we had had high hopes did not improve the attitude of the
students. Moreover, a survey showed that the self-concept of
the students who took the course was significantly lower than
the others’ self-concept [6]. Studies investigating the origins of
the problem showed that the decreasing popularity of
programming could be traced back partly to the low level of
programming self-concept and lack in abstraction capabilities
of the students [14].
The first successful attempt was the application of Lego
Mindstrom mobile robots (Fig. 1) in the higher education
starting with visual programming tools and continuing with a
C-like language [5][9]. In course of the laboratory classes the
students worked in groups of two or three using cooperative
learning methods. Instead of traditional knowledge transfer
techniques the teachers provided tutoring, motivation and
coordination. The students first had to build a robot from the
available components, followed by the development of the
program that controls the robot.
Fig. 1. Lego Mindstrom mobile robot [7]
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This approach resulted in a temporary improvement in
motivation of the students; however, after a couple of years the
small robots became available in secondary schools and even
in some elementary schools as well. Thereafter they have
gradually lost their charm in the eyes of university students and
the popularity of programming related courses started to
decline again.
As a response to this change a new approach was
introduced at our institution, i.e. the team assignment based
laboratory classes and student work evaluation [14]. The “team
experiment” was partly initiated by the software companies we
were in contact. They unambiguously demanded the
improvement of team-work capabilities and soft skills of the
graduating students. At that time most of our students had no
idea about software development in teams, because both the
educational and the evaluation systems were based on the
individual performance. Only this skill had been assessed
during their previous studies. In course of the team-work based
problem solving the emphasis was put on educating good team
players, gaining experience in business process modeling,
object oriented system design, database design and
management, as well as test design and execution.
The students met the team assignments for the first time in
the third semester of their studies starting with the laboratory
classes of the Programming Paradigms and Techniques course
where they enhanced their object oriented programming skills
using the C# language. The experiment continued in the third
and fourth semesters, respectively, with the laboratory classes
of the Visual Programming and Software Engineering courses,
where rapid application development techniques and software
engineering methodologies were taught.
While the Lego robot based project was an instant success
at its time [10], the team-work based approach needed a longer
period of time to be accepted by students and to result in the
improvement in the interest in programming related topics. The
low-key approval of the team-work by the students was caused
by their concern about being left to their own by their team
mates and having to do the whole project by themselves.
Unfortunately, we could not say the worry was groundless.
However, after some times the students got used to the team-
work, and in order to ensure the most fairly individual grading
a new student evaluation model was developed that took into
consideration peer rating as well [13]. Thereafter the majority
of the students have been no longer afraid of team-work.
Although the team skills and other soft skills have
improved significantly as a result of the team-work, the
original objective of the project, i.e. obtaining a considerable
positive change in the attitude of the students towards
programming, has not been fully achieved.
III. REAL-WORLD PROJECT ASSIGNMENTS
Due to the moderate success of the team assignment based
projects we recognized that new ideas are needed. We
recognized that the actual implementation of the team-work
based assignments suffered from some deficiencies. For
example the assignment problems were invented by professors
and teaching staff and so maybe sometimes they were not as
related to the everyday problems as it would be optimal.
 Back to Contents

Moreover, some of them were even considered by students to met practical problems, solutions and technologies, and
be boring. acquired a skillset that matches industry needs.
The analysis of the previous results led to the assumption
that real-world problems and assignments could be a key factor IV. COOPERATIVE EDUCATION AS LONG-TERM SOLUTION
to successful team projects and therefore to the realization of Kecskemét College started a new initiative in Hungary
our aims regarding the improvement of student motivation. aiming the education of engineers who meet the requirements
Thus we decided to increase the attractiveness of the software of the labor market at the highest possible level by not only
projects by invoking external help from some partner having right after the education the necessary theoretical
companies. knowledge, but the practical social and methodological skills
The idea of real-world software project assignments was as well.
strongly supported from the beginnings by several partner KC adopted the German cooperative (also called dual)
companies, whose support made it possible the compilation of model [1] where students carry out periods of academic study
a pool of interesting problems. Having a significant number of at the university alternating with the on-the-job training at
real-world problems we decided to include a new course in the companies. The exact schedule is presented in Table I. This
curriculum focusing only on the software engineering kind of study program was initially offered in the field of
assignments. It was called IT Project and at first it was offered Vehicle Engineering as a pilot project in 2012. Later the
as an elective course for computer science students in approach was extended to other fields as well and so starting
collaboration with some software companies. Most of these from September 2015 the secondary education graduates who
companies not only defined the problems to be solved but also enrolled to KC could opt for the dual type education in the field
offered counselling for the students. of Computer Science as well. Cooperative education has a big
At the beginning of the semester the students who enrolled potential, which was also shown by a study [15] that revealed
into this course had to form teams of four or five. The teams that the Vehicle Engineering students who were the first ones
had to be formed self-organizing, i.e. nobody was forced to enrolling into our dual program had better study results and
join a group. Each team could select one assignment from the increased motivation than their counterparts who studied in the
problem offer list. Besides, a tutor was also assigned to each traditional study program.
team. Some of the tutors came from industry, while others were
university staff. There were no mandatory contact classes, the TABLE I. TABLE STYLES
team had to ask for consultation meeting. One of our partner
Sem. Cooperative study program Traditional study program
companies offered in case of some assignments the simulation
Academic studies: 13 weeks Academic studies: 13 weeks
of a real customer-software developer team relationship, where 1
Industry practice: 8 weeks
one of its employees acted as a customer liaison with no Academic studies: 13 weeks Academic studies: 13 weeks
programming knowledge. Thus the team members could 2
Industry practice: 16 weeks
experience the whole software project life-cycle starting with 3
Academic studies: 13 weeks Academic studies: 13 weeks
the problem specification through customer meetings until the Industry practice: 8 weeks
product delivery. Academic studies: 13 weeks Academic studies: 13 weeks
4
Industry practice: 16 weeks
No specific software development methodology was 5
Academic studies: 13 weeks Academic studies: 13 weeks
prescribed, but conform to the current trends teams were Industry practice: 8 weeks
Academic studies: 13 weeks Academic studies: 13 weeks
encouraged to use Scrum [12]. At the end of the semester each 6
Industry practice: 16 weeks
team had to prepare a presentation and a technical report about Academic studies: 13 weeks Academic studies: 13 weeks
the results. Besides, each student had to evaluate the 7
Industry practice: 8 weeks Industry practice: 8 weeks
contributions of his or her team members to the group effort. Sum
Academic studies: 91 weeks Academic studies: 91 weeks
The considered factors were attendance and participation in Industry practice: 80 weeks Industry practice: 8 weeks
team meetings, individual contributions to the project,
communication within the group, etc. These evaluations were
completely confidential and have not been shown to other team V. CONCLUSIONS
members.
Starting from the early 2000s the Hungarian computer
After two-semester experiences one can say that this science related higher education has faced problems like the
initiative proved to be successful. Not only the attitude of the students’ decreasing interest in a career as a software engineer
students has improved but the new component of programming and the lack of their enthusiasm for programming. Meanwhile
teaching has also contributed to the deepening of our relations the labor market showed a huge demand on software engineers.
with the software industry. The potential benefit for the Therefore several projects have been started to make
involved companies laid in increasing the company visibility programming more attractive and enjoyable for students.
and being able to select talented students who could be later
Most of these projects (like the usage of Lego robots and
employed. The benefit of the program for the university and
the team assignment based laboratory classes) had at least a
the involved teaching staff was that they would get a better
temporary positive effect on the attitude of the subject group
knowledge of practical needs and problems of software
but a longer lasting result could be achieved for the first time
companies. Finally, the benefit for the students was that they
by the real-world software project assignments. This approach

245

not only increased the students’ interest, but also contributed to
the enhancement of their team-work skills, professional
knowledge, and contributed to the effective education for
practical and industrial problems.
In order to improve the social and professional skills as
well as the industry readiness of our graduates a new kind of
collaboration was started between university and industry at
Kecskemét College adapting the German dual model. This
model makes possible to students to meet industry demands
and everyday practice from the beginning of their studies,
which approach can lead to better motivation and
understanding of their future profession.
ACKNOWLEDGMENT
This research was supported by ShiwaForce Ltd. and the
Foundation for the Development of Automation in Machinery
Industry.
REFERENCES
[1] A. Göhringer, “University of Cooperative Education – Karlsruhe: The
Dual System of Higher Education in Germany,” Asia-Pacific Journal of
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http://www.salaryexplorer.com/best-paying-jobs.php?loc=98&loctype=1
[3] P. D’Este, F. Guy, and S. Iammarino, “Shaping the formation of
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[4] “Digital Economy: Economical and Social Breakout Opportunity for
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2007, Portoroz, Slovenia, 2007.09.24., pp. 133-136.
[6] Z.C. Johanyák, R. Pap-Szigeti, and R.P. Alvarez Gil, “Analyzing
students’ programming failures,” A GAMF Közleményei, Kecskemét,
XXII. (2008), ISSN 0230-6182, pp. 115-120.
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[9] A. Pásztor, “How can it be Tought Playfully with the Help of
Programmable Robots?,” in Proceedings of International Technology
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Development (IATED), 2008. Paper 933.
[10] A. Pásztor, R. Pap-Szigeti, E. Lakatos Török, “Effects of Using Model
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[11] H. Saiedian, “Bridging Academic Software Engineering Education and
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[12] K. Schwaber and J. Sutherland, “The Scrum Guide™. The Definitive
Guide to Scrum: The Rules of the Game,” Scrum.Org and ScrumInc,
2014. [Retrieved 25-01-2016]
http://www.scrumguides.org/docs/scrumguide/v1/Scrum-Guide-US.pdf
[13] G.F. Tóth, Z.C. Johanyák, “Reform of the Software Engineering
Teaching – Demands and Conception,” 7th International Conference on
Applied Informatics (ICAI 2007), January 28 - 31, 2007, Eger, Hungary,
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[14] G.F. Tóth, Z.C. Johanyák, “Teaching Software Engineering -
Experiences and new Approaches,” XIX Didmattech 2006, September
6-7, Komarno, Slovakia, pp. 261-265.
[15] E. Török, Z. Kovács, “Dual Training in the Light of Vehicle Engineering
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Management), Belgrade, October 15-16, 2015, pp. 377-381.
 Back to Contents

The impact of Information Technology and the

alignment between business and service innovation
strategy on service innovation performance

Fotis Kitsios, Maria Kamariotou

Department of Applied Informatics
University of Macedonia
Thessaloniki, Greece
kitsios@uom.gr
tm1367@uom.edu.gr

Abstract—New Service Development is a fundamental issue
concerning researchers and managers, as successful new services
can have a positive impact on competitive advantage. Innovation is
an important factor which can positively affect firm performance.
Unfortunately, the percentage of unsuccessful services is high that
can be due to lack of strategy in New Service Development. When
services are supported by Information Technology they can support
and increase their innovation rate. Such an implementation requires
both advanced technological capabilities and alignment. By the way
there is a lack of structured literature reviews in the field of New
Service Development upon the examination of these issues.
Consequently, this literature review aims to promote not only the
strategic alignment but also the Information Technology capabilities
considering these two main factors as the most important ones for the
successful implementation of new services. Webster’s and Watson’s
methodology has been selected as it is tried and tested by many
researchers in the field of Management. Research shows that
managers should focus on these two factors in order to develop
successful new services in accordance with their customers’ needs
and to increase their performance, as well.
Keywords—new service development; innovation; strategy;
alignment; Information Technology capabilities
I. INTRODUCTION
As services account for the 70% of the economic activity of
a country its importance can be easily understood [22]. It is
crucial that managers should comprehend both the stages of
New Service Development and its critical success factors in
order to achieve increasingly successful new services that can
enhance their competitive advantage [10, 13]. It is reported by
both businesses and researchers that innovative services have
an impact on increasing market share and revenue [24, 25]. The
percentage of failed services is high, because of many factors.
The most important one is lack of strategy in New Service
Development process [3]. Strategic development of New
Service Development process is necessary for businesses so as
to gain competitive advantage. Alignment is one of the most
important factors of success of new services according to
researchers [15, 28, 30, 31]. Alignment refers to the connection
between objectives of business and new service strategy [2, 9].
Another critical factor is Information Technology, which
affects the whole process of New Service Development.
Services must be supported by Information Technologies to
improve [5]. The successful implementation of innovation in
services requires the existence of the necessary resources.
These resources include business strategy, knowledge,
Information Technologies, skills of employees, the structure of
the organization and communication with customers [46].
However there is a lack of structured literature reviews in
the above issues of New Service Development [1, 40, 41].
Structured literature reviews are important because they define
the existing knowledge and they highlight areas for further
investigation [45]. As New Service Development has been
critical issue for researchers recently, this research aims at
developing the respective concepts, in order to highlight the
importance, both by academics and by Managers. The aim of
this literature review is the promotion of strategic alignment
and Information Technology capabilities as the two main
factors for the successful implementation of new services.
The structure of this paper is as follows: after a summarized
introduction, the methodology of literature review is analyzed
and then the theoretical framework is examined. Firstly, a
general framework for new service development and service
innovation is provided and then the meaning of alignment and
Information Technology capabilities are examined. Finally, the
study works out an overview of these two critical success
factors and further research avenues.
II. METHODOLOGY
A. Literature review methodology
Literature review is very important and the initial idea is a
compilation of summaries and literature of previous studies.
The quality of the literature review is important since it
determines the way in which researcher combines the different
parts of the studies and how they have been analyzed. Finally,
it highlights areas that require further research.
Three steps are suggested by this methodology of literature
review to achieve effective implementation of the above. These

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are the search, in which it refers the definition of keywords and
databases, and the selection of individual topics , the
"backward search" and finally the "forward search." Finally,
the analysis and synthesis of the central ideas of articles is
followed [45].
B. Implementation of the literature review methodology
As primary and decisive stage of the search of articles
seemed appropriate, an initial and general search on the issue
of New Service Development, innovation in new services, and
corresponding literature reviews that have been implemented
by previous researchers to create a basic idea of the concepts
resulting. Databases and keywords are selected from these
literature reviews of the field. Databases are Scopus, Science
Direct, Web of Science and ABI/INFORM and searching was
done with keywords “new service development”, “innovation
management and new services”, “service innovation process”
and “service innovation strategy”. Articles are not limited to
certain periods due to the fact that this field of research has
occupied researchers for decades. Also, articles are only in
English and are published in scientific journals or conferences,
not in books.
Having searched all databases there has been a total
outcome of 78 articles. In which 30 articles from initial sources
were added, after having excluded all common results, the
content of which is strictly relevant to the subject under
investigation. Thus, a total number of 108 appears. Therefore,
it appears a total of 108 articles. In these 108 articles search
included 28 more, which resulted from the backward search.
Additionally, 9 more articles completed all the articles after the
forward search and thus a total of 144 articles revealed.
Search was completed when it came to common articles
from all databases and different combinations of keywords. It
was then that the critical mass of relevant literature sources was
considered as having been collected.
III. THEORETICAL FRAMEWORK
A. New Service Development and Innovation
The major concepts of these 144 articles are about New
Service Development stages and critical success factors.
Researchers have proposed models for the successful process
of New Service Development, since 1989, but a few of them
have dealt with the success factors of New Service
Development for the successful implementation of the process
and in creating successful services [4, 12].
Researchers and businesses report that innovation in
services has an impact on increasing market share and revenue
[24, 27]. During the last two to three decades there have been
many studies on innovation in products, services, Information
Technology processes and systems, as innovation is a factor of
competitive advantage [44]. Generally the term innovation
services has been used in the literature not only to describe new
or improved services, strategy and processes to create new
services using new knowledge, new processes and
technologies, as well [21].
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Innovation may concern several aspects. The first
dimension concerns the final characteristics of the service, the
second the approach of information through new technologies
of enterprise for customers and suppliers and the third
dimension the resources at the undertaking and thus give a
competitive advantage in regard to the new service. These
resources relate to the skills and knowledge of employees [14].
Another distinction correlates the four dimensions of
innovation, to the content of the service, distribution service,
customer interaction and technology. The first dimension
examines the value proposition that will be given to the
customer, the second the distribution pattern of innovation in
New Service Development activities, the third dimension
relates to customer interaction and the recent contribution of
technology to New Service Development process [34, 35, 36,
37].
The innovation process is characterized by uncertainty, so it
requires human, financial and technological resources to
support innovation in New Service Development [20]. For the
successful implementation of innovation in services the
existence of necessary resources is required. These resources
are related to business strategy, the knowledge, Information
Technologies, skills of employees, the structure of the
organization and communication with customers [46].
Technologies and Information Systems play an important role
in service innovation [19]. However, investments in
Information Technologies should be supported by the
principles of business [46].
Innovation in services is a risk for a company and for this
reason implementing innovation has to be strategically
designed from scratch. Consequently a business should firstly
define its innovation strategy and then is to be passed across
the business by managers [21].
The highly percentage of failed services is attributed to lack
of strategy [3]. To gain the competitive advantage businesses
need to strategically develop New Service Development
process [24, 37]. New Service Development is important
requisition strategy for companies [6]. The failure of new
services is high because the required strategic resources,
procedures, methods for New Service Development have not
been understood. This fact is increases the need of further study
of this field [16].
Enterprises with services have developed innovative
strategies for New Service Development and use the
appropriate resources to achieve and thus gain competitive
advantage. Most studies relate success factors to the process,
though there has been little research regarding the required
resources. In their research, [17], various types of services
concluded that the resources that affect each stage of New
Service Development are divided into organizational, natural
resources and related knowledge. In the first category resources
are related to the structure, control, reactions and relationships
of members of the company. The second category includes
resources such as materials, location, technologies and
facilities. The third category includes resources such as
education, knowledge and skills of employees. Technological
resources are required for the dissemination of information,
such as customer needs [33, 46].

The skills which are required for New Service
Development are cooperation, information gathering, effective
planning process, the involvement of customers in the process
and setting goals and commitment to them [26]. Additional
capabilities, that are important for New Service Development,
concern technology, structure of the organization, marketing
and Research and Development [42]. Needed essential skills
needed for New Service Development are categorized to
strategic, organizational and administrative. Strategic skills
concern the choice of appropriate operational strategy,
organizational with change management and administrative
with communication and leadership [29].
The above analysis shows that the alignment of business
strategy, the strategy of new services and information
technology, combined with the capabilities of Information
Technologies leads to successful services and increases the
performance of a firm. The following sections discuss these
two factors.
B. Alignment
Alignment is one of the most important factors of success
of new services according to researchers [15, 28, 30, 31].
Alignment refers to the connection of objectives and of
business and new service strategy [2, 9]. To achieve this
connection, enterprises need to collect information from clients
about their needs, data on competitors, but also to understand
the process of New Service Development, to manage to
harmonize the strategic goals of the business with them from
the process of New Service Development. Research is needed
on how to align the operational strategies with service
innovation strategy [37]. The difficulty in aligning customer
needs with the new service is the challenge for quick
introduction of the service to the market the use of
specifications in technology [7].
The innovation strategy of services can be defined as the
strategic decision to change an attribute or a combination of the
characteristics of innovation to achieve competitive advantage
[37].
An additional consideration of alignment was obtained
[19], according to which the alignment is the extent to which
the mission, objectives and plans contained in the Business
strategy are linked to the Information Technology strategy. The
alignment of these two strategies offers a competitive
advantage. For this reason, the strategy requires use of
technology. The design of technology is part of the strategic
planning operation.
The alignment of business strategy and the strategy of new
services provide expertise in business for customers and the
market. It also enables communication between the company
and customers to develop new service according to their needs.
The result of the alignment, therefore, is to increase the firm
performance of the business [9].
Companies that successfully develop New Service
Development process, align the innovation of service to the
environment to reduce the risks and failures. Companies have
focused on the strategic use of Information Technology to
achieve competitive advantage and to align the capabilities of
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Information Technology on organizational and strategic
objectives for successful services. Alignment of innovation
strategy with the surroundings leads to more rapid introduction
of the new service on the market.
The three types of services emerging strategy is cost
leadership, differentiation and focus on this market segment.
The diversification strategy supports innovation and is
promoted by the structure of the organization in the
development and delivery of service. The cost leadership
strategy is trying to minimize costs in all activities in the
company and strategic focus on this market segment tries to
cover this market segment with specific needs.
Every innovation strategy provides a clear direction for
addressing strategic issues, the selection of the market where
the company wants to enter and abilities to be developed.
Communication, informed decisions about the technology to be
used and definition of the concept of innovation for the
enterprise are required so as to develop the innovation strategy
[21].
The three types of innovation strategy services emerge are
focused on the creation of the service, the distribution of
service and the customer engagement.
These types align with each other in the following ways.
The first way of the alignment is between the
differentiation strategy and the focus on the creation of the
service. The diversification strategy affects the competitive
advantage. Focus on creating the service is changing the way
of service to the customer and the diversification strategy
affects the strategy of focusing on the creation of the service on
how to promote service.
The second way refers to the alignment between strategy of
cost leadership and the focus on service delivery. The cost
leadership strategy reduces the cost of each operation and the
focus on the distribution of the service strategy aims to change
the way of delivery to the customer, which also aims to reduce
costs.
The third way of the alignment is between the strategic
focus on this market segment and focus on customer
engagement. The first strategy aims to cover specific needs and
with the second strategy the firm receives feedback on
customer needs so as the service can be adapted to these.
These alignment methods are combined thereby to increase
the efficiency of the operation. Deciding the kind of impact that
that alignment is going to have should be given the most of
attention in Information Technology which will impact
business operations [34, 35, 36, 37].
C. Information Technology Capabilities
Improvement services supported by Information
Technologies [5]. The development of technology has changed
the way of production services. The technology applications to
services require knowledge and training of workers. However
they help to increase the customers’ choices since most offer
integrated service packages [18].

Several studies have research the relationship between the
business strategy, the strategy of the new service and the
impact of Information Technology skills to achieve
competitive advantage [35].
Information Technology capabilities include the
harmonization of strategies, systems and people, who must
know how to handle systems [11]. Information Technology
capabilities in services help to assist in the distribution system,
the process and the communication with customer. Information
Technology capabilities enhance the knowledge that is needed
in the development and distribution service. Information
Technology capabilities reduce the cost of finding the
information in New Service Development [34, 35].
When a company has technological capabilities can
innovate and thus the relationship between innovation and
strategy of Information Technology which is very important
because companies should choose the right technology that will
provide them with the necessary information. This information
concerns the environment of the business and the customers.
Business through Information Technology can personalize
services to customers and increase their efficiency [19].
New technologies have created opportunities for companies
with high technological services, after increasing the value
offered to customers [43]. Through the capabilities of
Information Technology companies communicate with
customers and this is a strategic resource that gives competitive
advantage, because businesses create the new service according
to their customers’ needs [38].
With the use of technology, businesses personalize service
and adapt to customer needs. Businesses also use Information
Technologies to further innovation, because they can analyze
the needs of customers [11].
Internet offers opportunities to communicate businesses
with their customers. Internet contributes to market research,
generation and evaluation of ideas in collaborative service
planning and proposals for improvement. Also, virtual
communities help to analyze the environment, the generation
of ideas and their evaluation [39].
Subsequently, there are many studies that show how the
capabilities of Information Technology affect services.
Businesses should understand what kind of strategy they
need to use to develop Information Technology capabilities
employee’s training programs, to participate in the process of
personalization of new services according to customer needs
and to apply the innovation process in services so as to
maximize the value provided to the client [11].
IV. CONCLUSIONS
The objective of this paper was to highlight the importance
of alignment and capabilities of Information Technology as
two critical factors of success of New Service Development.
The development of these factors was selected because the
percentage of successful new services is low and this is due to
lack of strategic alignment with the necessary resources.
Technological capabilities are important as they influence
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factors throughout the process of development process of new
services.
To highlight the importance of these factors a literature
review was conducted in accordance to the methodology of
Webster and Watson.
The results of the literature review state that companies
competing in today's changing environment are facing the
challenge of developing new services according to the needs of
customers. To achieve this goal, companies align their business
strategy with new service strategy and with Information
Technology strategy. Information Technologies affect all
stages of New Service Development process. Information
Technologies help knowledge sharing about customer needs
and therefore are required appropriate technological
capabilities.
Future efforts should be made in the light of literature and
empirical review surveys, in order to assess and enlight this
field. Yet, managers are recommended that look at these
surveys to successfully implement new services.
The field of New Service Development is broad and
researchers suggest that the literature review of this field
should be associated with others, such as Information Systems
and the Organizational Theory or Strategy, which will
constitute categories of successful factors of new services [8].
The percentage of new services is low. Managers need to
understand the process of New Service Development and to
align new service skills of employee, resources of the company
and its strategy in order to increase the competitive advantage.
Managers should effectively organize the process of New
Service Development and be in line with customers’ needs and
abilities of marketing. Researchers propose to investigate the
way in which businesses align their strategy to meet market
and customers’ needs and maximize their market share [4, 32].
Finally, new services have to respond to an ever-changing
technological environment, but also to changeable customer
needs. Many services fail and taking this into account
managers need to decide how to properly conduct the
procedure to obtain competitive advantage [23].
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 Back to Contents

Optimal Strategies for Escaping from the Middle

Income Trap: Automotive Supply Chain in Thailand
Kanda Boonsothonsatit*, Orapadee Joochim
Institute of Field Robotics
King Mongkut’s University of Technology Thonburi
Bangkok, Thailand
*kanda@fibo.kmutt.ac.th

Abstract— The middle income trap is escaped by an increase

in gross domestic product (GDP). In Thailand, its achievement is
mainly influenced by automotive industry as a production base.
It has consequences on suppliers providing materials and auto-
parts to motor vehicle assemblers (original equipment
manufacturers: OEMs) and aftermarket suppliers (replacement
equipment manufacturers: REMs). The escape from the middle
income trap needs the optimal strategies considering all
perspectives along the automotive supply chain. They are often
generated by a strategic map designed through a tool of balanced
scorecard (BSC). However, BSC is criticized as limitations
because of unidirectional causality and internal focus. They are
overcome by a causal linkage-based strategic map design along
the automotive supply chain in Thailand. Its conceptual
framework is proposed in this paper purposing to causally link
the automotive strategies to operations. The causal linkages
contribute to identify their root causes leveraging the RA vision
and mission. This contribution is useful for policy makers to set
the optimal automotive strategies interrelated systematically
along the supply chain stages.
Keywords— middle income trap; automotive; supply chain
I. INTRODUCTION
Thailand is one of many countries having upper-middle
incomes (USD 4,126 to 12,735) as shown in Fig. 1 [1]. This
trap can be escaped by an increase in gross domestic product
(GDP), especially manufacturing sector. One of the most
important industries in Thailand is automotive. It generated
GDP of 3% in 2013 and continuously growing [2]. This is
because of increases in domestic and oversea demand of motor
vehicles which leads to an increase in motor vehicle production
at 1.88 million units in 2014 as shown in Fig. 2 [3].
Fig. 2 Thailand motor vehicle production
The increased demand is caused by moving production
bases from western to eastern world. Several of them are
emerging countries (e.g. China and India) where have lower
rate of motor vehicle ownership and higher rate of motor
vehicle consumption when compared to mature countries (e.g.
United States, Europe, and Japan). In terms of motor vehicle
ownership, India has the lowest rate (58.9 people per motor
vehicle) whereas the highest rate belongs to United States (1.3
people per motor vehicle) [4].
Apart from the increased demand of motor vehicles, supply
chain management (SCM) is one of the most important
enablers for escaping from the middle income trap. It also
supports the vision of the master plan for automotive industry
2012 – 2016, namely “Thailand is a global green automotive
production base with strong domestic supply chains which
create high value added for the country” [4]. Thailand
automotive supply chain covers four stages including domestic
and oversea customers, motor vehicle assemblers (original
equipment manufacturers: OEMs) or aftermarket suppliers
(replacement equipment manufacturers: REMs), and auto-part
suppliers (tiers 1 and 2 or 3) as shown in Fig. 3. The 2nd or 3rd
tier suppliers procure raw materials (e.g. steel, plastic, and
rubber) and machineries (e.g. molds and dies) for
manufacturing auto-parts. They are dispatched to the 1st tier
suppliers as components for manufacturing powertrain,
suspension, electronical and electronic, body, and others before
assembled as motor vehicles by OEMs. On the other hand,
aftermarket-parts are manufactured by REMs. The end-
products (i.e. motor vehicles and aftermarket-parts) can be sold
to domestic and oversea customers. These material flows are
depicted as arrows in Fig. 3.

