Innovative Computing and Information, Part I - ICCIC 2011

Communications in Computer and Information Science

231

Minli Dai (Ed.)

Innovative Computing and Information International Conference, ICCIC 2011 Wuhan, China, September 17-18, 2011 Proceedings, Part I

13

Volume Editor Minli Dai Suzhou University No. 1, Shizi Street Suzhou City, 215006, China E-mail: [email protected]

ISSN 1865-0929 e-ISSN 1865-0937 ISBN 978-3-642-23992-2 e-ISBN 978-3-642-23993-9 DOI 10.1007/978-3-642-23993-9 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: Applied for CR Subject Classification (1998): C.2, H.4, I.2, H.3, D.2, J.1, H.5

© Springer-Verlag Berlin Heidelberg 2011 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, re-use of illustrations, recitation, broadcasting, reproduction on microfilms or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Typesetting: Camera-ready by author, data conversion by Scientific Publishing Services, Chennai, India Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

Preface

The present book includes extended and revised versions of a set of selected papers from the 2011 International Conference on Computing, Information and Control (ICCIC 2011) held in Wuhan, China, September 17–18, 2011. The ICCIC is the most comprehensive conference focused on the various aspects of advances in computing, information and control providing a chance for academic and industry professionals to discuss recent progress in the area. The goal of this conference is to bring together researchers from academia and industry as well as practitioners to share ideas, problems and solutions relating to the multifaceted aspects of computing, information and control. Being crucial for the development of this subject area, the conference encompasses a large number of related research topics and applications. In order to ensure a high-quality international conference, the reviewing course is carried out by experts from home and abroad with all low-quality papers being rejected. All accepted papers are included in the Springer LNCS CCIS proceedings. Wuhan, the capital of the Hubei province, is a modern metropolis with unlimited possibilities, situated in the heart of China. Wuhan is an energetic city, a commercial center of finance, industry, trade and science, with many international companies located here. Having scientific, technological and educational institutions such as Laser City and the Wuhan University, the city is also an intellectual center. Nothing would have been achieved without the help of the Program Chairs, organization staff, and the members of the Program Committees. Thank you. We are confident that the proceedings provide detailed insight into the new trends in this area. August 2011

Yanwen Wu

Organization

Honorary Chair Weitao Zheng

Wuhan Institute of Physical Education, Key Laboratory of Sports Engineering of General Administration of Sport of China

General Chair Yanwen Wu

Huazhong Normal Universtiy, China

Program Chair Qihai Zhou

Southwestern University of Finance and Economics, China

Program Committee Sinon Pietro Romano

Azerbaijan State Oil Academy, Azerbaijan

International Program Committee Ming-Jyi Jang Tzuu-Hseng S. Li Yanwen Wu Teh-Lu Liao Yi-Pin Kuo Qingtang Liu Wei-Chang Du Jiuming Yang Hui Jiang Zhonghua Wang Jun-Juh Yan Dong Huang JunQi Wu

Far-East University, Taiwan National Cheng Kung University, Taiwan Huazhong Normal University, China National Cheng Kung University, Taiwan Far-East University, Taiwan Huazhong Normal University, China I-Shou University, Taiwan Huazhong Normal University, China WuHan Golden Bridgee-Network Security Technology Co., Ltd., China Huazhong Normal University, China Shu-Te University, Taiwan Huazhong University of Science and Technology, China Huazhong Normal University, China

Table of Contents – Part I

A Study on Cloud Backup Technology and Its Development . . . . . . . . . . . He Zhonglin and He Yuhua

1

Research on the Engineering Management Reform of the Yellow River . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deng Yu and Gu Lieya

8

Research on Hospital CRM System Model Based on Multi-Agent . . . . . . . Wang Suozhu and Fu Yan

14

Risk Assessment Based on the Life Cycle of Virtual Enterprise . . . . . . . . . Xia Wang, Zhimin Xie, and Xianjun Guan

21

Research on Financial System Computing Simulation . . . . . . . . . . . . . . . . . Tang Chuan and Chen Ling

29

The Construction and Evaluation of the Regional Innovation System of Zhejiang Province . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cai Ning and Huang Chun

36

Design of an Improved Method of Rijndael S-Box . . . . . . . . . . . . . . . . . . . . Chunxia Tu

46

Implementation of AES S-Box Based on VHDL . . . . . . . . . . . . . . . . . . . . . . Zhichao Yu

52

Research on Security of VoIP Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xiaojun Liu and Chunxia Tu

59

The Analysis on Network Security and Protection . . . . . . . . . . . . . . . . . . . . Zhou Jing

66

The Analysis of the Safety Defects Based on ASP.NET . . . . . . . . . . . . . . . Zhou Jing

71

Spatial Distribution and Vertical Variation of Cu Concentration in Guangdong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fang Yuan and Chen Li-yan

76

The Quantitative Application of Information Extraction by Remote Sensing in Aranbaotai Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fang Yuan and Chen Li-yan

83

VIII

Table of Contents – Part I

Research on the Sustainable Development of Export Trade in China . . . . Fei Wang

88

The Game Analysis of the Reasons for Chinese Defeat in Iron Ore Negotiation—Based on the Bargain Model . . . . . . . . . . . . . . . . . . . . . . . . . . Xianyong Zheng and Hanmin Huang

94

Research on Coal Mine Safety Accident Based on Grey Relational Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xue Yang and WenSheng Li

101

E-V Utility Function and Its Application in Shanghai Securities Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Qiang Shao, Zhongbing Wu, and Feng Zhou

109

Bender’s Algorithm for Facility Location Problem with Uncertain Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Haibin Li, Jun Yan, and Mingming Ren

115

A Kind of Coal Mine Safety Control Model Based on Cybernetics . . . . . . Lixia Qi and Xue Yang

124

The Research and Progress of Global Digital Content Industry . . . . . . . . . Han Jieping, Cong Rijie, and Wei Yaqiong

132

A Novel Smoothing Method for Symmetric Conic Linear Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xiaoni Chi and June Liu

143

Supply Chain’s Function in Improving the Innovation of Building Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhang Xi ping and Zhu Ming qiang

150

On Innovative Impetus Driving China’s Sustainable Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wu Yong

156

Highway Operation Safety Management Decision-Making Model . . . . . . . Zhang Huili, Sun Hailong, and Kang Yongzheng

161

Question and Countermeasure Existing in the University Finance Informationization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chen Liyu and He Zhonglin

166

Study of the Training for a Financial Informationization Talented Person in Electronic Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chen Liyu

172

The Impact of Technology Acquisition Mode on Innovative Performance of Listed Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chengyu Wen and Zhixin Liu

177

Table of Contents – Part I

IX

Institutional Arrangements for Knowledge Sharing in R&D Team . . . . . . Tu Jing and Zhang Wenping

184

Study on the Forming Mechanism of Brand Alliances Based on the Brand Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wang Chujian

191

Arrangement of Venture Enterprise Financing Contract with Taking Entrepreneurs as Center Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fumin Wang

198

Knowledge Management’s Functions in E-Commerce Implementation . . . Zhang Xi ping and Zhu Ming qiang

206

Research and Practice Based on GIS to Improve Commercial Network Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Li Hengkai and Liu Xiaosheng

213

Pricing and Revenue Sharing Analysis on Platforms and Content Providers under Tri-networks Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chonglu Wang, Rong Luo, and Zhanhong Xin

222

Research on the Application and Development Prospects of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wang Na

233

Review of Customer Citizenship Behaviors Scales in Service Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Song Yang and Ma Qinhai

238

China’s Low Carbon Economic Rise and Countermeasures of Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tao Yu

244

Undergraduate Accounting Major’s Main Curriculum’s Situation Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jin Huixin, Zhao Rui, Guo Yanzhen, and Li Guohong

248

How to Build the Knowledge Resources Framework of Real Estate Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shen Liang-feng

255

Explore and Analyse of Computer Network Security Technique and Defence Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wang Fengling and Wang Zhiqiang

262

On the Countermeasures of Consummating Bank Internal Accounting Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xiaohui Wang and Yong Zhang

269

X

Table of Contents – Part I

Analysis on Strategy of Human Resource Management in Economy Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xuan Fuhua

275

Research on the Index System and the Evaluation Method of Logistics Service Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mai Ying

280

Social Benefits Evaluation of Reverse Logistics – Case of the Automobile Recall System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiang Chengcheng and Li Congdong

288

Study on Trust Model in P2P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gan Zhi-gang

295

Information Technology and Economic Growth – The Empirical Research Based on Spatial Econometric Model . . . . . . . . . . . . . . . . . . . . . . . Zhou Qin and Zhang Hong-li

302

The Practice Teaching Model of Accounting Research . . . . . . . . . . . . . . . . Zhou Xiaona, Zhao Rui, Mao Jiuzhi, and Zhang Yin

313

Research about Broadband Media Distribution Protocol on Media Stream System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiang Guo-song and He Xiao-ling

320

Research about Media Location Registry and Content Distribution Base on MSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiang Guo-song and He Xiao-ling

328

IUP Modeling Method and Its Application for Complex Information Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yingyong Bu, Libin Zhu, and Jinyu Wang

335

Study on International Competitiveness of Tire Industry Based on Factor Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chen Jing-xin and Wang Xiao-ying

343

Study on Quantitative Evaluation of Enterprise Core Competence Based on Resources and Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chen Jing-xin and Liu Wei

351

Automobile Insurance Pricing with Bayesian General Linear Model . . . . . Cheng Gao, Qi Li, and Zirui Guo

359

Risk Identification Based on Strategic Steps of Brand Alliances . . . . . . . . Wang Chujian

366

The Application of Fuzzy Synthesis Evaluation Method Based on ANP in E-Business Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhang Xinzhong and Qin Yamin

373

Table of Contents – Part I

XI

Research and Application of Three Dimensional Visualization of Geological Objects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hua Li and Hao Wu

380

The Control and Measure of Requirements Stability in Software Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chen Ting

387

A Novel Initial Radius Selection with Simplify Sphere Decoding Algorithm in MIMO System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Song Yang, Li Jianping, and Cai Chaoshi

395

The Research of Customer Relationship Management between China and Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xinbao Guo

403

The Process Reengineering of Accounting Information System . . . . . . . . . Xinbao Guo

409

The Model of Optimal Price and Leadtime in the Decentralized Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quan Jie

413

Urban Residential Land Automatic Recognition from Remote Sensing Image Based on Combined Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yunjun Zhan

421

Decision Support System for Emergency Response of Geological Hazards in Three Gorges Reservoir Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . Haifeng Huang and Shimei Wang

428

To Promote the Development of Retail E-Commerce in Depth with Regional E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bo Zhang, Haijun Zhang, and Bingwu Liu

437

Research on Management Accounting for SMEs Innovation in China . . . . Min Pan

446

Web Services Technology and Its Application in Geophysical Data Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jianbo Lian, Minghua Zhang, and Chengxi Wang

451

The Analysis of Strengths and Weaknesses of Online-Shopping . . . . . . . . . Li Milong

457

Confusion of Franchisor of Chain Business and Development Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Li Yuhong, Lu Hong, and Han Weixi

465

XII

Table of Contents – Part I

On Early Warning Evaluation Index System of Enterprise Purchasing Risk Based on the Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yongsheng Liu and Chunlei Ma

471

Investment Value Analysis for Listed Companies of China Communications Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hua Han and Fei Tang

478

E-Comeerce Extension Multi-factor Assessment . . . . . . . . . . . . . . . . . . . . . . Sunxu and Wan Haixia

484

SWOT Analysis of E-Commerce Development in Yunnan Province . . . . . Sun Liangtao and Chen Gang

492

Application of Analytic Network Process in Agricultural Products Logistics Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xiaolin Zhang and Chunhui Wang

500

SMEs Contest between Asymmetric Rivals in Financial Market from an Evolutionary Viewpoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zheng Zhou and Fanzhao Zhou

507

Study on Fuzzy Evaluation of Train Operation Dispatching System for China Passenger Dedicated Lines Based on AHP . . . . . . . . . . . . . . . . . . . . . Sunqi, Zhangyanpeng, Liyulong, and Liminzhi

513

Disruption Management Optimal Decisions of Supply Chain under Uncertain Environment Based on Dynamic Network . . . . . . . . . . . . . . . . . . Xiaonan Cai and Jing Lu

519

Visual Angles and Reference Systems of Management Theory . . . . . . . . . . Sun Bo

526

Process Improvement Model and It’s Application for Manufacturing Industry Based on the BPM-ERP Integrated Framework . . . . . . . . . . . . . . Liu Hongjun and Li Nan

533

A Study of Business Process Reengineering Based on Petri Net . . . . . . . . Kang Zhiyuan

543

Combined Noise Reduction in CT-Image Based on Adaptive Median Filter and Wavelet Packet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Houjie Li, Jiyin Zhao, Shuang Xu, and Yanqiu Cui

550

Author Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

559

A Study on Cloud Backup Technology and Its Development He Zhonglin1 and He Yuhua2 1

Computer College of Science and Technology, Huanggang Normal University, Huanggang, Hubei, China. 438000 2 Chinese Teaching and Research Group, Tuanfeng Experimental High School, Tuanfeng, Hubei, China. 438800 [email protected]

Abstract. With the rapid development of computer technology, IT hardware price continues to decrease. Equipment is no longer important, while data is becoming increasingly vital. Cloud backup service is ideally suitable for those who wish to provide valuable data backup solution and hold data safely beyond data center. In this paper the development of cloud backup technology is illustrated. Compared with conventional backup software, the advantages of cloud backup technology and its challenges are analyzed. Combined with cloud backup service platform, B-Cloud, the cloud backup service mechanism is introduced. Moreover, it makes a simple conjecture on the future development of cloud backup technology. Keywords: Cloud backup, PaaS, B-cloud.

1 Introduction In recent years, with the emergence of SaaS (Software-as-a-Service)[1][2] and Cloud Computing [3][4], Cloud backup service gradually become a hot topic in IT field and its core concept is to realize customer value through services. As data scale and data safety is sharply increasing, a third party is urgently needed to provide professional online data backup service. Cloud backup service software is the core technology to establish professional online data backup service, which has great social and economic benefits. Cloud backup service platform software can realize online backup and restore services of file set, database and operating system under heterogeneous WAN environment consisting of Microsoft Windows and Linux platform, which is favored by users. Compared with traditional software, it has many advantages, like low cost, quick returns, easy management, easy and flexible operation, etc. Due to the importance of data backup and the many advantages of cloud backup service, it has gradually become a new direction of storage application field. Bill Gates has said openly several times that software will eventually become a kind of service.