Fig. 1 Country classifications by income

978-1-5090-1671-6/16/$31.00 ©2016 IEEE

252

Fig. 3 Thailand automotive supply chain
All of the OEMs are multinational companies such as
Toyota, Honda, Isuzu, etc. Most of the 1st tier suppliers are
oversea enterprises, whereas most of the 2nd or 3rd tier
suppliers (including REMs) are Thai small and medium-sized
enterprises (SMEs). In 2013, a Thai enterprise generated much
lesser revenue than a joint venture (6.3 times) as shown in Fig.
4, and twice lower profit margin than its average as shown in
Fig. 5. The lowest profit margin was incurred by Thai small-
sized enterprises (0.28%), and followed by Thai medium-sized
enterprises (1.08%) [5]. To escape from the middle income
trap, SCM in Thailand automotive industry emphasizes Thai
SMEs manufacturing auto-parts and aftermarket-parts.
Fig. 4 Revenue per enterprise by nationality
Fig. 5 Profit margin by enterprise size
SCM in Thailand automotive industry confronts of
complexity in nature. It negatively impacts dispersions of
supply chain operations from their strategies which spread
from their missions and vision [6]. This is generally overcome
using a balanced scorecard (BSC). It is a technique for turning
the supply chain vision into actions (ViA) in perspectives of
learning and growth, internal process, customer, and financial
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[7]. The BSC-based ViA can be interrelated directly and
indirectly [8][9] but considered as causal in upward directions
[10][11][12] as shown in Fig. 1. In practical, these
interrelations are multi-directional. They are resolved by a
technique of causal linkages which are broadly applied
[13][14]. In addition, the causal linkages are capable of
identifying the root causes which leverage the GDP
maximization. The identified root causes contributes policy
makers to set the optimal strategies which are interrelated
casually and systematically along the automotive supply chain
in Thailand as the aim of this paper.
II. THREE-STEP METHODOLOGY
In order to achieve the paper aim, its methodology
undergoes three steps as follows (Fig. 6). Firstly, the Thailand
automotive supply chain’s vision and missions are clarified.
Secondly, their related parameters are brainstormed and
conceptualized as a unified causal loop diagrams (CLD). Its
root causes (leveraging the clarified vision and missions) are
analyzed and identified for setting the optimal strategies as the
third step.
Fig. 6 Three-step methodology
III. RESULTS AND DISCUSSIONS
According to the three-step methodology, it is step-by-step
presented and discussed as follows.
A. Clarification of Vision and Mission
The vision is to escape from the middle income trap whose
mission emphasizes maximizing GDP. In order to achieve such
the vision and mission, its conceptual framework is developed
as shown in Fig. 7. The 2nd or 3rd tier suppliers (especially,
Thai SMEs) are supported by three means that include
enhancing domestic competitiveness, expanding auto-part
exports, and increasing aftermarket-part sales. They are caused
by automotive expert brainstorms.
Fig. 7 Means to escape from the middle income trap
 Back to Contents

B. Conceptualization of Parameters The last four reinforcing loops (i.e. R5 to R8) and one
Subsequently, the three means are conceptualized along balancing loop (B1) are illustrated in Fig. 10. Its root causes are
with their interrelated parameters as shown in Fig. 8. The technology transfer (R5 to R8) and government support (B1).
interrelations of causes and effects are indicated by arrows, and The technology transfer have positive effects on capabilities of
directed by polarities. The polarity is positive if causes robotics and automation technology, diversification, and
reinforce their effects; otherwise, the polarity is negative. The research and development (R&D) as well as quality system
individual interrelations are linked until closing cycles. The so- management (company certified with ISO/TS 16949). The first
called causal loop diagram (CLD) can be reinforcing (R) and two effects support increasing productivity (+), reducing auto-
balancing (B) loops. There are nine reinforcing loops and one part cost (-), and then expanding FDI (+) before enhancing
balancing loop (Fig. 9 and 10) emerged from the vision and GDP (+) and government support (+). The enhancement of
mission, namely the GDP maximization along the supply chain GDP (+) and government support (+) are also reinforced by the
in Thailand automotive industry. last two effects which add value of auto-parts. Otherwise, the
government supports worsening restriction of intellectual
Tax incentives property (IP) (-) which causes R&D incapability (+) (B1).
+
+ Financial + Government Tax incentives
Technology
accessibility support +
transfer
+ + + - + Financial + Government
+ Technology
Company certified + Robotics & Fluctuation of R5 accessibility support
transfer
(ISO/TS16949) automation technology material price + +
+ -
+
+ + - + Company certified + Robotics & Fluctuation of
+ + +
Diversification ASEAN autopart (ISO/TS16949) automation technology material price
Autopart reliability Productivity Autopart cost R6
capability network +
- + + + - +
+
+ - Diversification ASEAN autopart
Autopart + + Autopart reliability Productivity Autopart cost
Autopart supply capability network
- value-added GDP FDI R8 -
+ + + -
Autopart supply Autopart + + B1
R&D capability IP restriction - value-added
- GDP FDI
+ R7 +
+
-
IP restriction
Fig. 8 CLD overview +
R&D capability

Fig. 9 illustrates the first four reinforcing loops (i.e. R1 to
R4) which government support is a root cause. It has a negative
effect on fluctuation of material price (-); and positive effects
on ASEAN auto-part network (+), financial accessibility (+),
and tax incentives (+), respectively. They impact auto-part cost
as follows. The lower auto-part cost is directly influenced by
lesser fluctuation of material price (+) and stronger ASEAN
auto-part network (-), whereas its indirect influencers include
more financial accessibility (-) and more tax incentives (-).
They supports more investment in robotics and automation
technology (+) for increasing productivity (+) and then
reducing auto-part cost (-). The reduced cost of auto-parts
enhances foreign direct investment (FDI) (+), GDP (+) and
then government support (+).
Fig.10 CLD 2
C. Set of Optimal Strategies
To leverage the vision and mission, the identified two root
causes (i.e. government support and technology transfer) are
discussed for setting their related strategies. The government
mainly emphasizes supporting technology transfer. It aims to
increase number of companies certified with ISO/TS16949,
enhance capabilities of process technology (i.e. robotics and
automation, and diversification), and product innovation (i.e.
R&D). The last one support overcoming increasingly serious
restriction of IP. These aims leverage to the GDP maximization
which contributes to the escape from the middle income trap.

Tax incentives
+
IV. CONCLUSION
R4

Technology
+ Financial + Government This paper proposes a conceptual framework of causal
transfer accessibility support linkage-based strategic map design along the automotive
+
+
+ R3 + - supply chain in Thailand. It primarily aims to set root cause-
Company certified
(ISO/TS16949)
+ Robotics &
automation technology
Fluctuation of
material price
R2 based strategies interrelated systematically along the supply
+ +
chain stages. The proposed framework is capable of identifying
+ -
+
Diversification
+ +
ASEAN autopart
the root cause-based strategies which eventually leverage the
Productivity Autopart cost
Autopart reliability capability
- network clarified vision and mission. Noticeably, the proposed
R1
+ Autopart +
- framework is considered as qualitative. It only informs how the
Autopart supply +
- value-added GDP FDI supply chain vision and mission, strategy themes, and other
+ + parameters are interrelated. These interrelations cannot be
R&D capability IP restriction - otherwise expressed as numbers. In order to bridge these gaps,
+
the proposed framework can be extended using system
Fig. 9 CLD 1 dynamic modelling as a future work.

254

ACKNOWLEDGMENT
The author would be indebted to the Thailand Research
Fund (TRF) which provides funds for studying a project
entitled “Policy research to enhance green automotive industry
in Thailand”. Moreover, the author would be most grateful to
the TRF project’s working group from King Mongkut's
University of Technology Thonburi, Thammasat University,
National Institute of Development Administration, Chiang Mai
University, and Thailand Automotive Institute. Furthermore,
the author would be thankful to all partners in I AM
(Innovative and Advanced Manufacturing) Research Group,
Institute of Field Robotics, King Mongkut's University of
Technology Thonburi for valuable knowledge and information
sharing.
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[1] The World Bank, “GDP at market prices (current US$),” 2015.
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(NESDB), “National income of Thailand chain volume measures,”
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Production,” Ministry of Industry Thailand, Bangkok, 2015.
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industry 2012 – 2016,” Ministry of Industry Thailand, Bangkok, 2012.
[5] The Office of Industrial Economics (OIE), “Structure of auto-part
production in Thailand automotive industry,” Ministry of Industry
Thailand, Bangkok, 2014.
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[6] S. Li, S.S Rao, T.S. Ragu-Nathan, and B. Ragu-Nathan, “Development
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 Back to Contents

The Design of Models for Coconut Oil Supply Chain

System Performance Measurement
Meilizar
Department of Agro-industry Logistic
Management
Polytechnic of ATI Padang - Ministry
of Industry, Padang, Indonesia.
Tel: (+62) 0751-7055053, Email:
iza_zanetha@yahoo.com
Lisa Nesti
Department of Agro-industry Logistic
Management
Polytechnic of ATI Padang - Ministry
of Industry, Padang, Indonesia.
Tel: (+62) 0751-7055053, Email:
lisa_nesti@yahoo.com
Putranesia Thaha
Departement of Civil Engineering
Bung Hatta university, Padang,
Indonesia
Tel: (+62) 0751-8952381, Email:
putranesia@yahoo.com

Abstract− The performance measurement was
proposed to improve continuously on a supply chain,
so that reduce cost, provide a satisfaction of customer
and increasing profits. This research developed model
of performance measurement on a supply chain
system to coconut oil agro-industry with SCOR model
as initial formula. It was focused on evaluation of a
coconuts raw material supply from the suppliers and
also evaluates an order fulfillment to coconut oil from
customers. The beginning observation have a twelve
variables; Inventory Accuracy of Raw Material,
Internal relationship, Planning employee reliability,
Time to produce a production, Source fill rate, Mean
lateness of delivery, Percentage of correct delivery
quantity, Percentage of correct delivery quality,
Delivery to Commit Date, Order Fulfillment Lead
Time, Make Time, and Response Time. The
performance measurement was calculated by internal
benchmarking based on company target. Calculation
result to all variable shows that the value still under
expected target. Hence, the business process
improvement method is implemented to repair the
overall system that saving time about 120 minutes. An
analysis result concludes that coconut oil agro-
industry should do improvement in several aspects, as
follow; supplier partnership, the accurate of supply
report, standardization fulfillment time of order, sales
forecast, and sales report system in every period.
Keywords− performance measurement, supply
chain system, SCOR, business process improvement.
I. INTRODUCTION
In 2014, the department agriculture stated that agro-
industry with coconut as a raw material has been grown
up because of high level production of coconut in
padang pariaman. Where padang pariaman have 38.045
hectare of wide area that also as a large central
production of coconut at west sumatera province.
Although coconut oil is not popular than palm oil but
society in padang pariaman still processing the coconut
become cooking oil and medicinal herb. The Institute for
Agricultural Technology of west sumatera has been
training improvement for production technology and
packaging the coconut oil in several processing industrial
coconut oil at padang pariaman, by expected to raised the
image of coconut oil in society.
The government supporting motivates an agro-
industry to increase quality production and distribution of
coconut oil. Good cooperation among farmer, distributor,
and customer is needed to realize the competitive coconut
oil agro-industry [6].
The competitiveness and continuity of a coconuts
agro-industry can be developed with performance system
approach that optimized supply chain network. By
activity of supply chain management, the company with
better supply chain performance has a big chance to
wining the competition. The company learn and analyze
that profitability can be magnified drastically by focused
to a cross-company operational in one unity of supply
chain [1].
Performance measurement of supply chain system
was applied in different area and method. Refer to [4]
and [5], the performance measurement of supply chain
system was implemented on non-agro-industry. Balanced
scorecard method also applied by [8]. An integration
SCOR model and AHP explained by [9]. Then [7] used
integration SCOR model and fuzzy AHP to the vegetable
supply chain system. Next, [3] shows an important of

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performance measurement that supporting to strategic
level, and operational.
SCOR model can be used to communicate frames that
explain the detail of supply chain, definition and process
categorize, develop metrics or measurement indicator
that needed in supply chain performance measurement.
Hence, an integration measurement is obtained among
the supplier, internal of company, and consumer [2].
This research focused on evaluation order of raw
material to the supplier and fulfilled order from a
consumer. Begins with design performance measurement
model and prepare proposals for supply chain system to
control ordering raw material and minimize delay of
order fulfillment from a customer.
II. RESEARCH METHODOLOGY
This research has been done in several industrial
processing of coconut oil at Padang Pariaman district.
The initial stage collects a secondary data related to
documentation system of the ordering raw material to the
supplier and order documentation from customer. The
observation survey purposed to determine value added
activity as fundamental concept of business process
improvement.
Two stages was implemented in this research, first
stage are reference model developed of performance
measurement. The initial stage determines the expected
objective, then determine prospective measurement and
Key Performance Indicators (KPIs) that refer to model
Supply Chain Operation Reference (SCOR) that adapted
by condition of coconut oil industrial processing. The
next sequence, actual performance is calculated by using
SCOR to every perspective that supported by primary
and secondary data of coconut oil industrial process.
Then, internal benchmark will follow this step after value
of actual performance is calculated. An internal
benchmark is a result comparison of actual performance
and target that determined by processing industry base
expected optimal condition for continuity of production
and to customer satisfaction. Second stages are design a
coconut agro-industry supply chain system. Initial step is
mapping an initial business process on raw material
ordering system to the supplier and fulfill consumer order
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system. Next, process efficiency will be determined by
identify value-added and non value-added process. The
last suggestion process for improvement by eliminate a
process, simplicity a process, or joint process, while
suggestion of a mapping business process and
improvement of supply chain system.
III. RESULT
A. Reference Model Development of Performance
Measurement
The development of performance measurement has
been done by consider a performance measurement
model of supply chain which is developed before. Based
on frame on model SCOR, the supply chain can be
divided by five fundamental management process, such;
plan, source, make, deliver, and return that improved
become a performance objectives that consist of
reliability, responsiveness, flexibility, asset, and cost.
Every performance objectives can be developed to
performance indicator that more specifies and must be
adapted with conditions of company. The effective
supply chain performance measurements must be useful
to control the percentage of utilization from existing
resources. This research focused on policy stages about
ordering systems of raw material to the supplier and
fulfillment ordering of the customer, because the
expected target to solve the performance case was related
to production time and ordering delivery time. The
corporation among the supply chain component which is
exist on processing coconut oil industry at Padang
Pariaman District can be base to improve the companies
performance.
Reliability and quickness be an important factor in
this research, because the coconut commodities that
becomes object of study are an agro products which isn’t
durable and easily rotten. The harvest time of coconut
most influence to the production oil quantity and quality.
Hence, the efficient and good of supply chain
management is required to make a stable, responsive and
sustainable supply chain activity in agro-industry coconut
oil.
Initial observation toward raw material ordering
system and fulfillment the customer order provides
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supply chain reliability and process time becomes two of Percentage of Accuracy delivery
correct quality from supplier
main prospective that should be measured. The delivery
perspective process time consists of make time and quality
response time variable, while the perspective supply Reliability Percentage order that
Delivery to
filled before or on time
chain reliability is adopted from metric SCOR by Commit Date
agreement.
inventory accuracy of raw material, internal relationship, Order
Material fulfillment time
fulfillment
planning employee reliability, time to produce a lead time
order
production, source fill rate, mean lateness of delivery, Deliver Responsive Processing time to filled
ness Make time order and supports
percentage of correct delivery quantity, percentage of administration
correct delivery quality, delivery to commit date, and Time to response the
order fulfillment lead time. Response input from one make
time time to the next make
time.
The perspective supply chain reliability was selected
because model should be able to monitor and control;
ordering quantity of coconut raw material that already B. The Actual Result of Performance Measurement
filled by supplier, delivery time required to processing The result of performance measurement and
industry, quantity ordering of coconut oil from a benchmark shows that all measure variable still under
customer that complete fulfilled by processing industry, expected target. The expected target is determined by
and required time to fulfill the customer order. While the company based on optimal condition expected for
perspective process time was selected because the production continuity and costumer satisfaction. Result
lateness of delivery order that relate directly to the comparison of initial performance a companies target
timing, so this perspective can be used to find the shown on table 2.
performance of every component of time and possibility
of delay effect. The selected KPIs on refered model are TABLE II. THE ACTUAL RESULT OF PERFORMANCE
MEASUREMENT
explained by Tabel 1.
Target Performance
No. KPIs Variable
TABLE I. REFERENCE MODEL INFORMATION (%) result (%)

Level 3 Inventory Accuracy of raw

1 70% 90%
Level 1 Level 2 (KPIs Definition material
Variable)
2 Internal relationship 70% 90%
Reliability Inventory Storage percentage in
accuracy of warehouse inventory 3 Planning employee reliability 65% 85%
Raw Material (physically)
Relationship inter Time to produce a production
Internal 4 60% 85%
division that affect to the schedule
relationship
plans process
5 Source fill rate 66,5% 90%
Planning Reliable of employee
employee that relate to the 6 Mean lateness of delivery 60% 85%
reliability planning process
Responsive Time to Percentage of correct delivery
Quickness into planning 7 73,8% 95%
ness produce a quantity
Plan process of purchasing
production
Source material Percentage of correct delivery
schedule 8 75% 90%
quality
Reliability Amount of percentage
Source fill
delivery can be filled by 9 Delivery to Commit Date 72% 90%
rate
supplier
The average of material 10 Order Fulfillment Lead Time 65% 80%
Mean lateness
delivery delay time from
of delivery 11 Make time 74,7% 90%
supplier
Percentage of Accuracy delivery 12 Respon time 85% 90%
correct quantity from supplier
delivery
quantity

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C. Evaluation Result of Initial Business process and quantity of raw

material
Identification Process
A11 Record the receipt of 20 VA
The mapping process of initial business has been raw material

done on the inspected link to find the sequence and A12 Confirmation of 10 VA
recording receipt a raw
detailed activities. The business process was inspected to material to purchasing
coconut oil industrial process involves the ordering division
process of raw material to the supplier and order from A13 The warehouse waiting 50 VNA-4
customer. The next step is selected process that have approval a transaction
value-added and non-value added to know the value of of raw material
reception
efficiency process. Table 3 shows evaluation results of
Processing time VA 140
initial business process.
Total time 621

TABLE III. EVALUATION RESULT OF INITIAL BUSINESS

PROCESS Sales of A1 Sales section receive 15 VA
coconut oil the order from a
Seq. Name of Business Time Activity
Chain to the customer
No Process (min.) VA/NVA customer A2 Sales section calling 10 VA
Purchase A1 Raw material 25 VA (sales finished product of
section of warehouse sections section, warehouse section to
row verify a supply section of confirm amount of
material to physically of raw finished supply in warehouse
supplier material and conform product and due-date ordering
(raw to supply warehouse,
A3 Sales section waiting 55 NVA
material documentation. and section
confirmation from -5
warehouse A2 The warehouse section 10 VA delivery)
finished product
and record demand of raw warehouse about
purchasing material purchase. availability of coconut
unit)
A3 Warehouse gives 3 VA oil
record demand of raw A4 Sales section make a 10 VA
material purchasing to purchase order (PO)
purchasing section.
A5 Sales section waiting 35 NVA
A4 Purchasing section 15 VA staff from finished 6
receive a record product warehouse to
demand of raw take PO
material from
A6 Sales section submit 15 VA
warehouse and submit
PO to staff warehouse
to operational manager
to approve A7 Sales section make 20 VA
invoice and delivery
A5 A wait purchasing 75 NVA-1
order
approval of raw
material from A8 Sales section submit 10 VA
operational manager invoice and delivery
order to finished
A6 Make a purchase order 20 VA
product warehouse
to supplier
A9 Finished product 45 VA
A7 Await a raw material 300 NVA-2
warehouse staff
from supplier
checking amount of
A8 Receive delivery order 10 VA coconut oil that
and raw material from accordance with the
supplier order
A9 Await demolition order 55 NVA-3 A10 Finished product 20 VA
A10 Checking quality and 25 VA warehouse staff record

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a pick up coconut oil in also stop to improve another business improvement. The
warehouse order book
non-value added processed were explained on table 4.
A11 The finished product 40 NVA
warehouse is awaiting -7 TABLE IV. IMPROVEMENT PROCESS A NON VALUE-ADDED
to do a packing
coconut oil base on Improvement
NVA Explanation of Improvement step
invoice from the sales Step
section 1 Standardization - Raw material purchase section should
A12 Finished product 5 VA waiting a long waiting time to do
purchase because they should wait an
warehouse receive
purchase agreement of raw material
invoice and delivery from operational manager to
order eliminate time, so that
A13 Packing coconut oil 35 VA standardization of decision makes
according to the should be implemented.
- The standardization improvement sep
invoice
also use for NVA-3, NVA-4, NVA-5,
A14 Finished product 10 VA NVA-6, NVA-7.
warehouse is calling 2 Supplier The waiting time of raw material from
delivery section partnership the supplier can be minimized by
A15 Awaiting delivery 90 NVA supplier partnership implementation
section -8 such a controlling arrival schedule of a
A16 Delivery section are 25 VA raw material.
doing check an amount 3 Transportation - A waiting time transportation can be
partnership minimized by transportation
A17 Delivery section record 20 VA partnership implementation such a
an invoice on delivery controlling delivery schedule a
book coconut oil.
A18 Delivery section 60 NVA - The transportation partnership is also
use for NVA-8 and NVA-9
awaiting deliver -9
transport.
A19 Ordering coconut oil 120 VA
delivered to customer E. Suggestion Business Processed Mapping
Processing time VA 360 Suggestion of business process improvement on raw
Total Time 630 material purchasing section by doing standardization
processes as a non-value added, while founded a new
business process. The suggestion of business processed
Table 3 shows that chain of raw material purchase mapping for raw material purchase section are shown in
section to the supplier consist of 13 business process by figure 1.
620 total processing time, chain of purchase a coconut oil
to customer consists of 19 business process by 630 total Raw
Purchase Request of Raw Delivery and Sending
Material
processes time. The total processing efficiency are 40%. Warehouse
Material Delivery Order
The non-value added activities are 9 business process
Operational Request Approved of Receive Raw Material
with 750 minute total time. Manager Purchase Raw Material and Delivery Order

D. Suggestion for Process Improvement Sales Section Purchase Raw Material

Record Raw Material
Reception
The next step after process identification of value-
added and non-value added are minimized or dismiss a Record Raw Material
Supplier Processing Raw Material
process non-value added that waste time without Transaction

additional value to result of end product. These process

can be improved by dismiss a process, simplicity, or joint Figure 1 The suggestion of business processed mapping for a row
process by using a technology to support a process, and material purchase section.

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Suggestion business processed improvement on sales
section by standardization process as a non-value added,
while founded a new business process. The figure 2
shows a suggestion of business processed mapping on
sales section
Initial performance level of Inventory Accuracy of Raw
Material are 70%, internal relationship are 70%, planning
employee reliability are 65%, time to produce a
production schedule are 60%, source fill rate are 66.5%,
mean lateness of delivery are 60%, percentage of correct
delivery quantity are 73.8%, percentage of delivery
quality are 75 %, delivery to commit date are 72%, order
fulfillment lead time are 65%, make time are 74.7%,
response time 85%.

Suggestion of business process was improved by

business processed improvement concept that provides
minimize time during 120 minutes. Suggestion
improvement toward sales section are preparing sales
plan, preparing sales monthly report system and develop
communication with transportation section during
ordering request of coconut oil to the customer.
Suggestion improvement to sales section are speed up
Figure 2. Suggestion of business processed mapping on sales section purchasing approval process of a raw material by
operational manager, improvement sales support and
F. Suggestion for Supply Chain System Improvement. develop communication to supplier.
Purchase section of raw material is also important
that must observe an available of a raw material while
production process run continuity time sales section
REFERENCE
should be able to do anticipation to minimize the delay
[1] A. Vereecke, and S. Muylle, “Performance Improvement
time, because it is a front liner which have direct relation Through Supply Chain Collaboration in Europe,” International
to the customer. The summary suggestion for Journal of Operations & Production Management. Vol. 26,
pp. 1176-1198, 2006.
improvement are shown in table 5 [2] D. Simchi-Levi, P. Kaminsky, dan E. Simchi-Levi, Designing and
Managing the Supply Chain : Concept, Strategies, and Case
TABLE V. SUMMARY SUGGESTION FOR IMPROVEMENT OF Studies, McGraw-Hill Higher Education, Singapore, 2000.
SUPPLY CHAIN SYSTEM [3] JGAJ Van Der Vorst, “Performance Measurement in Agrifood
Supply Chain Network : An Overview. In : CJM Wijnands, JHM
No Section Improvement Explanation Huirne, RBM Kooten Van, O. Quantifying The Agri-food Supply
- Measurement by Chain/Ondersteijn. Dordrecht : Springer/Kluwer, (Wageningen
1 Company - Integration of
customize model UR Frontisseries15).
in general performance
- Process elimination of [4] Sudaryanto and R. Bahri, “Performance evaluation of Supply
measurement
non value added Chain Using SCOR Model: The Case of PT. Yuasa, Indonesia,”
- Business processed
Proceeding of International Seminar on Industrial Engineering and
changing
Management, pp.49-55, 2007.
2 Purchasing - Purchasing planning - Purchase report
[5] RR. D. Rahayu, “Pengembangan Model Pengukuran Kinerja
section of - Communicate to contains target and
Rantai Pasok: Studi Kasus Direktorat Aerostructure PT.
raw supplier realization
Dirgantara Indonesia,” Tesis Program Pasca Sarjana Teknik dan
- Monthly purchase - Shorten the approval
material Manajemen Industri Institut Teknologi Bandung, 2009.
report time of purchase
[6] N. Hosen, “Profil Usahatani Kelapa di Sumatera Barat,” Jurnal
- Simplicity of process
Teknologi Pertanian. Vol.5, pp. 15-23, 2009.
3 Sales - Sales planning - Sales report contains [7] A. Setiawan, Marimin, Y. Arkeman, F. Udin, “Integrasi Model
Section - Corporation with targets and realization. SCOR dan Fuzzy AHP untuk Perancangan Metrik Pengukuran
delivery or - An implementation Kinerja Rantai Pasok Sayuran,” Jurnal Manajemen dan
transportation section penalty for delay time. Organisasi, Vol.1, pp. 148-161, 2010.
- Sales monthly report [8] D. Rahmayanti, and U. Putri, “Perancangan Model Pengukuran
Kinerja Rantai Pasok Semen dengan Balanced Scorecard (BSC),”
Jurnal Optimisasi Sistem Industri, Vol. 10, pp. 135-144, 2011.
[9] A. Lutfiana, Y. Perdana, “Pengukuran Performansi Supply Chain
IV. CONCLUSION dengan pendekatan Supply Chain Operation Reference (SCOR)
dan Analitical Hierarchy Process (AHP),” Jurnal manajemen dan
The supply chain performance measurement has been Organisasi, Vol. 2, pp. 57-72, 2012.
done to find an actual level performance of the system.