2 The Development Status of Cloud Backup Cloud backup is to automatically store data located at the client into the center of cloud data of SSP (Storage Service Provider) through network so as to recover data in time. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 1–7, 2011. © Springer-Verlag Berlin Heidelberg 2011

2

H. Zhonglin and H. Yuhua

About ten years ago, there were some SSPs who began to hype online backup service concept, but because of the technical problems and bandwidth limitation, it wasn’t put into practice. In recent years, along with the thriving of SaaS and cloud computing, cloud backup experiences a rapid development. A. The Overseas Development Status of Cloud Backup American Berkeley Data System Company was established in 2005. The Mozy software it developed can provide online backup service, and has a great deal of enterprise and individual customers. EMC acquisitioned Berkeley data System Company in September 2007 with $76 million, and eventually acquired Mozy software. It took SaaS as the core direction of its future products. In May 2009, McAfee officially announced its cooperation with EMC, and provided online backup service with Mozy department of EMC together. In July 2009, EMD takeover data companies in duplicated data deletion field with $21 billion, and engaged in new generation of disk backup and recovery solutions. Tool software vendor Symantec announced its business in cloud backup market in April 2007, and launched its product: Symantec Protection Network. Later, it acquisitioned Network backup service provider SwapDrive in 2008 with $123 million. In June 2009, Symantec and Hewlett-Packard (HP) reached cooperation. HP resales the cloud backup services of Symantec through its personal computers. PC users must pay the fee yearly after a month free trial of online backup. In addition to the above representatives like EMD and Symantec that provide software backup solution, Amazon's simple storage service is based on the concept of service infrastructure, and takes a charge according to the volume of data being stored. Nirvanix Company also claimed that its cluster structure of warehousing and distribution networks can provide higher reliability and usability for the recovery of backup data. There are other major manufacturers that enter into cloud backup field through acquisitions, such as Iron Mountain who takeover PC data online backup and restore service provider Connected in 2004 with $1.17 billion, and LiveVault Company in 2005 with $50 million. It continues to expand its product line and service range through acquisitions, and in 2007 the company's revenues reached $27 billion. The hardware manufacturer Seagate takeover Evault with $1.85 billion at the end of 2006. It binds SaaS products on hardware products for sales. The giant IBM bought Arsenal Digital Company with $1.1 billion in 2007, for Arsenal Digital Company has been committed to the high-end online backup market. B. The Domestic Development Status of Cloud Backup New research of Datacenter of the China Internet shows from 2006 to 2011 the compound growth rate of cloud backup market will reach 33.3% and by 2011 the yearly income will reach $715 million, but this data does not include China. The reason that foreign firms did not introduce cloud backup service into Chinese market lies that some large domestic enterprises have already set up their own data centers, and those small and medium-sized enterprises still have consumption habit obstacles to accept this service. While the cloud backup market abroad is thriving, the domestic cloud computing has also raised [5]. Shanghai Eisoon Software Company together with Shanghai telecom launched "biz navigator – Eisoon enterprise online backup" service in 2006. The purpose is to provide disaster tolerance service at different locations for Chinese

A Study on Cloud Backup Technology and Its Development

3

enterprises. The initial service only covers Shanghai city, and now gradually develops in a nationwide area. China telecom also launched its file storage service -- e cloud online backup software [6]. Free users can possess a 2G space, and for larger space, fee is needed. Through e cloud online backup, private chatting and transaction records, family photographs and video, music files and other important computer files can be protected. The largest IDC service provider launched a cloud computing platform--CloudEx in 2008, providing elastic computing services for Internet enterprises and storage and backup services for individuals and small and medium-sized enterprises. Cloud backup has become an important direction in storage industry, while there is less foreign literature about the systematic discussion of cloud backup in the academic filed. In Internet backup, peer-to-peer (P2P) network backup is often used [7] [8]. The equivalent node stores the backup data of other nodes. Each node makes a contribution of its idle storage resources, at the same time, they complete data backup corporately. By this mode, the mutual trust between nodes, as well as the management of multiple nodes becomes challenging problems. Some experts suggest a service-oriented backup method [9], which brings peer-topeer network backup into client/server backup mode, taking use of the idle resources of application servers to constitute a virtual backup server. However, as it involves many factors, this method is only applicable to backup services in fixed geographical scope, not for the WAN. Some scholars put forward the idea of combining client/server and peer-to-peer model together, designing a backup and recovery system servicing JTang files [10]. Some industry delegates propose general data center architecture based on network storage and backup [11], which divides the data of application system into fixed data and variable data, and respectively backup and stored so that the application system can be recovered in time. Blue Whale Backup System (BWBS) [12] developed by Computing Technology Research Institute of Chinese Academy of Sciences is for data backup and management of Blue Whale virtual storage equipment system. The development of many current backup systems more or less takes a reference of open source network backup system Bacula [13]. Bacula can realize many backup and restore functions perfectly, but it doesn’t solve gateway penetration problem well, and the backup server is responsible for connecting the backup client actively, so the software can only be used in LAN within enterprises, but not for the WAN, and it cannot turn from software mode to service mode. Another open source backup recovery software called Amanda [14], developed by Maryland University, is based on traditional UNIX backup tools such as dump and tar, which supports the capability of saving workstation data into tapes, and is widely used.

3 Analysis of Cloud Backup Technology Cloud backup service mode has many advantages compared with backup software, and also conforms to the trend of current software evolution. The important factor that influences its acceptance lies in users’ consumption habit. At present, most users favor to backup their important data in storage equipment in the side, while online storage service allows users to store their data in the online data center of storage service providers, which will undoubtedly make many users worry about data security problem. Thus, from the technical angle, to capture the market, cloud backup must guarantee the safety and reliability of users’ data. When accident occurs, it can guarantee 100% data recovery, at the same time, it also needs enough network resources to ensure the speed of backup services. Technical problems will directly

4

H. Zhonglin and H. Yuhua

cause the failure of cloud backup promotion. In April 2008, HP Upline cloud backup service was formally online, but in early 2009 it had no choice but close. When Hewlett-Packard first launched cloud backup, it failed. The reason is that the infrastructure is unable to keep pace with the increasing users brought by free trial, and system overload causes machine crash [15]. There are some other examples of failure, such as S3 cloud storage service of Amazon that failed because of software malfunction [16], Google's Gmail that cannot operate for several hours due to system faults, and Linkup that has to stop service after losing nearly half of data being stored. Cloud backup service system under WAN environment must satisfy various needs. It must be compatible with the heterogeneous data platform of the client, and satisfy the high extensibility of end storage devices and the storage organization form of mass data. It must both consider network transmission efficiency, and ensure the security of data. It satisfies data integrity not only at the block and file level, but also at the application layer. Moreover, it also must provide concurrent access for a large number of users, and have active control over service quality. To take overall consideration of these problems means that cloud backup system faces more complex technical problems during the development process than conventional backup software. The efficient solution of these problems is the key that determines whether cloud backup is accepted by users or not. The differences between cloud backup and traditional backup are: from the aspect of users, what users concern include: first, security problem, namely, how to ensure the data on the cloud is not theft, tampered and leaked; second, performance problem, namely, is backup quickly enough to satisfy users demands; third, reliability problem, namely, whether data recovery is reliable. From the aspect of service, what service providers concerns include: how to deploy and provide stable backup service? how to realize easy extension, upgrade and management? how to reduce service cost? From the aspect of research, what researchers need to solve include the system structure of cloud backup, the security policy of backup data, concurrent scheduling of multi-user backup jobs and the effective management of the mass data etc. Therefore cloud backup is going to face challenges from five aspects [17], the first is to meet user needs at a lower cost; the second is to solve cross-regional centralized management and concurrent access problems brought by centralized storage of mass data; the third is to guarantee the high reliability and privacy of backup data; the fourth is to ensure service quality within limited bandwidth; the fifth is to consider backup information sharing so as to satisfy fast expansion of new business.

4 B-Cloud B-Cloud is based on the idea of PaaS (Platform as a Service), which provides a development framework, submitted to users in SaaS mode. It is also a kind of application of SaaS mode, but it can accelerate the development of SaaS, especially the development speed of SaaS applications. Based on the above concept, high reliable, extensible and upgradable applications can be developed. One application can have several instances at the same time, and there is no single point of failure. Application servers can make lateral extension and automatically acquire maintenance, do not need manual maintenance. Huazhong University of Science and Technology and Wuhan Hexun Computer Engineering Co., LTD. jointly developed a cloud backup service platform (B-Cloud) [18], which adopts backup technology, providing online backup services for education network users. The deploy structure is shown in figure 1. This

A Study on Cloud Backup Technology and Its Development

5

system includes three-level backup: the upper layer is wide-area cloud (public cloud), covering areas accessed by all backup users through WAN. The wide-area cloud servers include the wide-area manager and the wide-area cloud storage nodes. The middle layer is regional cloud, generally divided according to the geographical areas (such as provinces, municipalities, etc.). The corresponding service nodes include the regional managers and regional storage servers. The lower layer is local cloud (private cloud), which can be divided according to smaller geographical area or specific entities, such as campus, enterprises or organizations. It can run both in the WAN or LAN. Users are limited to the local area. Service nodes include the local managers and private cloud storage servers. Regional cloud and private cloud, similar to wide-area cloud, has multiple local storage servers that provide services for multiple backup clients corporately.

Fig. 1. The deployment structure of B-Cloud

The topology of the above B-Cloud backup system may be described as: wide-area cloud is taken as the root node, regional and local cloud as branch nodes, and a tree structure is formed Each node has its own backup managers and storage servers, which are to realize the backup task scheduling and backup data access at the local area. There is physical connection between wide-area cloud, regional cloud and local cloud. The relationship between the adjacent layers is called father-son relationship, and the child node can be considered as a special customer of the father node. This structure has good expansibility. At present, only three layers have been defined. With the increasing of user scale and the expanding of service area, nodes at a certain layer can be split as needed, and new nodes can be added. The B-Cloud backup system includes three modules: cloud backup client, cloud backup manager and storage server. A. Cloud Backup Client Cloud backup client software is installed on the host machine that is geographically distributed and needs to accept backup services. It can be a common customer terminal, a WWW server, and database server or file server. The communication between the client and the manager is mainly to make preparation before backup and restore operation and record state feedback during and after the operation, including user registration, creating backup objects, assigning backup objects corresponding

6

H. Zhonglin and H. Yuhua

backup policy, obtaining the address of the storage servers and session key information, and feedbacking status information to the scheduling servers at a regular interval. The client and the storage server merely complete backup and restored data transmission. During data backup, the client is responsible for acquiring all source data needed backup, and sending it to the storage server according to the manner set by the system. During recovery, the inverse operation is done. The storage server sends the required data to the directory specified by the client so as to recover the data. B. Cloud Backup Manager Cloud backup manager is the monitor and management center of the whole service system, which is responsible for registration and management of users and storage servers, task scheduling, status monitoring during job execution and metadata management. When a client logins in the system, it does identity authentication to make sure whether it is a legitimate user. It scans task queue regularly. When the execution time is end, another service thread is started. According to load balancing policy, connection between the client and server is established, and task execution is monitored. At the same time, each storage server status is also monitored and regular space arrangement and fragment recovery is done. The database needed for execution is maintained by managers, which backup registration information of the client and the storage server, as well as some dynamic information related to job execution such as backup object information, task list information, version information of successful backup, error log information, etc. The correct recovery of backup data is realized through the mapping relationship between logical files stored in cloud backup managers and physical data blocks. C. Storage Servers The storage server is a valid storage medium node accredited by the manager. Under the centralized management of the manager, it makes real-time responses to data backup and recovery queries from multiple clients, accepts backup data, manages data storage and sends recovered data to the backup client. To support efficient execution of backup and recovery operations, reasonable organization mode and management methods of backup data must be designed for the storage server. At the same time, the system must support multiple storage servers and multiple files single server, realize high expansibility of the storage side, and satisfy mass data storage requirements.

5 Conclusions From cloud computing to cloud storage, cloud backup, and to more future applications, there is still a long way to go for both research and industrialization. As the 10 big predictions of information industry and telecoms industries in 2010 announced by Internet Data Center, cloud computing will expand and become mature, many new public cloud and private cloud services, cloud applications and services related public cloud and private cloud together are emerging. Cloud backup provides users a new way of data disaster tolerance, and it is an application of cloud storage. Of course, compared with traditional distributed storage technology, deeper study must made on underlying data organization, parallel task scheduling and security strategies.

A Study on Cloud Backup Technology and Its Development

7

References 1. Laplante, P.A., Zhang, J., Voas, J.: What’s in a Name? Distinguishing between SaaS and SOA. In: IT Pro., May/June 2008, pp. 46–50 (2008) 2. Namjoshi, J., Gupte, A.: Service oriented architecture for cloud based travel reservation software as a service. In: Proceedings of 2009 IEEE International Conference on Cloud Computing (CLOUD), pp. 147–150. IEEE, Piscataway (2009) 3. Hayes, B.: Cloud Computing. Communications of the ACM 51(7), 9–11 (2008) 4. Lin, G., Dasmalchi, G., Zhu, J.: Cloud computing and IT as a service: opportunities and challenges. In: Proceedings of 2008 IEEE International Conference on Web Services. IEEE, Piscataway (2008) 5. Zheng, W.: The Curtain of Cloud Computing Is Opened. Communications of CCF 6, 6–7 (2009) 6. http://www.zaix8.com/html/zaixiancunchu/eyun.html 7. Tran, D.N., Chiang, F., Li, J.: Friendstore: Cooperative online backup using trusted nodes. In: Proceedings of the 1st Workshop on Social Network Systems, pp. 37–42. Association for Computing Machinery, USA (2008) 8. Lluis, P.-J., Pedro, G.-L., Marc, S.-A.: Rewarding Stability in Peer-to-Peer Backup Systems. In: Proceedings of 16th IEEE International Conference on Networks, pp. 1–6. IEEE Computer Society, United States (2008) 9. Cheng, H., Ho, Y.H., Hua, K.A., et al.: A Service-Oriented Approach to Storage Backup. In: Proceedings of 2008 IEEE International Conference on Services Computing, pp. 413– 421. IEEE Computer Society, United States (2008) 10. Su, Y.: Design and Implementation of Backup and Recovery Tool for Distributed File Storage System. Library of Zhejiang University, Hangzhou (2008) 11. Zhang, Z., Zhang, X.: Generalized Data Center Architecture Based on Network Storage and Backup. In: Proceedings of 2008 ISECS International Colloquium on Computing, Communication, Control, and Management, pp. 166–169. IEEE Computer Society, United States (2008) 12. Xu, W.: Blue Whale Backup System. Computer Engineering 34(19), 9–11 (2008) 13. Bacula, http://www.bacula.org 14. da Silva, J., Guthmundsson, O.: The Amanda network backup manager. In: Proceedings of the Seventh System Administration Conference, pp. 171–182. USENIX Assoc., Berkeley (1993) 15. http://storage.doit.com.cn/article/2009/0302/6947880.shtml 16. Gohring, N.: Amazon’s S3 down for several hours (2008), http://www.pcworld.com/businesscenter/article/142549/ amazonss3downforseveralhours.html 17. Li, J., Zhou, Y.: Innovations of Online Backup Service based on Cloud Storage. Technology forum 3, 35–37 (2010) 18. http://www.backupcloud.com.cn

Research on the Engineering Management Reform of the Yellow River Deng Yu and Gu Lieya Yellow River Institute of Hydraulic Research Research Center on Levee Safety Disaster Prevention MWR Zhengzhou, china [email protected]

Abstract. For further improving and perfecting the level of engineering management, the engineering management database of Yellow River is established, which is an effective means to realize the share and distributed storage of basin engineering management information and serves the function of regulating development of the Yellow River engineering management. At the same time, the system framework of new management mode is established preliminarily and the level of engineering management is reformed dramatically. Keywords: engineering management, database, management mode, Yellow River.

1 Introduction The reform of water management system concentrating on separation of management and maintenance conducted by YRCC, which is related to the further development of 76 water management departments under YRCC, has very important significance. Facing the total new system, how to establish matching management mode which is “management scientifically and running canonically “has been paid much attention by each sides from the beginning of reform and specially studied by YRCC following the issue of related regulations and large –scale training. The “Digital Yellow River” project has the function of data collection, real–time transmission, storage management and on-line analysis and process, so it can realize effective management of the flood control projects. The establishment of Yellow River engineering management database is an important means to realize the share and distributed storage of basin engineering management info and serves the function of regulating development of the Yellow River engineering management database. At present, the system framework of new management mode is established preliminarily and the level of engineering management is reformed dramatically. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 8–13, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research on the Engineering Management Reform of the Yellow River

9

2 Database of Engineering Management A. Establishment Contents According to the characteristics of the Yellow River flood control engineering management and practical situation, the large quantity basic info generated in the longterm management and operation of the Yellow River flood control projects is analyzed, sorted, compiled. Thus the management info is classified into three types, i.e. basic info of engineering management, management info of project operation and safety monitoring info of flood control. The basic info of engineering management is the original data describing basic features about the Yellow River flood control projects, including declaration to project site, engineering structure and technology. The management info of project operation is generated in operation and maintenance process of the Yellow River flood control projects and includes the management info about daily project maintenance, detection for hidden defect, project inspection etc. In addition, the management info of maintenance for biology protection engineering and pertain establishment is included, too. The safety monitoring info of flood control is collected by the inner-outer sensors and nondestructive examination technology from the flood control projects, such as dike, danger spot, river training project, water gate etc. B. System Management The database structure construction of the Yellow River engineering management database had been finished in the end of 2003 and the test operation run in the Yellow River Transaction Agency Zhengzhou foremost. The database is late-model according to unified standards of “Digit Yellow River” (ORACLE 91, ARC/INFO). So far, the database has been logged in a lot of transaction agencies. [1] 1) Info Acquisition There are two manners for database info acquisition of the Yellow River engineering management database. One is on-line real time acquisition, such as sensor collecting data on site, which can realize real-time monitoring, regular observation and entering warehouse automatically, and the other is non-on-line and non-real-time acquisition, including file info of project history and late data of artificial acquisition. 2) Info Log-in The info of the Yellow River engineering management is collected by county engineering management departments and checked to log in base by town engineering management departments. The staff of logging data is authenticated safely. 3) Authority of System Management The administrative organization for the Yellow River flood control projects is ranked to four grades, whose authority can be set according to application function and user demand.