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Application of Conjoint Analysis in Establishing
Aviation Fuel Attributes for Air Travel Industries
Karla Ishra S. Bassig and Hazeline A. Silverio
Department of Industrial Engineering
College of Engineering, Adamson University
Manila, Philippines
Abstract— With oil being a non-renewable energy source,
buyers of aviation fuel are more inclined to purchase Jet-A1 from
oil companies that offer the best jet fuel. But the fact of the
matter is that, aviation fuel has the same content even when you
purchase it from halfway across the world. Although price is an
apparent factor that airlines consider when deciding which oil
company to choose for as a supplier, there are ambiguous factors
that need to be established so that continuous product
development can be made by aviation fuel organizations. This
study used conjoint analysis as a tool to establish the attributes
considered by airlines in deciding which oil company will best
meet their needs. As a result, the following six attributes of
aviation fuel were identified: availability, price, accessibility,
manpower, equipment and facilities, and fuel quality and safety.
The results indicate that fuel quality has the greatest influence on
the respondents’ purchasing intentions, followed by price,
availability, equipment and facilities, and accessibility.
Manpower was the least important attribute with regard to the
airlines’ buying intention. Based on the results from data
analysis, it is concluded that conjoint analysis is an appropriate
tool to identify the key attributes of aviation fuel. Using the
results presented in this study, aviation fuel companies can better
tailor their fuel services to meet the needs of airlines and thus
increase sales.
Keywords—Conjoint Analysis; Aviation Fuel; Purchasing
Intention; Consumer Preference; Part-worth
I. INTRODUCTION
Jet Fuel (Jet A-1) is produced only by the three major Oil
Companies in the Philippines namely, Petron, Shell, and
Chevron. Jet Fuel from these companies are then stored under
the supervision of Joint Oil Companies Aviation-Fuel Storage
Plant (JOCASP). From this point of view, despite the different
companies that supply jet fuel, the reality is that they all
provide the same oil to different airlines. A bidding system for
airlines is regulated for the aviation organizations operating in
the Philippines to make a decision on what oil company to go
for when it comes to their jet fuel supply and establish a
contract between the supplier and the end-user with a defined
timeframe that occasionally changes.
Although they literally supply the same jet fuel, the airlines
that operate locally consider factors, aside from price and
availability, in making the oil supplier choice. These are
uncertain factors that are expected to be identified as the
researchers use conjoint analysis as an analytical tool for
aviation fuel suppliers; this will help them improve their
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product management and service based on the set of criteria
from the conjoint analysis that the researchers are seeking to
establish. With over 33 airlines operating in the local aircraft
industry, it’s an unexpected reality that Philippines has only
one source of jet turbine engine fuel (Jet A-1) of which all the
aviation oil companies are of the beneficiary. By means of a
bidding system, the crude oil trade commences between the
local airlines and the aviation oil depots. While these aviation
oil entities supply the same kind of fuel, there are uncertainties
as to why airlines change their decisions on their fuel supplier.
This can come as an opportunity for oil companies and other
airlines but without a doubt, difficulties will emanate along
with the seeming opportunities because of the unsystematic
bidding approach both parties are currently bounded by.
Based on the aforementioned discussion, the research
objectives of the study are as follows: 1) Identify the key
attributes that are taken into consideration by airlines operating
locally in assessing viable jet turbine engine fuel supply using
conjoint analysis. 2) Establish decision criteria and metrics
based on the key attributes that heavily influence the airline
organizations’ purchasing intention. 3) Develop an integrated
assessment of the jet fuel service and define an approach that
will enable local jet fuel suppliers to optimally provide the
needs of the airlines operating in the Philippines. The focal
point of this study is to help both the airline organizations and
aviation fuel companies improve their decisions and product
management
II. REVIEW OF RELATED LITERATURE
A. Conjoint Analysis
Getting the market to make trade-offs for product managers
and other corporate decision-makers answer questions like
“how do you know what the market wants?” or “What market
segments exist? What those segments prefer?” [21].
Conjoint analysis helps in understanding the trade-offs one
should make by recognizing the trade-offs the market will
make and then applying the newly acquired market knowledge
to the organization’s revenue, profit or share objective.
Conjoint analysis has been effectively functional in many
industries, such as financial services, health care, real estate, air
travel, electronics, computers and smart phones. Because
conjoint analysis helps in comprehending a market’s
preferences, it is applicable to a variety of difficult aspects of
the job, including competitive positioning, pricing, product line

analysis, product development, segmentation, and resource
allocation; conjoint analysis done right is impactful [21].
In a more dictionary definition approach, “Conjoint
analysis is a set of market research techniques that measures
the value the market places on each feature of your product and
predicts the value of any combination of features. Conjoint
analysis is, at its essence, all about features and trade-offs”
[21]. With conjoint analysis, one must ask questions that force
respondents to make trade-offs among features, determine the
value they place on each feature based on the trade-offs they
make and simulate how the market reacts to various feature
trade-offs considered. Extensive attention has been given to
this technique both in academia and industry to quantify
preferences through utility trade-offs among products and
services particularly [26].
These preferences are assumed to be influenced by the
market’s subjective perceptions on the presented options.
Consequently, the preference structure is a function of the
individual’s economic, social, and cultural conditions, which
affect the organization’s decision. Public preferences have an
important role in decision-making because they may in fact
highlight a stark policy trade-off. In choice-based conjoint
analysis, a set of attributes and their respective levels define the
respondents’ choices. Distinctively, the combinations of
attribute levels characterize the choice tasks in conjoint surveys
conducted. A conjoint study leads to a set of part-worth or
benefits, which would measure the relative appeal or worth of
an attribute level. The higher the benefit, the more enviable the
attribute level [21].
B. Decision Trade-Off
Trade-offs is the heart of product management. Whether the
objective is to increase the market share, profit margin or
revenue, the deciding person makes trade-offs—quality vs.
cost, time to market vs. breadth of features, richness of the
offering vs. ease of use, etc. Decision trade-off involves
making a choice between one quality and aspect of an entity to
gain something in return of another quality or entity of an
entity. More particularly, trade-off decisions require a balanced
bearing of which when one commodity increases, its equivalent
entity must decrease. A trade-off decision generally requires
the deciding person to have full comprehension of both the
advantage and disadvantage of a specific option [26].
C. Preferences
People’s preferences are often based on their own
condensation of past experience. Lichtenstien & Slovic [27],
defines preference technically as “the ordering of options (e.g.,
prices and choices) available for decision making which will
result in systematic responses.” The difference between the
first and last option of a prospective customer is based on the
important attribute related to each choice [47]. There are
different types of preferences; preferences based on scenario,
object preference, model preference, etc. Experienced
customers expect that the options and choices currently
available will lead to changes in their preference [52]. Potential
customers’ actions will differ according to what they want, and
therefore the central objects and scenarios of their preference
will sway their decisions. How logically preferences are
connected to each other makes them rational or true based, as
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well as all of the available and related information [14].
Consumer preference is a make or break factor associated with
whether a purchase will be made or not, and, if made, which
specific item will be chosen [30].
D. Purchase Intention
Reference [33] defines intention as “a conscious plan to
carry out a particular behavior and the motivation to perform
it.” Blackwell, Miniand, and Engel [8] defined intentions as
“subjective judgments about how consumers will behave in the
future.” Reference [6] asserted that customers judge the
performance outcomes of using a product/service and then use
this information to form their own succeeding expectations, as
well as relying on the experiences of others through word-of-
mouth. Behavioral intention can be divided into two categories:
economic and social, as further studied by [6]. Economic
behavioral intentions came from activities repeated from their
purchase behavior, while social behavioral intentions are those
that are based on customers’ complaints and engaging in word-
of-mouth communication. Behavioral intention is an indication
of a person’s readiness to perform a behavior [7], and the
relative contributions of attitudes, perceived norms and
perceived behavioral control with regard to a specific intention
are expected to vary from one person to another [51].
E. Purchasing and Procurement
Purchasing refers to the acquisition of goods and services
of a business organization in order to meet the organizational
goals and objectives. Though there are several organizations
that attempt to set standards in the purchasing process,
processes can vary greatly between organizations; Centralized
and Decentralized are the two types of purchasing. Typically
the word purchasing is not used interchangeably with the word
procurement, since procurement typically includes expediting,
supplier quality, and traffic and logistics (T&L) [10].
Specifically, procurement involves the process of acquiring
goods, works, and services, covering both acquisitions from
third parties and from in-house providers. This process starts
from the identification of the needs, through to the end of
service contracts or the end of the useful life of an asset.
Procurement also involves options (supplier) appraisal and the
critical “make or buy” decision which may result in the
provision of services in-house in appropriate circumstances
[29].
The need to contribute insights and describe patterns of
human behavior in organizations or networks against different
contextual backgrounds is what the academic research about
purchasing and supply management wants to address [29].
We are aiming to contribute and build theories that will
help us better understand purchasing and supply chain
management phenomena, in order to provide different
purchasing department of different airlines with some clear
guidelines to make better decisions.
III. RESEARCH METHODOLOGY
A. The conceptual model
Fig. 1 shows the conceptual model used in this study to
establish the attributes.

Fig. 1. Conceptual Model
B. Research Design
The purpose of this study is to identify the attributes of
aviation fuel that affects the purchasing intentions of air travel
organizations. Conjoint analysis is adopted to measure the
potential customer preferences for Jet-A1. Conjoint analysis
has been widely used as a marketing tool to explore consumer
preferences since it was first initiated. Conjoint analysis
requires respondents to rate different scenarios with varying
combinations of attribute levels; in this study, combinations of
fuel attributes are made into scenarios. Moreover, conjoint
analysis is able to create a way to plot the strategic thinking of
customers as it quantifies subjective opinions. This reveals
hidden motivations when purchasing and also forces the
respondents to assess the attributes individually according to
their respective importance by the combinations created for
each scenario. Trade-off decisions are required to be made by
the respondents to actually determine the weight of the attribute
versus another attribute.
C. Sampling
For this study, the researchers deemed survey as the
appropriate tool and will therefore be used as the main
sampling tool. Airlines operating locally shall be chosen as the
sampling frame because this industry consists of all the
affiliated companies of the population of interest. The survey
will be designed with the aim of not just describing the sample,
which will come from the sampling frame, but also describing
the larger population. The survey shall be designed through a
set of questions with the criteria formulated by the researchers
from an interview with these airlines. All data shall be
requested from the air travel industry for analysis. The
proponent will be requesting historical data of their previous jet
fuel suppliers and any details that entail anything about their
decision on the supplier. The interview is expected to yield the
key attributes that influences the airlines’ purchasing intention.
The survey is then constructed based on the output of the
interview conducted. The survey, using conjoint analysis,
consists of a series of scenarios for respondents to assess. For
this study, each scenario is made up of combination of the focal
jet fuel supplier attributes each of which is measured by two
levels: high and low (pertaining to the importance of the given
factor).
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A fractional factorial design will be used by the researchers
to yield the n number of scenario; fractional factorial design
was specially selected to maximize the attributes explored
while minimizing the number of scenarios. The key attributes
and their characteristics that will be used in this experiment
will function as the independent variables. As for the
dependent variables, the researchers will examine the
respondents’ purchase intentions with regard to the jet fuel
combinations described in each of the scenario; The subjects
will be asked to order the eight profiles from the most preferred
to the least preferred.
D. Participants
The sampling size for this research study is unconventional
due to the classified and notable field of the aviation industry.
Random sampling techniques are not applicable for
determination of the number of respondents for this study
because of the limited number of staff in fuel operations and
because there are only a few fraction of personnel from fuel
operations department who are able to answer the survey with
credible background knowledge and over-all know of the entire
fuel operation. The stratum selected by the researchers is
personnel from the top-level management of the fuel operations
department; these are usually the directors, managers, senior
vice president of the fuel operations department, and specialists
for Jet-A1 fuel.
A total number of ten (10) respondents were gathered by
the researchers; three (3) from Philippine Airlines, six (6) from
Cebu Pacific, and one (1) from Air Asia. Although the small
number of respondents determined in the study is questionable
as it may not produce a credible data, the researchers for this
study considered the potential respondents’ background,
responsibilities and how these may affect the survey results. As
established from other previous studies, quality sampling may
be characterized by the number and selection of subjects or
observations. Obtaining a sample size that is appropriate in
both regards is critical for many reasons. While a large sample
size gives more of a representative in a population, the
researchers determined the sample size based on the number of
fuels department personnel who is capable of giving a more
comprehensive data. A quality sample size must consider the
rate of response. Incomplete or illegible responses are not
useful observations. Thus, the total sample size must account
for potential issues that may arise if the researchers take as
many as possible responses without filtering the importance of
purposive sampling. For qualitative studies, where the goal is
to “reduce the chances of discovery failure,” purposive
sampling was the method chosen by the researchers. Purposive
sampling is a common strategy for sampling in qualitative
research studies as it places its respondents’ in groups relevant
to the criteria that fits the research question. Factors that affect
sample size include their job description and responsibilities,
work experience on the specific department, and their decision-
making scope. The researchers determined the essential
inclusion and exclusion criteria for the study population such
that findings can accurately generalize or specify results to the
target group rather than setting a target number of respondents.
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Fig. 2. Factor Development Model
E. Development of Factors
Price and availability are both the most recurring and
constant factor from the selected pool of respondents for the
research, as expected by the researchers from the related
literature when it comes to vehicle purchasing intention. The
researchers correlated the buying intentions of vehicle buyers
to that of an airline’s intention of buying oil as shown in Figure
2. Both aforementioned factors, price and availability, were
validated from the interviews performed by the researchers and
in addition, other factors were also derived from the discussion.
The survey was then developed from the exchange with the top
level management of fuel operations for each airline.
Factor 1: Lower prices for jet fuel are associated with
more positive buying intention.
Buying jet fuel for a lower price compared to the
competitors in the aforementioned industry takes the interest of
all the airlines as interviewed by the researchers. This is
because any organization is targeting a cost-effective system
when it comes to their company expenditures.
Factor 2: A more available jet fuel is associated with more
positive buying intention.
An airline cannot make a purchase of Jet A-1 if the oil
company, either Shell, Petron or Caltex, cannot meet the
airline’s demand. An oil company might be able to offer oil for
a low price but if it’s not available, purchasing fuel is without a
solution; The bigger the oil station and their capability to store
larger number of oil, the more likely it is for them to purchase
the fuel from the oil company.
Factor 3: A more accessible jet fuel is associated with
more positive buying intention.
Transportation fee is one of the additives that is included to
the final price fuel and services that an oil company takes
account of. Of course, the further the oil depot is the higher the
transportation fee added to the price will be.
Factor 4: Better equipped and able manpower that runs the
aviation fuel company is associated with more positive buying
intention.
An equipped and skilled workforce is directly proportional
to servicing a quality fuel work from creating excellent Jet-A1
content down to the superior performance of transferring the
fuel to its end-user (the airlines’ airplanes). A capable staff
entails the great ability to handle fuel superbly, as well.
Factor 5: Better and advanced equipment is associated
with more positive buying intention.
The instruments and devices used by the oil company in
storing and maintaining the oil is a factor that airlines consider
because of the effect it has on Jet-A1. Equipment and facilities
that are not maintained and is a little behind the technology
advancements negatively influences the content and quality of
the fuel itself. Therefore, the overall amenities and overhaul of
the oil company is regarded as an important buying intention
by air travel organizations.
Factor 6: Fuel service that pass, if not exceeds, the quality
standards that the air travel has is associated with more
positive buying intention.
Air travel organizations have standards to be followed and
an oil companies’ oil content and other oil services needs to
pass, if not exceed, the quality standards set by the airline. Fuel
quality entails the oil content of Jet-A1 and overall
performance of service of the companies such as Shell, Petron
or Chevron.
F. Variables
The factors used in this research are based on the answers
of the interview conducted by the researchers. The effects of
price, availability, accessibility, manpower, equipment and fuel
quality on purchase intention with regards to Jet-A1 fuel were

TABLE I. INDEPENDENT FACTORS & THEIR DEFINITIONS

Factors Definition
Price Final cost of fuel according to the oil company
Availability Available supply of oil that the oil company can provide; this is a question of whether Shell, Petron and/or
Chevron is able to meet the fuel demand of an airline.
Accessibility The ease of access and convenience in attaining the Jet A-1
Manpower Educational attainment and capabilities of the oil company’s personnel with regards to providing quality
service; this also includes trainings and seminars their staff has undergone.
Equipment Instruments and devices used by the oil company in storing and maintaining the Jet A-1 fuel; their amenities
and overhaul of the oil company is also included in the factor’s scope.
Fuel Quality Whether the company’s oil content and other fuel services pass the quality standards of the air travel
organization a propos fuel operations; this factor includes the safety measures and/or the risk management
taken by the oil company with regards to fuel handling; this can also mean the ability of the oil company to
deliver aviation fuel on time.

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TABLE II. SCENARIO COMBINATION

Card List
Card ID Price Availability Accessibility Manpower Equipment Fuel Quality

1 Low Low Low High High Low

2 High Low High Low High Low

3 High High Low High Low Low

4 Low Low High High Low High

5 High High High High High High

6 High Low Low Low Low High

7 Low High High Low Low Low

8 Low High Low Low High High

all assessed by asking the respondents to react to eight (8) scenario’s total worth or subtract from it. Most attributes had
scenarios with various combinations of stimuli. Table I gives a positive and higher scores if present or at a high level, and had
summary of the independent variables used in this experiment negative or lower scores if absent or at a low level. Based on
and their specific characteristic A survey using conjoint the results, it could thus be determined which of the attributes
analysis provides a series of scenarios for respondents to had the strongest influence on the choice of the respondents
consider. In this study, each scenario is made up of a when deciding on which jet supplier to choose from.
combination of the six crucial fuel attributes, each of which is
measured with two levels. If a full factorial design is used, and
all possible combinations are presented, the respondents would TABLE III. UTILITY SCORES OF THE ATTRIBUTES
have to consider 64 scenarios (2 × 2 × 2 × 2 × 2 × 2 or 26). The
researchers decided to minimize the number of scenarios as a Utilities
64 scenario survey would be too large for a single respondent Utility Std.
to evaluate. The scenarios were minimized to eight scenarios Estimate Error
with different combinations of the stimuli that were used while
still maintaining orthogonality among the levels. To achieve a Price Low −1.250 0.050
smaller number of scenarios, the fractional factorial design is High −2.500 0.100
adopted so that not all possible combinations are used, but Low 1.650 0.050
Availability
profiles are specially selected to maximize the attributes
explored, while minimizing the number of profiles and thus High 3.300 0.100
this study adopted an orthogonal array design to construct the Accessibility Low 0.800 0.050
eight hypothetical Jet-A1 profiles as used in this study.
Fractional factorial designs can be expressed by the formula High 1.600 0.100
Lk-p, in which: Manpower Low 0.100 0.050
• L: the number of levels of each attribute High 0.200 0.100
Equipment Low 0.850 0.050
• k: the number of factors investigated
High 1.700 0.100
• p: the size of the fraction of the full factorial used.
Fuel Quality Low 2.800 0.050
In this study, we use 1/8 of the full factorial design or 26-3. In High 5.600 0.100
the case of the combinations among these eight models, each
attribute will have six values of High and Low values in order (Constant) −2.925 0.185
to create a balanced profile. Table II shows the eight distinctive
scenarios created for this work, and the related combinations of
attributes were used in the survey.
Table III lists the utility scores for all six attributes. Price
IV. RESEARCH RESULT attribute had a score of −1.250 when low, and −2.500 when
high, as this attribute had a reverse effect. Therefore, it can be
A. Part-worth scores said that the respondents were attracted to Oil Companies that
A part-worth score or utility score was established for each offers lower prices. The second attribute (availability) had a
attribute after generating the Conjoint Analysis Command very high score of 3.300 when the Oil Company can provide
Syntax, and it shows whether an attribute will add to a the amount of Oil needed by the Airline Company, and a score

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TABLE IV. AVERAGE IMPORTANT SCORE
Importance Values
Price 20.371
Availability 18.894
Accessibility 10.060
Manpower 5.515
Equipment 10.941
Fuel Quality 34.219
of 1.650 when it can’t. It can thus be stated that the respondents
prefer a high level of Availability over a low level. The high
level of Accessibility contributed a score of 1.600, while a low
level of accessibility had an effect of 0.800. These results
indicate that a high level of accessibility is preferred by the
respondents. In terms of Manpower, the results showed a score
of 0.200 with regard to high manpower, and 0.100 for low
manpower. This indicates that the respondents prefer an Oil
Company having a well-trained employees. With regard to
equipment, these scored 1.700 when labeled as high and 0.850
when labeled as low. As a result, it can be said that a high level
of equipment is preferred by the respondents. Lastly, the fuel
quality attribute had a score of 2.800 when low, and 5.600
when high, it can be said that the respondents values the high
quality of fuel that the Oil Companies offered. The part- worth
utility scores all indicated that the respondents preferred a high
level of availability, accessibility, manpower, equipment, and a
low level of price. Therefore, the premises from the factor
development (3.5) established by the researchers, Factors 1–6,
were supported.
While the study focuses on acquiring the utility scores of
each attribute, the researchers applied conjoint analysis to
calculate an averaged importance score out of a total of 100.
For instance, if an attribute is given a score of 50, this would
mean that it contributed 50% to the outcome of the consumer’s
decision making. The tallied result from the initial survey is
expected to correlate with the averaged importance score and
yield a similar outcome.
B. Discussion
From conjoint analysis, the attributes developed has proven
that a set of key attributes do affect decisions of airlines in
choosing which oil company to opt for in terms of aviation fuel
supply presented in Table IV confirms that these attributes hold
a weight over the airlines’ decision, thus supporting the
purpose of the study.
V. CONCLUSION AND RECOMMENDATION
A. Conclusion
This study focused on identifying the key attributes of
aviation fuel using local airlines operating in the Philippines as
the subjects. Rather than merely surveying respondents to find
out what they consider to be the most important attributes when
making a decision about choosing a Jet-A1 supplier, this study
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TABLE V. CLASSIFIED IMPORTANCE SCORE
Importance Values
Fuel Quality 34.219
Price 20.371
Availability 18.894
Equipment 10.941
Accessibility 10.06
Manpower 5.515
sought to measure a dependent variable, in this case purchase
intention, toward eight scenarios with different combinations of
the six main attributes. This conjoint approach allowed the
respondents to consider more realistic situations and to take
into account what they believe to be important. As a result, the
outcomes of this study are able to show the relative importance
of each attribute (i.e., the part-worth utility score), rather than
just a comprehensive preference ranking evaluation.
Using conjoint analysis, the researchers are able to
conclude the significant key attributes of jet fuel that heavily
influences the purchasing intention of an airline. Table V and
Figure 3 shows the attributes and their respective importance
score; the attributes are listed according to their importance
with the first attribute having the heaviest importance weight
and the last attribute having the least value of importance
weight. The conjoint analysis conducted in this study
investigates preferences for the jet fuel industry. Within
conjoint analysis respondents rate the oil company’s Jet-A1
services consisting of multiple attributes. Thus, in conjoint
measurement, a respondent considers all factors concurrently
for each attribute combination. Using this analysis, the user
evaluations can be decomposed into separate utilities, or part-
worths. Data collection is, therefore more holistic and more
ecologically valid, because complete situations, rather than
single features, are considered.
In this term, conjoint analyses provide an additional value
to acceptance research since it is possible to obtain an accurate
estimation of user trade-offs between single device
characteristics. Furthermore, it is possible to determine a valid
model of consumer judgments. It is clear that some jet fuel
characteristics are more relevant in the decision process of the
Fig. 3. Average Importance Score

airlines than others. Although the attribute price has the second
heaviest importance weight among the other factors, compared
to Table III, price had a negative value and actually had the
lowest utility score. This means that consumers are willing to
trade-off low price for services that had high level from any of
the five attributes; when combined with other attributes and
given a level as a complete scenario, consumers suddenly shift
their purchasing intention for a more important attribute.
ACKNOWLEDGMENT
There are a number of people without whom this research
might not have been written and to whom we are greatly
indebted: To our parents who never stopped pushing us to do
our best and has been an inspiration to us. To our adviser, Engr.
Venusmar Quevedo, who has opened her life to us for over a
year; to all the local airline companies who opened their doors
and gave us their time so we could gather essential data. And of
course, we would never accomplish any of this without the
help of our Almighty God.
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Internet of Things-Enabled Supply Chain Performance Measurement Model
Abdallah Jamal Dweekat
Departement of Industrial Engineering/Automation and
Systems Research Institute,
Seoul National University,
Seoul, Rebublic of Korea
Email: jamal1002snu.ac.kr
Abstract— Internet of Things is expected to offer promising
solution to transform the operation and the role of many existing
industrial systems. It is also increasingly seen as an engine of
development in many systems and fields. Supply chain
performance measurement is one of these systems that might be
significantly affected by Internet of Things evolution. In the last
few decades, many standards and models have been developed to
measure supply chain performance. However, it has been argued
that these systems still have some problems, such as being static,
short term, lack of holistic approach, and data collection
difficulties, etc.[1-3] [1].
To overcome these problems, this research has introduced a
new Internet of Things-Enabled model to collect information and
communicate things for the sleek of supply chain performance
measurement. Supply Chain Operation Reference model and ISA-
95 standards have been used to analyze supply chains and identify
performance metrics’ data identification queries. The model also
can be used to show the promising and essential role of Internet of
Things technologies in the next generation performance
measurement systems that can be employed to monitor, manage
and control the overall supply chain in real-time and in more
integrated and cooperated way.
Keywords— Internet of Things (IoT); Supply chain Performance
Management SCPM; performance metrics (PM); SCOR; ISA-95.
I. INTRODUCTION
Internet of Things (IoT) arrivals represents a
transformative shift for human, business, and the overall
economy similar to the shift that combining PC introduction.
IoT emergence incorporates other major technology trends
such as data mining cloud computing etc., and goes beyond
them. IoT connection ability surpasses the earlier efforts to
track and control systems such as Radio Frequency
Identification (RFID) as it gives almost limitless adaptability
[4].
‘IoT’ term was initially introduced by Kivin Ashton in
1999 to refer to uniquely identifiable interoperable connected
objects using RFID in P&G (Procter & Gamble) SC [5]. IoT is
expected to transform the operation and role of most of the
existing industrial systems and therefore offer a promising
solutions for all systems related to Supply Chain (SC) such as
manufacturing systems, performance management systems
and others [6].
With the evolution of IoT, new paradigm has been
emerged, “Sensing Enterprise”. The trend identified within
this paradigm is aiming to achieve the seamless integration of
This work was supported by the National Research Foundation of
Korea (NRF) grant funded by the Korea government (MSIP), (No.
2015R1A2A2A03008086). And also by the Automation and Systems Research
Institute (ASRI).
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Prof. Jinwoo Park
Departement of Industrial Engineering/Automation and
Systems Research Institute
Seoul National University,
Seoul, Rebublic of Korea
Email: autofact@snu.ac.kr
business and Information and Communication Technologies
in cyber space [7]. In Sensing Enterprise data acquired
automatically using physical and virtual things, transformed
into multi-dimensional information, analyzed, and organized
in such a way as to provide context awareness and decision
support; and that requires digitalization of enterprise entities,
regardless of their properties: tangible or intangible, simple or
complex . Sensing Enterprise will therefor better incorporate
reactive behavior and provide a direct link between stimuli
and actions [8].
Developing a smart environment for it is the first step
towards developing IoT-enabled SC resource management
system. Such environment can be defined in terms of:
resource identity, visualization and virtualization capabilities,
communication capabilities, and interoperability.
Theoretically, that can be digitally characterized by an
identity unique identifier, a processing unit, a memory, and
networking capabilities. In order to do that, many IoT-
enabling technologies have been developed and ready to be
used in various SC management applications. These
technologies can be summarized into four groups:
identification and tracking technologies such as RFID
systems, barcode, intelligent sensors, communication and
networks technologies such as WAN, LAN, WLAN, etc. and
service management technologies such as storage space,
security management, operational support, etc. which are
recently offered through cloud computing [6, 9, 10].
With all of these IoT-related technologies a large impact
has been and is being made on the new SC information,
communications and management systems. Therefore, IoT
can affect the whole SC in many ways. Firstly, it can develop
the SC reliability by enabling object visibility and real-time
information exchange. Secondly, it can enhance SC
responsiveness and decrease its costs facilitating a real time
optimization for its functions and business process activities.
Thirdly, it can improve the SC assets managements by
tracking resource in real-time. And lastly, it can enhance the
SC agility by speeding up the information flow processes.
Accordingly, IoT technologies offer promising potentials to
address the traceability, visibility, and controllability
challenges in SC. Building on that, this paper introduced an
IoT- Enabled Supply Chain Performance Measurement
System (SCPMS) model. The model can be used to enable
real-time performance measurement in any SC and therefore
enhance more efficient decision making.

II. IoT-ENABELED SC PERFORMANCE
MEASUREMENT MODEL
Efficient SCPMS should have the capability to fulfill three
type of integrations within the SC. Hierarchical Integration
which means integrating the SC activities over strategic, tactical
and operational planning horizon, Special Integration which
means integrating all of the supply chain activities across its
geographically spread markets and Functional Integration which
means integrating the supply chain functions (i.e. purchasing,
manufacturing, transportation, and warehousing) [11].
Achieving such integrations can enable efficient SC decisions.
However, in the current dynamic markets, that became directly
related to the ability of seeing and perceiving objects in its real
time and to collect and analyze all information about it. In this
research we are going to introduce a model to enable such
abilities for the sake of SCPMS (Fig. 1).
Fig. 1. IoT- Enabled SCPMS Model
This model uses SCOR model and ISA-95 standard as tools
to finding out the data sources required to calculate the
performance metrics which should be decided and identified by
management. The model also will be used to show the
promising and essential role of the IoT technologies in the next
generation performance measurement systems. A detailed
explanation of model steps are given bellow.
1- Identify the supply chain scope and the metrics that reflects
its strategic objectives.
2- Configure the SC using Supply Chain Operation Reference
(SCOR) model [12].
By shorting [13]’s procedure to configure, any distinct SC
can be represented using SCOR Model processes in three
steps.
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(1) Depict SC entities geographically using business
processes level-1. And develop SC business processes
Level-2 diagram for all SC entities [6].
(2) All SC entities related to the SC performance metrics
under concern should be more deeply analyzed. Hence,
for each entity, a business processes Level-3 flowchart
should be configured.
(3) In this step, it is the place where the inputs and outputs
for each Level-3 process in previous step can be
identified. Using SCOR Model manual (i.e. from
SCOR Model revision 10 and 11, it is easy to find out
each process inputs and outputs, and hence deciding
which processes should be monitored or measured to
collect the required data).
3- By deciding metric’s Data related processes, an analysis
should be conducted using ISA-95 standards. ISA-95
defines three main objects information models: personnel
model, material model and equipment model. At least one
of these models can be used to identify the shape and
characteristics of the information under concern.
4- The outputs of the previous steps are exactly the data that
we are interested to collect as well as the objects or things
that hold or produce these data. And it is required to
develop the system that can enable collecting and
communicating these data. Therefore, this step is the most
important one in this model. The roles of IoT technologies
to facilitate and promote SCPM processes are expressed in
three diminutions. First it decreases the data collection time
to be almost zero (real-time data). Second it increases data
efficiency, (i.e. increase the efficiency of the many
processes that can handle the data such as storage, access,
filtering, sharing, etc.). Third it enables real-time data
communication among all of the SC objects and entities.
Accordingly, this leads to fulfill the three types of
integration mentioned at the beginning of this section. Fig.
2 shows a general SC IoT architecture. To apply it to this
research approach, we need to think about how to
communicate the objects identified in step 3 and its
information among all of the entities using this SC IoT
architecture and in the same time consider each entity needs
and authorities. That can be primarily done in three steps.
Fig. 2: Supply Chain IoT Architecture.

(1) In the first step, every object should be uniquely
identified. GS1 system and IPv6 (Internet Protocol
version 6) can perfectly satisfy this requirement. GS1
is a system what provides for the use of unambiguous
numbers to identify goods, services, assets, and
locations worldwide. These numbers can be
represented in barcodes or tags in order to enable their
electronic reading wherever required in business
processes [14]. While IPv6 is the most recent version
of the (IP) Internet Protocol; it is the communications
protocol that provides an identification and location
system for computers on networks and routes traffic
across the Internet [15].
(2) The second step is to find out the sensing or tracking
system that can enable collecting real-time data from
objects and enhance the communication between them.
Many technologies have been developed and are being
developed for this purpose. RFID and WSN are the
most popular and advance technologies in this field.
Commonly, sensing and tracking systems includes
short distance connecting network technologies such as
Wi-Fi, ZigBee, and Bluetooth, etc. [6].
(3) The last step is developing the internet-based
communicating network. To let all entities perceive
and communicate all information required to measures
its local performance as long as the whole SC
performance simultaneously.
III. RESULTS AND FUTURE WORK
To develop SCPMS it is required to coordinate SC in order
to achieve the three type of integration, operational, special and
hierarchical integration. Having a performance measurement
systems that satisfying these requirements and can serve in real-
time has been a kind of dream in the past few decades. However,
this has become a reality with IoT emerging as a technology
enabling objects to be perceived in the world of industry.
This work introduced a new model that can be used to
enable SCPM in real time and in efficient way. The model use
SCOR as the tool to find out metrics data. In other words, data
collection will be assembled directly from SC business
processes along all of its entities and that would achieve the
desired integration. To directly connect the operational level,
the approach uses ISA-95 standards to identify the information
and its holders, represented by an object or thing which can be
seen and perceived by IoT technology, and therefore enabling
automatic and real-time data collection. In short, this model,
showed that IoT has capability to enable real time data
collection. Increase data efficient as long as enable the real-time
communication within the supply chain.
Further researches are recommended in order to validate
the proposed model using case study. This work revealed that
IoT use in SCPM is a fruitful research topic and there is a need
of creative efforts to develop applications in this area. Industry
practitioners, IT experts, and researchers might play a
significant role in building a comprehensive real-time
performance measurement systems that may help to address
current and future challenges in SC management.
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ACKNOWLEDGMENT
The authors would like to thank Mr. Young-Woo Kim and
Mr. Gyusun Hwang for their help. This work was supported by
the National Research Foundation of Korea (NRF) grant funded
by the Korea government (MSIP) (No.
2015R1A2A2A03008086). And also by the Automation and
Systems Research Institute (ASRI) in Seoul National University
in the form of resources and administrative support.
REFERANCES
[1] A. Gunasekaran and B. Kobu, "Performance measures
and metrics in logistics and supply chain management:
a review of recent literature (1995–2004) for research
and applications," International Journal of Production
Research, vol. 45, pp. 2819-2840, 2007.
[2] A. Gunasekaran, C. Patel, and R. E. McGaughey, "A
framework for supply chain performance
measurement," International journal of production
economics, vol. 87, pp. 333-347, 2004.
[3] N. Agami, M. Saleh, and M. Rasmy, "Supply chain
performance measurement approaches: Review and
classification," Journal of Organizational Management
Studies, vol. 2012, pp. 1-20, 2012.
[4] F. Burkitt. (2015, 7 Jan. 2016). A strategist's guide to
the Internet of Things. Strategy+Business. Available:
http://www.strategy-
business.com/article/00294?gko=a9303
[5] A. Kevin. (2009, 15 Dec. 2015). That'Internet of
Things' Thing, in the real world things matter more
than ideas. RFID Journal. Available:
http://www.rfidjournal.com/articles/view?4986
[6] L. Da Xu, W. He, and S. Li, "Internet of things in
industries: a survey," Industrial Informatics, IEEE
Transactions on, vol. 10, pp. 2233-2243, 2014.
[7] M. Moisescu and I. Sacala, "Towards the development
of interoperable sensing systems for the future
enterprise," Journal of Intelligent Manufacturing, vol.
27, pp. 33-54, 2016.
[8] F. Cluster, "Future Internet Enterprise Systems:
Research Roadmap 2025," Final Report, Version, vol.
2, 2012.
[9] M. Sepehri, "A grid-based collaborative supply chain
with multi-product multi-period production–
distribution," Enterprise Information Systems, vol. 6,
pp. 115-137, 2012.
[10] F. Tao, L. Zhang, V. Venkatesh, Y. Luo, and Y. Cheng,
"Cloud manufacturing: a computing and service-
oriented manufacturing model," presented at the
Proceedings of the Institution of Mechanical Engineers,
Part B: Journal of Engineering Manufacture, 2011.
[11] J. Shapiro, Modeling the supply chain. Duxbury:
Wadsworth Group, 2001.
[12] S.-C. Council, "Supply-Chain Operations Reference
Model: version 11.0," ed, 2012.
[13] H. Stadtler, C. Kilger, and H. Meyr, Supply Chain
Management and Advanced Planning. Berlin: Springer,
2015.
[14] GS1, "GS1 General Specifications Version, 16," ed,
2016.
[15] A. J. Jara, L. Ladid, and A. F. Gómez-Skarmeta, "The
Internet of Everything through IPv6: An Analysis of
Challenges, Solutions and Opportunities," JoWUA, vol.
4, pp. 97-118, 2013.

Forecasting Method Under the Introduction of a
Day of the Week Index to the Daily Shipping Data
of Sanitary Materials
Komei Suzuki1
1.Graduate School of Humanities and Social Sciences,
Shizuoka University, 836, Ohya, Suruga-ku, Shizuoka-Shi,
Shizuoka-Ken, 422-8529, Japan
Hirotake Yamashita2
2. College of Business Administration and Information
Science, Chubu University,1200 Matsumoto-cho Kasugai,
Aichi,487-8501, Japan
Abstract— Correct sales forecasting is indispensable to
industries. In industries, how to improve forecasting
accuracy such as sales, shipping is an important issue.
There are many researches made on this. In this paper, we
propose a new method to improve forecasting accuracy
and confirm them by the numerical example. Focusing
that the equation of exponential smoothing method(ESM)
is equivalent to (1,1) order ARMA model equation, a new
method of estimation of smoothing constant in exponential
smoothing method is proposed before by us which satisfies
minimum variance of forecasting error. In this paper, “a
day of the week index” is newly introduced for the daily
data and the forecasting is executed to the manufacturer’s
data of sanitary materials. We have obtained good result.
Keywords— Minimum Variance, Exponential Smoothing
Method, Forecasting, Trend, Sanitary Materials
Introduction
1. INTRODUCTION
Correct sales forecasting is indispensable to industries.
Poor sales forecasting accuracy leads to increased inventory
and prolonged dwell time of product.
Many methods for time series analysis have been
presented such as Autoregressive model (AR Model),
Autoregressive Moving Average Model (ARMA Model) and
Exponential Smoothing Method (ESM) (Box Jenkins [1]),
(R.G.Brown[2]), (Tokumaru et al.[3]), (Kobayashi[4]).
Among these, ESM is said to be a practical simple method.
We proposed a new method of estimation of smoothing
constant in ESM before (Takeyasu et al. [5]). Focusing that
the equation of ESM is equivalent to (1,1) order ARMA model
equation, a new method of estimation of smoothing constant
in ESM was derived. In this paper, utilizing above stated
method, a revised forecasting method is proposed. “a day of
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Kazuhiro Takeyasu3
3. College of Business Administration, Tokoha
University,325 Oobuchi, Fuji City, Shizuoka, 417-0801,
Japan
the week index (DWI)” is newly introduced for the daily data
and a day of the week trend is removed. Theoretical solution
of smoothing constant of ESM is calculated for both of the
DWI trend removing data and the non DWI trend removing
data. Then forecasting is executed to the manufacturer’s data
of sanitary materials. This is a revised forecasting method.
Variance of forecasting error of this newly proposed method is
assumed to be less than those of the previously proposed
method. The rest of the paper is organized as follows. In
section 2, ESM is stated by ARMA model and estimation
method of smoothing constant is derived using ARMA model
identification. The combination of linear and non-linear
function is introduced for trend removing in section 3. “a day
of the week index (DWI)” is newly introduced in section 4.
Forecasting is executed in section 5, and estimation accuracy
is examined.
2. DESCRIPTION OF ESM USING ARMA MODEL[1]
In ESM, forecasting at time t +1 is stated in the following
equation.
xˆ t +1 = xˆt + α (xt − xˆt )
(1)
= αxt + (1 − α )xˆt
Here,
xˆt +1 : forecasting at t + 1
xt : realized value at t
α : smoothing constant (0 < α < 1)
(1) is re-stated as:
∞
xˆt +1 = α (1 − α ) xt −l
l
(2)
l =0
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p
By the way, we consider the following (1,1) order ARMA ~
model. xt = xt +  a i xt − i (8)
i =1
xt − xt −1 = et − βet −1 (3) q
~
xt = et +  b j et − j (9)
Generally, ( p, q ) order ARMA model is stated as: j =1
p q
x t +  a i x t − i = e t +  b j et − j (4) ~
x ~
i =1 j =1
We express the autocorrelation function of t as r k and from
(8), (9), we get the following non-linear equations which are
well known[3].
Here, q−k
{xt } : Sample process of Stationary Ergodic Gaussian Process r~k = σ e2  b jbk + j (k ≤ q)
x(t ) t = 1,2,  , N ,  j =0

{et } : Gaussian White Noise with 0 mean σ e2 variance 0 (k ≥ q + 1) (10)

MA process in (4) is supposed to satisfy convertibility
q
condition.
1. Utilizing the relation that:
r~0 = σ e2  b 2j
j =0
E[et et −1 , et −2 ,] = 0
For these equations, recursive algorithm has been developed.
we get the following equation from (3).
In this paper, parameter to be estimated is only b1 , so it can
be solved in the following way.
xˆt = xt −1 − βet −1 (5) From (3) (4) (7) (10), we get:
2. Operating this scheme on t +1, we finally get: q =1
a1 = −1
xˆt +1 = xˆt + (1 − β )et
(6) b1 = − β = α − 1
= xˆt + (1 − β )(xt − xˆ t ) (11)
~ (
r = 1 + b2 σ 2
0 1 ) e

If we set 1 − β = α , the above equation is the same with (1), r~1 = b1σ e2
i.e., equation of ESM is equivalent to (1,1) order ARMA If we set:
model, or is said to be (0,1,1) order ARIMA model because 1st ~
r
order AR parameter is −1 (Box Jenkins [1]), (Tokumaru et ρ k = ~k (12)
al.[3]). r 0
Comparing with (3) and (4), we obtain: the following equation is derived.
a1 = −1 b1
ρ1 = (13)
b1 = −β 1 + b12
From (1), (6), We can get b1 as follows.
α = 1− β 1 ± 1 − 4 ρ12
Therefore, we get: b1 = (14)
2 ρ1
a1 = −1
(7) In order to have real roots, ρ1 must satisfy:
b1 = − β = α − 1
From above, we can get estimation of smoothing constant 1
ρ1 ≤ (15)
after we identify the parameter of MA part of ARMA model. 2
But, generally MA part of ARMA model become non-linear b1 must satisfy:
equations which are described below. From invertibility condition,
Let (4) be:
b1 < 1

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From (13), using the next relation,

(1 − b1 )2 ≥ 0
( )
y = α1 (a1 x + b1 ) + α 2 a2 x 2 + b2 x + c2 　
(21)
(1 + b1 )2 ≥ 0 ( )
+ α 3 a3 x3 + b3 x 2 + c3 x + d3 　
(15) always holds. 0 ≤ α 1 ≤ 1　　, 　
　 0 ≤ α 2 ≤ 1　　, 　
0 ≤ α3 ≤ 1
As (22)
α1 + α 2 + α 3 = 1
α = b1 + 1
b1 is within the range of: as the combination of linear and 2nd order non-linear and 3rd
order non-linear function.
− 1 < b1 < 0
Trend is removed by dividing the data by (21).
Finally we get:

1 − 1 − 4 ρ12
b1 = 4. A DAY OF THE WEEK INDEX
2 ρ1
(16)
1 + 2 ρ1 − 1 − 4 ρ12 “a day of the week index (DWI)” is newly introduced for the
α= daily data of sanitary materials. The forecasting accuracy
2 ρ1 would be improved after we identify the “a day of the week
index” and utilize them. This time in this paper, the data we
which satisfy above condition. Thus we can obtain a handle consist by Monday through Sunday, we calculate
theoretical solution by a simple way. DWI j ( j = 1,  ,7 ) for Monday through Sunday.
Here
ρ1 must satisfy:
For example, if there is the daily data of L weeks as
1 stated bellow:
− < ρ1 < 0 (17)
2
in order to satisfy 0 < α <1. {x } (i = 1,, L ) ( j = 1,,7 )
ij

Focusing on the idea that the equation of ESM is equivalent to

(1,1) order ARMA model equation, we can estimate
smoothing constant after estimating ARMA model parameter. 3. where xij ∈ R in which L means the number of weeks
It can be estimated only by calculating 0th and 1st order (Here L = 10 ), i means the order of weeks ( i -th week), j
autocorrelation function. means the order in a week ( j -th order in a week; for example
3.TREND REMOVAL METHOD j = 1 : Monday, j = 7 : Sunday) and xij is Daily shipping
data of sanitary materials. Then, DWI j
is calculated as
As trend removal method, we describe the combination of
linear and non-linear function. follows.
[1] Linear function
1 L
We set:
 xij
L i =1
DWI j = (23)
y = a1 x + b1 1 1 L 7
(18) ⋅   x ij
as a linear function. L 7 i =1 j =1
[2] Non-linear function DWI trend removal is executed by dividing the data by (23).
We set: Numerical examples both of DWI removal case and non-
removal case are discussed in section 5.
y = a2 x2 + b2 x + c2 (19)
5. FORECASTING THE SANITARY MATERIALS
y = a3 x3 + b3 x2 + c3 x + d3 (20) DATA
as a 2nd and a 3rd order non-linear function. 5.1. Analysis Procedure
[3] The combination of linear and non-linear function The shipping data of 2 cases from January 31, 2012 to April 2,
We set: 2012 are analyzed. Analysis procedure is as follows. There are
68 daily data for each case. We use 49 data(1 to 49) and
remove trend by the method stated in section 3. Then we
calculate a day of the week index (DWI) by the method stated
in section 4. After removing DWI trend, the method stated in

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section 2 is applied and Exponential Smoothing Constant with Product Case1 1.00 0.00 0.00
minimum variance of forecasting error is estimated. Then 1 B Case2 1.00 0.00 0.00
step forecast is executed. Thus, data is shifted to 2nd to 50th
and the forecast for 51st data is executed consecutively, which As a result, we can observe the following two patterns.
finally reaches forecast of 63rd data. To examine the accuracy ① Selected liner model:
of forecasting, variance of forecasting error is calculated for Product A Case2, Product B Case1, Product B Case2
the data of 50th to 63rd data. Final forecasting data is obtained ② Selected 2nd order model:
by multiplying DWI and trend. Product A Case1
Forecasting error is expressed as: Graphical charts of trend are exhibited in Figure 5-3 to 5-4.
ε i = xˆi − xi (24)

N
1
ε =
N ε
i =1
i (25)

Variance of forecasting error is calculated by:

2
1 N
σε =
2
(εi − ε )
N −1 i=1
(26)

In this paper, we examine the two cases stated in Table 5-1.

Fig. 5-3. Daily Shipping Data of Product A
Table 5-1. The combination of the case of trend removal and
DWI trend removal
Case Trend DWI trend
Case1 Removal Removal

Case2 Removal Non removal

5.2. Trend Removing

Trend is removed by dividing original data by (21). Here, the
weight of α1 and α 2 are shifted by 0.01 increment in (21)
which satisfy the equation (22). The best solution is selected Fig. 5-4. Daily Shipping Data of Product B
which minimizes the variance of forecasting error. Estimation
results of coefficient of (18), (19) and (20) are exhibited in 5.3. Removing Trend by DWI
Table 5-2. Data are fitted to (18), (19) and (20), and using the After removing trend, a day of the week index is calculated by
least square method, parameters of (18), (19) and (20) are the method stated in 4. Calculation result for 1st to 49th data is
estimated. Estimation results of weights of (21) are exhibited exhibited in Table 5-4.
in Table 5-3. The weighting parameters are selected so as to
minimize the variance of forecasting error. Table 5-4. a day of the week index
Table 5-2. Coefficient of (18),(19) and (20) a day of the week index
Case
Thu. Fri. Sat. Sun. Mon. Tue. Wed.
Produ Case
ct A 1 1.010 1.209 0.736 1.142 0.875 0.797 1.230
1st 2nd 3rd
Produ Case
1.231 0.382 0.863 1.154 1.049 1.196 1.125
a1 b1 a2 b2 c2 a3 b3 c3 d3 ct B 1

Product 0.15 23.95 0.01 -0.42 28.80 -0.00 0.09 -1.97 35.57
A
5.4. Estimation of Smoothing Constant with Minimum
Product
B
0.27 15.85 0.01 -0.35 21.15 0.00 -0.10 1.93 11.16 Variance of Forecasting Error
After removing DWI trend, Smoothing Constant with
Table 5-3. Weights of (21) minimum variance of forecasting error is estimated utilizing
(16). There are cases that we cannot obtain a theoretical
Case α1 α2 α3 solution because they do not satisfy the condition of (17). In
Product Case1 0.41 0.59 0.00 those cases, Smoothing Constant with minimum variance of
A Case2 1.00 0.00 0.00 forecasting error is derived by shifting variable from 0.01 to

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0.99 with 0.01 interval. Calculation result for 1st to 49th data Table 5-6. Variance of Forecasting Error
is exhibited in Table 5-5. Case Variance of Forecasting Error
Product A Case1 309 *
Table 5-5. Estimated Smoothing Constant with Minimum
Variance Case2 378
Product B Case1 981 *
Case ρ1 α 995
Case2
Case1 -0.4703 0.30
Product A
Case2 -0.0832 0.92
Case1 -0.1432 0.85 6. CONCLUSIONS
Product B
Case2 -0.2008 0.79
Correct sales forecasting is indispensable to industries.
Focusing on the idea that the equation of exponential
5.5. Forecasting and Variance of Forecasting Error
smoothing method(ESM) was equivalent to (1,1) order ARMA
Utilizing smoothing constant estimated in the previous section,
model equation, a new method of estimation of smoothing
forecasting is executed for the data of 50th to 63rd data. Final
constant in exponential smoothing method was proposed
forecasting data is obtained by multiplying DWI and trend.
before by us which satisfied minimum variance of forecasting
Variance of forecasting error is calculated by (26).
error.
Forecasting results are exhibited in Figure 5-5 to 5-6.
In this paper, “a day of the week index (DWI)” is newly
introduced for the daily data and a day of the week trend is
removed. Theoretical solution of smoothing constant of ESM
was calculated for both of the DWI trend removing data and
the non DWI trend removing data. Then forecasting was
executed on these data.
Regarding both data, the forecasting accuracy of case1 (DWI
is imbedded) was better than those of case 2 (DWI is not
imbedded). It can be said that the introduction of DWI has
worked well. It is our future works to ascertain our newly
proposed method in many other cases. The effectiveness of
this method should be examined in various cases.
Fig. 5-5. Forecasting Results of Product Ａ
REFERENCES

[1] Box Jenkins: Time Series Analysis Third Edition (Prentice

Hall, 1994)
[2] R.G. Brown: Smoothing, Forecasting and Prediction of
Discrete – Time Series (Prentice Hall, 1963)
[3] Hidekatsu Tokumaru et al.: Analysis and Measurement –
Theory and Application of Random data Handling (Baifukan
Publishing, 1982)
[4] Kengo Kobayashi: Sales Forecasting for Budgeting
(Chuokeizai-Sha Publishing, 1992)
Fig. 5-6 Forecasting Results of Product B
[5] Kazuhiro Takeyasu and Kazuko Nagao: Estimation of
Smoothing Constant of Minimum Variance and its Application
Variance of forecasting error is exhibited in Table 5-6. to Industrial Data. Industrial Engineering and Management
Systems Vol. 7, No. 1 (2008), 44-50.

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Text Mining Analysis on the Questionnaire

Investigation for High School Teachers’ Work Load
Kazuhiro Takeyasu Tatsuya Oyanagi
Tokoha University Hachinohe Gakuin University
Shizuoka, Japan Aomori, Japan
e-mail: takeyasu@fj.tokoha-u.ac.jp e-mail: oyanagi-t@hachinohe-u.ac.jp

Yasuo Ishii Daisuke Takeyasu

Yamato University The Open University of Japan
Osaka, Japan Chiba, Japan
e-mail: y-ishii@oiu.jp e-mail: take1111@hotmail.co.jp

Abstract－High School teachers in Japan are sending very
busy days on their daily works including teaching, support for
the club activities and deskwork. Among them, they share a lot
of time for managing the club actives of students compared with
other countries. School Social Worker can coordinate the
professionals out of school and can help teachers by decreasing
their burden on that area. There are few related papers
concerning the support of club activities by utilizing the
professionals outside. In this paper, a questionnaire investigation
is executed in order to clarify their current condition and their
consciousness, and to seek the possibility of utilizing school social
worker for their support. Fundamental statistical analysis and
Text Mining Analysis are performed. Some interesting and
instructive results were obtained.
Key Words－High school teacher, Text Mining Analysis, School
Social Worker
function. For example, H. Konyuba (2011) analyzed the
teacher’s sparing time for club activities and pointed out that
there is a difference between the sports club and the culture
club. K.Yonekawa (2011) discussed the mental health support
by school social worker. M.S.Kelly et al. (2010) made School
Social work survey and derived instructive insight.
In this paper, a questionnaire investigation is executed in
order to clarify their current condition and their consciousness,
and to seek the possibility of utilizing school social worker for
their support. Fundamental statistical analysis and Text
Mining Analysis are performed. Some interesting results were
obtained.
The rest of the paper is organized as follows. Outline of
questionnaire investigation is stated in section 2. Text Mining
Analysis is conducted in section 3 which is followed by the
Remarks of section 4.

1. INTRODUCTION 2. OUTLINE AND THE BASIC STATISTICAL RESULTS OF THE

Teacher at High school / Junior High School in Japan are
sending very busy days in general on their daily works
including teaching, support for the club activities and
deskwork. Among them, they share a lot of time for managing
the club actives of students compared with other countries.
There are many researches made on School Social Workers’
QUESTIONNAIRE RESEARCH
2.1 OUTLINE OF THE QUESTIONNAIRE RESEARCH
We make a questionnaire investigation for the Support of
High School Teachers by the School Social Worker. The
outline of the questionnaire research is as follows (Table 2.1).