10

D. Yu and G. Lieya

•

•

• •

The county administrative departments are the basic net station. They are in charge of logging data and the logging data staff should pass the safety authentication. In addition, they have the access to call the relevant info of one’s county, call-on the superior public platform. The city project departments manage the county project departments within their domain. They are in charge of the work of check and log-in data, authenticating log-in data and the staff entering warehouse. They have the access to call data info of all county engineering management stations within their domain, call-on the superior public platform. The provincial engineering management departments manage the city departments. They have the access to call the data info of all city and county project departments within their domain, call-on the superior public platform. The Yellow River Conservancy Commission engineering management department manages the provincial project departments and directly under project departments. And it has the access to call the data info of the departments within its domain.

3 Management Modes The research on management and operation modes of the Yellow River engineering should be under the guidance of “the implementation proposal of the reform on management system of hydraulic engineering “issued by the state council, and the precondition of guaranteeing the integrity and safe-operation afar the separation of management and maintenance. The unified, scientific and canonical criteria system which is “management scientifically and running canonically” should be formed step by step, and restriction mechanism including trade restriction, restriction between departments and restriction inner department should be established , to establish the supervision modes in which the quality safety, fund spending and schedule of engineering management work and maintenance processing were supervised by superior administrator, water management department and supervision department according to related regulations ;to establish the stimulation modes with the core of competition and the measures of engineering check, bidding and bid, integrated appraisal, strict and impartial reward and penalty ,as well as encouraging innovation; to establish the guarantee mechanism including organization guarantee, fund guarantee, system guarantee, labour resources guarantee and benefit keeping.[2-3] A. Reform Meausures Consulting to the experiences of construction management of infrastructure in the Yellow River and other trades as highway maintenance, focusing on the characteristics of maintenance processing and requirement of the present work in the Yellow River harnessing, YRCC established the overall framework of the research on management and operations modes of the Yellow River engineering, and worked out matching management regulations and methods. As a result, the work processing and

Research on the Engineering Management Reform of the Yellow River

11

crucial stages of the management and maintenance of the Yellow River engineering were standardized effectively, and the further performance of the reform on water management system were promoted ,founding the base of the transformation of management and maintenance work of the Yellow River engineering running under new mechanism. Specifically, including: •

• • •

Dividing the range of professional work responsibility between engineering management and maintenance definitely, working out demonstration text of maintenance contract, making the authority clear, privilege and responsibility definite in both sides,. Key stages related to maintenance work such as contract sign, plan workout, maintenance criteria, and engineering supervision, quality monitoring and project acceptance were standardized systematically. Systematic quality management system of engineering maintenance was established, moreover, supervision and quality monitoring mechanism were imported into maintenance work. Eleven training class on management modes were held, staff of water management department and maintenance enterprise were trained in large scale.

B. Effect of Implementation 1) Standardized System Has Been Preliminarily Established andTaken Effect The issue of standardization method for management effectively stipulated the work process and main stages of the management and maintenance of the Yellow River engineering. The departments under YRCC matched and constituted detailed implementing rules according to their own situation, which further stipulated the development of operation management, and realized the canonical operation of engineering management and well running of the maintenance market.

一

2) The Status of Water Management Department as non Profit Institutional Department Has Been Confirmed, the Way of Fund Is Smooth The water management department has been defined as complete non-profit institutional department, the fund of engineering maintenance is considered into the budget of national finance. Both the management and maintenance fund are guaranteed, which can financially guarantee to keep engineering intact and improve flood control capability. 3) The Professional Team Is on Duty, the Management of Contract Is Enhanced The well management mode of maintenance for the Yellow River engineering has been established, the on duty of professional team changed the way of segmental contract by employing and quickened the process of professional team construction and standardized management, which effectively promoted the further development of

12

D. Yu and G. Lieya

engineering management. Simultaneously， contract management between water management department and Maintenance Company is implemented, so that contact sign, supervision and acceptance are enhanced, and the engineering strength and quality are so that guaranteed. 4) The work passion of staff is improved, the appearance of engineering has been improved dramatically Broad and further propaganda made the staff know the further significance of reform and realize the care of nation to the Yellow River affairs is also the care to their work; the increase of various fund in the reform scheme will greatly change the past condition of which income was less than expense， so the work confidence of the staff was enhanced. The reform insisted on the principle of“ publicity， justice and equity ”and performed“sunlight processing"， and the establishment of endowment insurance system after retirement released the further misgivings of the enterprise staff, so the condensation strength of the staff is enhanced. Management system and measures of reward and penalty have been established and perfected in management department and maintenance enterprise respectively， the passion of staff for working well on own duty has been improved. The improvement of passion in both maintenance enterprise and their staff, with the refining of the regulations in check， evaluation, reward and penalty， which has made the forming for good work phase of chancing "passiveness" into "initiative"， changing "let me do" into "I would do”. The daily management of engineering has been enhanced and the appearance of engineering as been improved greatly. C. Recommended • • • •

Clarifying the responsibility of water management department, realizing harmonious and unified management. Supply and revise related standards and methods, improve the management and operation mechanism of the Yellow River engineering. Improve the cognition to market, enhance the management of contract. Enhance team training; improve the modernization level of management.

4 Conlusion The management system reform is very important in the national water conservancy engineering management; which indicates there is a great step in the water conservancy reform and development. In 2006， Water conservancy reform of Yellow River Water Conservancy Committee has fully implemented, the management of water engineering has improved gradually .And there are more problems have emerged as well. As long as the problems are solved continuously Yellow River Water Conservancy engineering management lever will become better in the future.

Research on the Engineering Management Reform of the Yellow River

13

References 1. Li, G.: Practice Digital Yellow River Project construction and its result. Chinawater, 30–32 (July 2008) 2. Chang, C., Liang, S.-k.: Management and Maintenance of Yellow River′s Water Projects after the Reform of Water Management System. Journal of North China Institute of Water Conservancy and Hydroelectric Power, 101–103 (August 2009) 3. Zhao, Y., Zhu, T.: Promoting reform of water management system and enhancing level of water project management. Chinawater, 17–19 (October 2007)

Research on Hospital CRM System Model Based on Multi-Agent Wang Suozhu and Fu Yan Department of Information Engineering Capital Normal University Beijing, China [email protected]

Abstract. In order to change the customer relationship management in hospital lacks of flexibility, adaptability, initiative, we research a model based on MultiAgent is proposed to overcome these shortcomings. By using Multi-Agent technology, the traditional customer relationship management system of hospital is constructed to a Multi-Agent system. In the paper, every part’s functions of this model are discussed. Keywords: hospital customer relationship management, Multi-Agent system, data mining.

1 Introduction For a long time, hospital administrators, doctors and patients generally agreed that patients were asking hospital for help when they were ill, so the hospitals did not find ways to attract patients. In China, medical service is a special area. As the industry’s peculiarities and shortcomings, the main medical resources focus on the state of public hospitals[1]. However, with the deepening of China’s medical and health system reform, especially after the accession to WTO, a large number of foreign hospitals entered the domestic market, which bringing a new competition pattern of medical service market. If our domestic hospitals want to win in the competition, they must improve core competitiveness[2]. The competition among hospitals whose strength is considerable is the competition for customers in fact. Hence, the hospitals pay more and more attention to market, and the “customer” concept is gradually introduced to hospital management. By integrating hospital business philosophy, business processes, medical technology and customer relationship into enterprise customer relationship management (CRM, Custom Relation Management), the hospital establish a "patient-centered" management system HCRM (Hospital Custom Relation Management). The system’s purpose is to maintain and retain existing customers, to absorb potential customers, to expand the ranks of loyal customers, and to get the customers’ lifetime value ultimately[3]. But HCRM system is still in the initial stage. Hospitals for reference CRM not only lack of intelligence and initiative, but also impossible to mine customers’ information M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 14–20, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research on Hospital CRM System Model Based on Multi-Agent

15

well. In this paper, a HCRM system model based on Multi-Agent is proposed to improve the system activity, so the system can provide better service.

2 Multi-Agent A. Agent Technology Agent technology is one hot research of the distributed artificial intelligence in recent years. Until now, there is still no unified definition about Agent. Agent is generally believed as a computer system which is packaged in a certain environment, it can achieve the purpose flexibly and automatically [4]. Agent general has the following characteristics[4]-[5]: a) Autonomy. It is one of the basic characteristics of Agent. Agent is running without the direct intervention of person or other Agent, its actions and behavior are based on its knowledge, the internal state and the perception from the external environment to control. b) Social ability. Agent and the other Agents can communicate through a language, which is Agent has the ability to cooperate with other Agents in external environment, and there are the relationship of interdependence and constraints between them. They can cooperate when they meet conflict. c) Pro-activeness. Agent can not only react to the outside world, but also do the basic behaviors by accepting some revelation of information. d) Reactivity. Agent has perception on the surrounding environment, and it can change the environment through their own behavior. e) Initiative. Agent can get and analyze patient information on its own initiative; it also can take initiative services depending on the patients’ needs. B. Multi-Agent System Multi-Agent Systems (Multi-Agent System, MAS) is composed of multiple Agents. It is a distributed autonomous system, and its basic idea is to arrange these Agents based on their objectives, resources, so that every Agent can complete its tasks as can as possible. In the system, each Agent is an autonomous computing entity which has objective, knowledge and ability. Lots of Agents work together to solve the problems. In the expression of the actual system, MAS expresses the system’s structure, functions and behavioral characteristics through Agents’ communication, cooperation, mutual solution, coordination, scheduling, management and control. Because the Agents in the same MAS can be heterogeneous, multi Agent technology is important for complex system, it provides a unified model for a variety of practical systems, and a unified research framework for their research. The system’s application is very broad, and it’s potentially market is huge. By the definition of Agent and the function of MAS, it is clear that the system using multi-Agent technology can response to changing circumstances rapidly and makes timely action. The features of Agent ensure the interaction and interoperability between the system with users and external system.

3 Customer Relationship Managemeing In the current competitive market, the concern of all manufacturers is how to seize the customers, how to retain customers, and how to maintain competitiveness. If the

16

W. Suozhu and F. Yan

hospital wants to gain the advantage in the market, they must master the needs’ trend of customers, at the same time, they must strength ties with customers, and manage customers. CRM (Customer Relationship Management customer relationship management) is to meet the needs, and it is developing rapidly. CRM is a customer-centric business, by using information technology, it resigns business program and makes arrangement for workflow, in order to maintain regular customer, and to attract new customers. CRM was first proposed by the Gartner Group in the United States, he thought that CRM is a system which is constituted by marketing automation, sales, customer service and back office. It can make customers process more efficient and business process clear and better. The system includes three levels of applications: customer access, business processes, decision support. In the increasingly competitive market conditions, hospitals had to change the traditional concept and establish HCRM (Hospital Customer Relationship Management). HCRM (Hospital Customer Relationship Management) is a “patientcentered” management system in which enterprise CRM management experience is fused into hospital business philosophy, business processes, medical technology and customer relationship. HCRM needs to make effective cases for human resources, medical service process, information management process, and medical technology, etc, and then they may improve customers’ satisfaction and loyalty as can as possible.

4 HCRM System Based on Multi-Agent (MAHCFM) A. The Overall Structure of MAHCRM System The basic functions of HRCM must include the following aspects: a) to get different needs of customers by analyzing and evaluating the information of inpatients and outpatients in HIS (Hospital Information System); b) to include clear customer feedback channels, for which customers’ views and suggestions can be reflected; c) to include convenient channels. Hence, customers can get hospitals’ service easily by using their own tools (such as telephone, fax, internet, face to face conversation, etc); d) to disseminate hospitals as can as possible, so that all kinds of customers including potential customers will be know hospitals; e) to establish a feedback system in which the exchange of information among hospitals’ policy makers, managers, medical personnel, logistics personnel and customers is completely smooth. So that all the management system can be integrated together; f) to analyze and evaluate the customer relationship strongly[6]. Consequently, the implementation of HRCM system should be dynamic. It not only should have strong adaptability, but also have the characteristics to eliminate heterogeneous among systems. Based on Agent’s characteristics and the idea of Multi-Agent system, this paper establishes a MAHCRM system, its system structure is shown in Fig.1.

Research on Hospital CRM System Model Based on Multi-Agent

Phone service

Fax service

Information processing Agent

Web service

17

Email service

Mobile Agent

Interface Agent

GUI level User Agent Customer Service Agent

HIM A Hospital Marketing Agent

Intelligent Decision Agent

DW

Customer Care A Operation control level DM level DA Agent

Rule

Model

Medical Quality Agent Customer Rescores Agent

Data Model Agent

KB

Fig. 1. MAHCRM system structure

B. MAHCRM Interface Management Agent Customer contact layer is the interactive platform of information between hospitals and external environment. Its forms include: fax, website, email and other multimedia forms. Interface management. Agent is to set all kinds of information to the hospitals’ unified interactive platform. On the one hand, it passes the information to the other Agent in system based the user’s requirements; on the other hand, it receives the request from system Agent and sends it to the appropriate destination by moving Agent. The interface management Agent can word 24 hours uninterrupted and make quick response to customers’ need for hospitals’ service, it is composed of the following three parts: 1) Interface Agent. Different interfaces will be displayed for different types of customers; it can record the customers’ habits and sick, and then make adjustments. 2) Mobile Agent. It can move according to certain rules in the heterogeneous network, and complete a specific task on behalf of users by dealing with or using the right computer resource, information resource and software resource. 3) Information processing Agent. It is responsible for receiving the input data from customers or other external application, such as website, voice, mail, fax and

18

W. Suozhu and F. Yan

other information, while it is responsible for converting them into the common data format in MAHCRM system for the lower Agent processing. C. MAHCRM Business Process Management Agent Business process management includes almost all the business process management modules in MSHCRM. From the point of business logic, it is the core of HCRM. 1) User Agent. It is the inherent sign of user in system. At some moment, the user may not appear in their work space, so the user Agent should receive the information about user, and send user information to other Agent. In some cases, the user Agent completes certain tasks on behalf of the user. 2) Application Agent. They are the Agent who completes the co-application work in fact, and they belong to particular applications. Depending on the need of application, application Agent will start or terminate the work. In the system, they provide each other service and communicate each other, so that, they can complete a business process together. There are six specific parts in application Agent: a) Hospital information management Agent. It connects MAHCRM system and hospital information system (HIS), so MAHCRM system service can be extended into HIS, and HIS can be integrated into MAHCRM system. In hospital information management Agent, resources can be shared, and hospital information work can play a better role on hospital construction; b) Customer service Agent. Its tasks including receiving the user service requests, processing the requests, establishing service tasks and service response, tracking the tasks; c)Medical quality Agent. It is responsible for receiving customers’ complaints from Agent-interface layer, providing processing and feedback mechanisms, supervising and inspecting the health care quality; d) Hospital marketing Agent. Its tasks include the establishment of the hospital marketing plans, the implement of marketing activities, the collection and market analysis of competitor information; e) Customer care Agent. Based on users’ demands, customers are classified by the Agent to carry out personalized service, so that hospitals can

OLAP

data source

data of patient and custome

abstract clean f

data mining of business system customers data warehous e

core of data mining Mining algorithm

data mining plug-in

model design; hospital service; project recommendation; response, obtaining, value, segmentation of customer

Fig. 2. MAHCRM system’s data mining structure

provide medical information and treatment information timely. The medical reminding service based on users’ demands improves the awareness of hospitals’ initiative service. f) Customer resource management Agent. The Agent is responsible for the establishment of customer resources database and the classification for customer resources, it needs to classify and evaluate the customers based on their importance, and it also needs to provide basic data resources for the analysis of customers’ value.