TABLE 2.1 OUTLINE OF THE QUESTIONNAIRE RESEARCH

(1) Scope of High School Teachers, 7 High Schools in Aomori Prefecture,

investigation Japan
(2) Period January ～March 2014
(3) Method Leave until called for
(4) Collection Number of distribution 231
Number of collection 170(collection rate 73.6%)
Valid answer 170

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eous 3 （ Q1-2-2 53
2.2 BASIC STATISTICAL RESULTS Within 1 3.5 Not filled 1.7
④ -5）
Now, we show the main summary results by single Experien year 3 in 6
variable (Table 2.2). ce as a 1-2 years 2.9
Table 2.2 The main summary results by single variable (3) Course（Q1-2）（％）
teacher 4
(1)Attribute（Q4）（％） ⑤ How Within 1 4.7 （Q4-4） 3-4 years 11. Ordinary 31.
year 1 ①Course
many 18 course 76
① Sex Male 64. years are 1-2 years 6.4 5-9 years 14. Technical 31.
（Q 12 you 7 71 course 76
4-1） Female 31. working 3-4 years 12. More than 67. General 5.2
76 for the 94 10 years 06 course 9
Not filled 4.1 present 5-9 years 18. Not filled 0.5 Profession 14.
in 2 school? 24 in 8 al course 12
② Age 20-29 16. （Q4-5） More than 57. Ordinary/ 17.
（Q 47 10 years 09 Profession 06
4-2） 30-39 28. ⑥ How Adviser 86. al course
82 about the 47
40-49 22. sort of Deputy 11.
35 job? Adviser 18 3. TEXT MINING ANALYSIS
50-59 29. （ Q1-2-2 Miscellan 2.3 Now, we make analysis utilizing “Text Analytics for Surveys”
41 -3） eous 5 by focusing important keywords found in Key Graph. Key
60- 1.7 (2) Status of the club Graph is a method to visualize the data structure using key
6 activity（2-2-3,4）（％） words.
First of all, we explain the abbreviation form in the following
Not filled 1.1 Yes 18.
① Is the figures. If the sentence is stated in the figure as it is, it
in 9 82
club becomes too complicated and we can hardly identify them.
③ Posi Deputy 3.5
strong Therefore the abbreviated form is introduced in each figure. In
tion Principal 3
enough to Cannot 17. those figures, the character “1”, “2”, “3” at each word means:
（Q participat say either 06
“1”: Affirmative / It is better to do so. I think so.,“2”:
4-3） a person 8.2 e in the 62.
Neutral /Not either,
in charge 4 national 94
“3”: Negative / It is not better to do so. I do not think so.
of sport No
education For example, the abbreviated form is expressed as follows.
meet? “1”FeelItBurdenToTeach, “2”FeelItBurdenToTeach,
al affairs
（ Q1-2-2 “3”FeelItBurdenToTeach
Teacher 74. Not filled 1.1
-4）
71 in 8 3.1 CONSCIOUSNESS FOR THE CLUB ACTIVITIES AND THE
Lecturer 9.4 Yes 52. DAILY WORKS（Q1-2&Q2）
② Is the
1 94
Assistant 1.1 club Cannot 31. The Key Graph analysis is executed selecting the item of
activity Q1-2 “Current Condition of Club Activities” and Q2
8 say either 76
active? “Consciousness for the daily works”. Co-occurrence
Miscellan 2.9 No 13.
probability is utilized for the analysis of co-appearance rate.

FIGURE 3.1 CONSCIOUSNESS FOR THE CLUB ACTIVITIES AND THE DAILY WORKS（Q1-2&Q2）

279

From Figure 3.1, we can extract 2 clusters. The cluster located
in the upper middle is a clear one which shows that “Adviser
in the non-strong club” has a strong co-occurrence rate with
“ 3” Handling Students Performance, “3”Teaching, “ 3”
Preparing Teaching, “3” Club Activities, “3” Committee
Guidance, “3” Class Management and “3” PTA meeting,
where these mean that they do not feel burden to such daily
works. On the other hand, we can observe the second cluster
in the left downward in the figure. Those who feel it burden
FIGURE 3.2 CONSCIOUSNESS FOR THE DAILY WORKS（Q2）
From Figure 3.2, we can observe two clusters. Those who
do not feel it burden for the daily works do not feel it burden
for each job (Right hand side of the figure). While those who
feel it burden for the daily works feel it burden for each job
(Left hand side of the figure).
FIGURE 3.3 CONSCIOUSNESS FOR GUIDING THE CLUB ACTIVITIES（Q3）
One strong cluster can be found from Figure 3.3. “Feel
Worthwhile” has a high co-occurrence rate with “Better for
the professionals to Guide”, “Want the person to
consult with”, “Struggling in Technical Guidance” and
“Struggling in Mental Guidance”. Therefore it is
expected to decrease the burden by utilizing professionals
outside.
280
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for the daily works feel it burden for other jobs. In particular,
those feel it burden for “Handling Students Performance”
also feel it burden for “Teaching”, “Preparing Teaching”,
“Class Management”, and “PTA meeting”.
3.2 CONSCIOUSNESS FOR THE DAILY WORKS（Q2）
In this section, relationship among items in “Consciousness
for the daily works” is analyzed.
3.3 CONSCIOUSNESS FOR GUIDING THE CLUB ACTIVITIES（Q3）
Focusing on Q3 “Consciousness for guiding the club
activities”, relationship among items is pursued.
3.4 CONSCIOUSNESS FOR THE DAILY WORKS AND
CONSCIOUSNESS FOR GUIDING THE CLUB ACTIVITIES（Q2&Q3）
The Key Graph analysis is executed selecting the item of
Q2 “Consciousness for the daily works” and Q3
“Consciousness for guiding the club activities”.
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FIGURE 3.4 CONSCIOUSNESS FOR THE DAILY WORKS” AND CONSCIOUSNESS FOR GUIDING THE CLUB ACTIVITIES（Q2&Q3）

From Fig.3.4, we can observe one strong cluster and the

second two clusters. Strong cluster located at the center is the
one that they do not feel it burden for the daily works. The
cluster located in the right hand downward is the one that they
feel it burden for the daily works. Connecting item for each
cluster is “Feel Worthwhile”. This item is a key word for
solving problem.
3.5 CONSCIOUSNESS FOR THE CLUB ACTIVITIES AND
CONSCIOUSNESS FOR GUIDING THE CLUB ACTIVITIES
（ Q1-2&Q3）
In this section, Consciousness for the club activities and
Consciousness for guiding the club activities（Q1-2&Q3）are
analyzed in order to search the relationship between these and
the key word: “Feel Worthwhile”.

FIGURE 3.5 CONSCIOUSNESS FOR THE CLUB ACTIVITIES AND CONSCIOUSNESS FOR GUIDING THE CLUB ACTIVITIES（Q1-2&Q3）

From Figure 3.5, we can find one strong cluster. “Feel mental guidance and it is better for the professionals to guide
Worthwhile” has a high co-occurrence rate with “Club club activities.
Activities is active”, “Better for the professionals to
Guide”, “Not Inexperience” and “Adviser”, and a rather 3.6 CURRENT HEALTH CONDITION（Q4-15,16,17）
high co-occurrence rate with “Struggling in Mental Here, Current Health Condition（Q4-15,16,17）is analyzed.
Guidance”. We can see that even if they feel worthwhile to
guide club activities, many of think that they are struggling in

FIGURE 3.6 CURRENT HEALTH CONDITION（Q4-15,16,17）

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From Figure 3.6, we can find one strong cluster. “Good
Physical Condition”, “Progressing Smoothly”, and
“Living a Full Life” have a high co-occurrence rate.
4. REMARKS
In this paper, text mining method is applied and the
followings are the main results.
(1) “Adviser in the non-strong club” has a strong
co-occurrence rate with “ 3” Handling Students
Performance, “3”Teaching, “3” Preparing Teaching, “3”
Club Activities, “3” Committee Guidance, “3” Class
Management and “3” PTA meeting, where these mean
that they do not feel burden to such daily works. On the
other hand, those who feel it burden for the daily works
feel it burden for other jobs.
(2) “Feel Worthwhile” has a high co-occurrence rate with
“Better for the professionals to Guide”, “Want the
person to consult with”, “Struggling in Technical
Guidance” and “Struggling in Mental Guidance”.
Therefore it is expected to decrease the burden by
utilizing professionals outside.
(3) “Male” has a high co-occurrence rate with “Feel
Worthwhile”, ”Married”, “Experience 5~10 years”,
“Present School 5~10 years” and “Teacher”. These
suggest that married male teachers who are working long
have the high possibility to feel worthwhile.
(4) “Good Physical Condition”, “Progressing
Smoothly”, and “Living a Full Life” have a high
co-occurrence rate. Keeping a good health condition
makes a great influence to having the feeling of
“Worthwhile”.
“Feel Worthwhile” has a high co-occurrence rate
“Club Activities is active”, “Better for
professionals to Guide”, “Not Inexperience”
“Adviser”, and a rather high co-occurrence rate
REFERENCE
[1] Hideyuki Konyuba （ 2011 ） ,“Analysis on teachers' workload and
development of school organization: focusing on the school club
activities”, National Institute for Educational Policy Research, 140,
pp.181-193.
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Keeping a good health condition makes a great influence to
having the feeling of “Worthwhile”.
“Struggling in Mental Guidance”. We can see that even if
they feel worthwhile to guide club activities, many of think
that they are struggling in mental guidance and it is better for
the professionals to guide club activities.
We can find a cluster that they do not feel it burden for the
daily works. On the other hand, there is also a cluster that they
feel it burden for the daily works. Connecting item for each
cluster is “Feel Worthwhile”. This item is a key word for
solving problem. To promote to feel worthwhile by decreasing
burden would be an essential function to be investigated. To
introduce outer professionals in guiding the club activities is
one of the solutions for that.
5. CONCLUSION
High School teachers in Japan are sending very busy days on
their daily works including teaching, support for the club
activities and deskwork. Among them, they share a lot of time
for managing the club actives of students compared with other
countries. In this paper, questionnaire investigation is
executed in order to clarify their current condition and their
consciousness, and to seek the possibility of utilizing school
social worker for their support. Fundamental statistical
analysis and Text Mining Analysis were performed. Based
upon the results, these suggest that unique/original approach
should be executed to the “Club Activities”. Teachers’ burden
may be decreased by utilizing outer specialist in guiding club
activities. School Social Worker can coordinate the
professionals out of school and can help teachers by
decreasing their burden on that area. This suggests the
possibility of developing the new activity field for the School
with Social Worker.
the Various cases should be investigated here after.
and
with
[2] Kazuo Yonekawa (2011) “The role of school social worker for
mental health of a junior high school teacher”, Bulletin of Faculty of
Literature, Kurume University, 10・11, pp.7-15.
[3] Michael Stokely Kelly, Stephanie Cosner Berzin, Andy Frey,
Michelle Alvarez, Gary Shaffer and Kimberly O’Brien ,“The State
of School Social Work: Findings from the National School Social
Work Survey”, School Mental Health, September 2010, Volume 2,
Issue 3, pp132-141
282

The Analysis to the Questionnaire Investigation on
the Rare Sugars
Yuki Higuchi
Faculty of Business Administration
Setsunan University
Osaka, Japan
y-higuch@kjo.setsunan.ac.jp
Hiromasa Takeyasu
Faculty of Life and Culture
Kagawa Junior College
Kagawa, Japan
takeyasuh@kjc.ac.jp
Abstract—The Rare Sugars exist naturally and have many
kinds (more than 50). They have good effect for health such as
prevention of increasing the blood ‐ sugar level after eating,
suppression of fat accumulation, suppression of increasing the
blood pressure, and anti-oxidative effect etc. It is in the spotlight
for many people especially for those who are in the metabolic
syndrome. There are few related papers concerning the
marketing research and its utilization of this matter. In this
paper, a questionnaire investigation is executed in order to clarify
consumers’ current condition and their consciousness, and to
seek the possibility of utilizing the Rare Sugars. Hypothesis
testing was executed based on that. Some interesting and
instructive results were obtained.
Keywords—the rare sugars, consumer, hypothesis testing
I. INTRODUCTION
The Rare Sugars’ study has launched on 1980th by
Professor Takeshi Izumori (Kagawa University). The way to
the mass production was developed by the method of
enzymatic reaction. The International Society of Rate Sugars
was established in 2001. Local government of Kagawa
Prefecture comes to assist this research activity on this big
innovation newly born in Kagawa Prefecture. The Rare Sugars
have advantage that a blood-sugar level does not increase so
much after eating, in spite of it being a sugar. And it also hold
the upturn of the blood pressure. Therefore it is expected as a
new functional material for the prevention of metabolic
syndrome.
Many medical research papers are published on the Rare
Sugars as follows.
Analysis of the function of D-psicose ; [2]
Analysis of the function of D-allose ; [1]
On the other hand, these are few papers analyzed by the
viewpoint from consumers. The Rare Sugars is good for the
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Kazuhiro Takeyasu
College of Business Administration
Tokoha University
Shizuoka, Japan
takeyasu@fj.tokoha-u.ac.jp
health and is sold in the market as a sweetening, seasoning or
functional ingredient for food.
In this paper, a questionnaire investigation is executed in
order to clarify the recognition level among consumers and to
pursue the future possibility of the Rare Sugars. Basic
statistical analysis and hypothesis testing are conducted. The
three main issues are set. Then, 7 sub issues are set and
hypothesis testing is executed. The rest of this paper is
organized as follows. In section 2, outline of the questionnaire
investigation and its basic statistical results are exhibited. After
that, hypothesis testing is performed in section 3, which is
followed by the remarks of section 4.
II. OUTLINE AND THE BASIC STATISTICAL RESULTS OF THE
QUESTIONNAIRE RESEARC
A. Outline of the Questionnaire Research
A questionnaire investigation is executed in order to clarify
the recognition level among consumers and to pursue the future
possibility of the Rare Sugars. The outline of the questionnaire
research is as follows.
(1) Scope of investigation: Participants to the cooking class in
Kagawa Prefecture
(2) Period: April – June 2015
(3) Method: Leave until called for
(4) Collection: Number of distribution 300
Number of collection 171 (collection rate 57.0%)
Valid answer 171
B. Basic Statistical Result
Now, we show the main summary results by single
variable.
1) Basic characteristics of answerers
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Q32 Sex 2) Summary results for the items used in Hypothesis

Frequency % Testing
Male 30 18 Q1 Do you know the Rare Sugars?
Female 137 82 Frequency %
Total 167 100 Know 152 89.9
Q33 Age Do not know 17 10.1
Frequency % Total 169 100
-19 54 32.1 Q3 Do you know that the Rare Sugar has effect on
20-29 18 10.7 obese prevention and/or diabetes prevention etc.?
30-39 8 4.8 Frequency %
40-49 15 8.9 Know 126 79.7
50-59 17 10.1 Do not know 32 20.3
60- 56 33.3 Total 158 100
Total 168 100 Q6 Have you drunk or eaten the food
Q34 Occupation which includes the Rare Sugar?
Frequency % Frequency %
Student 68 40.7 Yes 124 79.0
Officer 8 4.8 No 33 21.0
Company Employee 14 8.4 Total 157 100
Clerk of Organization 3 1.8
Independents 6 3.6
Part-timer 9 5.4
Housewife 49 29.3
Miscellaneous 10 6
Total 167 100

Q10 I want to use it in the cooking.

Think it Slightly Cannot Slightly do Do not
Total
very much think so say either not think so think so
Frequency 45 65 34 10 7 161
% 28.0 40.4 21.1 6.2 4.3 100
Q18 I cannot grasp the concrete effect.
Frequency 26 38 31 26 36 157
% 16.6 24.2 19.7 16.6 22.9 100
Q20 Surrounding people do not use it so often.
Frequency 24 72 51 9 2 158
% 15.2 45.6 32.3 5.7 1.3 100
Q25 Do you take interest in a diet?
Frequency 64 57 18 16 11 166
% 38.6 34.3 10.8 9.6 6.6 100

III. HYPOTHESIS TESTING B) Those who do not know the Rare Sugars feel anxiety for
Hereinafter we make hypothesis testing based upon the them.
questionnaire investigation data. C) Generally, female have much more interest in the Rare
Sugars than male.
A. Setting Hypothesis Next, we set the following 7 themes (sub issues) before
First of all, we start from the hypothesis testing. Three main setting Null Hypothesis.
issues are set as follows. A-1) Those who know the Rare Sugars know that they are
A) Those who have interest in the Rare Sugars have also effective for obese prevention and/or diabetes prevention.
interest in health. A-2) Those who know that the Rare Sugars are effective for

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obese prevention and/or diabetes prevention have eaten
or drunk food in which the Rare Sugars is contained.
A-3) Those who have eaten or drunk food in which the Rare
Sugars is contained have interest in diet.
B-1) Those who do not know the rare Sugars have
acquaintances who do not use the Rare Sugars.
B-2) Those who do not know the Rare Sugars do not
understand the concrete effect of them.
C-1) Female have much more experience of eating or drinking
food in which the Rare Sugar is contained than male.
C-2) Female want to use the Rare Sugars for cooking more
than male.
Now, we set the following 7 Null hypothesis
A-1) There is not so much difference concerning that the Rare
Sugars have effect on obese prevention and/or diabetes
prevention between these who know the Rare Sugars and
those who do not know.
A-2) There is not so much difference concerning that they
have experience of eating and drinking food in which the
Rare Sugars are contained between those who know that
the Rare Sugars are effective obese prevention and/or
diabetes prevention and those who do not know.
A-3) There is not so much difference concerning that they
TABLE I. SUMMARY TABLE FOR NULL HYPOTHESIS A-1)
have interest in diet between those who have eaten or
drunk food in which the Rare Sugars are contained and
those who have not.
B-1) There is not so much difference concerning that they do
not have acquaintances who do not use the Rare Sugars
between those who know the Rare Sugars and those who
do not.
B-2) There is not so much difference concerning that they do
not know the concrete effect of the Rare Sugars between
those who know the Rare Sugars and those who do not.
C-1) There is not so much difference concerning that they
have eaten or drunk food in which the Rare Sugars are
contained between male and female.
C-2) There is not so much difference concerning that they
want to use the Rare Sugars for cooking between male
and female.
B. Hypothesis Testing
The results of statistical hypothesis testing are as follows.
Null Hypothesis A-1): There is not those who know the
Rare Sugars know that they are effective for obese prevention
and/or diabetes prevention. Summary table concerning Null
Hypothesis A-1) is exhibited in Table 1.

Do you know that the Rare Sugar has effect on obese

Do you know the
prevention and/or diabetes prevention etc.?
Rare Sugars?
Know Do not know Total
Frequancy 125 26 151
Know
% 82.8% 17.2% 100.0%
Frequancy 1 5 6
Do not know
% 16.7% 83.3% 100.0%
Frequancy 126 31 157
Total
% 80.3% 19.7% 100.0%
significance probability　0.000
(Rejection region is over 6.6349 for 1% significance level, Null Hypothesis A-2): There is not so much difference
3.841 for 5% significance level, 3.537 for 6% significance concerning that they have experience of eating and drinking
level and 2.874 for 9% significance level by 1 degree of food in which the Rare Sugars are contained between those
freedom.) The null hypothesis is rejected with 1% significance who know that the Rare Sugars are effective obese prevention
level. It can be said that those who know the Rare Sugars know and/or diabetes prevention and those who do not know.
that they are effective for obese prevention and/or diabetes Summary table concerning Null Hypothesis A-2) is exhibited
prevention. in Table 2.
TABLE II. SUMMARY TABLE FOR NULL HYPOTHESIS A-2)

Have you drunk or eaten the food

Do you know that the Rare Sugar has effect on obese
which includes the Rare Sugar?
prevention and/or diabetes prevention etc.?
Yes No Total
Frequancy 103 21 124
Know
% 83.1% 16.9% 100.0%
Frequancy 20 12 32
Do not know
% 62.5% 37.5% 100.0%
Frequancy 123 33 156
Total
% 78.8% 21.2% 100.0%
significance probability　0.011

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The null hypothesis is rejected with 2% significance level.
It can be said that those who know that the Rare Sugars are
effective for obese prevention and/or diabetes prevention have
eaten or drunk food in which the Rare Sugars is contained.
Null Hypothesis A-3): There is not so much difference
concerning that they have interest in diet between those who
have eaten or drunk food in which the Rare Sugars are
contained and those who have not. Summary table concerning
Null Hypothesis A-3) is exhibited in Table 3.

TABLE III. SUMMARY TABLE FOR NULL HYPOTHESIS A-3)

Have you drunk or eaten

Do you take interest in a diet?
the food which includes the
Rare Sugar? Think so Cannot say either Do not think so Total
Frequancy 94 7 19 120
Yes
% 78.3% 5.8% 15.8% 100.0%
Frequancy 22 6 5 33
No
% 66.7% 18.2% 15.2% 100.0%
Frequancy 116 13 24 153
Total
% 75.8% 8.5% 15.7% 100.0%
significance probability　0.077
The null hypothesis is rejected with 8% significance level. the Rare Sugars between those who know the Rare Sugars and
It can be said that those who have eaten or drunk food in which those who do not. Summary table concerning Null Hypothesis
the Rare Sugars is contained have interest in diet. B-1) is exhibited in Table 4.
Null Hypothesis B-1): There is not so much difference
concerning that they do not have acquaintances who do not use

TABLE IV. SUMMARY TABLE FOR NULL HYPOTHESIS B-1)

Do you know the Surrounding people do not use it so often.

Rare Sugars? Think so Cannot say either Do not think so Total
Frequancy 89 41 11 141
Know
% 63.1% 29.1% 7.8% 100.0%
Frequancy 7 9 0 16
Do not know
% 43.8% 56.3% 0.0% 100.0%
Frequancy 96 50 11 157
Total
% 61.1% 31.8% 7.0% 100.0%
significance probability　0.065
The null hypothesis is rejected with 7% significance level. Rare Sugars between those who know the Rare Sugars and
It can be said that those who do not know the rare Sugars have those who do not. Summary table concerning Null Hypothesis
acquaintances who do not use the Rare Sugars. B-2) is exhibited in Table 5.
Null Hypothesis B-2): There is not so much difference
concerning that they do not know the concrete effect of the

TABLE V. SUMMARY TABLE FOR NULL HYPOTHESIS B-2)

Do you know the Rare I cannot grasp the concrete effect.

Sugars? Think so Cannot say either Do not think so Total
Frequancy 52 26 62 140
Know
% 37.1% 18.6% 44.3% 100.0%
Frequancy 11 5 0 16
Do not know
% 68.8% 31.3% 0.0% 100.0%
Frequancy 63 31 62 156
Total
% 40.4% 19.9% 39.7% 100.0%
significance probability　0.003

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The null hypothesis is rejected with 4% significance level. Null Hypothesis C-1): There is not so much difference
It can be said that those who do not know the Rare Sugars do concerning that they have eaten or drunk food in which the
not understand the concrete effect of them. Rare Sugars are contained between male and female. Summary
table concerning Null Hypothesis C-1) is exhibited in Table 6.

TABLE VI. SUMMARY TABLE FOR NULL HYPOTHESIS C-1)

Have you drunk or eaten the food

Sex which includes the Rare Sugar?
Yes No Total
Frequancy 24 2 26
Male
% 92.3% 7.7% 100.0%
Frequancy 99 31 130
Female
% 76.2% 23.8% 100.0%
Frequancy 123 33 156
Total
% 78.8% 21.2% 100.0%
significance probability　0.066
The null hypothesis is rejected with 7% significance level. Null Hypothesis C-2): There is not so much difference
It can be said that female have much more experience of eating concerning that they want to use the Rare Sugars for cooking
or drinking food in which the Rare Sugar is contained than between male and female. Summary table concerning Null
male. Hypothesis C-2) is exhibited in Table 7.

TABLE VII. SUMMARY TABLE FOR NULL HYPOTHESIS C-2)

I want to use it in the cooking.

Sex
Think so Cannot say either Do not think so Total
Frequancy 14 9 6 29
Male
% 48.3% 31.0% 20.7% 100.0%
Frequancy 95 24 11 130
Female
% 73.1% 18.5% 8.5% 100.0%
Frequancy 109 33 17 159
Total
% 68.6% 20.8% 10.7% 100.0%
significance probability　0.027
The null hypothesis is rejected with 3% significance level. seek the possibility of utilizing the Rare Sugars. Hypothesis
It can be said that female want to use the Rare Sugars for testing was executed based on that. We have set three main
cooking more than male. issues. All of their Null Hypotheses were rejected and the main
issues were insisted clearly.
IV. REMARKS Further study on this should be executed such as
The Results for Hypothesis Testing are as follows. Main multivariate analysis. Various cases should be investigated here
issue A consists of 3 sub issues (A-1~A-3). All of their Null after.
Hypotheses were rejected and the main issue A was insisted
clearly. 2 sub issues were set for the main issue B (B-1, B-2).
All of their Null Hypotheses were rejected and the main issue REFERENCES
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C (C-1, C-2). All of their Null Hypotheses were rejected and inhibits osteoclast differentiation in Raw264 cells. Yamada K, Noguchi
the main issue C was insisted clearly. C, Kamitori K, Dong Y, Hirata Y, Hossain MA, Tsukamoto I, Tokuda
M, Yamaguchi F. Nutr Res. 2012 Feb;32(2):116-23.
V. CONCLUSION [2] Rare sugar D-psicose improves insulin sensitivity and glucose tolerance
in type 2 diabetes Otsuka Long-Evans Tokushima Fatty (OLETF) rats.
The Rare Sugars exist naturally and have many kinds (more Hossain MA, Kitagaki S, Nakano D, Nishiyama A, Funamoto Y,
than 50). They have good effect for health. In this paper, a Matsunaga T, Tsukamoto I, Yamaguchi F, Kamitori K, Dong Y, Hirata
questionnaire investigation is executed in order to clarify Y, Murao K, Toyoda Y, Tokuda M. Biochem Biophys Res Commun.
2011 Feb 4;405(1):7-12.
consumers’ current condition and their consciousness, and to

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Predicting Customer Lifetime Value through Data
Mining Technique in a Direct Selling Company
Arsie P. Mauricio1, John Michael M. Payawal2, Maida A. Dela Cueva3, Venusmar C. Quevedo4
Industrial Engineering Department
Adamson University
Manila, Philippines 1000
arsiemauricio@yahoo.com1, johnmichaelpayawal@gmail.com2, maidadelacueva@yahoo.com3, vcquevedo@gmail.com4
Abstract— The Direct Selling Industry in the Philippines is
continuously growing as more people become direct sellers. With
this, the ability of direct selling companies to manage its sellers
will be a challenge. Customer Lifetime Value (CLV), or the
monetary value a customer is expected to contribute to the
company before churning, is one measure that can be used as a
basis for managing customers and for this matter, the
computation of the CLV must be accurate enough to be used
effectively. However, CLV computation that is specific only for
direct selling companies is not yet established. This research used
Data Mining Techniques, specifically Binomial Logistic
Regression Analysis and Multilayer Perceptron Neural Network
to develop a model that can predict CLV based on historical
customer’s transaction and demographic data. Through
Binomial Logistic Regression Analysis, the direct seller’s average
Service Lifetime was found to be 12 years and the significant
factors that affects customer churn was determined as well.
Through Multiple Linear Regression Analysis the significant
factors that affect customer profit contribution was identified.
Markov Chain Analysis was then used to establish possible
customer states and a state transition probability matrix. Finally,
Multilayer Perceptron Neural Network with 1 hidden layer was
used to establish a neural network predictive model. The results
are used to develop the final model, which was based on the
Present Worth formula. The resulting model has a hold out
relative error of 0.018, which indicates a good predictive
accuracy of the equation. The model can be used by direct selling
companies to help them manage their customers more effectively.
Keywords— Selling, Customer Lifetime Value, Data Mining,
Binomial Logistic Regression, Multilayer Perceptron Neural
Network, Multiple Linear Regression, Markov Chain
I. INTRODUCTION
Customer Lifetime Value (CLV) is one of the core
tools in Customer Relationship Management. Customer
Lifetime Value is the monetary net present value of the profit
contribution of the customer throughout his lifetime or service
length with the company. It can be used to determine which
customer segments are the most profitable (high value) and
which are not (low value) by predicting how much profit will
the customer contribute to the company in the future.
CLV model in each business differs, as the behaviour
of the customers in each of the different business varies.
Different CLV models are proposed by several researchers for
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specific industries in the past years but the Direct Selling
Industry was not tapped yet.
This study created a CLV model, based on Data
Mining Models, to be applied on the Direct Selling Industry
with the direct sellers as its Customers. The researchers
conducted the study on a leading direct selling company in the
Philippines that sells fashion items. Three (3) year customer
transaction and demographic data were collected and are
subjected to Data Mining Techniques.
In this study, we aim (a) to identify the significant
factors that affect customer churn in a direct selling company,
(b) to identify the significant factors that affect customer profit
contribution in a direct selling industry, and (c) to develop a
model that can be used to predict customer lifetime value in a
direct selling company.
II. REVIEW OF RELATED LITERATURE AND STUDIES
The Direct Selling Industry of the Philippines
(DSAP) defined Direct Selling as the “face to face selling” of
any product to customers via independent distributors or
sellers [1]. Customer lifetime value (CLV) prediction is
considered the “touchstone for customer relationship
management” [2]. In a direct selling sense, CLV is the
measure of how much a direct seller will contribute to the
company, in monetary terms, before he/she terminates his/her
transaction terminate, say he/she stops being a direct seller or
switched transactions to other direct selling company.
Through the years, CLV prediction models have been
established by several researchers. In the context of banking
sector, Khajvand and Jafar proposed an RFM model for
segmenting customers and a time series method for CLV
prediction [3]. A customer-pyramid approach segmentation
technique and Markov Decision process in determining the
maximum customer lifetime value was also studied [4]. On a
Department Store and Supermarket setting, a weighted RFM
by AHP method and Artificial Neural Network SOM method
for sorting customers and enhancing customer lifetime value
prediction was presented [5]. In a car manufacturing and
maintenance sectors, a study regarding the use of data mining
models, specifically Decision Tree, Logistics Regression,
Markov Chain, and Neural Network, was used to determine
the most applicable method in customer lifetime value
prediction [6]. Based on different literatures present, Data

Mining is the most appropriate technique to use in CLV
prediction.
Data Mining is a means of “explaining the past and
predicting the future” through the use of data analysis [7].
Data Mining uses mathematical models and algorithms to
segment data and predict values through searching large
collections of data to detect patterns and trends [8]. It should
be noted that the field where Data Mining is used the most is
CRM [9].
In this paper, the researchers used one type of
Classification Data Mining Technique: Logistic Regression.
Logistic Regression attempts to predict the probability that a
certain binary event will happen. Logistic Regression enables
a statistical analysis to overcome restrictions of linear
regression. For example, in Logistic Regression, the
dependent and independent variables can have no linear
relationship and that the dependent variable and the error
terms need not to be normally distributed [10]. Logistic
Regression is similar to a linear regression except that it
predicts a dichotomous dependent variable instead of a
continuous one. Logistic Regression was used to predict the
service life or the time before churn of each subject customer.
The researchers also used one type of Regression
Data Mining Technique: Artificial Neural Network (ANN).
Neural Network, or more properly known as Artificial Neural
Network, is based on the structure of a mammalian cerebral
cortex where a neuron cell is stimulated by several inputs and
can be activated by an outside process [11]. The overall
process creates a predictive model that can be used even if
linear relationship between variables are not present. Also,
ANN has less assumptions and restrictions for data compared
to other Data Mining Models. In this paper’s context, the
ANN, specifically Multilayer Perceptron, was used to predict
future customer contribution.
Multilayer Perceptron (MLP) is the most famous
ANN architecture as it can approximate any function. MLP
has three distinct layers: the input layer, the hidden layers, and
the output layer. It uses neurons that are capable of processing
data using weights and activation functions, send data to the
succeeding neuron, and propagating the error of preceding
neurons, or back propagation [12]. MLP is an example of
supervised training and its most common training algorithm is
back propagation [13].
III. METHODOLOGY
This research used a quantitative research design to
solve the research questions presented. To solve the research
problems, statistical techniques was applied, and thus required
a quantitative design approach to the problem.
The researchers used a correlational research design
to determine the factors that affect customer churn and profit
contribution.
The first sampling design the researchers used was
convenience sampling, to find the company that the
researchers will conduct its study. The researchers sought the
help of a leading direct selling company (Company A) in the
Philippines to gather data to be used in the study. The
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researchers then used stratified random sampling where only
the direct sellers transacting in Company A with at least 3
years in the business will be subjected for the study. The
computed sample size is 51 participants. The 3 years
transaction and demographic data of the 51 randomly chosen
direct sellers were then provided to the researchers which
totals to 4661 transactions.
The researchers used software applications,
specifically, Microsoft Excel and SPSS (Statistical Product
and Service Solutions) to analyze and interpret data.
The following are the research procedure that lead to
answering the research questions.
A. Data Gathering
The researchers collected a 3-year transaction and
demographic data of the randomly selected direct sellers.
B. Estimation of Service Length through Churn Prediction
Possible factors are extracted from the transaction
and demographic data collected and were translated into
variables. These variables were used as independent variables
in the logistic regression analysis.
A churn criteria was established to determine the
churn status of the customer. The churn criteria was
established by the subject company. The churn status was used
as the dependent variable in the logistic regression analysis.
Let Cs be the churn status of the customer where Cs = 0
indicates a not-churn customer and Cs = 1 indicates a churn
customer
The factors to be tested were divided into transaction
and demographic data. The factors were the independent
variable for the test while the Churn Status (Cs) was the
dependent variable. The statistical software SPSS was used to
aid the analysis. The researchers used the following
parameters for the Logistic Regression Analysis in this study:
CI for exp(B) is still 95%, Probability for Stepwise Entry =
0.05 and Removal = 0.10, Classification cutoff = 0.5, and
maximum iterations = 20.
The logistic regression equation model based on the
analysis was then created and the model’s accuracy was
tested. Then, the probability Pci that the churn status is equal
to 1 for each of the selected direct sellers was computed using
the formula
Pci = eYi / (1 + eYi) (1)
Where Yi is the Y score computed using the logistic
regression generated. The mean churn probability Pc of all the
customers was then computed. The probability of churn in a
logistic regression follows a geometric distribution. The
expected length L of observations before the first churn
customer occurs is expressed by the formula
L = 1 / Pc (2)

C. Estimation of State Transition Probability
From the transaction and demographic data, factors
that can affect customer profit contribution prediction are
identified. The factors were then translated into variables.
The variables for significance in predicting profit
contribution using multiple linear regression analysis were
tested. The Net Sales was the dependent variable for the
equation. The confidence intervals level under Regression
Coefficients is 95% and the Probability of F under Stepping
Method Criteria was used where Entry = .05 and Removal =
.10.
Using the significant variables identified, the possible
customer states and next states were determined. Based on
past transactions, the transition probabilities are computed and
then a transition probability matrix P was created.
An Identity matrix It that will be used as a matrix
multiplier to indicate the current state of the direct seller was
also created.
D. Prediction of Customer Contribution
Multilayer Perceptron Neural Network was then run
using Net Sales as the dependent variable and the identified
significant factors be the covariates. One hidden layer was
used and the activation function used was identity type. 70%,
20%, and 10% was used as training, test, and hold out set for
the model, respectively.
The researchers used SPSS to perform Multilayer
Perceptron Neural Network. The researchers chose to
randomly assign cases based on relative numbers of cases for
Partition Dataset. The number of hidden layer is one which
has a Hyperbolic Tangent activation function. Under Output
Layer, activation function is Identity and the rescaling of scale
dependent variables is standardized. In this study, the type of
training for MLP is online and the optimization algorithm is
gradient descent. Under SPSS MLP options, user- missing
values is excluded, maximum steps without a decrease in error
is 1, the data to use for computing prediction error and
maximum training epochs is automatic, the maximum training
time is 15 minutes, the minimum relative change in training
error is 0.0001, the minimum relative change in training error
ratio is 0.001, and the maximum cases to store in memory is
1000.
Based on the resulting Network diagram and synaptic
weights, the Neural Network model equation Zt was
established. The model’s accuracy was also tested.
E. CLV Prediction Model
The prevailing discount factor d in the market was
determined. Using the Service Lifetime (L) computed in
equation (2), Initial State Vector (It), Initial State Transition
Probability (P), and Neural Network Model Equation (Zt), a
model that will compute Customer Lifetime Value was then
created.
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IV. DATA AND RESULTS
A. Data Gathering
The transaction data used are Dealer Code,
Transaction Number, Transaction Month, Transaction Day of
the Month, and Transaction Day of the Week, Gross Sales per
Transaction, Discount, Returns, and Net Sales per Transaction.
The demographic data gathered includes the Position, Age,
and Gender of the direct sellers subject for this study.
B. Estimation of Service Length through Churn Prediction
The subject company consider their dealers as
“churn” once they didn’t pay their debts within the allotted
due date (within 40 days of the specified due date).
Based on the Binomial Logistic Regression Analysis,
the Average Expense per Visit and Average Return per Visit
are significant in determining the likelihood that a customer
will churn or not. The Nagelkerke R2 value or the variation of
the dependent variable in the model is 62%. Overall, the full
model can correctly predict 94.1% of the cases.
Based on the average Pci, the model predicted that the
churn probability Pc of a customer is 0.0892. The Estimated
Service Length L of the customers is therefore 12 years. This
means that the average length of time before a customer stops
transaction is 12 years.
C. Estimation of State Transition Probability
Through Multiple Linear Regression Analysis, the
adjusted R² of the regression model is 0.995 with the R² =
.995. This implies that the independent variables explain
99.5% of the variation in the dependent variable, Net Sales.
Position, Frequency of Visit per Month, Expense per Visit,
Discount per Visit, and Return per Visit are statistically
significant since their p-value < .05 (alpha level). The factors
Position, Frequency of Visit per Month, Expense per Visit,
Discount per Visit, and Return per Visit, were subjected to
state transition probabilities. Since Position depends on the
accumulated gross sales he/she made during 2 consecutive
months. Only the variables Average Expense per Visit,
Average Discount per Visit, Average Return per Visit, and
Frequency of Visit per month were used to define customer
states.
This means that there are 4 dimensions for each
State. To reduce the number of possible states, the continuous
variables are further divided into classes. This results to a total
of 672 possible customer states. An Initial State Vector It
needs to be set to indicate at what state the customer is during
time t. The Estimated Service Lifetime of the customers is 12
years which means that there are 672 different It. The
customer states identified will then be subjected to Markov
Chain analysis to determine the customer state transition
probability P.
D. Prediction of Customer Contribution
SPSS software was also used to aid the analysis of
Multilayer Perceptron Neural Network. The significant factors
that affect customer profit contribution are the Independent
Variables while the Net Sales is the Dependent Variable.
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A network diagram was generated by the Neural

Network analysis. There are 6 sources of input (Bias, Position,
Frequency of Visit, Ave. Expense per Visit, Ave. Discount per
Visit, and Ave. Return per Visit) which will be activated by
the 4 hidden layer nodes through a Hyperbolic tangent
activation function along with the assigned synaptic weights.
The results of each the 4 hidden nodes are subjected to an
identity function and the output (Net Sales) are generated
through the sum of these resulting values.
Table (1) shows the synaptic weights of each of the
nodes from the input layer to the hidden layer and from hidden
layer to the output layer. From the network diagram, the
formula is generated, shown on equation (3).
Table 1
Synaptic Weights for Artificial Neural Network
(3)
Where ri is the input of factor i, wi is the synaptic weight
from input i to hidden layer, and vj is the synaptic weight from
hidden layer j to the output node.
The model has a Training Relative Error of 0.151, a
Testing Relative Error of 0.014, and a Hold out Relative Error
of 0.018. The values are a good indicator of model accuracy.
E. CLV Prediction
The customer lifetime value is the present worth of
all the predicted customer contribution in the future during
their service lifetime. The predicted Customer Lifetime Value
(CLV) is computed using equation (4)
(4)

Predicted
Output Where It is the Identity matrix used in time t, P is the
Hidden Layer 1
Predictor Layer transition probability matrix, Zt is the predicted customer
contribution at time t, and d is the discount rate in the market.
Net
H(1:1) H(1:2) H(1:3) V. CONCLUSION
Sales
With the use of Binomial Logistic Regression, the
researchers identified that the Average Expense per Visit and
(Bias) -.121 -.534 -.690
Average Return per Visit are the significant factors that affect
customer churn in a direct selling industry. These are the only
Position .133 -.043 .024 factors associated with the likelihood of churn. Also, the
probability that a customer will churn using Binomial Logistic
Regression is 0.0892. The Binomial Logistic Regression
Frequency
.085 .037 -.057 Analysis was found to have a good prediction accuracy in
Input of Visit classifying churn and not-churn customers which is 94.1%.
The model generated is therefore accurate and reliable.
Layer Expense Based on the computed churn probability, the
.695 .606 .635 expected Service Lifetime L of the Customer is found to be
per Visit
. This means that on average, a customer
Discount will churn within 12 years of transaction with the company.
1.212 -.246 -.226 With the use of Multiple Linear Regression, the
per Visit
researchers identified that Position, Frequency of Visit per
Return Month, Expense per Visit, Discount per Visit, and Return per
-.205 -.132 -.173 Visit are the significant factors that affect customer profit
per Visit
contribution. The Multiple Linear Regression model generated
from the analysis was found to have a good fit of data.
(Bias) 1.608
Based on the significant factors determined, a Neural
Network was created to predict customer profit contribution.
Hidden H(1:1) .262 Neural Networks are used because of its ease of use but an
Layer accurate and reliable prediction can be obtained. The resulting
H(1:2) 1.423 Neural Network model, based on a feed forward Multilayer
1 Perceptron Analysis with 1 hidden layer and a hyperbolic
tangent hidden layer function and an identity output function.
H(1:3) 1.548 The model has a Training Relative Error of 0.151, a Testing
Relative Error of 0.014, and a Hold out Relative Error of
0.018 which indicates a good prediction model.

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The Identity matrix is a 1 x 672 matrix that denotes [3]
the state of a customer at time t. The transition probability
matrix is a 672 x 672 square matrix that shows the probability
that a customer will shift from one state to another for the next [4]
year t. The discount factor is prevailing the interest rate of
money.
The predictive model can be used by the company to
[5]
compute for the Customer Lifetime Value of each customers.
VI. RECOMMENDATION
The computed CLV using the developed model [6]
should be used and interpreted correctly by the company.
Otherwise, the CLV will not be useful at all. The company can
also use the results of the significance test to prevent [7]
customers from the likelihood of churn and/or to improve the [8]
customer’s profit contribution. The company’s marketing [9]
strategy can be based on the computed CLV. The company [10]
should also be able to improve the model through the
acquisition of more data, use of other techniques, increase of
sample size, and a larger time scope. For further studies, the
[11]
product details such as type of product purchased, quantity of
product purchased and its specifications can also be included
for additional significant factors to be tested. A deeper look at
the factors might also extract data that the Data Mining [12]
techniques might find significant in both customer churn
status and profit contribution.
Determining possible customer states became
extensive with the use of Markov Chain analysis as the said
method accepts only one dimension variables. Multiple
[13]
variables are likely to be involved in representing a customer
state when this model is applied to other companies making [14]
the Markov chain model unmanageable (four, in this
research’s case). In order to resolve this problem, System
dynamic or Petri net might be used to model a customer’s
future purchasing behaviour as proposed by Cheng et.al. [15]
Also, the Data Mining techniques used in this study
such as Binomial Logistic Regression, Multiple Linear
Regression, and Multilayer Perceptron Neural Network can be [16]
improved for more accurate results by integrating other data
mining techniques such as Support Vector Machine (SVM).
[17]
According to literatures, this type of data mining is a complex
algorithm and time consuming but if used correctly and if
given more time it will also give good prediction accuracy.
A bigger sample size and a larger time scope can be [18]
used as input for the study to increase the accuracy of the
results of the model. The study can also include different
companies with similar line of business to make the result [19]
generalized for the whole direct selling industry under the
garments line of products.
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[1] DSAP. (n.d.). Definition of Direct Selling and MLM vs Pyramiding.
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lifetime value prediction by a Markov chain based data mining model:
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Angelis, Y. S., Koupparis, M., & Georgakopoulos, C. (2012).
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artificial neural networks for prediction of gas chromatographic relative
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Knowledge Sharing and the Innovation Capability
of Chinese Firms: The Role of Guanxi
Oswaldo Jose Jimenez Torres (1st Author)
School of Business Management
Harbin Institute of Technology
Harbin, China
Oswaldojim@gmail.com
Abstract—Building on the theory of Social Capital the present
theoretical study aims to introduce a framework to analyze the
extent to which the innovation capability of Chinese firms is
affected by Guanxi as a moderator between the former and the
knowledge sharing behaviors among individuals and teams. The
three dimensions of knowledge sharing considered here are: Type
of knowledge, quantity and quality of knowledge shared plus the
influence of the last two on the perceptions of trustworthiness
among employees. Also this article includes propositions and
recommendations to lead future research in this area.
Keywords—Guanxi; innovation; knowledge sharing
I. INTRODUCTION
The set of social principles known as Guanxi is the central
piece of the Chinese society, it has its origins in the
Confucianism which has been part of the Chinese social
system for over 2.500 years. The concept of Guanxi was built
on and preceded by the concept of lun, which encloses three
main notions, which are: The importance of human
relationships, the social order and moral principles [1]. Much
of the literature on Guanxi is business orientated, in that, is
focused on grasp and explain to non-Chinese the relevance
and complexities of this concept for conducting negotiations
and achieve competitive advantage in China as well as
dealing with Chinese organizations overseas. Confucianism
encloses the theory of Relationalism, which establishes that
individuals must be relationship-based, even though
Confucianism also clearly differentiates the most important
human relationships, known as the Five Cardinal
Relationships which are: ruler-subject, father-son, husband-
wife, elder brother-younger brother, and friend-friend, in
addition Confucianism establishes moral principles that
dictate the interactions between parties, this means that in
each human relationship different moral standards are to be
applied. Although the values of the Chinese society have
evolve it’s still based on the idea of the Confucian society and
so Guanxi relationships are conducted considering those
values. The clear distinctions established on the
Confucianism about the kind of relationships individuals
have, the obligations of the parties
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Dr. Dapeng Liang (2nd Author)
School of Business Management
Harbin Institute of Technology
Harbin, China
Ldp920@hit.edu.cn
and the moral principles applicable in each different case
suppose and unequal or discriminatory treatment of members
in society or groups.
Considering those facts it’s worthy to analyze the impact of
all this socio-cultural connotations in the organizational
context in order to identify whether those are beneficial,
harmful or irrelevant for organizations.
Different authors have studied the effects of this social
norms in organizations, such as [2], whom based on the
theory of social capital proposed that favor exchanges in
organizations outside the private lives frequently implicate
the use of organizational resources as well as positions. This
practices benefits the knowledge providers, in that, it
increases their private social capital but not necessary the
public social capital in the organization. [3] showed that
individuals who share strong empathy with each other tent to
foster this empathy by providing resources also between them,
even when this implicates neglecting the collective good [4].
Therefore, it can presumed that the behaviors implicit in
Guanxi relationships, though generate benefits for
individuals whom share close ties with each other, might be
detrimental for organizations, specifically for knowledge
sharing practices among team members, because it would act
as a barrier restricting the equalitarian or unbiased flow of
knowledge between all the members involve in specific tasks
for an organization and therefore holding back the firm’s
innovation capability. The role of intraorganizational
knowledge sharing in enhancing firm’s innovation capability
has been the focus of previous research for instance: [5] and
[6]. Its importance in accelerating the capacity of individuals
and teams of solving problems, generate new ideas and
business models is created by both knowledge donating and
collecting among individuals in an organization.
Therefore, the main assumption of the present study is
that the innovation capability of organizations is affected by
the role of Guanxi as a moderator between the former and the
knowledge sharing behaviors of their employees. Hence, this
study presents a conceptual framework build on previous
literature, propositions and directions for upcoming research
on this subject. The dimensions of knowledge sharing to be

addressed are the following: Type of knowledge shared
(explicit and tacit), quality and quantity of knowledge shared,
and the impact of the last two dimensions on the perceptions
of trust among colleagues.
II. LITERATURE REVIEW
Guanxi and the Theory of Social Capital
Research on Guanxi has been conducted taking different
approaches aimed to understand its meaning, the values it
encloses, its impact on the society and organizations. In this
effort, academics had analyzed it using the theory of social
capital due to similarities observed in this two abstract concepts.
[10] studied the concept of social capital considering the
approach of two main intellectual streams focused on social
action. One of those treats actors as social individuals highly
influenced by a set of norms, rules as well as obligations. On
the other hand, we found the economical stream of though, the
basic assumption here is that the actor drives himself according
only to his self-interest. [11] explained that social capital can
operate in two forms depending on the actors and their
dynamics, in this sense, public social capital is owned by the
unit or organization as a whole while private social capital is
owned only privately by a certain group of individuals. [12]
defined social capital as: The sum of the resources, actual or
virtual, that accrue to an individual or a group by virtue of
possessing a durable network of more or less institutionalized
relationships of mutual acquaintance and recognition”.
[13] introduced a comprehensive analysis on the different
definitions that had been attributed to Guanxi throughout
decades, also some examples of the various meanings the word
Guanxi can have depending on the context. Some definitions
relevant for academia are: “Friendship with implications of a
continual exchange of favors”. [14] “The concept of drawing
on connections in order to secure favors in personal relatives”
[15]. Therefore, there seems to be an affinity between the
dynamics and essence found in both the theory of social capital
and Guanxi, and clear academic basis to use the former as a
theoretical kaleidoscope to study the latter.
III. CULTURAL DIFFRENCES BETWEEN CHINA AND BOTH
CONFUCIAN AND NON-CONFUCIAN SOCIETIES.
Japan share roots with the Chinese culture and so the
Confucian precepts are also embraced in that country, never
the less some substantial variations can be acknowledged.
Different authors have identified Wa as the analogous social
code of Guanxi applied in Japan. Wa can be understood as
harmony, and it’s composed by other social values that
basically aim to foster harmony and unity in the Japanese
society [7]. Based on this facts and previous studies on
Guanxi, in which it has been considered rather a dyadic or
close-network figure in society we can identify a key
difference from Wa. This Japanese social norm aims to foster
a collectivistic society placing the interest of the community
or organization first instead of individuals, while the main
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objective of Guanxi relationships is to provide benefits and
advantages for individuals instead of the whole community.
Therefore, it could be assumed that the relationship between
knowledge sharing behaviors and firm’s innovation
capability in a social context based on the values of Wa would
be substantially different from results obtained in China.
The knowledge sharing behaviors and their impact in
firm’s innovation capability in the Chinese context it’s also
very likely to differ from non-Confucian-based societies. For
instance, Wasta, which is an indigenous concept of Arab
countries refers to a process whereby individuals can achieve
goals by networking with key persons [8]. According to [9],
Wasta relationships do not include the principle of reciprocity
between parties. This constitutes a major difference with
Guanxi whereby reciprocity (renqing) among parties its
fundamental in order to maintain and strengths the
relationship.
In the light of this, it can be claimed that the results
obtained in this research as well as the conclusions reached on
it will not only be applicable in the Chinese context, but also
have the potential to help researches and managers to
understand the same phenomena in different cultural
environment.
IV. GUANXI AS A MODERATOR
The framework introduced by this article proposes Guanxi
to be treated as a moderator between the three dimensions of
knowledge sharing identified for this research: Type of
knowledge (tacit and explicit), quality and quantity of
knowledge shared plus the effect of the last two on the
perceptions of trustworthiness towards outsiders and the
innovation capability of firms. This approach refines and
develops previous literature in which Guanxi has been
regarded as a moderator considering its features as well as its
impact between certain variables of study, such as: [16], in
that article both tangible relational value (relational benefits)
and intangible relational value (Guanxi) were analyzed
independently as moderators between the variables of
relational risk and the willingness to share knowledge at the
inter-organizational level in supply chains. The results
confirmed the role of Guanxi as a moderator, which improved
the interaction between relational risk and knowledge sharing.
V. PROPOSITIONS
According with the analysis of previous literature
conducted for the present study as well as the approach taken
for it, a series of propositions are presented next:
Propositions on knowledge sharing behaviors:
Proposition 1: Organizations where the type of knowledge
shared among their employees is determined to a major extent
by Guanxi networks present less innovation capability as
compare to those that present a rather opposite dynamic.

Proposition 2: Organization where the type of knowledge
sharing among their employees is determine to a major extent
by Guanxi networks present less innovation capability as
compare to those that present a rather opposite dynamic.
Proposition 3: Organization where the quality of
knowledge sharing among their employees is determined to a
major extend by Guanxi networks present less innovation
capability as compare to those that present a rather opposite
dynamics.
Proposition 4: Organizations where the quantity of
knowledge sharing among their employees is determined to a
major extend by Guanxi networks present less innovation
capability as compare to those that present a rather opposite
dynamic.
Propositions on the perceptions of trustworthiness
Proposition 5: The perceptions of trustworthiness towards
team members outside individual’s Guanxi networks present
a positive correlation with the quality of knowledge shared
with those.
Proposition 6: The perceptions of trustworthiness towards
team members outside individual’s Guanxi networks present
a positive correlation with the quantity of knowledge shared
with those.
Proposition 7: The innovation capability of organizations
where the perception of trustworthiness towards team
members outside individual’s Guanxi networks is low tent to
be inferior to those organizations that show a rather opposite
dynamic.
Proposition on Guanxi
Proposition 8: The innovation capability of Chinese
organizations is determined by the role of Guanxi as a
moderator between the former and certain knowledge sharing
behaviors among their staff.
VI. ECONOMIC RELEVANCE
Concrete governmental actions to spur innovation in
Chinese organizations had been taken by its national
government, which in 2005 released the Medium-and Long-
term National Plan for Science and Technology Development
(2006-2020) [17]. It included the policy of ‘indigenous
innovation’ as part of China’s national strategy. [18] explored
the evolution of the innovation process in China by
identifying three stages of technology innovation: imitative
innovation, cooperative innovation, and indigenous
innovation. That study argued that even though China had
achieve success on implementing the two previous stages of
innovation (imitative and cooperative), indigenous
innovation still had been elusive to Chinese organizations.
Hence, the object of the present research is closely aligned
with current managerial needs generated by the necessity to
stimulate innovation capabilities pressing Chinese
organizations.
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VII. DISCUSSION
Both social capital and Guanxi include precepts that stress
the distinction between insiders and outsiders in relation with
an individual’s social circle. In this sense, we found the
figures of private social capital in one hand and the
relationalism embedded in Guanxi relationships in the other.
Considering this and the approach taken to build this
theoretical framework, the figure of Guanxi networks is
presented in this work to distinguish specifically the
dynamics and perceptions of actors towards insiders and
outsiders.
By answering the main question of this research important
contributions for the literature on organizational behavior
could be obtained, as well as set the bases for future research.
The main question to be addressed is:
Does the innovation capability of Chinese organizations
is affected by the role of Guanxi as a moderator between the
former and the knowledge sharing behaviors of their
employees?
The main outcomes of conducting a formal research based
on the framework here presented can be summarized as
follows:
First, identify the current state of Guanxi in Chinese
organizations, specifically how it moderates the relationship
between knowledge sharing behavior among employees and
the innovation capability of firms. The evolutive nature of
this concept has been addressed in previous literature, for
instance [19] and [20]. Hence, this study is focused on
determine how the ongoing changes in Chinese organizations
generated by diverse factors, such as the generational shifts
in management positions and new societal objectives along
with a strong influence from the western world affects the
relevance of Guanxi and its role as a moderator between
knowledge sharing and the innovation capability of firms
[21].
Second, find the features of the Chinese organizations that
have mitigated the externalities implicit in Guanxi, so the
applicability of those can be considered and implemented in
different organizations. By identifying the relevant features
of the organizations that have successfully reduced the
externalities present in Guanxi, more organizations could
consider, adapt and apply those managerial practices to deal
better with indigenous social norms.
Third, present empirical bases to compare the role and
evolution of Guanxi in intraorganizational knowledge
sharing behaviors and innovation capabilities in Chinese
organizations, with the impact of analogue social norms at the
organizational level in different countries, this in order to
foster the design of more comprehensive and universal
managerial principles.