Research on Hospital CRM System Model Based on Multi-Agent

19

D. MAHCRM Data Management Agent The primary duty of data management Agent is to provide various data analysis services for MAHCRM, to provide users with decision analysis. There are mainly three parts in MAHCRM data management Agent: 1) Intelligent decision Agent. Based on decision-making needs of other subsystems in HCRM, this Agent uses heuristic methods to find the appropriate data sets automatically from databases, and then it cleans the corresponding data and runs the appropriate data mining method. 2) Data analysis Agent. This Agent is to complete the statistical analysis and forecasting by using database, knowledge base and rule base, it also is used to support the decision-making. 3) Data modeling Agent. This Agent is responsible for monitoring the results of decision support, updating the outdated information and data in database, improving the information and knowledge extracted from database, so that the information and data can play a better role in future decision-making support services. E. MAHCRM Data Mining In MAHCRM System, data mining take the guiding role. Data mining is the only way to change lots of database data to a description of the characteristics of the images. By analyzing the images, we can obtain much information about customers, and let customer (patient) information and knowledge to flow and share effectively at hospital. So it makes the hospital to be timely and accurately on the patient information processing, satisfy patient personnel services to enhance the efficiency. MAHCRM system’s data mining structure is shown in Fig.2. As in Fig.2, data mining construction is divided into three aspects. First level is the hospital management system, which provides original data. Second level is data mining reference server. Through extracting, clearing and transforming, it takes the first level’s data putting into data washhouse, then analyze the data with data mining algorithm. Third level uses the data mining plug-in for the application of technology in MAHVRM.

5 Conclusions In recent years, there is more fierce competition between hospitals and hospital information management especially the research for hospital customer management is developed rapidly, so the design and development of hospital customer relationship management system is playing an important role in enhancing the core competitiveness of hospitals. In this paper, the MAHCRM system based on Multi-Agent system is constructed. It has used the popular artificial intelligence techniques—Agent technology, and the design idea of Multi-Agent system. In order to overcome the defects in existing hospital customer relationship management system such as inflexible and static, the MAHCRM system brings the concept of Multi-Agent system, in the system, different Agent works together to solve the above defects. At present, the analysis and design for the model has been completed basically, but there is a lot of work before the system is used into practical application.

20

W. Suozhu and F. Yan

References 1. Guo, x.: The implementation of CRM strategy in public hospital. Economist, 1004–4914, 05-217-02 (2008) 2. Li, x., Dong, j.: The implementation of CRM to improve the core competitiveness of the hospital, vol. 6(12), pp. 30–33 (2002) 3. Shang, w., Wu, h.: The discussion about the implementation of hospital customer relationship management. Hospital of Chinese mathematics 1, 2 (2007) 4. Idgem, W., Jenn Ings, N.R.: Intelligent Agents: Theory and Practice. The Knowledge Engineering Review (1995) 5. Wang, d., Guo, s.: The theory and application of Agent and Multi-Agent system. Computer Technology and Automation (2006) 6. Chen, x.: The functions’ overview and development trend of customer relationship management system. Technology Square (2008) 7. Yi, p.: Customer relationship management system- CRM. Computer Age 12, 14–17 (2001)

Risk Assessment Based on the Life Cycle of Virtual Enterprise Xia Wang, Zhimin Xie, and Xianjun Guan School of economics and management Tongji University Shanghai, China [email protected]

Abstract. The ambiguity and uncertainty of various endogenous and exogenous risks in virtual enterprise cause some difficulty to risk assessment, leading to subjectivity and inaccuracy of risk assessment in the virtual enterprise. Aiming at this problem, based on the analysis of various risk factors during every period of life cycle of virtual enterprise, this paper proposes the use of two-level fuzzy comprehensive evaluation to analyze the specific risks existing in every period of virtual enterprise, and then conducts an effective evaluation on the risk of specific virtual enterprise, which proves the feasibility of using fuzzy comprehensive evaluation method to assess the risk of virtual enterprise. Keywords: Virtual Enterprise, Risk Comprehensive Evaluation.

Assessment, Life cycle, Fuzzy

1 Introduction Virtual enterprise, a new form of organization and mode of operation, is increasingly being applied by more and more enterprises under the background of economic globalization, marketing dynamic change and demand individualization [1]. However, when the partners of virtual enterprise enjoy the common profits, they must take greater risks than the traditional companies. According to the study of Laciyt, for outsourcing typed virtual enterprises, 13% were of total failure, 19.6% in high-risk status, only 47.8% were completely successful. That means proportion of high risk and complete failure accounted for 32.6% of the total. So the negative effects caused by risks cannot be ignored, which could result in failure of virtual enterprises, and bring irretrievable losses to the companies [2]. Because of the ambiguity and uncertainty of various endogenous and exogenous risks in virtual enterprise, there are some difficulties in risk assessment. Risk assessment is to determine the acceptable level of risk in the whole company with the basis of individual risk assessment. The evaluation methods commonly used are breakeven analysis, sensitivity analysis, and probability analysis, which are all from a profit point of view to find the simple relationship between profits and the related parameters, and then give a description with the use of simple mathematical or probability analysis M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 21–28, 2011. © Springer-Verlag Berlin Heidelberg 2011

22

X. Wang, Z. Xie, and X. Guan

method. However, enterprise, especially the virtual enterprise is a complex system composed of many parts with specific functions. The risk assessment for such a complex system should use system analysis method, from a system perspective, based on a comprehensive analysis of system objective and functions of its sections and the relationship between them, study the operating rules of various risks, and finally determine the overall risk level. Furthermore, the probability analysis in the risk assessment of virtual enterprise has failed, because the virtual enterprise is a temporary form of dynamic alliance to seize emerging market opportunities. There are no raw data for reference, and the objective probability distribution is unknowable, entirely reliance on the experience and subjective judgments, so there is great ambiguity [3, 4, 5]. Therefore, form the system point of view, this paper establishes a risk assessment model of virtual enterprise with the use of fuzzy mathematics theory.

2 Theoretical Basis of Risk in Virtual Enterprise A. The Meaning of Risk in Virtual Enterprise In the process of operation, enterprises may encounter risks anytime. If risks cannot be dealt with properly, they will lead to business failure. The word “risk” has three versions: one refers to the possibility of accident happening; the second refers to the unfavorable consequence caused by accident; the third refers to the condition of accident happening [6]. The three claim that there is a large degree of uncertainty in the occurrence of risk, and that the likelihood of risk and the severity of its consequence are associated with the condition of its happening. According to the definition of risk, risk of virtual enterprise can be described as the uncertainty of access to income in the process of operation, including both the uncertainty of gaining unexpected profits and the possibility of encountering unexpected losses. In the business process of virtual enterprise, because of the complexity of production process and the particularity of management mode, there are lots of uncertain factors that can bring loss to enterprise, if not being coped with, they would not only bring obstacles to the normal operation, but lead to complete failure of virtual enterprise [6]. So, the risk studied in this paper mainly refers to the uncertainty of encountering losses. B. The Type of Risk in Virtual Enterprise The risk of virtual enterprise can be divided into two categories: endogenous and exogenous risks. Exogenous risks are caused by external factors, including political risk, market risk, technical risk and financial risk; endogenous risks caused by the business activities can be controlled if enterprise takes appropriate strategy [7 8].

，

1)

Exogenous risks a) Political risk. It mainly includes changes in the law and policy, social instability and the government's intervention. b) Financial risk. It mainly includes changes in interest rates and exchange rates, changes in the stock market, global or regional financial crisis and so on.

Risk Assessment Based on the Life Cycle of Virtual Enterprise

23

c) Technical risk. It mainly refers to the uncertainty and difficulty associated with the technology project undertaken by virtual enterprise. d) Market risk. It mainly includes changes in consumer demands, market competition, changes in the upstream market, economic decline and so on. 2) Endogenous risks The endogenous risks are different in different stages of life cycle of virtual enterprise. Then we will introduce them respectively. a) Risks in identification stage i. Identification risk of market opportunity. It refers that the core business mistakes the market opportunity of little value for the promising one because of inaccurate market information or the mischoice of analysis tool of market opportunity. ii. Identification risk of core competency. It is caused by mischoice of the realization mode because the core business overestimates or underestimates its core competency. iii. Selection risk of strategy formulation. It refers to failure to achieve market opportunity due to the selection of improper strategy formulation. b) Risks in formation stage i. Selection risk of partner. It refers to the loss caused by changing partner halfway for selecting improper partner at first. ii. Risk of resources integration. It refers that due to the failure of resources integration virtual enterprise loses flexible and cannot respond to market changes quickly. iii. Adverse selection risk of partner. Because of information asymmetry, partner may exaggerate its capacity to enhance its own value, resulting in the core business to make wrong decisions. iv. Risk of benefits distribution. If the benefits distribution is unreasonable, the partners may withdraw halfway or their enthusiasm may be impacted, and the virtual enterprise may breakup halfway. v. Risk of task assignment. It refers that the core business assigns tasks to inappropriate partners, leading to partners can not complete subtasks, which delays the total duration. c) Risks in operation stage i. Communication risk. It refers to the chasm in the time process due to the poor communication channel or lack of communication enthusiasm. ii. Risk of cultural differences. As partners come from different countries and regions, cultural differences will generate lots of friction and conflicts, which may lead to disintegration of the virtual enterprise halfway. iii. Liquidity risk. Virtual enterprise is an open organization, and partners are free to join or leave. Such liquidity could lead to postponement or collapse of projects and is not conducive to the accumulation of knowledge for virtual enterprise. iv. Risk of task coordination. There are conflicts in the task completion time and quality among partners, which may cause the project cannot be completed on time. v. Quality risk. It refers to the risk due to substandard products.

24

X. Wang, Z. Xie, and X. Guan

vi.

Moral hazard of partner. It refers that some member or members in transactions, contrary to the general requirements or ethics of the market mechanism, seek to maximize their own interests and let other partners bear losses. vii. Time risk. It refers to the loss of failure to achieve market opportunity caused by poor management. d) Risks in termination stage In the termination stage, the possible risks still cannot be ignored. First, the legal disputes will arise due to unreasonable benefits distribution or contradiction between the implementation and the distribution scheme, and they could affect the image of core business or partners. Second, because the virtual enterprise does not exist legally, the legal disputes are easy to arise in the settlement stage due to the ambiguous property rights.

3 The Basic Principle of Fuzzy Comprehensive Evaluation The process of fuzzy comprehensive is outlined as follows [9]. 1) Factor set U Assuming the influenced factors can be classified into n categories, marked as u1 , u 2 , " , u n . The n factors form a factor set

U = {u1, u 2 , " , u n

}

(1)

Remark set V The remark on each factor can be divided into m degrees, marked as v1 , v 2 , " , v m , so we can get the remark set

2)

V = {v1 , v 2 , " , v m 3)

}

(2)

Membership matrix R R is the fuzzy mapping from factor set U to remark set V. The element rij in

matrix denotes the possibility of factor i belonging to remark Grade j , also called membership grade of remark Grade j for factor i . If fix i , (ri1 , ri 2 , " , rim ) is a fuzzy set of V , representing the remark of the single factor i . We can get the fuzzy membership matrix R by combining the remarks of each factor. 4) Weights Usually the importance of each evaluation factor is different. So the weights of evaluation factors can be regarded as a fuzzy set W of factor set U , and n

∑ W (u ) = 1 i

(3)

i =1

5)

Comprehensive evaluation model S =W D R

Where W is the weighting set corresponding to the factor set U.

(4)

Risk Assessment Based on the Life Cycle of Virtual Enterprise

6)

25

Determine the evaluation grade According to the evaluation model, generally we select the remark of

s k = max{s i }

(5)

1≤i ≤ m

as the remark grade of the subject, in which si is the element of S . But when the following occurs, appropriate adjustments should be made. k −1

a) Calculate

∑ i =1

k −1

m

s i and

∑

s i . If

i = k +1

∑ i =1

1 si ≥ 2

m

∑

m

s i , or

i =1

∑

1 si ≥ 2 i = k +1

m

∑s

i

, then

i =1

select s k −1 or s k +1 . b) If the number of equal maximum number in S = {s1 , s 2 , ", s m } is q ( q ≤ m ), make shift calculation respectively according the rule of a). If the evaluation degree is still discrete after shift, then take the evaluation of the center grade. If there are two center grades, then select the one with higher weight. 7) If there are several subsets in factor set, first use fuzzy comprehensive evaluation for the underlying indexes, and then combine the results to form the evaluation matrix of upper-layer indexes adjacent. By analogy, the value of total evaluation can be gained [10].

4 Case Analysis of Risk Assessment of Virtual Enterprise This paper takes virtual enterprise A for an example. Currently Enterprise A is in the identification stage. Its exogenous risks include political risk, market risk, technical risk and financial risk; the endogenous risks are identification risk of market opportunity, identification risk of core competency and selection risk of strategy formulation. 1)

Fuzzy comprehensive evaluation of endogenous risk of Enterprise A a) Factor set

{

U1 = u11 , u12 , u13

}

(6)

Where u11 represents the identification risk of market opportunity; u12 represents the identification risk of core competency; u13 represents selection risk of strategy formulation. b) Remark set

V = {higher ， high ， medium ， low ， lower

}

c) Fuzzy membership matrix According to investigation, the evaluation vector of factor u11 is (0.5,0.2,0.2,0.1,0 ) , that means 50% think the selection risk of partner is higher, 20% think it is high, 20% think the risk is medium, 10% think it is low, and nobody considers the risk is lower. Similarly, we can get the evaluation vectors of other

26

X. Wang, Z. Xie, and X. Guan

factors: the evaluation of factor u12 is (0.1,0.3,0.3,0.2,0.1 ) , and that of factor u13 is (0,0.1,0.2,0.6,0.1 ) . So we can get the fuzzy membership matrix of endogenous risk: ⎡0.5 0.2 0.2 0.1 0 ⎤ R1 = ⎢⎢ 0.1 0.3 0.3 0.2 0.1⎥⎥ ⎢⎣ 0 0.1 0.2 0.6 0.1⎥⎦

(7)

d) Weights W = {0.45,0.3,0.25

}

(8)

e) Fuzzy comprehensive evaluation model S1 = W D R = (0.45,0.3,0.3,0.25,0.1)

(9)

f) Determine the evaluation grade 5

s11 = max {s1i } = 0.45

,

1≤ i ≤5

5

Because

∑

s1i >

i=2

∑s

= 0.95

1i

i=2

1 2

,

1 2

5

∑s

1i

= 0.7

.

i =1

5

∑s

1i

, we select the remark of 0.3 as the evaluation result of

i =1

endogenous risk, that means the endogenous risk of Enterprise A is high. 2) Fuzzy comprehensive evaluation of exogenous risk of Enterprise A a) Factor set U = {political risk, market risk, technical risk, financial risk} 2

b) Fuzzy membership matrix ⎡0 ⎢0.4 R2 = ⎢ ⎢ 0 .3 ⎢ ⎣0.4

0.1 0.1 0.5 0.3⎤ 0.3 0.2 0.1 0 ⎥⎥ 0.3 0.2 0.1 0.1⎥ ⎥ 0.4 0.2 0 0⎦

(10)

W2 = {0.2,0.4,0.1,0.3}

(11)

c) Weights

d) Comprehensive evaluation model S 2 = (0.4,0.3,0.2,0.2,0.2 )

(12)

e) Determine the evaluation grade

s 21 = max{s 2i } = 0.4 , 1≤i ≤5

5

∑ i=2

s 2 i = 0 .9 ,

1 2

5

∑ i =1

5

s 2i = 0.65 . Because

∑ i=2

s1i >

1 2

5

∑s

1i

,

i =1

we select the remark of 0.3 as the evaluation result of exogenous risk, that means the exogenous risk of Enterprise A is high.

Risk Assessment Based on the Life Cycle of Virtual Enterprise

3)

27

Fuzzy comprehensive evaluation of overall risk a) Factor set U = {endogenous risk, exogenous risk} b) Fuzzy membership matrix ⎡0.45 0.3 0.3 0.25 0.1⎤ R=⎢ ⎥ ⎣ 0.4 0.3 0.2 0.2 0.2⎦

(13)

W = {0 . 65 ，0 . 35 }

(14)

c) Weights

d) Comprehensive evaluation model S = (0.45，0.3，0.3，0.25，0.2 )

(15)

e) Determine the evaluation grade

s1 = max{s i } = 0.45 , 1≤i ≤5

5

∑s i=2

i

= 1.05 ,

1 2

5

∑s

i

= 0.75 , 1.05 > 0.75 . So we select

i =1

the remark of 0.3 as the evaluation result, that means the overall risk of Enterprise A is high.