VIII. CONCLUSION
To consider the particularities implicit in Guanxi as
compared with different social norms from Confucian and
non-Confucian societies is a promising approach to
understand the Chinese culture and constitutes a solid
argument to engage in deeper and more detailed research on
its relevance at the organizational level, for instance on
knowledge sharing and the innovation capability of firms.
An empirical study build on this conceptual framework
could also include the analysis of second order variables that
might explain different results across organizations such as:
Industry, staff composition, age of the organization, etc.
This would also contribute to identify more directions for
new research.
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Two-level Hierarchical Routing based on Road

Connectivity in VANETs
Zubair Amjad
Department of Computer Engineering
Jeju National University
Jeju, Rebublic of Korea
Email: xubairamjad@gmail.com
Wang-Cheol Song∗
Department of Computer Engineering
Jeju National University
Jeju, Rebublic of Korea
Email: philo@jejunu.ac.kr
Khi-Jung Ahn
Department of Computer Engineering
Jeju National University
Jeju, Rebublic of Korea
Email: kjahn@jejunu.ac.kr

Abstract—Vehicular ad hoc networks have received consider-
able attention in recent years. Being a subclass of mobile ad
hoc networks, VANETs have some different characteristics than
MANETs such as, fast moving nodes and frequent disconnections
in the network. Existing routing protocols of MANETs do not
perform well under these dynamic conditions in VANETs. We
present a two-level hierarchical routing protocol based on road
connectivity in VANETs called Hybrid Road-Aware Routing
(HRAR) designed specifically for inter-vehicle communication in
urban and/or highway environments. A distinguished property
of HRAR is it’s ability to not only discover the available paths
between source and destination pairs but also to re-adjust the
paths on the fly, without starting a new destination discovery
process. Unlike other routing protocols, the path from source
to destination is made by road id’s. Gateway nodes help in
locating the destination and forwarding the packets from one
road segment to other. For the evaluation of HRAR protocol, we
perform extensive simulations and results show that HRAR can
help in design and deployment of VANETs.
Index Terms—VANETs, Road-Aware, Hybrid, Geographic
routing, Location service, Intelligent transport system.
I. I NTRODUCTION
Vehicular Ad-hoc Network (VANET) is a subclass of Mo-
bile Ad-Hoc Networks (MANETs) and in the recent years,
it has become an important area of research because of its
promising solutions to Intelligent Transportation System (ITS).
VANETs are characterized by highly mobile nodes and are
constrained by movement patterns. VANETs have a highly
dynamic topology due to the fast moving vehicles. Vehicles
with active connection can have link failure frequently because
of the short lifetime of the connections and unpredictable
drivers’ behavior. Due to these characteristics of VANETs, it
becomes a challenge to provide an efficient routing protocol
that can deal with the dynamic characteristics of VANETs.
Vehicles move along the roads. So, a road-aware approach is
needed that can use the road information efficiently to reduce
the bandwidth utilized by the routing packets. A road between
intersection can be treated as a zone or a segment, and vehicles
on a road segment usually have similar communication char-
acteristics/conditions. If the routing information of each road
is considered separately, the change in vehicle topology can
be handled on the local road segments very efficiently without
utilizing the bandwidth of the entire network.
∗ Corresponding Author
In the past, different types of routing protocols are proposed.
One type of routing protocols, such as, AODV [2] (Ad-hoc
on Demand Distance Vector Routing) and DSR [3] (Dynamic
Source Routing) do not maintain routing tables all the time.
However, before starting the data transmission, source vehicle
sends a route request to find available path to the destination.
If the destination moves away from its location or the path
between source and destination somehow breaks, the process
of destination discovery has to be initialized from the start.
While other type of protocols, e.g., OLSR [4] (Optimized
Link State Routing) and ZHLS [5] (Zone-based Hierarchical
Link State Routing) maintain routing tables and update them
periodically. These routing protocols are expensive in terms of
routing packets as they update the routing tables periodically.
Therefore, reducing the control overhead in VANETs remains
a challenge for researchers.
In recent years, Geographic Routing (GR) is studied spe-
cially to deal with node mobility in VANETs. Position based
routing does not require routing tables maintained in each
node. It is considered scalable with respect to the size of
the network and is therefore an excellent candidate for the
vehicle communication. The geographic routing can select
the forwarding nodes in a flexible manner by using location
information of nodes. Several GR protocols are proposed
specifically for VANETs, e.g., [7], [8], [9]. However, most
of them use the global view of the simulator and location of
destination is already known. Therefore, these protocols have
zero location service overhead. Furthermore, the performance
of GR protocols still needs to be improved in terms of
delivery ratio and end-to-end delay for real-time and safety
applications.
We present a novel position-based hierarchical routing pro-
tocol based on road connectivity called Hybrid Road-Aware
Routing (HRAR) designed specifically for inter-vehicle com-
munication in an urban and/or highway environment. HRAR
integrates locating destination with identifying available paths
between source and destination. Gateway Vehicles (GV) help
in connectivity between different road segments. Destination
discovery process does not flood the network with the packet
broadcasts. Once a path is discovered, it is adjusted on the
fly to account for changes in the topology, without initiating
a new destination discovery request. The proposed protocol is

978-1-5090-1671-6/16/$31.00 ©2016 IEEE

298

hybrid because it uses characteristics of both types of routing
protocols, proactive as well as reactive at the same time to
reduce the routing overhead.
This paper is organized as follows. We talk about the
related work in Section II. In Section III we introduce the
Hybrid Road-Aware Routing (HRAR) protocol. We discuss
the simulation setup and the results of HRAR in Section IV.
Section V concludes the paper.
II. R ELATED W ORK
Connectivity Aware Routing (CAR) [1] is a position-based
routing protocol designed for VANETs. It uses adaptive bea-
coning to create and maintain neighbor routing tables. CAR
introduces the concept of ”Guards” that help in path failure
recovery process. Optimized broadcast is used to discover the
location of the destination vehicle. However, the discovery
packet is received be all vehicles between source and des-
tination at-least for once. Greedy forwarding is used over the
discovered path.
Road Topology-aware Routing (RTR) [10] extends the
destination discovery mechanism of AODV [2] to discover
two junction-disjoint routing paths. Source node uses one of
the established paths rather than all paths for one packet
forwarding so that communication overhead is reduced. When
both two junction-disjoint paths are connected, they are chosen
alternately to transfer data packets. RTR utilizes two junction-
disjoint paths to transfer data packets, which avoids network
congestion and link failure in a single routing path. However,
the control overhead for discovering the destination is even
more than that of AODV because the RREP is sent back to
source by the destination over two different paths.
Zone-based Hierarchical Link State routing (ZHLS) [5] is a
link state routing based protocol for MANETs which divides
the network into zones and routes the traffic through the zones.
Each node only knows the node connectivity within its zone
and the zone connectivity of the whole network. The link state
routing is performed on two levels: local node and global
zone levels. Unlike other hierarchical protocols, there is no
cluster head in ZHLS. The zone level topological information
is distributed to all nodes. It provides a flexible, efficient, and
effective approach to accommodate the changing topology in
a wireless network environment. However, the distribution of
zone level topological information to all nodes in the network
introduces a huge amount of routing overhead.
There are some proposed GR protocol that return the
shortest path between source and destination [11], [8], [9].
However, it is not always possible that the shortest path
between source and destination is populated. Furthermore,
if the local maximum is reached at any point, a new route
is calculated. This process may take some time and may
waste network capacity. Typically, GR protocols require the
location information of the destination before starting the data
forwarding process. The majority of proposed GR protocols
assume destination location is known at any time [12], [13],
[14]. The performance of these protocols is evaluated with
zero location service overhead. However, it remains unclear
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how destination location discovery process can influence the
network capacity. Moreover, if the destination vehicle moves
a substantial distance from its known position, these protocols
fail.
The concept of ”Gateway Nodes” is not completely new. In
[5], authors make use of gateway nodes in order to maintain
connectivity between zones. There may be more than one
gateway nodes between two zones, therefore, it avoids single
point of failure. A similar concept is used in UGAD [6], where
vehicles at intersections are given the highest priority in order
to avoid the transmission blocking by the buildings. Vehicles
on the intersections can send/receive packets to/from other
connected roads. We believe using these vehicles in an efficient
manner can improve the performance of the routing protocol.
III. H YBRID ROAD -AWARE ROUTING
We present a novel two-level hierarchical position-based
routing protocol called Hybrid Road-Aware Routing (HRAR)
designed specifically for inter-vehicle communication. In the
first level of hierarchical model, vehicles generate link state
packets (LSPs) containing their neighbor information to make
road segment routing table. This proactive mechanism is only
used for the routing on road segments between intersections.
In the second layer of hierarchical routing, source vehicle
uses enhanced reactive routing mechanism to discover the path
to destination. The path request is not sent to every vehicle
rather it is only forwarded to a few vehicles on each road
segment. Once a path is discovered, it is adjusted on the
fly to account for changes in the topology without initiating
a new destination discovery request. Unlike other reactive
routing protocols, destination discovery process does not flood
the network with the packet broadcasts. The HRAR protocol
consists of four main parts: (1) road LSP generation; (2) path
discovery; (3) packet forwarding over discovered path; and (4)
path maintenance.
A. Neighbor tables
In HRAR roads are divided into segments with unique
𝑟𝑜𝑎𝑑𝐼𝐷s. Vehicles asynchronously broadcasts link requests
to discover their neighbors. Neighbors within communica-
tion range in turn reply to link request that includes <
𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝐼𝐷, 𝑟𝑜𝑎𝑑𝐼𝐷, 𝑃 𝑜𝑠𝑖𝑡𝑖𝑜𝑛, 𝑆𝑝𝑒𝑒𝑑, 𝐷𝑖𝑟𝑒𝑐𝑡𝑖𝑜𝑛 >. Vehi-
cles wait for an interval to receive the response of link
requests from their neighbors. After receiving the response
of link requests from the neighbors, every vehicle generates
its neighbor link state packet (LSP) which contains the infor-
mation about all the neighbors of the vehicle. Vehicles then
propagate their neighbor-LSP locally within their road segment
via intermediate neighbors. Using the neighbor-LSP, a road-
LSP for road 1 in Fig. 1a is generated by every vehicle as
shown in Table I. Vehicles may also receive neighbor-LSP
from other roads. After receiving the neighbor-LSP from other
vehicles, each vehicle knows the road segment level topology.
The shortest path algorithm is used to build its road segment
routing table. Table II shows an example of a routing table of
vehicle S in a road segment in Fig. 1a.
 Back to Contents

Road
Road 2 Segment
F
Intersection
I1 I3
G
E A Source

D
Road 3 H C 1) S - I1 - I2 - I4
2) S - I1 - I3 - I4
Road 1 Dest.
B
I S I2 I4

Source/Dest
Normal traffic
Gateway
vehicles

(a) (b) (c)

Fig. 1: Destination discovery [(a) A simple intersection with gateway vehicles, (b) RREQ, (c) Graph representation of roads]

TABLE I: Neighbor-LSP for Road 1
Source Neighbors
A B
B A,C,D
C B,D,S
D B,C,E,S
E S,D,2
S C,D,E,2,3
TABLE II: Road segment routing table of vehicle S
Destination node Next node
A C
B C
C C
D D
E E
2 G
3 H
The vehicles on the intersection or near to intersections
also receive link requests from the vehicles on different road
segments. We call these vehicles the Gateway Vehicles (GVs).
As shown in Fig. 1a (with red color), vehicles S, E, G and H
are gateway vehicles. GVs provide connectivity between road
segments. Due to the fast moving vehicles and channel fading,
the procedure of link request has to be performed periodically
to detect and update the changes in the links between vehicles.
B. Path discovery
In level two routing, HRAR takes reactive routing approach.
In order to find a path to a destination, HRAR uses route
request/reply RREQ/RREP. Before sending the RREQ, source
vehicle checks its road segment routing table to find the
destination vehicle if both are on the same road segment. If the
destination vehicle is on a different road than the source, the
source vehicle sends a route request to the gateway vehicle.
The gateway vehicle then forwards that RREQ to the gateway
vehicles on all the connected roads. On the intermediate roads,
the RREQ is forwarded using the road segment routing table
from one GV to others. The gateway vehicles that receive the
RREQ, check their road segment routing tables to find the
destination vehicle. Fig. 1b shows the process of RREQ. The
gateway vehicle that finds the destination vehicle on its road,
replies the RREQ with route reply RREP packet. RREP is sent
back as unicast to the source vehicle. The process of RREP is
illustrated by the graph in Fig. 1c where intersections are the
vertices and the roads are represented as edges. The root node
is the first intersection near the source vehicle. The packet
travels from one intersection to other towards the source.
In all the routing protocols that use RREQ/RREP, path in
the RREP includes the 𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝐼𝐷s. However, HRAR uses
𝑟𝑜𝑎𝑑𝐼𝐷s instead of the 𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝐼𝐷s. Reason for using the
𝑟𝑜𝑎𝑑𝐼𝐷s in a path instead of 𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝐼𝐷s is because a link
between two vehicles in the path may fail at any time resulting
in decreased performance. Therefore, even after the link failure
between any two intermediate vehicles, the packets can still
be forwarded by other vehicles using their road segment
routing table. The gateway vehicle that sends the RREP to
the source, can receive more than one RREQ from different
roads. However, only the shortest path in terms of distance
and number of intermediate hops is selected by the gateway
vehicle.
C. Packet forwarding over discovered path
The HRAR protocol uses road segment routing table to
forward the packets towards the destination. The packets are
sent from one intersection to another by the gateway vehicles.
Intermediate vehicles use their road segment routing tables to
route the packet towards next gateway vehicle. Since beacon-
ing is a basic building block of all inter-vehicle communication
protocols, HRAR extends its concept to generate the road
segment routing tables. An illustration of intermediate vehicle
packet forwarding can be seen in Fig. 1b.
D. Path maintenance
Any path between source and destination may become
invalid. Let us assume that the path between two intersections
stay connected. Therefore, only possibility for a path to break
is when end point vehicles (source and/or destination) move a
substantial distance from the initial position. In such scenarios,
majority of the previously proposed protocols fail because they
have to start a new destination discovery process each time

300

a path fails. Here we present how gateway vehicles help to
adapt to such situation without loosing data packets and avoid
starting a new destination discovery process.
1) Gateway vehicles in path maintenance: When there is a
data transmission going on, the gateway vehicles on both sides
(source and destination) maintain a table of active connections.
The path remains active if the end point vehicles do not
move to a different road segment than the current one. If
any of the endpoint vehicles move to another road segment,
the gateway vehicle of previous road segment finds it out
from the road segment routing table as the table is updated
periodically. The gateway vehicle send a destination discovery
request to all other GVs on connected roads. The GV on the
same road as the destination vehicle, replies to the destination
discovery request. The old GV updates the path from source
to destination and sends it to the source vehicle to use the new
active path in the transmission. Since the source vehicle does
not have to start a new destination discovery request, a huge
amount of network bandwidth is saved.
Gateway vehicles help adjusting the connected path without
employing new path discoveries even if the end point vehicles
change their moving speeds and/or directions.
IV. E VALUATION OF HRAR PROTOCOL
A. Simulation setup
In our experiments we use version 3.18 of the ns-3 simulator
[15] with the Two-ray ground model. The communication
range of a vehicle is 250 m. The node speed is in the range
of [18, 120] km/h and the data packet size is 512 bytes.
The evaluated protocols are: AODV, GPSR, and the HRAR
protocol.
In this paper we present results for three different vehicle
densities: low (less than 20 vehicles/km of road), medium (30-
40 vehicles/km), and high (more than 50 vehicles/km) in two
movement scenarios: highway and city. 10 CBR traffic sources
with a sending rate of 5 packets/s are considered. Sources stop
sending data packets 30 seconds before the simulation end.
Source/sink nodes neither leave the simulation area nor park
anywhere in the map during the simulations (300 seconds).
B. Metrics
We present the following metrics to compare the perfor-
mance of the evaluated protocols.
∙ Packet delivery ratio: The fraction of data packets sent
by the source that are received by the destination.
∙ End-to-end delay: The time required for the data to reach
the destination vehicle from the source vehicle.
∙ Routing overhead: The number of routing packets trans-
mitted per data packet delivered at the destination.
C. Simulation results
1) Packet delivery ratio: Fig. 2a and Fig. 3a show packet
delivery ratios for city and highway scenarios respectively with
three different densities of vehicles. For all traffic densities,
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AODV performs very poorly in the city scenario, with 12-
13% of data packets delivered. Also, GPSR shows better per-
formance than AODV (around 21% delivery ratio) but shows
lower delivery ratio than HRAR. Despite the additional over-
head to maintain road segment routing table and to discover the
destination location and path, HRAR demonstrates much better
results than GPSR. The highway scenarios are geographically
less sophisticated than the city scenario, therefore, all studied
protocols show better PDR in highway scenario. Again, HRAR
outperforms AODV and GPSR, despite the need to obtain and
maintain paths between source-destination pairs.
2) End-to-end delay: In terms of the average end-to-end
delay (Fig. 2b and Fig. 3b), AODV and GPSR are worse
than HRAR in both scenarios (city and highway). In HRAR,
the path discovery process precedes for the first time a data
transmission is required between two vehicles. This step adds
delay for the first packet. However, once the source vehicle
finds out the path, it is maintained by the gateway vehicles.
Therefore, the delay is very low for the data packets after the
first one. The average end-to-end delay of the data packet for
HRAR is much lower than for AODV and GPSR. This result is
a consequence of HRARs use of real connected paths between
source and destination vehicles, whereas, GPSR often fails
due to resolution of local maximum handled by the perimeter
mode. Furthermore, each time a path fails between source and
destination pairs, AODV starts a new discovery process which
adds a huge amount of delay in the packet delivery process.
HRAR handles short-term disconnections very easily due to
the use of gateway vehicles. In the scenarios with low density
of vehicles, the network often becomes disconnected, which
leads to a low PDR and high end-to-end delay for all the
tested protocols. However, it can be clearly seen that HRAR
outperforms other two protocols in both metrics.
3) Routing overhead: The normalized routing overhead
is presented in Fig. 2c and Fig. 3c. Routing overhead of
AODV consists of the destination discovery, whereas, in GPSR
periodic beaconing contributes mainly to the routing overhead.
Destination discovery process in AODV consists of broadcast-
ing the packet to all the nodes in the network. However, in
HRAR, there is no broadcast for the destination discovery
process. Discovery packets are sent only to the gateway vehi-
cles. In GPSR, the routing overhead caused by the failed paths
contributes significantly to the degraded performance. It can
be seen from the evaluation results that HRAR generates less
routing overhead than other two protocols in both scenarios.
It is mainly because HRAR does not use broadcasting of
destination discovery and it does not start a new discovery
process each time a path disconnects.
V. C ONCLUSION
In this paper we presented HRAR, a novel Hybrid Road-
Aware Routing protocol for VANETs. HRAR uses character-
istics of both types, proactive and reactive routing protocols
to provide a scalable low overhead routing algorithm with
efficient delivery ratio for inter-vehicle communication both
in city and highway scenarios. HRAR is able to locate the
 Back to Contents

0.9 14 20
AODV AODV AODV
0.8 GPSR GPSR 18
12 GPSR
HRAR HRAR HRAR
16
0.7

Average end−to−end delay [s]

Normalized routing overhead

10 14
0.6
Paket delivery ratio

12
0.5 8
10
0.4 6
8
0.3
4 6
0.2
4
2
0.1 2

0 0 0
low medium high low medium high low medium high
Vehicle density Vehicle density Vehicle density

(a) (b) (c)

Fig. 2: City scenario [(a) Packet Delivery Ratio, (b) Average end-to-end delay, (c) Routing Overhead]

1 12 20
AODV AODV AODV
0.9 GPSR GPSR 18 GPSR
HRAR HRAR
10 HRAR
0.8 16
Average end−to−end delay [s]

Normalized routing overhead

0.7 14
8
Paket delivery ratio

0.6 12

0.5 6 10

0.4 8
4
0.3 6

0.2 4
2
0.1 2

0 0 0
low medium high low medium high low medium high
Vehicle density Vehicle density Vehicle density

(a) (b) (c)

Fig. 3: Highway scenario [(a) Packet Delivery Ratio, (b) Average End-to-End delay, (c) Routing Overhead]

destination without using a location service. Rather than using [3] Johnson, David B., and David A. Maltz. ”Dynamic source routing in ad
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VANETs must deal with the always changing node topolo- [7] Seet, Boon-Chong, et al. ”A-STAR: A mobile ad hoc routing strategy for
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An Overview of Wax Crystallization, Deposition
Mechanism and Effect of Temperature & Shear
Azwan Harun1, Nik Khairul Irfan Nik Ab Lah1,
Hazlina Husin1
Faculty of Chemical Engineering,
UniversitiTeknologi MARA, Shah Alam, Malaysia
Abstract –Wax deposition can cause serious problem to crude
oil transportation especially in offshore transport pipelines. It is
cause by the heat transfer between the crude oil and the
surrounding if there is no or insufficient thermal insulation layer
coating on the pipeline. Cause of the wax deposition in the pipeline
will lead to a smaller flow diameter of the pipeline, thus will
results in flow restriction and production loss. This paper will
explain briefly how wax started to form deposits base on
crystallization theory. Besides that, this paper will review some of
the proposed mechanisms of wax deposition such as molecular
diffusion, soret diffusion, shear dispersion, brownian diffusion
and gravity settling. Furthermore, the effects of temperature and
shear towards wax deposition on internal surface of the pipeline
are discussed.
Index Terms – Paraffin wax; wax crystallization; wax
deposition mechanism; temperature; shear
I. INTRODUCTION
In oil reservoir, wax is soluble in the crude oil due to high
pressure and temperature (HPHT) reservoir condition. When
the crude oil is extracted up to the sea surface, the temperature
of the crude oil is decreased due to the heat loss to the
surrounding. Decreasing the temperature below the Wax
Appearance Temperature (WAT) or Cloud Point (CP) leads to
wax crystallization process [1]. The precipitated solid wax
crystal then, deposited on the internal surface of the pipeline.
This wax deposition issues are frequently appear throughout
the production process either in offshore or onshore production
in all over the world [2].
Deposition of wax in the pipeline during oil flow leads to the
pipeline blockage where the average flow decrease cause by
decreasing in pipeline diameter of the fluid and thus results in
the reduction of production output. In worst cases, it can causes
a fully blockage that lead to huge production loss. Cold finger
and flow loop tests performed in the laboratory are widely used
in the petroleum industry for evaluation of the wax deposition
risk in pipelines and in identifying suitable inhibitors for
deposition mitigation [3]. This paper is to review and discuss
the theory of the wax crystallization process due to temperature
drops below the WAT, suggested mechanisms of wax
deposition and the effect of temperature & shear on wax
deposition.
This research was financially funded by research grant namely Research
Acculturation Grant Scheme (RAGS) which manage by Research
Management Centre UiTM.
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
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Zulkafli Hassan2
Faculty of Chemical and Natural Resources Engineering,
Universiti Malaysia Pahang, Malaysia
II. WAX CRYSTALLIZATION PROCESS
Crystallization is defined as the process of formation of an
ordered state (solid) from a disordered (gas) or partially ordered
state (liquid) [4]. The solid wax crystal is formed from a nuclei
precipitated out from crude oil that act as centers of
crystallization [5]. The wax crystallization process is occurred
in two stages, which are nucleation and crystal growth [6].
Nucleation can be divided into two groups, which is primary
nucleation and secondary nucleation. Primary nucleation
consists of spontaneous nucleation (homogenous) and induced
by foreign particles (heterogeneous). Secondary nucleation is
induced by the crystals that already formed from primary
nucleation. Spontaneous nucleation can be generated in
isothermal conditions while induced by foreign particles
nucleation where it can be happened at non-isothermal
conditions in the occurrence of a cooling rate process [7].
The process of wax crystallization occurred when
temperature decreases, wax molecules in the crude oil are being
hindered, due to less energy to move around freely. This will
make it easier for the wax molecules to come closer and formed
short-lived cluster. The short-lived cluster of the wax molecules
is called nuclei, and the formation process is nucleation. Short
chain or flats monolayers maybe form initially and eventually
crystalline lattice structure built up which is referred to as the
growth process [8]. Once the nuclei are formed and the
temperature is kept low, the growth process which occurs
rapidly continue in the local region with high molecules
concentration. If the nucleus growth certain critical size, it
becomes stable under average condition of high molecules
concentration in the bulk of the crude oil [5].
III. WAX DEPOSITION MECHANISM
The wax deposition mechanism on the internal surface of the
pipeline consists of the processes that are theoretical complex.
The studies of wax deposition mechanism have been ongoing
for decades by a lot of researchers such as Hunt, P. A Bern, V.
R. Withers, R. J. R. Cairns, E. D. Burger, T. K. Perkins, and J.
H. Striegler [9]–[11]. A few mechanism have been suggested
in order to develop the better understanding about the wax
deposition such as molecular diffusion, soret diffusion, shear
dispersion, brownian diffusion and gravity settling [12].
A. Molecular Diffusion
Molecular diffusion has been suggested as the most
dominant mechanism for wax deposition on the internal surface
of the pipeline [10]. For the crude oil flow inside the pipeline, it