5 Conclusions Virtual enterprise is creature of economic globalization and rapid development of information technology. It helps businesses improve the ability of response to market changes, but also brings some new problems. For example, the negative effects caused by risks throughout the entire life cycle of virtual enterprise cannot be ignored. Therefore, the risk control of virtual enterprise plays a decisive role in the entire process of management, and assessing the risks effectively and appropriately is the key step for virtual enterprise to adopt effective risk control measures. This paper analyzes the specific risks existing in every period of virtual enterprise with the use of two-level fuzzy comprehensive evaluation, aiming to provide theoretical guidance to virtual enterprise to estimate the magnitude of its risk. Acknowledgment. Zhimin Xie wishes to express thanks to Pro. Xia Wang and Dr. Xianjun Guan for the valuable discussion and suggestions. Without their help, this thesis cannot be accomplished.

References 1. Dai, F.: Study on Risk Management of Virtual Enterprise. Zhejiang University of Technology (April 2006) 2. Gao, W.: Study on the Construction and Benefits and Risks of Virtual Enterprise. Harbin Institute of Technology (January 2004)

28

X. Wang, Z. Xie, and X. Guan

3. Zeng, Z., Li, Y., Li, S.: Evaluation of Risks in Virtual Enterprise Based on Fuzzy AHP. Fuzzy Systems and Mathematics 20(4), 135–139 (2006) 4. Yan, K., Li, J.: Application of Fuzzy Integrative Evaluation Method on Risk Management of Virtual Enterprises. Industrial Engineering Joural 07(3), 40–43 (2004) 5. Huang, M., Wu, X., Wang, X., Ip, W.H., Yung, K.L.: PSO based single strategy risk programming problem for virtual enterprise. In: Proceedings of 2006 America Control Conference, pp. 4506–4510 (2006) 6. Wang, M.: Study on Risk Management of Virtual Enterprise. Ocean University of China (March 2005) 7. Ye, F., Sun, D.: Study on Risk Management of Virtual Enterprise Facing life cycle. Science of Science and Management of S&T 11, 130–133 (2004) 8. Zhang, D.: The Risk and its effective control of Virtual Enterprise. Group Economy 173, 89–90 (2006) 9. Zhang, Y., Wu, T., Wang, M., Sun, Z.: Systems Engineering, pp. 307–308. China Meteorological Press (1997) 10. Gong, C.: A Study on Virtual Enterprise’s Risk Based on Entropy Coefficients Multi-level Fuzzy Comprehensive Evaluation. Harbin University of Science and Technology (June 2005)

Research on Financial System Computing Simulation∗ Tang Chuan and Chen Ling Dept. of computer science & technology Guangdong University of Finance Guangzhou, China [email protected]

Abstract. This paper presents a multi-agents modeling method based on agent micro-interaction about financial system. Build micro-layered model between agents interaction under the ideally financial system. Offer a decision way to deal with the variation trend of financial system. Keywords: multi-agent, financial system, modeling, computing simulation.

1 Introduction Towards integration in the global economy environment, the world's financial system has been gradually integrated into an age of the global economy and the financial system. To maintain the stability of the financial market system is running one of the core works for the national economies in the world. To effectively prevent and manage financial risk and to maintain financial market stability is a common goal for all levels of our government and investment institutions. The complexity of the financial system and the speculation of financial markets have determined fluctuations for the unpredictable and non-equilibrium financial markets in state level. From a series of major financial risk events and the global financial crisis in the 90's of last century, we know that the complexity of a financial system and its risk management is very important. Establishment and use of security and controllable system of financial resources in the national economies and the strategy of financial system development have guaranteed an important part of the national economy under smooth and healthy development. In a process of a strategy of developing countries financial resources, we need to consider the suitable use of financial products, but also to consider the carrying capacity for the states, enterprises and people and to take into account the functions of national, local, collective, individual, fairness and efficiency, etc. They are a highly complex, implementation of prediction and controlled process. ∗

This work is partially supported by Guangdong Nature Science Foundation of China (81510521000009).

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 29–35, 2011. © Springer-Verlag Berlin Heidelberg 2011

30

T. Chuan and C. Ling

2 The Financial System Complexity With the development of science system theory, cybernetics and information theory and in-depth study dissipative structural system under the physics, we found that there are specific observation periods for the non-equilibrium open system in the nature system and widespread in sociological systems. Their macroscopic characteristics show self-organization and chaos. They would a mutation and a motion of a system with uncertainty and complexity. A complex system in the nature means that a system with the physical quantities far from equilibrium, the time coordinate space is not reversible and a non-linear trajectory and behavioural characteristics can’t be determined. There are a large number of studies concerned about the complexity by the domestic and foreign scholars. They think that the complex system is composed of multiple elements, with complex nonlinear relationship between elements of the system. According to the numbers of subsystems in complex system, the number of sub-level categories, the interaction between the subsystems associated with the complexity of the relationship between openness and dependence on the environment, we know that the complex system can be divided into single large-scale systems, complex giant system and open complex giant system. [l]. A financial system is characterized by a great number of components of a system and its participants, which including individual investors, institutional investors, producers, financial intermediaries and government. There are more complex between subsystems interaction. It is an open complex giant system [2]. The financiers, investors and financial intermediaries in a financial system deal with economic activities under the environment of interdependence and mutual restraint. The government use fiscal policy and a monetary policy tool to control the macroeconomic in a system so that the financial system can be smooth development as expected. Affect the factor of a financial system operating is not only by the acts of government at all levels, but also by the behaviours of the financiers and investors. The financial activities of the participants, consumers, investors, producers, financial intermediaries, or government have their own subjective. The information obtained from those numbers of participants and decision makers has not symmetry, risk in different and profit preferences. It is seemingly random to make their profit targets and operation of different decision-making in their investment in all levels and time points so that the whole financial market becomes very complicated in the product price changes. To study the law of price changes of the financial products in a financial system, we aimed at understanding the internal laws of system operation in order to better control and use of a financial system. The system administrator has concerned about its smooth and efficient operation. The investor has concerned about the lowest investment cost and the most returns of the profit. From the microscopic point of view, although a financial product price changes on the performance in the time frame is very complicated, but from a macro perspective, in general, the financial system operating is relatively stable and convergent. It only occasionally shows up nonlinear characteristics with oscillations, local instability and trajectory divergence. It is very meaningful and useful to study those nonlinear characteristics and turning point.

Research on Financial System Computing Simulation

31

3 Modelling Method of a Financial System The study of the complexity of a financial system is an intersection field of science and the social sciences. It is a combination subject of physics, mathematics, computing, economics, and finance. Their study method contains of the modelling method and information technology. Their knowledge area includes non-linear dynamics, thermodynamics, fractal geometric theory, chaos theory, financial market theory, econometrics, mathematical statistics and computer science. To study the complexity of a financial system is usually first need to establish a research object model. The way to build a modelling is a basic method in the risk of a financial system. At present, we know that the main methods of the modelling are including physical modelling, mathematical modelling, and graphical modelling and computer simulation modellings. From the financial system modelling level they can be divided into a top-down model, a bottom-up model and a mixed model. From the mathematical methods they can be divided into a linear model and a nonlinear model. From the research methods they are divided into a simulation modelling and an optimization modelling. We know that the financial system over the risk management model in the early stages is based on the description of macroscopic physical structure and the optimization of macro-physical parameters. It is also emphasized by the macro-laws in a system and the qualitative description of macro features. For the difference of micro level and initiative problem in the product exchanges in a system, we usually take the shield method and ignore market transactions complexity of time and space. Macro-quantitative research in traditional are taking the way of linear extension of time-coordinate-data and macro-statistic methods and be short of optimization model of evolution mechanism and marginal effect of non-linear trend extrapolation model so that we are difficult to explain them by the system involved in the main external factors and internal interaction between the macro-economic data. Since it is oversimplified for the relationship of the structure of a system in the traditional equilibrium economic model and ignores the difference between subject participation, micro component systems and participatory and active learning. We can’t understand the complex characteristics of a financial system well. Therefore, it can be happened some errors on models and calculation when we have done a prediction and evaluation for the complexity of a financial system.

4 Based on Multi-Agent Simulation Model in a Financial System In recent years, the method of ABM (Agent-Based Model) is considered about as a most effective method in studying the complexity problem. Its studying method is so different from the traditional modelling way. It has an own way, i.e. a concept of AGENT. This agent is a cell of the basic unit of a system and has self-target, internal micro-structure, survival and learning initiative power. It can through self-modify their behaviour to adapt to the surrounding environment. The ABM generally uses multi-agent system (MAS). We are modelling under the description for all kinds of micro-agent interaction. At the same time, we use a modelling method of a complex system combined with the discrete event simulation of computer simulation

32

T. Chuan and C. Ling

technology, agent action simulation and micro-agent interaction simulation as our study method. [4]. The core idea here is that we have simulated the exchange between the agents in a complex system and out outside of the material or information, the exchange between the agents and sub-agents and agent interaction so that we get that the changes of macro variables and the changes of micro-agent interaction. [5]. We use a MAS-ABM modelling method as our researching method in this paper so we get our goal by a micro-agent interaction in a system from a macro in the system. We also claim that a multi-agents modelling method based on micro-agent interaction about a financial system. Using role with agent binding mechanism and agent layered mechanism; this model describes investment behaviour abstractly and set up the system structure of dynamic investors in a financial complex adaptive system. A. The Modelling Assumption a) The financial products involved in a transaction are completely electronic and no logistics barriers for free flow in the network. b) Agent contains the financial market authorities, securities companies, institutional investors, the main investors. c) There are no different and non-symmetry in cross-layer information for all kinds of agents from the different layers. d) Every agent nearby get together and forms a small group or secondary structure. The agents inside a small group follow criterion of micro-structure interaction. The neighbor agents inside a small group follow criterion of micro-structure interaction from the neighbor agents. e) All kinds of agents has action free, information exchange, learning perception, inference, optimization, response, collaboration and self-evolution. f) The behavior of the agent follows criteria for bounded rationality and pursues the most satisfactory solution, not an optimal solution in a real system. B. The Modeling Construction Our research is focus on modeling process in the system module using structured modeling from an angle of systems engineering. We first have decomposed the functional structure of complex systems into several independent subsystems. Secondly, we have separated the subsystems to establish an objective model and an ideal model for those subsystems. Finally, we have considered the relationship between those subsystems and established the behavior path model for those subsystems to form the simulation model for the whole system. I) Master Process Model (MPM) Definition 1: MPM= < system level, organizational structure, group class, role, goal, path >

Fig. 1. Primary process model

Master process model has showed in the Figure 1 above. It describes the whole structure in the system modelling process. System layered structure modeling process

Research on Financial System Computing Simulation

33

divides level for system goal. Group structure modeling process divides agents into several groups, to form a secondary structure on the primary structure, there for can analyses group independently. Using layered method, this model divides layer into several groups and reduces system complexity. Based on the results from front modelling process, Group layered modeling process extract group and role class, then binding role, define group expected goal. Behavior path modeling process build group behavior path model, finish system primary modelling process design. From the Figure 1, the output value of each sub-process is the input value of next subprocess. In multi-agent modeling process, each sub-process can be interacted and roll back. II) System layered model(SLM) To reduce modeling complexity, we use the hierarchy structure modularization modeling method [6]. First, according framework and function requirements divided the whole system into several independent lower dimensional substructure systems; then on the basis of some combination principle, level system are divided into several group tissues. Each group tissue can be analyzed separately, role modeling respectively, reduce the complexity and accuracy of system analyst.

Fig. 2. MAS layered model

System layered model has showed in the Figure 2 above. Multi-Agent system is divided into several layer groups. The interactions with agents inside group are greater than interactions with agents outside group. III) Group internal construction Definition 2: Role model (RM) Agents and groups are the most powerful relating within role. Each agent can be bound with one or some roles. Group can adapt to the changing conditions through dynamic roles translation. Agent can achieve group’s global goals through role share specific tasks. The formal definition of RM is: RM= Name denote group tissue name. r denote probable equities of business operations. O denote business operations that be performed probably. ST denotes transfer quantity of business status. Definition 3: Tissue model (TM) In the course of systematic modelling, the group tissues denote a set of agent role aggregate according to agent behaviour principle of clustering. Group tissues are

34

T. Chuan and C. Ling

encapsulated specific behaviour functions of sub-system and have certain behaviour goals. The formal definition of TM is: TM= Name denote group tissue name. R denotes all agent roles aggregate in group tissues. G denotes behavior goal aggregate of group. C denotes the relevance between agent roles and group behavior goals. IV) Group class model (GCM) Group class modelling is the result above two steps modelling will be encapsulated to the group agent class, then forming multi-agent system. Definition 4: Group class model The formal definition of GCM is: GCM = Name denote group tissue name. R denotes all agent roles aggregate in group tissues. G denotes behavior goal aggregate of group. MO denote the aggregate belong group layer. TC denotes the aggregate of group communication. Group model is established in role model and communication mode. Through the binding agent and role of groups, determine the role of groups and organization’s layers. GCM of financial products trading system has showed in the Figure 3 below. There are three classes of principal trades agents in GCM: individual trade class, agency trade class and organization trade class. All trade classes are bound three roles: trade monitoring, normal trade and emergency trade.

Fig. 3. Groups class model of financial products trading system

V) Group goal model(GGM) First, from the initial environment identify group goals. Then, quantitative logic group goal and form layer. The lower layer is son. Our research method is according operation procedure to obtain group goals. Goal model can be described using a set of simplified variables and constraint condition. The formal definition of GGM is: GGM= Name denote group tissue name. V denotes variable aggregate. CC denotes constraint condition aggregate. VI) Behavior path model(BPM) The behaviour path is related to goal. Each path implement a goal, then a goal can be implemented by several paths. Using generator of concurrency form and compound IF statement to design path [7]. The formal definition of BPM is:

Research on Financial System Computing Simulation

35

BPM=< name, R, G, PA, CF> Name denote group tissue name. R denotes all agent roles aggregate in group tissues. G denotes behaviour goal aggregate of group. PA denotes behaviour parameter aggregate. CF denotes aggregate of concurrency form.

5 Conclusion From the systems engineering point of view, presents a multi-agents simulation modelling method based on the complex financial market system. The simulation process microscopic behaviour of the complex systems was divided into sub-process and the system sub-model: system layered model (SLM), role model (RM), tissue model (TM), group class model (GCM), group goal model (GGM) and behaviour path model(BPM) as the basic elements of computing simulation. Thus, we can reduce the complexity of a system and use dynamic mechanism way in the lowest layer agent to understand changeable-performance in the complexity of a financial system. We also provide a way to measure for a method research of the financial system and its complexity. Our computing simulation method allows us to understand the rules in lower agent layer and to emerge macro surge. We also know what it happens in the interaction mechanism in the system architecture agent and its subsystems (groups) in the complexity of a financial system. Finally, in order to reduce complexity, we have set some initial idealized assumptions in modelling starting. Our simulating result is only fit some simple relationship between agents and subsystems in ideal condition. Well, for an actual financial system we have some deficiencies, we need to take some revise in the results from its modelling. Acknowledgment. The authors would like to acknowledge the financial support of Guangdong Nature Science Foundation of China (81510521000009) for this work.

References 1. Qian, X.-s., Yu, J.-y., Dai, R.-w.: A new discipline of science—the study of open complex giant system and its methodology. Chinese Journal of Nature l, 3–10 (1990) 2. Song, X.-f.: Survey and Prospect on the Science of Complexity. Complex Systems and Complexity Science 2, 10–17 (2005) 3. Li, T., Yan, Q., Qi, Z.-c.: Research on the Software Development Methods Based on MultiAgent Systems. Computer Engineering & Science 28, 118–130 (2006) 4. Liao, S.-y., Dai, J.-h.: Design Pattern and Software Framework for Agent-Based Modelling and Simulation. Journal of System Simulation 17(4), 863–866 (2005) 5. Kolp, M., Giorgini, P., Mylopoulos, J.: A goal based organizational perspective on multiagent architectures. In: 8th International Workshop on Intelligent Agents VIII, WA, USA, pp. 128–140 (August 2001) 6. Muller, J.P., Pischel, M., Thiel, M.: Modelling Reactive Behaviour in Vertically Layered Agent Architectures. In: Wooldridge, M.J., Jennings, N.R. (eds.) ECAI 1994 and ATAL 1994. LNCS (LNAI), vol. 890, pp. 261–276. Springer, Heidelberg (1995) 7. Wu, J., Feng, C., Peng, H.: A Role-based Dynamic Multi-Agent Cooperative System RBDMAS. Yunnan Nationalities University (Natural Sciences) 7, 246–249 (2008)

The Construction and Evaluation of the Regional Innovation System of Zhejiang Province* Cai Ning and Huang Chun College of Public Administration Zhejiang University HangZhou China [email protected]

Abstract. Concerning the economic development situation of Zhejiang Province, a set of evaluation indicators urgently need to be established to reflect the regional development demand and fit for the regional innovation of the Province. Yet, since the economic and social development in Zhejiang is unbalanced, there are still obvious differences in regional innovation among the 11 prefecture-level cities. Thus, how to objectively evaluate the creativity of one region and make countermeasures to raise the regional innovation in accordance with the differences among the regions has become an urgent theoretical problem and practical requirement. The paper constructs an evaluation system of Zhejiang’s regional innovation by theoretical and empirical selection. Based on the evaluation indicator system and combined with the specific data material, the paper conducts practical measurement and horizontal comparative analysis to the regional innovation of the 11 prefecturelevel cities of Zhejiang Province. Keywords: regional innovation, innovation system, construction, evaluation.

1 Introduction The creativity of one region is closely related with its economic development. The differences in social foundation, system environment, economic structure, and investment factors of the regional development definitely lead to the unbalanced regional economic development of the Province. There have been obvious differences in the degree and the route of economic development among the Eastern Zhejiang Economic Circle (including the six cities of Hangzhou， Ningbo， Jiaxing, Huzhou, Shaoxing and Zhoushan)， the Wenzhou-Taizhou Economic Circle in Southern Zhejiang (including Wenzhou, Jinhua and Taizhou), Jinhua-Quzhou-Lishui Economic Circle in southwestern Zhejiang. Thus, we need to conduct comparative analysis to Zhejiang’s regional innovation based on the distinction of the differences in regional *

Funded by the NSF China : “The Transform and Diffusion Path and Control the Risk of Enterprise Cluster Caused by the Fading of Focal Enterprises”.（ No.70973103） and the NSF China : No. 70573109.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 36–45, 2011. © Springer-Verlag Berlin Heidelberg 2011

The Construction and Evaluation of the Regional Innovation System

37

innovation of the 11 prefecture-level cities, and at the same time work out development policies according to the different regional creativities. Then how to evaluate the creativity of one region and what are the differences among the regions? Which indicators influence regional innovation? From which aspects can we work out policies to raise regional innovation? All these issues need the academic circle to conduct indepth theoretical analysis and empirical research based on the distinctive evaluation of the regional innovation.

2 Theoretic Construction of Regional Innovation System The evaluation system of regional innovation can directly evaluate one regional innovation, evaluate the strength of sub-factors (capabilities) of the regional innovation, establish the platform for mutual comparison of the various regional creativities, and thus explore the general trend and advantages and disadvantages of the regional innovation, and put forward policy measures to raise the regional innovation and competitiveness, and promote the sustainable development of the regional economy and society. Furman and Hayes(2004) hold that comprehensive indicator system shall include the infrastructure for creation, the environment for the creation of industrial cluster, and the link between science and technology departments and the industrial departments. Gu Guofeng（ 2003） applies the obscure mathematics comprehensive determination method based on the connotation, structure and operation route of the regional scientific and technological creation, and conducts value evaluation to the five indicators with key roles in affecting regional innovation. Shen Juhua（ 2005） takes Lianyungang as an example, and applies factor analysis method and layer analysis method to separately establish the evaluation indicators of regional scientific and technological creativity both from horizontal aspect and vertical aspect. Yin Xiaoli (2005) believes that the creativity indicator system shall be made up of creation potential, development capability, output capability and contribution capability of the science and technology. These research achievements provide sound foundation to the establishment of scientific evaluation system of regional innovation and the scientific countermeasures by actual measurement. Generally speaking, there are obvious shortcomings in the previous researches, which can be reflected in the following four aspects:（ 1） concerning the theoretical selection of evaluation indicators: the subjectivity and randomness are strong, and the candidate indicators lack certain rationality and objectivity;（ 2） concerning the empirical selection of evaluation indicators: there lacks the analysis, subordinate degree analysis and the distinction analysis to the evaluation indicators of theoretical selection, which leads to the fact that there exists a high degree of relativity among the evaluation indicators, and there lacks enough distinction leading to the repetitive use of information and the evaluation results are not scientific;（ 3） concerning the ratification of research results: there is no ratification to the credibility and effectiveness of the research result, and the system lacks credibility and effectiveness； （ 4） concerning the countermeasures and suggestions: There is no experiment research or research to the mental simulation of policy suggestions (including policies) to the research.

38

C. Ning and H. Chun

3 The Construction of Evaluation System of Zhejiang’s Regional Innovation The regional innovation is the result of the integration of multi-strength. Based on the previous documents and the lectures by the experts, and in the principle of indicator selection, the paper selects 90 indicators to form the first round indicator system X from the five aspects of regional innovation input capability, regional innovation allocation capability, regional innovation supporting capability, regional innovation management capability and regional innovation output capability. As shown in Table 1, the laddered theoretical model is formed by evaluation modular layer, evaluation field layer and the evaluation indicator layer. Maintaining the Integrity of the Specifications (1 )

Table 1. The first round evaluation indicator

X

(1 )

of the regional innovation

A. Analysis and Consultancy of the Experts In the research, the author selects 30 experts from Zhejiang in the field of regional creation, and organizes three expert consultancy meetings with 10 experts attending each meeting. The author conducts in-depth discussion, analysis and evaluation to the first round of evaluation indicator system X of Zhejiang’s regional innovation, and revises and optimizes the indicator system. By the above adjustment and revision, the paper obtains 50 evaluation indicators for the second round evaluation indicator system X of Zhejiang’s regional innovation. (1 )

(2)

B. Analysis of Subordinate Degree The researcher selects 100 experts from the Zhejiang provincial government and the colleges, enterprises and institutions, makes the second round evaluation indicator system X into expert consultancy table, sends the table to experts by post, e-mail or interview, and selects 20 evaluation indicators with the most importance by combing their knowledge and experience. By the statistical analysis to the 63 valid expert survey tables, 50 subordinate degrees of evaluation indicators is obtained. By the subordinate degree analysis, it’s found that of the 50 evaluation indicators, the subordinate degree of 13 indicators is lower than the absolute value. By eliminating these evaluation indicators, 36 are retained to form the third round evaluation indicator system X of Zhejiang’s regional innovation. (2 )

(3）

The Construction and Evaluation of the Regional Innovation System

39

C. Relativity Analysis (3）

In the third round evaluation indicator system X of Zhejiang’s regional innovation, there exists certain relativity among various evaluation indicators, and it’s easy to be repeatedly endowed when the indicators are endowed with rights, thus the persuasiveness and credibility of the evaluation result are reduced. Hence, the influence of the information repetition to the evaluation result needs to be minimized by eliminating the indicators with big relative coefficient in the analysis. In this way, the scientific nature and rationality of the evaluation indicator system can be raised. The researcher collects the relative indicator data of 11 prefecture-level cities of the Province in 2008, and applies SPSS statistics software package to analyze the evaluation indicators. The following 6 pairs of indicators with high relativity have been obtained. The paper eliminates 6 indicators with relatively low relativity, retains the remaining indicators, and forms the fourth round evaluation indicator system X of Zhejiang’s regional innovation. (4)

D. Perception Analysis The paper applies SPSS statistics software package to conduct variance analysis to the indicators, and based on the analysis to calculate the variation coefficient of 30 indicators in the fourth round evaluation indicator system X . By calculation, it eliminates and adds certain indicators in the 30 indicators, and forms the fifth round evaluation indicator system X of Zhejiang’s regional innovation. (4 )

(5)

E. Evaluation System of Zhejiang’s Regional innovation By experts’ selection, subordinate degree analysis, relativity analysis and perception analysis, the first round of evaluation indicators has been turned into the fifth round of evaluation system X with 25 indicators. By using V to express the variable sign of the evaluation indicators, the paper establishes the evaluation system to measure Zhejiang’s regional innovation as shown below. ( 5 )

Table 2. The fifth round evaluation indicator system Table Head

Regional

Zhejiang Province

(5)

of Zhejiang regional innovation

Table Column Head Evaluation

innovatio n of

X

input capabilities

No

Evaluation indicators

Unit

1

The percentage of scientific and technological activities to GDP

%

2

The percentage of R&D expenditure to GDP

%

3 4 5 6 7

Expenditure of technology introduction per 10,000 persons technological development fees for enterprises with 10,000 persons The number of technicians per 10,000 persons The number of scientist and engineers per 10,000 persons ratio of high tech industrial employees to total employees

10,000Yuan 10,000Yuan persons persons %

40

C. Ning and H. Chun Table 2. (continued) Table Head

Table Column Head Evaluation

No

8 9 supporting capabilities

10 11 12 13

Regional innovatio n of

managemen t capability

Province

number number 10,000Yuan 10,000 households %

ratio of financial expenditure to GDP

%

15

ratio of financial tech payment of the level to the financial expenditure of the level

%

science popularization activity fees per capita

Yuan

16

18 19

output capabilities

Unit number

14

17

Zhejiang

Evaluation indicators The number of higher institutions per 10,000 persons The number of public libraries per 10,000 persons The number of R&D institutions per 10,000 persons The number of postal services per 10,000 persons The number of international internet users per 10,000 persons ratio of urban residents’ remaining deposits to GDP

Tax reduction and exemption to technological development enjoyed by various governments per 10,000 persons fees of the tech items at provincial level and above the number of invention copyright endowment per 10,000 persons

10,000Yuan Yuan items

20

electricity consumption per 10,000 Yuan GDP

Kilowatt hour

21

agriculture labor production rate

%

per capita GDP

Yuan

22 23 24 25

the ratio of VA of high-tech products to industrial VA percentage of high-tech products to total export production rate of new industrial products

% % %

4 The Actual Measurement and Comparative Analysis of the Regional Innovation of 11 Prefecture-Level Cities in Zhejiang Province A. Collection of and Treatment to the Data of Evaluation Indicators The indicators of the evaluation system of Zhejiang’s regional innovation constructed in the paper are all objective evaluation indicators. There are mainly four sources: first source is the Statistics Yearbook and the Technology Statistics Yearbook by Zhejiang Provincial Statistics Bureau, the second source is the Statistics Yearbook published by the 11 prefecture-level cities of the Province, the third comes from the tech monitoring data of Zhejiang Provincial Technology Office (for different data sources, the data with different indicators take the technological monitoring data as the basis), and the evaluation indicators at the last part come from the government website and the statistics report of the 11 prefecture-level cities. The paper applies the dimensionless method to

The Construction and Evaluation of the Regional Innovation System

41

these data to reduce the big errors caused by the dimensional indicators, thus raising the credibility of result evaluation. And it calculates and gets the evaluation value of regional creation input capability, regional creation supporting capabilities, regional creation management capabilities and regional creation output capability of Zhejiang, and gets the evaluation value of regional creation comprehensive capabilities, by referring to the utility value and weight value of various evaluation indicators. F = ∑ Wi × V i

Of which, F is the evaluation value； W is the weight value of No. i evaluation indicator； Vi is the utility value of No. i evaluation indicators. i

By comparison, it concludes that Hangzhou scores the highest in regional creation input capability, regional creation management capability, regional creation output capability and the regional creation comprehensive capability at last. Zhoushan scores the highest in regional creation supporting capability. As shown in Table 3: Table 3. comprehensive evaluation value of the regional innovation of 11 prefecture-level cities in Zhejiang Province Table Column Head Table Head

comprehen sive evaluation value of the regional innovation of 11 prefecturelevel cities in Zhejiang Province

Regions

Regional innovation input （ F1）

Regional innovation support （ F2）

Regional innovation management （ F3）

Regional innovation output （ F4）

comprehensiv e regional innovation （ F）

1

Hangzhou

18.710

6.762

26.399

29.757

81.628

2

Ningbo

9.841

5.008

17.679

23.347

55.875

3

Wenzhou

4.304

1.641

9.359

12.425

27.730

4

Jiaxing

9.690

0.951

8.845

20.973

40.459

5

Huzhou

5.004

1.989

14.386

20.194

41.574

6

Shaoxing

7.338

0.770

15.767

17.719

41.593

7

Jinhua

6.936

2.280

8.615

10.425

28.256

8

Quzhou

2.029

1.382

2.574

18.082

24.068

9

Zhoushan

3.341

8.210

11.108

14.997

37.656

10

Taizhou

6.955

0.945

7.191

17.356

32.446

11

Lishui

0.150

2.409

6.695

1.392

10.646

No.

B. Analysis of the Specific Indicators of Regional innovation of the 11 Prefecture-Level Cities in Zhejiang Province This part is based on the analysis to the regional innovation to conduct comparative analysis to the indicators forming the field layer, with an aim to find key indicators of raising the creativity. Based on the analysis to the weight and importance of the four big fields, the paper further analyzes the indicator layer. The following ranking is made based on the utility value of regional creation output capability, creation management capability, creation input capability, and creation supporting capability：

42

C. Ning and H. Chun

Table 4. Ranking of the utility value of the regional innovation output capability evaluation indicators Table Head

Table Column Head

Regions Hangzhou

Ranking Ranking Ranking Ranking (V19) (V20) (V21) (V22) 1 9 5 1

Ranking (V23) 4

Ranking (V24) 1

Ranking (V25) 7

Ningbo

2

6

4

2

6

2

8

Wenzhou

6

7

11

9

2

7

10

Ranking of Jiaxing the utility value of Huzhou the Shaoxing regional innovation Jinhua output capability Quzhou evaluation indicators Zhoushan

8

2

2

5

8

3

2

7

4

3

6

5

5

4

5

3

6

3

7

9

3

3

5

8

8

9

4

9

9

1

10

10

1

10

6

10

11

1

4

10

8

1

Taizhou

4

10

7

7

3

6

5

Lishui

11

8

9

11

11

11

11

Table 5. Ranking of the utility value of regional innovation management capability evaluation indicators Table Head

Ranking of the utility value of regional innovation managem ent capability evaluation indicators

Table Column Head

Ranking (V19)

Ranking (V20)

Ranking (V21)

Ranking (V22)

Ranking (V23)

Hangzhou

5

1

1

1

7

Ningbo

4

4

2

2

8

Wenzhou

6

5

7

9

11

Jiaxing

10

7

3

6

10

Huzhou

7

2

4

4

4

11

3

6

3

5

Jinhua

8

5

9

10

6

Quzhou

3

11

11

7

2

Zhoushan

2

6

5

5

1

Taizhou

9

9

8

8

9

1

10

10

11

3

Regions

Shaoxing

Lishui

The Construction and Evaluation of the Regional Innovation System

43

Table 6. Ranking of the utility value of the regional innovation output capability evaluation indicators Table Column Head Table Head

Ranking Regions (V19) Hangzho 1

Rankin g(V20) 1

Rankin g(V21) 2

Ranking (V22) 1

Ranking (V23) 1

Rankin Ranking g(V24) (V25) 1 1

u

Ranking of the utility value of the regional innovation output capability evaluation indicators

Ningbo

5

5

4

3

2

3

3

Wenzhou

8

8

10

9

8

2

6

Jiaxing

3

2

1

4

3

7

5

Huzhou

6

6

8

5

7

5

8

Shaoxing

2

3

3

2

4

11

9

Jinhua

7

7

6

7

6

8

2

Quzhou

10

10

9

10

10

10

7

Zhoushan

9

8

5

8

9

4

10

Taizhou

4

4

7

6

5

9

4

11

11

11

0

11

6

11

Lishui

Table 7. Ranking of the utility value of the regional innovation output capability evaluation indicators Table Column Head Table Head

Ranking of the utility value of the regional innovation output capability evaluation indicators

Ranking Rankin Rankin Ranking Ranking Ranking Rankin Regions (V19) g(V20) g(V21) (V22) (V23) (V24) g(V25) 1 1 2 1 1 1 1 Hangzhou Ningbo