will either laminar or turbulent but at the adjacent and close to
the wall will be a thin laminar sub-layer form associated with
the shear stress action acting on the internal surface of the
pipeline [13]. In a subsea pipeline where pipe wall is being
cooled below the Wax Appearance Temperature, there is a
temperature gradient across the laminar sub-layer. At this
condition, wax crystallization will be occur and precipitated out
from the crude oil. The concentration gradient of dissolved wax
will be established since wax solubility decreases with the
temperature and leads to transportation dissolved material
toward the wall by molecular diffusion [11]. The rate of
molecular diffusion can be estimated by Fick’s Law:
(1)
Where mm is the mass of deposited wax, ρd is the density of the
solid wax, Dm is the diffusion coefficient of liquid wax in oil, A
is the surface area over which deposition occurs, dC/dr is the
radial concentration gradient [11].
B. Soret Diffusion
Soret diffusion is the thermal diffusion, which refer to mass
separation that caused by the existence of a temperature
gradient within the pipeline [14]. There are arguments between
researchers about the contribution of the soret diffusion as wax
deposition mechanism. Some of the researcher such as D.
Merino-Garcia, M. Margarone, and S. Correra , have stated that
the effect of soret diffusion in wax deposition is negligible [15].
However R. Banki, H. Hoteit, and A. Firoozabadi, have
classified that stating diffusion in term combination of
molecular and thermal diffusion permits the wax deposition to
be modeled ideally [16].
C. Shear Dispersion
The flowing crude oil inside the pipeline (contains) small
solid waxy particles that move with the mean speed and
direction of the crude oil. However, the shearing effect of the
fluid near the pipe wall induces the lateral motion of the
particles that known as shear dispersion. This will result in
transportation of wax particles to the internal surface of the
pipeline [10]. This is agreed by a few researcher such as A.
Fasano, L. Fusi, and S. Correra that claim the shear dispersion
is dominant at certain condition [17], [18]. In other hand, there
are some researchers such as such Azevedo and Teixeir stated
that shear dispersion give zero contribution to wax deposition
since experimental results shows no deposition of wax under
conditions of zero heat flux. However, shear dispersion can still
contribute as wax removal mechanism where the wax particles
transported away from the pipe wall [13].
D. Brownian Diffusion
The mechanism is occurred when small solid crystal
that suspended in crude oil collide with thermally agitated oil
molecules which lead to small random Brownian movements of
the suspended particles. With existence of concentration
gradient of these particle, this Brownian motion will lead to a
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net transport of the solid waxy crystal to pipe wall which,
mathematical description is similar to diffusion [11]. There is
an argument between the researchers about the Brownian
diffusion as the mechanism for wax deposition. A. Majeed, B.
Bringedal, and S. Overa dismiss Brownian diffusion as a
relevant mechanism for wax deposition based on justification
that Brownian diffusion flux will be away from the wall, where
the solid concentration would be highest [19]. However,
Azevedo and Teixeira have different view, if the wax crystals
are trapped in the immobile solid layer at the wall, the
concentration of solid crystals in the liquid at the wall is
approximately zero, allowing for Brownian diffusion toward
the wall [13]. Therefore, it can be concluded that Brownian
diffusion remains as one of the possible mechanism for wax
deposition.
E. Gravity Settling
Gravity settling becomes the possible wax deposition
mechanism since the precipitated solid waxy crystal is denser
than the crude oil. Therefore the solid waxy crystal would
settled and deposited at the bottom of the pipes [11]. However,
based on the experimental results, the wax deposition from
horizontal and vertical flow is similar. Therefore, gravity
settling have been classified as insignificant in contributing to
wax deposition [11], [20]. Some mathematically studies
proposed that gravity settling effect might be eliminated by
shear dispersion that re disperse settled solid waxy crystal in the
flow.
IV. EFFECT OF TEMPERATURE ON WAX DEPOSITION
Temperature is one of the parameters that contribute a
significant effect in wax deposition. Wax deposition is usually
characterized by three temperatures: the cloud-point or wax
appearance temperature (WAT), the pour-point, and the
melting-point temperatures. Cloud-point is the temperature at
which the first precipitation or crystal of solute is formed.
Pour-point temperature is the lowest temperature at which the
oil is mobile. A temperature at which a pure substance liquefies
is its melting point [21].
There are a lot of researches have done on the effect of
temperature on wax deposition in the last few decades and can
be separated into different scope. A. S. Kasumu, S. Arumugam,
and A. K. Mehrotra , has conducted a research about effect of
cooling rate on the wax precipitation temperature (WPT) of
waxy mixtures [22]. WPT has been used in this study to define
the temperature for the onset of solid formation under a
constant cooling rate, which distinguishes it from the WAT.
Based on the experimental result, it has been found that WPT is
higher for same crude oil at a lower cooling rate. This means
that the wax will be started to precipitate at higher temperature
if temperature drop rate. There a few researchers that obtained
similar results with A. S. Kasumu, S. Arumugam, and A. K.
Mehrotra in related laboratory test [22]–[24].
Another researcher, Jennings and Weispfennig has
performed a laboratory test about the effect of temperature
differential (∆T) between crude oil and cold surface and found
that the total deposition increase when the ∆T is increase. The
increase in total deposition is because of the increase in

thermodynamic driving force for deposition. In the experiment,
Jennings and Weispfennig use two different sizes of cold
fingers to test the effect of ∆T on the wax deposition. Figure 1
shows the result from the experiment that indicates the increase
of total deposit density with the increase in ∆T at fixed shear
rate and running time [25].
Fig. 1. The effect of temperature differential between crude oil and cold surface
on the wax deposition [25]
At fixed shear stress, a higher ∆T will generate a softer
deposit. The result from the experiment is similar to the results
obtained from an experiment that performed by Lee-Tuffnell,
where overall weight of the deposit increased and became
mechanically easier to remove” as the ∆T value increased for
experiments performed at equal shear rates. Besides that, based
on the same experiment, different ∆T will result different mean
carbon number of the wax that is physically depositing. Lower
∆T runs had higher mean carbon numbers of the physically
depositing wax [26].
Fig. 2. Variation of wax content and carbon number distribution in deposit with
time (Toil = WAT, Tcoolant = WAT-15 ˚C) [27]
The effect of temperature range on aging of wax deposition
and effect of coolant temperature on wax deposition has been
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studied by Q. Quan, J. Gong, W. Wang, and G. Gao [27]. Cold
finger apparatus and waxy crude oil with wax content 18.6%
from oil field in China is used to perform this experiment. In
order to test the effect of temperature range on aging of wax
deposition, experiment is set up using two set of different
temperature range. The first temperature range is Toil = WAT+5
˚C, Tcoolant = WAT-10 ˚C (higher temperature range) while the
second temperature range is Toil = WAT, Tcoolant = WAT-15 ˚C
(lower temperature range).
Figure 2 and 3 show the results from experiment, which the
variation of wax content in deposit in different temperature
ranges. Amount of lower carbon number components in deposit
decreases and amount of higher carbon number components in
deposit increases as the deposit time increases at higher
temperature range [27].
Fig. 3. Variation of wax content and carbon number distribution in deposit with
time (Toil = WAT+5 ˚C, Tcoolant = WAT-10 ˚C) [27]
Under the same temperature difference, the amount of higher
carbon number components in deposit increases with the
increase in the temperature range. The reason for this result is
that both the radial concentration gradient and the actual cold
finger surface temperature increase as the temperature range
increases under the same temperature differential, which results
in more amount of wax molecules dissolved in bulk oil and
larger carbon number components diffused into deposit [27].
For second experiment, the effects of coolant temperature on
wax deposition are conducted using the same apparatus and
crude oil. For this experiment, all the parameters from the first
experiment are maintained except the coolant temperature as
manipulated parameter. At constant bulk oil temperature, wax
content in deposit increases with the increase in the coolant
temperature. For the decrease in the coolant temperature under
the same bulk oil temperature, the amount of gel oils in deposit
increase while amount of higher carbon number components in
deposit decrease. This is due to the increase of the precipitating
ability and decrease of the dissolving ability of carbon number
components in the crude oil [27]. Therefore, based on the
review from this research and experimental test, it can be

concluded that temperature is one of the most crucial parameter
that contribute a significant effect in the wax deposition.
V. EFFECT OF SHEAR ON WAX DEPOSITION
Shear plays an important role in wax deposition and removal
mechanism. Jennings and Weispfennig have studied about the
effect of shear on the performance of wax inhibitors [25], [28].
In the research, three different stirring speeds which is 500, 750
and 1000 rpm are used to evaluate the effect of shear on the
performance of different wax inhibitors. For untreated crude
oil, it has been found that total weight of the solid deposit
decreases with increasing shear as the speed increase from 500
to 1000 rpm. The results have been plotted as shown in Figure 4
below.
Fig. 4. Effect of shear on the amount of total deposition for untreated crude
oil [28].
Also for untreated crude oil, amount of entrained crude oil
contained within deposits decrease but amount wax contained
within deposits increase with increase of shear forces as shown
in Figure 5.
Fig. 5. Effect of shear on wax content of deposits for untreated crude oil [28]
In Figure 6, the treated crude oil with different wax inhibitor
showed that the overall trends increasing inhibition with
increased shear rate/stirring speed. In addition to measuring the
actual amount of total depositor amount of deposited wax to
gauge inhibitor performance, indications of inhibitor
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performance often can be gained from visual assessment of
deposits. The amount of surface area bare of deposit increased
with increasing stirring speed in almost all of the tests with the
different inhibitors.
Fig. 6. Effect of shear on inhibitor performance for C35+ wax inhibition in
crude oil [28].
Based on the experimental evidence, Zougari in his paper
agreed with the fact that higher shear will lead to decrease in
solid deposition on the wall. In addition, the deposit formed in
higher shear tends to be mechanically harder. Figure 7 shows
the result, effect of shear on the total weight of the solid deposit
where crude oil and wall temperature fixed at 35 ˚C and 28 ˚C
respectively [29].
Fig. 7. Solid deposit buildup as a function of shear [29]
The similar research also have been conducted by N.
Ridzuan, F. Adam, and Z. Yaacob which studied about the
effects of two factors on the deposition process, which are shear
rate and different types of inhibitors. 10mL of four different
types of wax inhibitors (cocamide diethanolamine (CDEA),
diethanolamine (DEA), poly (ethylenecovinyl acetate) (EVA)
and poly (maleic anhydridealt1octadecene) (MEA) is used in
experiments. The effect of these inhibitors is examined at
different shear rate which is 200, 400 and 600 rpm. The percent
of inhibition of each of wax inhibitor increase with increases of
shear rate from 200 to 400 rpm. In this case, EVA shows the
strong effect to inhibit wax formation, which is about 33.33%
reduction of wax deposit when the shear increases from 200 to
400 rpm. However, the wax inhibitors performance at 600 rpm
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outperformed where the volume of deposit attained increased 3–4, pp. 507–526, May 2003.
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307

Countercyclical Buffer of Basel III and Cyclical
Behavior of Palestinian Banks' Capital Resource
Ahmed N. K. Alfarra, Hui Xiaofeng, Ehsan Chitsaz and Jaleel Ahmed
School of Management
Harbin Institute of Technology
Harbin, 150001, China
ab_nouraldeen@hotmail.com
Abstract— One of the anxieties of the Basel Committee on
Banking Supervision is cyclical behavior of banks that has been
addressed in its new Basel III framework. The ‘countercyclical
buffer’ particularly targets at the extenuation of the allegedly
harmful behavior of bank capital. Mainstream discourses on the
subject usually assess a pro-cyclical behavior of banks' surplus
capital but this paper examines mostly annual data by GDP as a
deputation for the commercial cycle. Using collected annually
data, this paper identifies a defining pro-cyclical behavior of
Palestinian banks' capital.
Keywords—Basel III, Business cycle, Capital buffer,
Autoregressive Distributed Lag Model (ADL), Countercyclical
buffer.
I. INTRODUCTION
In socioeconomics context, the banks are playing a very
significant role since banking sector is considered one of the
main element to strengthening confidence in the state's policies
and caring for the economic interests. There is an ever
developing literature on the pro-cyclical impact of banking
arrangement. For instance, Basel II agreement, applied in 2007,
has support discussion on the cyclicality of regulation and the
probability that regulation increases business cycles. The
financial crisis in 2008 was barely the first in history [1-3]. For
this reason the Basel Committee on Banking Supervision
(BCBS) revised the regulatory framework in Basel III[4]. The
International Monetary Fund (IMF), the Bank for International
Settlements (BIS), and the Group of Twenty (G-20) support
this method and made an instruction proposal on the 20 July
2011 so as to provide a probable legal framework for the states
that follows Basel III[3-6]. The outline should be
comprehensive at the latest in 2018[7-9]. The resolution that
the committee suggests is dual: a capital preservation buffer
which can be accessible to under certain conditions and the
outline of a ‘countercyclical buffer’ [10, 11] . The latter
proposes to guarantee that banking sector capital requirements
take account of the macro-financial atmosphere in which banks
function” [4, 12]. The countercyclical buffer will be applied by
the state jurisdictions[13]. The extreme size of that buffer after
stepwise growths during the application stage and will finally
be 2.5%. It will be exciting to observe the international
uniformity of this approach [6, 14]. In addition excessive on-
and off-budget leverage, the quality of the capital basis and
inadequate liquidity buffers, Basel Committee is addressing the
pro-cyclical influence[4]. It tries to resolve the regulatory
978-1-5090-1671-6/16/$31.00 ©2016 IEEE
308
Back to Contents
paradox that a lowest capital requirement is slightly useless for
extenuating risks when there are approvals if the requirement is
not met [10, 12]. Stringent lowest capital requirements can in
chance upset the economy further (through lower bank lending)
which could open up to more difficulties for the banks—a
vacuum circle with an instability of the banking system as a
significance [4, 15]. Basel II was connecting capital
requirements with management risks and those risks are in
repetition related to the business cycle. In an economic
depression, loans are more likely to get relegated (i.e., creating
at least mark-to-market losses) and are more likely to lead to
nonpayment than a drop in retrieval rates. Important banks
might involuntarily stagnate their loan portfolio in a stagnation
[16] - hence the passive influence on the economy. According
to Basel III approach[4, 6], the assets risk weighted average
(RWA) calculated as:
RWA = K × 12.5 × E (1)
Where E is the exposition at default (EAD) 12.5 being the
reverse of the capital adequacy should be at least 8%, and K
being the capital requirement [17, 18]. Especially the latter is
calculated out of the loss given default (LGD) the possibility to
default (PD) and thus susceptible to cyclicality Calculated as:
K = [LGD∗N [(1−R) ^ (−0.5) ∗ G (PD) +(R/ (1−R)) ^
(0.5) ∗ G (0.999)] – PD ∗ LGD] ∗ (1−1.5 × b (PD)) ^ (2)
(−1) × (1 + (M−2.5) ∗b (PD)
R = 0.12 ∗ (1- EXP (-50 ∗ PD))/ (1-EXP (-50)) +0.24 ∗
(3)
[1-(1-EXP (-50 ∗PD))/ (1-EXP (-50))]
b = (0.11852- 0.05478∗ In (PD)) ^ 2 (4)
With R: correlation, N: normal cumulative distribution
function, M: maturity, b smoothed regression and G: inverse
cumulative distribution function.
The banking organization itself shows pro-cyclicality [2,
19] and time-varying capital requests may lead to an
extenuation of such difficulty if banks are permitted to pull on
their buffers when in requisite [18]. In this paper, we will
answer this question: is the cyclical behavior appropriate
indicator to Palestine bank sector? We answered this question
through explained the influence of macroeconomic shocks on
the capital and reserves of Palestine banks from 1996 until the
end of 2014 that was mentioned to the Palestinian Monetary
 Back to Contents

Authority annual report. In other words, we use an assessment III. RESULTS

of economic capital of the banks. Several experimental We have applied Autoregressive Distributed Lag Model
business cycle investigated exactly appraisal the surplus capital (ADL) to find the relationship between cyclical behavior of the
buffer—the buffer that outstrips the minimum regulatory economy and change in reserve capital. We have used Gross
requirement [13, 15]. The literature differentiates between Domestic Product (GDP) as a proxy to measure cyclical
long- and shortsighted banks [2]. However restricted banks will behavior of Palestinian economy. Descriptive statistics of the
not build up supplementary capital reserves through an given variables have presented in Table I. Mean values of the
improvement of the economy so as to take benefit of business GDP, CAD and CPI are 8.5030, 0.1443 and 3.8972,
opportunities, onward seeing banks will do so [15, 20]. respectively. Standard deviation of the mentioned variables
Elsewhere the Basel III structure some local methods stand up suggests a small variation in the given data set. As we have
with the cyclicality most conspicuously Spain, which taken annual data from 1996 to 2014, we can observe a
introduced effective provisioning in the year 2000[15, 21]. significant difference between maximum and minimum values
Contrary to capital buffers pointing at unanticipated losses, of the variables.
provisions have to safeguard banks against anticipated losses. It
builds on the credit stock and its deviation.
TABLE I. DESCRIPTIVE STATISTICS
We supplement to the literature in two methods: first, we
supplement another part of experimental proof about the pro- GDP CAD CPI
Mean 8.5030 0.1442 3.8972
cyclical behavior of banks. Second, we examine the data on a
Median 8.4641 0.1485 3.3250
higher regularity with Autoregresslve Distributed Lag (ADL) Maximum 8.9196 0.2440 9.8300
method. This lets us to evaluate the direct influence of shocks Minimum 8.1138 0.0640 1.1800
and the timing of capital modifications. Moreover, our dataset Std. Dev. 0.2562 0.0647 2.1440
contains the most current financial market crisis. In our
combined data we perceive a pro-cyclical behavior of the Autoregressive Lag Model suggests that the variables used
Palestine banking sector: banks increase their capital base in an in the model should be stationary. The variables included in
economic downturn and the bad conditions in Palestine our model have the time series properties. We have observed
territories especially after Israeli aggression on Gaza in that the mean of the interested variables is not constant over
summer 2014. The banks also did this to the Apartheid Wall in time or in other words they are not stationary. To make them
the West Bank and during the siege of the Gaza Strip since stationary we have taken their log difference. We can observe
2007. the behavior of GDP before and after taking the log difference
of the data in Figure 1.
II. DATA AND METHODOLOGY GDP

Most experimental studies that examine the behavior of 9.0

capital reserves as a task of the business cycle use GDP as 8.9

delegation for the cycle. The problematic with GDP is that it is 8.8

commonly only combined per quarter and in fact most studies 8.7

even only use the yearly aggregate. This has, among other 8.6

reasons, to do with the availability of budget data. The 8.5

Palestine offers yearly budget. The data represent all yearly 8.4

financial institutions in Palestine. 8.3

8.2
Autoregressive Distributed Lag (ADL) Model is more
appropriate when dependent variable depends on its previous 8.1
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
value (yt-1), current value of an independent variable (x) and on DLGDP
its previous value (xt-1). A simple ADL (1, 1) can be described .020
as: .015

yt = m + α1 yt −1 + β0 xt + β1xt −1 + γyt −1 + ut (5) .010

.005

Where yt is stationary dependent variable. xt Is stationary .000

independent variable. α, β and γ are parameters. ut Is an error -.005

term which has a zero mean, constant variance and serially -.010

uncorrelated. Being uncorrelated with ut and given values of -.015

xt allows us to use ordinary least square (OLS) estimates in our -.020

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
analysis. To find the effect of capital on cyclical behavior we
have estimated following model Figure 1. Behavior of GDP and CPI over the time

GDPt = m + α1GDPt −1 + β0CADt + β1CADt −1 + ut (6) Results of the ADL are reported in Table II. Two panels (A,
B) have been created in Table II. First panel (A) has been
created to report the results of the regression where GDP used

309
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as a dependent variable. Results of the panel A suggests that this study has shown that increase in capital reserves for the
GDP depends positively and significantly on its own lag. Palestinian banking sector cannot affect in GDP of the
Moreover, capital reserve ratio (CAD) has also positive and economy. Moreover, this study answers the research questions
significant effect on dependent variable (GDP). According to that the cyclical behavior is an appropriate indicator for
this regression GDP does not depends on its own lag. R-square Palestinian banking. Therefore, we propose the new concepts
of panel A is 95.11%. F-statistic is also significant which (Countercyclical Buffer) for Palestine Monetary Authorities
advocate the significance of the model. (PMA) to approve it to develop credit risk management
systems for Palestinian banks.
TABLE II. REGRESSION RESULTS
ACKNOWLEDGMENT
A. GDP as dependent variable
Std. This work is supported by the Nation Natural Science
Variable Coefficient t-Statistic Prob.
Error Foundation Of China Under Number 71173060.
C 4.3418 1.3625 3.1864 0.0066
GDP(-1) 0.4568 0.1707 2.6754 0.0181
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same like other developing economies, so we have found a Journal of Economic and Management Sciences, vol. 15, pp. 309-324,
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Author Index

A F
Ahmed, Jaleel ................................................308
Ahn, Haeil ...................................................... 58
Ahn, Khi-Jung ...............................................298
Al Sharqawi, Mohammed .............................238
Al-Aomar, Raid .............................................. 63
Alfarra, Ahmed N. K. ....................................308
Alhimairee, Mei ............................................238
Ali, M. O. .......... 133, 138, 143, 148, 216, 220, 229
Aljeneibi, Saeed ............................................. 63
Almazroui, Shereen ........................................ 63
Al-Salamah, Muhammad ..............................198
Amjad, Zubair ...............................................298
Faid, M. S. ......... 133, 138, 143, 148, 216, 220, 229
Fan, Chin-Yuan ............................................ 160
Fernandez, Noime B. ...................................... 48
G
Gao, Jie ........................................................... 68
Gourc, Didier ................................................ 224
Granada, S. ................................................... 130
Günthner, Willibald A. ................................... 15
Gutierrez, Alexander V. ............................... 126
Gutierrez, Ma. Teodora E. ............................ 175

B H
Bassig, Karla Ishra S. ....................................262 Hamidi, Z. S. ..... 133, 138, 143, 148, 216, 220, 229
Bhat, Sanjay P. ..............................................117 Harun, Azwan............................................... 303
Bhatia, Anil ...................................................117 Hasan, Norashikin .......................................... 11
Bongo, Miriam F. ............................................. 1 Hasan, Oskar Hasdinor ................................... 11
Boonsothonsatit, Kanda ................................252 Hassan, Zulkafli ........................................... 303
Bougaret, Sophie ...........................................224 Higuchi, Yuki ............................................... 283
Hui, Xiaofeng ............................................... 308
Husien, Nurulhazwani ............ 133, 143, 148, 216,
C 220, 229
Cabacungan, P. M. ........................................130 Husin, Hazlina .............................................. 303
Chan, Shiau Wei............................................. 53 Hussien, NurulHazwani................................ 138
Chang, Hyun-Soo ........................................... 99
Chang, Shu-Hao ............................................160
Chellaboina, Vijaysekhar ...................... 107, 112 I
Chen, Jianguo ................................................. 94 Idris, Nurhidayu ........................................... 170
Chen, Yi Yang................................................ 39 Inohara, Takehiro ............................................. 6
Chen, Ying ..................................................... 86 Ishii, Yasuo................................................... 278
Chen, Yu Ting ................................................ 39
Chitsaz, Ehsan ...............................................308
Chun, Ingeol ..................................................153 J
Jain, Arihant .......................................... 107, 112
Jaluvka, Michal .............................................. 34
D Jeon, Jaeho ................................................... 153
Dela Cueva, Maida A. ...................................288 Johanyák, Zsolt Csaba .................................. 243
Deniaud, Ioana Filipas ..................................224 Joochim, Orapadee ................................ 211, 252
Dewi, Dian Retno Sari ..................................165
Doulatabadi, M............................................... 72
Dweekat, Abdallah Jamal..............................270 K
Kaber, David B. .............................................. 43
Kamariotou, Maria ....................................... 247
E Kang, Rui ....................................................... 82
El-Sayegh, Sameh M. ............................ 234, 238 Kang, Sungjoo .............................................. 153

313

Kashif, Mustafa .............................................238
Kim, Hyun-Jin ................................................ 99
Kipouridis, Orthodoxos .................................. 15
Kitsios, Fotis .................................................247
Kong, Xianda ................................................188
Kotyrba, Martin .............................................. 34
Kuan, Lee Choo ............................................103
Kwon, He-Boong ..........................................122
L Perez, T......................................................... 130
Lah, Nik Khairul Irfan Nik Ab ......................303
Lee, In Jung .................................................... 48
Lee, Jooh .......................................................122
Li, Kai Way .................................................... 39
Li, Ruiying ..................................................... 82
Liang, Dapeng ...............................................293
Lim, Khan Horng ........................................... 53
Limpiyakorn, Yachai................................. 20, 24
Liu, Tzu-Hsin ................................................. 91
Lu, Qiang ....................................................... 68
M Ranny, ........................................................... 29
Ma, Wenqi ...................................................... 43
Marmier, François .........................................224
Marquez, John Carlo F. .................................. 48
Masuda, Shiro ...............................................188
Matsumoto, Mitsuho ...................................... 77
Mauricio, Arsie P. .........................................288
Meekaew, Jumnong.......................................211
Meilizar, .......................................................256
Moin, Noor Hasnah .......................................183
Monstein, C. .....................133, 138, 148, 220, 229
Moon, Sooyoung ...........................................153
Morad, Mohamed ..........................................234
Mujir, Mohd Shaleh ....................................... 11
N Song, Minseok .............................................. 206
Nesti, Lisa .....................................................256
Nikoula, Nilli.................................................238
Nyhuis, Peter .................................................193
O Suteeca, Raslapat .......................................... 156
Ocampo, Lanndon A. ....................................... 1
Omar, Abdul Razak ........................................ 53
Omar, Mohd ..................................................183
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Omar, Siti Sarah ............................................. 53
Oppus, C. ...................................................... 130
Osman, M. R. ............................................... 216
Oyanagi, Tatsuya .......................................... 278
P
Park, Jinwoo ................................................. 270
Payawal, John Michael M. ........................... 288
Peng, Shirui .................................................... 94
Preto, R. ........................................................ 130
Prompila, Ekarat ............................................. 24
Q
Quevedo, Venusmar C. ........................... 48, 288
R
Rahaju, Dini Endah Setyo ............................ 165
Rajendran, Rasvini ....................................... 178
Ramlan, R. ...................................................... 53
Ronquillo, Darwin Joseph B. ......................... 48
Röschinger, Marcus ........................................ 15
S
Sa’adon, Ahmad Azri ................................... 103
Sabri, S. N. U. ................ 133, 138, 143, 148, 216,
220, 229
Shang, Chunling ............................................. 68
Shariff, N. N. M. ............ 133, 138, 143, 148, 216,
220, 229
Shariff, S. Sarifah Radiah ............................. 183
Sheu, Shey-Huei ............................................. 91
Shon, Tae-shik ................................................ 99
Silverio, Hazeline A. .................................... 262
Song, Wang-Cheol ....................................... 298
Su, Guofeng .................................................... 94
Subramanian, Easwar ............................ 107, 112
Sugunnasil, Prompong.................................. 156
Suh, Jeong-Jun ............................................... 99
Suzuki, Komei .............................................. 273
Suzuki, Shinji ................................................... 6
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T W
Takeyasu, Daisuke ........................................278 Wang, Xiao..................................................... 68
Takeyasu, Hiromasa ......................................283 Wang, Zhiru ................................................... 94
Takeyasu, Kazuhiro........................ 273, 278, 283 Wattanagul, Napajorn..................................... 20
Tamura, Yoshinobu ........................................ 77 Willeke, Stefan ............................................. 193
Tang, Ning ..................................................... 86
Tangonan, G. .................................................130
Thaha, Putranesia ..........................................256 Y
Torres, Oswaldo Jose Jimenez ......................293 Yamada, Shigeru ............................................ 77
Tsai, Hsin-Nan ............................................... 91 Yamamoto, Hisashi ...................................... 188
Tu, Thi Bich Hong ........................................206 Yamashita, Hirotake ..................................... 273
Yang, Chenxuan ............................................. 82
Yuan, ZengHui ............................................... 86
U Yusof, S. M. ................................................... 72
Ullmann, Georg .............................................193

Z
V Zainol, N. H. ...... 133, 138, 143, 148, 216, 220, 229
Volna, Eva ...................................................... 34 Zainuddin, Zaitul Marlizawati ............... 170, 178
Zaman, Izzuddin ............................................. 53
Zhang, Yanbo ................................................. 82
Zhang, Zhe-George ........................................ 91

315