5

5

4

3

2

3

3

Wenzhou

8

8

10

9

8

2

6

Jiaxing

3

2

1

4

3

7

5

Huzhou

6

6

8

5

7

5

8

Shaoxing

2

3

3

2

4

11

9

Jinhua

7

7

6

7

6

8

2

Quzhou

10

10

9

10

10

10

7

Zhoushan

9

8

5

8

9

4

10

Taizhou

4

4

7

6

5

9

4

11

11

11

0

11

6

11

Lishui

44

C. Ning and H. Chun

5 Countermeasures to the Uplifting of Regional Innovation in Zhejiang The cultivation of regional innovation is a complex and systematic project. In the twelfth Five-year-plan period, Zhejiang puts forward the complete road of regional innovation: to continue deepening the reform of science and technology management system, giving full play to the leading role of the government, playing the fundamental role of the market in the allocation of creativity resources, establishing the main party role of the enterprises in the creation, and fully playing the backbone and leading role of the science and technology research institute within and outside the Province. The realization of these policies needs substantial cutting-in path, hence, to quicken the establishment of the creativity system and the cultivation of the creativity of the 11 prefecture-level cities in Zhejiang Province, the construction of the following three points needs to be pressed ahead. To optimize the regional innovation input system, and forcefully raise the creativity input: to establish and optimize the regional innovation input system in Zhejiang, the construction can be made from the following four aspects: firstly, establishing and optimizing the regional legal guarantee mechanism of the science and technology input in Zhejiang; secondly, securing the stable growth mechanism of the science and technology input by the financial offices of Zhejiang Province; thirdly, optimizing the input structure of the science and technology input by the financial offices of Zhejiang Province; fourthly, establishing multilateral science and technology input system in Zhejiang; fifthly, strengthening the introduction and cultivation of creative talents in Zhejiang Province. To establish regional innovation platform system and forcefully raise the capability in creativity support: the establishment of regional innovation platform system of Zhejiang, in the principle of optimizing external environment for regional innovation, can be realized by the following three aspects. Firstly, establishing a platform for regional R&D coordination in Zhejiang; secondly, establishing a platform for transferring the regional science and technology achievement in Zhejiang; thirdly, establishing a platform for sharing the regional science and technology resources in Zhejiang. To optimize the regional innovation management system and forcefully raise the creativity management capability: although the functions and roles of the regional innovation management system varied, the core is the same, i.e. to solve the incentive and restraint issues of the regional innovation. The effect of incentives and restraint can be achieved by reducing the transaction cost of regional innovation and the externality and uncertainties of the creativity, and creating cooperation opportunities. Firstly, the evolution system of the performance of the party and legal leaders of various levels needs to be optimized. Secondly, the preferential policy system of the technological creativity of the Province needs to be optimized. Thirdly, protection system of intellectual property rights of the Province needs to be optimized. Fourthly, the management system of the science and technology institutions of the Province needs to be optimized.

The Construction and Evaluation of the Regional Innovation System

45

References 1. Acs, Z.J., Anselin, L., Varga, A.: Patents and Innovation Counts as Measures of Regional Production of New Knowledge. Research Policy 31, 1069–1085 (2002) 2. Adler, P.S., Shenbar, A.: Adapting Your Technological Base: The Organizational Challenge. Sloan Management Review 25 (1990) 3. Arrow, K.J.: The Economic Implications of Learning by Doing. Reviews of Economic Studies 29 (1962) 4. Asheim, B.T., Isaksen: Regional Innovation Systems: The Integration of Local “Sticky” and Global “Ubiquitous” Knowledge. Journal of Technology Transfer 29, 77–861 (2002) 5. Burgelman, R.: Strategic Management of Technology and Innovation. McGraw-Hill, New York (2004) 6. DeBresson, C.: Estimating Gaps Fisparities, Seminar on the Measurement of Innovation Activities in OECD and Non-OECD Countries. Pretoria 29 (March 2001) 7. Cooke, P.: Introduction: Origins of the Concept (A). In: Braczyk, H., Cooke, P., et al. (eds.) Regional Innovation Systems: The Role of Governance in a Globalize World. UCL Press, London (1998) 8. Dolor, E.: What We Should Know about Regional Systems of Innovation. Technology in Society 24, 243–263 (2002) 9. Evangelista, R., Iammarino, S., Mastrostefano, V., Silvani, A.: Measuring the Regional Dimension of Innovation (2001) 10. Feldman, M.P., Audretsch, D.B.: Innovation in Cities: Science- based Diversity, Specialization and Localized Competition. European Economic Review 43, 409–429 (1999)

Design of an Improved Method of Rijndael S-Box Chunxia Tu School of Computer Huanggang Normal University Hubei Huanggang 438000 China [email protected]

Abstract. According to the design criterion of S-box in Rijndael algorithm, a number of S-boxes with good cryptographic properties were constructed, and the avalanche probabilities of these S-boxes were analyzed from variance point of view. Based on these studies, a key-controlled Rijndael algorithm with multiple S-boxes was proposed with the improvement of SubBytes algorithm in Rijndael. Experimental results show that the improved algorithm has stronger ability to resist differential attack, and the avalanche effect of the algorithm is more reasonable. Keywords: Rijndael algorithm, S-box, differential attack, avalanche effect.

1 Introduction The Advanced Encryption Standard (AES) was specified in 2001 by the National Institute of Standards and Technology . The purpose is to provide a standard algorithm for encryption, strong enough to keep U.S. government documents secure for at least the next 20 years[1]. Since Rijndael was identified as the AES ,it has been a hot spot study.Rijndael was carried out all aspects of the study hope to break AES. Years of research show that the differential attack is still an effective way to attack block cipher. S box is the only nonlinear components in Rijndael algorithm, directly affecting their security, thus improving the S-box against differential attacks performance has been the research focus. An enhanced Rijndael algorithm was proposed through improving bytes replacement algorithm.The improved algorithm has stronger ability to resist differential attack, and the avalanche effect of the algorithm is more reasonable[1-3].

2 Differential Attack on 2 Round Rijndael Key A simple differential attack implement on two round of Rijndael key described as follows : First, select two plaintext X(1), X(2) and the corresponding ciphertext Y (1), Y (2), the first of two expressly 8,11,14 Bytes are for the '00 ', the encryption key for the K=K1K2K3……K16. Secondly, the streamlining of the algorithm described in the following relationship can be established: [2] M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 46–51, 2011. © Springer-Verlag Berlin Heidelberg 2011

Design of an Improved Method of Rijndael S-Box

47

Y1(1)=S((‘02’ ⊙ S(X1(1) ⊕ K1(0))) ⊕ (‘03’ ⊙ S(X14(1) ⊕ K14(0))) ⊕ (‘01’ ⊙ S(X11(1) ⊕ K11(0))) ⊕ (‘01’ ⊙ S(X8(1) ⊕ K8(0))) ⊕ K1(1)) ⊕ K1(2) (1) Y1(2)=S((‘02’ ⊙ S(X1(2) ⊕ K1(0))) ⊕ (‘03’ ⊙ S(X14(2) ⊕ K14(0))) ⊕ (‘01’ ⊙ S(X11(2) ⊕ K11(0))) ⊕ (‘01’ ⊙ S(X8(2) ⊕ K8(0))) ⊕ K1(1)) ⊕ K1(2) (2) According to the characteristics of the selected explicitly, the equation (1), (2) can be simplified, respectively (3), (4): Y1(1)=S((‘02’ ⊙ S(X1(1) ⊕ K1(0))) ⊕ (‘03’ ⊙ S(K14(0))) ⊕ (‘01’ ⊙ S(K11(0))) ⊕ (‘01’ ⊙ S(K8(0))) ⊕ K1(1)) ⊕ K1(2) (3) Y1(2)=S((‘02’ ⊙ S(X1(2) ⊕ K1(0))) ⊕ (‘03’ ⊙ S(K14(0))) ⊕ (‘01’ ⊙ S(K11(0))) ⊕ (‘01’ ⊙ S(K8(0))) ⊕ K1(1)) ⊕ K1(2) (4) Suppose the elements of the outermost layer of S-box were δ1, δ2, the following equation can be established: Y*=Y1(1) ⊕ Y1(2)=S(δ1) ⊕ S(δ2) δ1 ⊕ δ2=(‘02’ ⊙ S(X1(1) ⊕ K1(0))) ⊕ (‘02’ ⊙ S(X1(2) ⊕ K1(0)))

(5) (6)

Finally, though processing (5) and (6) , we can get the possible range of K1(0) . And then repeatedly select the express and make the same treatment, until the only determining K1 (0) or K1 (0) up to the possible range of small. For the Ki(0)(1≤i≤16),a similar approach can be taken. Obviously, the main principle of the simplification and attacks on the Rijndael algorithm in references [2] is because that Rijndael block cipher using only one S-box. From that point too, the paper proposed an improved scheme.Ease of Use

3 Key-Controlled Rijndael Algorithm with Multiple S-Boxes In this paper, we improve the algorithm though the steps of the ByteSub. The S-box, which is used by each byte of intermediate state, is selected from a given number of Sboxes. The proposal below is based on the following rules to select the S-box: For the first n-bytes of state, the first n-bytes of the round keys decided to select which S-box. A.

Algorithm Description

(1) Bytes substitution algorithm in Rijndael: ByteSub(a[4][MAXBC],box[256]) /*Encrypted using the S box, decryption using the inverse S-box */ { int i,j; for(i=0;i<4;i++) for(j=0;j
48

C. Tu

(2) Improved Bytes substitution algorithm in Rijndael: ByteSub(a[4][MAXBC],box[boxnum][256],rk[4][MAXBC],f)/* “f “ is the flag */ { int i,j,k; word8 si[256]; if(f==0) {/* That is the encryption programm */ for(i=0;i<4;i++) for(j=0;j
Design of an Improved Method of Rijndael S-Box

49

⊙

⊙ ⊕ ⊕ ⊙ ⊕ ⊕ ⊕ ⊕ ⊙ ⊕ ⊕ ⊕ ⊙ ⊕ ⊕ ⊙ ⊕ ⊕ ⊙ ⊕ ⊙ ⊕ ⊕ ⊕ ⊙ ⊙ ⊕ ⊙ ⊕ ⊕ ⊙ ⊕ ⊕ ⊙ ⊕ ⊕ ⊙ ⊙ ⊕ ⊕ ⊙ ⊕ ⊙ ⊕ ⊕ ⊙ ⊕ ⊕ ⊕ Y1 =S((‘02’ ⊙ S((‘02’ ⊙ S(X1 ⊕ K1 )) ⊕ (‘03’ ⊙ S(X14 ⊕ K14 )) ⊕ (‘01’ ⊙ S(X11 ⊕ K11 )) ⊕ (‘01’ ⊙ S(X8 ⊕ K8 )) ⊕ K1 )) ⊕ (‘03’ ⊙ S((‘01’ ⊙ S(X4 ⊕ K4 )) ⊕ (‘03’ ⊙ S(X7 ⊕ K7 )) ⊕ (‘02’ ⊙ S(X10 ⊕ K10 )) ⊕ (‘01’ ⊙ S(X13 ⊕ K13 )) ⊕ K14 )) ⊕ (‘01’ ⊙ S((‘02’ ⊙ S(X3 ⊕ K3 )) ⊕ (‘01’ ⊙ S(X6 ⊕ K6 )) ⊕ (‘01’ ⊙ S(X9 ⊕ K9 )) ⊕ (‘03’ ⊙ S(X16 ⊕ K16 )) ⊕ K11 )) ⊕ (‘01’ ⊙ S((‘01’ ⊙ S(X2 ⊕ K2 )) ⊕ (‘03’ ⊙ S(X5 ⊕ K5 )) ⊕ (‘02’ ⊙ S(X12 ⊕ K12 )) ⊕ (‘01’ ⊙ S(X15 ⊕ K15 )) ⊕ K8 )) ⊕ K1 ) ⊕ K1 (8) Y1(1)=S((‘02’ S((‘02’ S(X1(1) K1(0))) (‘03’ S(X14(1) K14(0))) (1) (0) (1) (0) (1) (‘01’ S(X11 K11 )) (‘01’ S(X8 K8 )) K1 )) (‘03’ S((‘01’ S(X4(1) K4(0))) (‘03’ S(X7(1) K7(0))) (‘02’ S(X10(1) K10(0))) (‘01’ S(X13(1) K13(0))) K14(1))) (‘01’ S((‘02’ S(X3(1) K3(0))) (‘01’ S(X6(1) K6(0))) (‘01’ S(X9(1) K9(0))) (‘03’ (1) (0) (1) (1) S(X16 K16 )) K11 )) (‘01’ S((‘01’ S(X2 K2(0))) (‘03’ S(X5(1) K5(0))) (‘02’ S(X12(1) K12(0))) (‘01’ S(X15(1) K15(0))) K8(1))) K1(2)) K1(3) (7)

⊙ ⊙ ⊕ ⊕ ⊕ ⊕ ⊕

(2)

(2)

(2)

(2)

(0)

(0)

(2)

(0)

(0)

(2)

(2)

(0)

(2)

(0)

(2)

(2)

(2)

(0)

(1)

(1)

(1)

(0)

(1)

(0)

(2)

(2)

(2)

(2)

(2)

(0)

(0)

(2)

(0)

(0)

(0)

(0)

(2)

(0)

(3)

Suppose two plaintext byte, in addition to the first byte, all the rest are '00 ', so you can simplify (7)and (8) as (9)and (10):

⊙ ⊙ ⊕ ⊕ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊕ ⊙ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊕ ⊙ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊕ ⊙ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊙ ⊕ ⊕ ⊕ Y1 =S((‘02’ ⊙ S((‘02’ ⊙ S(X1 ⊕ K1 )) ⊕ (‘03’ ⊙ S(K14 )) ⊕ (‘01’ ⊙ S(K11 )) ⊕ (‘01’ ⊙ S(K8 )) ⊕ K1 )) ⊕ (‘03’ ⊙ S((‘01’ ⊙ S(K4 )) ⊕ (‘03’ ⊙ S(K7 )) ⊕ (‘02’ ⊙ S(K10 )) ⊕ (‘01’ ⊙ S(K13 )) ⊕ K14 )) ⊕ (‘01’ ⊙ S((‘02’ ⊙ S(K3 )) ⊕ (‘01’ ⊙ S(K6 )) ⊕ (‘01’ ⊙ S(K9 )) ⊕ (‘03’ ⊙ S(K16 )) ⊕ K11 )) ⊕ (‘01’ ⊙ S((‘01’ ⊙ S(K2 )) ⊕ (‘03’ ⊙ S(K5 )) ⊕ (‘02’ ⊙ S(K12 )) ⊕ (‘01’ ⊙ S(K15 )) ⊕ K8 )) ⊕ K1 ) ⊕ K1 (10) Y1(1)=S((‘02’ S((‘02’ S(X1(1) K1(0))) (‘03’ S(K14(0))) (‘01’ S(K11(0))) (‘01’ S(K8(0))) K1(1))) (‘03’ S((‘01’ S(K4(0))) (‘03’ S(K7(0))) (‘02’ S(K10(0))) (‘01’ S(K13(0))) K14(1))) (‘01’ S((‘02’ S(K3(0))) (‘01’ S(K6(0))) (‘01’ S(K9(0))) (‘03’ S(K16(0))) K11(1))) (‘01’ S((‘01’ S(K2(0))) (‘03’ S(K5(0))) (‘02’ S(K12(0))) (‘01’ S(K15(0))) K8(1))) K1(2)) K1(3) (9) (2)

(2)

(0)

(0)

(0)

(0)

(0)

(1)

(0)

(0)

(0)

(0)

(0)

(1)

(0)

(0)

(0)

(1)

(1)

(2)

(0)

(0)

(0)

(3)

Suppose the elements of the outermost layer of S-box were δ1, δ2, the following equation can be established:

⊕

⊙

⊙ ⊕ ⊕ ⊕ ⊙ ⊕

⊕ (‘03’ ⊙ S(K14 )) ⊕ (‘01’ ⊙ ⊙ S((‘02’ ⊙ S(X1 ⊕ K1 )) ⊕ ⊙ S(K8 )) ⊕ K1 )) (11)

δ1 δ2=(‘02’ S((‘02’ S(X1(1) K1(0))) (0) (0) (1) S(K11 )) (‘01’ S(K8 )) K1 )) (‘02’ (0) (0) (‘03’ S(K14 )) (‘01’ S(K11 )) (‘01’

⊙

⊕

⊙ ⊕

(0)

(2)

(0)

(1)

(0)

50

C. Tu

Y*=Y1(1)

⊕ Y1

(2)

=S(δ1)

⊕ S(δ ) 2

(12)

10 S-boxes were used in the formula (11), which the first and sixth are the same, because they are selected based on K1(2). Similarly, the second and seventh, third and eighth, fourth and ninth, fifth and tenth are the same. There are 5 one Ki(j) and boxnum one S-box in the formula (11) , so the computational complexity of attacks than attacks to improved algorithm is much more complicated than using only one Sbox of the original algorithm. In addition, the possible range of K1(0) will be much larger, about the original algorithms’ (boxnum) 6 times. 3) AVALANCHE PROBABILITY ANALYSIS According to above, it is ideal, when the avalanche probability value is 0.5. In this paper, under the conditions of the key length and the Plaintext length are both 128bits, the avalanche probability of original algorithm and improved algorithm was compared[3-5]. In the case of changing the key bits ,Figure 1 is the avalanche probability map, which conducted 128 tests， respectively, to the new algorithm and the old algorithm. We Can be see from the chart, the security of the improved algorithm is slightly higher than the original algorithm. In the case of changing the plaintext bits ,Figure 2 is the avalanche probability map， which conducted 128 tests， respectively, to the new algorithm and the old algorithm. As can be seen from Figure 1, the probability of output bits’ change is close to 0.5 for the two algorithms. After calculation, for the improved algorithm, the variance of the avalanche probability is 0.002095, while for the original algorithm , the variance of the avalanche probability is 0.006076 , showing that the improved algorithm is more secure[3].

Fig. 1. The avalanche probability map in the case of changing the key bits

Design of an Improved Method of Rijndael S-Box

51

Fig. 2. The avalanche probability map in the case of changing the plaintext bits

4 Conclusion This article makes some improvements on the Rijndael algorithm, although the need for storage space increases, but has greatly improved the security of Rijndael algorithm. At the same time, We can see almost no reduction efficiency form the Code described for the improved algorithm. Finally, under the conditions of the key length and the Plaintext length are both 128bits ,from the perspective of the avalanche probability, we can make a conclusion: that the improved algorithm is more secure than the original a Rijndael algorithm.

References 1. Advanced Encryption Standard (AES) Federal Information Processing Standards Publication 197 (November 26, 2001) 2. Chen, Q., Zhou, L.: Research on Rijndael Block Cipher and Differential Attack. Mini-micro Systems 4(24), 676–679 (2003) 3. Pan, Z.B., Zheng, B.Y., Wu, M.: An improved Rijndael algorithm and its implementation on DSP. Journal of China Universities of Posts and Telecommunications 10(3), 62–68 (2003) 4. Yin, X.-c., Yang, J., Xie, L.: Key-controlled Rijndael algorithm with multiple S-boxes. Journal on Communications 28(9), 125–132 (2007) 5. Liu, J.-m., Wei, B.-d., Cheng, X.-g., Wang, X.-m.: An AES S-Box to increase complexity and cryptographic analysis. In: 19th International Conference on Advanced Information Networking and Applications, pp. 724–728. ISI Proceedings, Taibei (2005)

Implementation of AES S-Box Based on VHDL Zhichao Yu School of Computer Huanggang Normal University Hubei Huanggang 438000 China [email protected]

Abstract. Rijndael is defined as the algorithm for the Advanced Encryption Standard (AES).This paper describes the design of AES and fast implementations of AES on hardware based on FPGA with VHDL. In this paper, the S-Box was synthesized using Xilinx ISE 8.1i VHDL Compiler and the construction procedure for implementing a 5 stage pipeline combinational logic based S-Box is presented and illustrated in a step-by-step manner. Keywords: component, AES,VHDL, FPGA, pipelining method.

1 Introduction The AES algorithm has a fixed block size of 128 bits and a key length of 128, 192 or 256 bits. It generates its key from an input key using the Key Expansion function. The AES operates on a 4x4 array of bytes which is called a state. The state undergoes 4 transformations which are namely the AddRoundKey, SubByte, ShiftRow and MixColumn transformation. [1-4] The AddRoundKey transformation involves a bitwise XOR operation between the state array and the resulting Round Key that is output from the Key Expansion function. SubByte transformation is a highly nonlinear byte substitution where each byte in the state array is replaced with another from a lookup table called an S-Box. ShiftRow transformation is done by cyclically shifting the rows in the array with different offsets.Finally, MixColumn transformation is a column mixing operation, where the bytes in the new column are a function of the 4 bytes of a column in the state array. [5-6] Of all the transformation above, the SubByte transformation is the most computationally heavy.

2 S-Box Construction Methodoloy T In this paper,the main thing I’m trying to improve is my use of look-up tables for all the SubByte related steps (cipher and key schedule). Using look-up tables means I have to waste a lot of valuable Block RAMs on the FPGA that could go to much better use elsewhere. This approach was very easy (make a fixed array of values and a generate statement to read from that array), but it was not practical going forward as I try and squeeze as much performance from as little fabric as possible. I needed a way to generate Rjindael S-Box values on the fly. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 52–58, 2011. © Springer-Verlag Berlin Heidelberg 2011

Implementation of AES S-Box Based on VHDL

53

This section illustrates the steps involved in constructing the multiplicative inverse module for the S-Box using composite field arithmetic. Since both the SubByte and InvSubByte transformation are similar other than their operations which involve the Affine Transformation and its inverse, therefore only the implementation of the SubByte operation will be discussed in this paper. The multiplicative inverse computation will first be covered and the affine transformation will then follow to complete the methodology involved for constructing the S-Box for the SubByte operation. For the InvSubByte operation, the reader can reuse multiplicative inversion module and combine it with the Inverse Affine Transformation, as shown above in Figure 1.

Fig. 1. Combined SubByte and InvSubByte sharing a common multiplicative inversion module

The individual bits in a byte representing a GF(28) element can be viewed ascoefficients to each power term in the GF(28) polynomial.There are multiply, addition, squaring and multiplication inversion in GF(24) operations in Galois Field. Each of these operators can be transformed into individual blocks when constructing the circuit for computing the multiplicative inverse.From this simplified equation, the multiplicative inverse circuit GF(28) can be produced as shown in Figure 2.

Fig. 2. Multiplicative inversion module for the S-Box. [1]

The legends for the blocks within the multiplicative inversion module from above are illustrated in the Figure 3 below.

54

Z. Yu

Fig. 3. Legends for the building blocks within the multiplicative inversion module

3 Isomorphic Mapping and Inverse Isomorphic Mapping The multiplicative inverse computation will be done by decomposing the more complex GF(28) to lower order fields of GF(21), GF(22) and GF((22)2). In order to accomplish the above, the following irreducible polynomials are used. [1]

GF(22) GF(2) : x2 + x + 1 GF((22)2) ǂ GF(22) : x2 + x + ij 2 2 2 2 2 GF(((2 ) ) ) ǂ GF((2 ) ) : x2 + x + Ȝ

(1)

where φ = {10}2 and λ = {1100}2. Computation of the multiplicative inverse in composite fields cannot be directly applied to an element which is based on GF(28). That element has to be mapped to its composite field representation via an isomorphic function, δ. Likewise, after performing the multiplicative inversion, the result will also have to be mapped back from its composite field representation to its equivalent in GF(28) via the inverse isomorphic function, δ-1. Both δ and δ-1 can be represented as an 8x8 matrix. Let q be the element in GF(28), then the isomorphic mappings and its inverse can be written as δ*q and δ-1*q, which is a case of matrix multiplication as shown below, where q7 is the most significant bit and q0 is the least significant bit. [1]mappings and its inverse can be written as δ*q and δ-1*q, which is a case of matrix multiplication as shown below , where q7 is the most significant bit and q0 is the least significant bit. [1]

(2)

Implementation of AES S-Box Based on VHDL

55

(3)

The matrix multiplication can be translated to logical XOR operation. The logical form of the matrices above is shown below.

(4)

(5)

56

Z. Yu

4 Composite Field Arithmetic Operations A binary number in Galois Field q can be spilt to qHx + qL. For instance, if q = {1011}2, it can be represented as {10}2x + {11}2, where qH is {10}2 and qL = {11}2. qH and qL can be further decomposed to {1}2x + {0}2 and {1}2x + {1}2 respectively. Using this idea, the logical equations for the addition, squaring, multiplication and inversion can be derived. A. Addition in GF(24) Addition of 2 elements in Galois Field can be translated to simple bitwise XOR operation between the 2 elements. B. Squaring in GF(24) The formula for computing the squaring operation in GF(24) is acquired as shown below.

K3=q3 K2=q3Ͱq2 K1=q2Ͱq1 K0=q3Ͱq1Ͱq0

(6)

Equation (1) can then be mapped to its hardware logic diagram and it is shown in Figure 4 below.

Fig. 4. Hardware diagram for Squarer in GF(24). [3]

C. Multiplication with constant, λ The formula for computing multiplication with constant λ is shown below

K3= q2 q0 K2=q3 q2 q1 q0 K1=q3 K0=q2

(7)

Implementation of AES S-Box Based on VHDL

57

Equivalently, the equation (2) can be mapped to its hardware diagram and it is shown in Figure 5 below.

Fig. 5. Hardware diagram for multiplication with constant λ. [3]

D.

Other Operations

The reference [3] breaks down the equivalent logic for each block (minus the Affine Transform). Based on the above diagram alone, it’s very apparent the generator equation is very computationally intense. This makes perfect sense given the whole point of the S-Box is to introduce non-linearity into the cipher-text. If the S-Box transform was linear, then the resulting logic would be very simple. Instead, S-Box generation method is a massive tangle of XORs and a few ANDs that jump between eight, four, and two bit operations. One nice thing about this method is that the inverse S-Box generator is the same core multiplicative inverse calculator with an inverse Affine Transform on the input instead of the standard Affine Transform on the output.

5 FPGA Implementation The S-Box was synthesized using Xilinx ISE 8.1i VHDL Compiler,and the architecture in Figure 5 is implemented on a Xilinx Spartan-II XCS200-5 FPGA. From [3], the area occupied by the S-Box can be reduced by merging the inverse isomorphic mapping with the Affine Transformation. Therefore, in the FPGA implementation, the δ-1 and Affine Transformation module is combined to reduce the slices occupied by the S-Box. To use the S-Box as one continuous path would be costly in terms of the logic delay since deep logic will severely reduce the highest possible achievable clock frequency. Thus, a 5-layer pipeline is used to break the logic delay in the attempt to achieve a higher clock frequency. Figure 5 below shows the applied pipeline register in the hardware implementation. The dotted line indicates a pipelined register. The five stage design uses four sets of interior registers to pass data. With five stages, synthesis results indicate 56 flip flops were added to the design (including the output register) with a maximum clock frequency near 210MHz.

58

Z. Yu

6 Conclusion A combinational logic based S-Box for the SubByte transformation is discussed and its internal operations are explained. As compared to the typical ROM based lookup table, the presented implementation is both capable of higher speeds since it can be pipelined and small in terms of area occupancy. This compact and high speed architecture allows the S-Box to be used in both arealimited and demanding throughput AES chips for various applications, ranging from small smart cards to high speed servers.

References 1. Satoh, A., Morioka, S., Takano, K., Munetoh, S.: A Compact Rijndael Hardware Architecture with S-Box Optimization. Springer, Heidelberg (2001) 2. Rijmen, V.: Efficient Implementation of the Rijndael S-Box, Katholieke Universiteit Leuven, Dept. ESAT, Belgium 3. Zhang, X., Parhi, K.K.: High-Speed VLSI Architectures for the AES Algorithm. IEEE Transactions on Very Large Scale Integration (VLSI) Systems 12(9) (Septemper 2004) 4. Advanced Encryption Standard (AES) Federal Information Processing Standards Publication 197 (November 26, 2001) 5. Good, T., Benaissa, M.: Very Small FPGA Application-Specific Instruction Processor for AES. IEEE Transactions on Circuits and Systems – I: Regular Papers 53(7), 57–64 (2007), doi:10.1109/SCIS.2007.357670

Research on Security of VoIP Network Xiaojun Liu and Chunxia Tu School of Computer Huanggang Normal University Hubei Huanggang 438000 China [email protected]

Abstract. As a voice transmission technology based on packet switching, VoIP is quite different from traditional telephone service which is based on circuit switching, which results in specific security issues on VoIP network. In addition, because of the high real time request for VoIP network, the characteristics of network services and the security strategies applied bring challenges for the capability and QoS of VoIP network. In this paper, the existing security threat and several security measures of VoIP network have been analyzed, and the author put forward suggestions for VoIP system deployment and related management policy. Keywords: VoIP, capability, security, voice quality.

1 Introduction VoIP (Voice over IP) is an application which built on the Internet, along with transmission of data, voice, image, video and other business. However, through IP networks to transmit voice and other information, VoIP has inherited the security risks of IP networks; Secondly, VoIP terminal security threats inherent in the operating system will also affect the security of VoIP; in addition, the VoIP protocols’ design deficiencies are also an important factor to VoIP security threats, security issues have become obstacles to the development of VoIP. And, as a real-time application ,VoIP is very sensitive to performance and QoS(Quality of Service). Current VoIP network performance and call quality worse than the traditional telephone, and the increase of VoIP security strategy will further weaken the VoIP network performance and voice quality, VoIP security and performance is still A pair of conflicting issues which need to resolve urgently. This article gives detailed analysis to the VoIP network security threats and the existing security policies, then expounds the impact of the security policy to VoIP network performance and voice quality, finally, puts forward the reasonable suggestions for the government management and enterprise deployment the VoIP network.

2 VoIP Network Information Security Threats There exists various security threats for VoIP network.VoIP network transmits voice and video signals in the IP network ,and make the IP network inherent security threats M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 59–65, 2011. © Springer-Verlag Berlin Heidelberg 2011

60

X. Liu and C. Tu

succession; VoIP system is like Internet at present, just simply no longer can be used for voice communication telephone system but is integrated with voice, video and other complex applications’ multi-media system; VoIP server is vulnerable to be attacked; The inherent security leak in the OS will also pose a threat to VoIP networks because of the intelligence of VoIP terminal. The analysis of VoIP security threats is as follows. 1) Protocol attacks. The protocols related to VoIP network include network infrastructure protocol(DNS, DHCP), signaling protocols (H.323, SIP) and streaming media protocol(RTP). The security leak of this protocols will directly affect VoIP security. In addition, even though the major protocols of the VoIP network make the security improvements, in the process of deployment, it is necessary to prevent new security issues because of expanding of the protocols. For example, the equipment of deployment of a new security protocol make the same conversation with the equipment of no deployment of a new security protocol; the interoperability of multi-protocols may bring some restrictions to the security of each protocol. 2) Application attacks. In addition to voice services, VoIP systems can integrate existing services and provide new services, including voice mail, Web-based and value-added services. These services may suffer malicious attacks. 3) Operating system attacks. Different from traditional phones, VoIP terminals is highly intelligent and very sensitive to attacks against the operating system. The leak of the operating system may result in security threat of VoIP. 4) Listening and sniffing. Many network softwares providing monitoring and troubleshooting for VoIP services can easily be used as a tool for wiretapping. At present, the VoIP system provides less protection for to listening and sniffing, especially to the invasion from VoIP network inside. 5) Network deception. Links are difficult to establish between phone number, so the network of deception in the VoIP network is more widespread attacks, which can be divided into multi-storey to carry out, such as the network layer (modeled IP address), application layer (replica URI) and so on. 6) Unauthorization. Malicious users obtain false authorization or unauthorized users directly access into network to acquire key information, which may result in significant loss of VoIP networks. 7) Theft of service. Attackers utilize some leaks of VoIP system, bypass the billing system, malicious abuse of VoIP network services and even peculate resources of legitimate users. Theft of service will affect the general performance of VoIP systems to increase operator's service expenditures. 8) Man in the middle attack. The damage of man in the middle attack to the VoIP network is enormous, and the malicious server can obtain information of the two sides of the communication, such as user names, passwords and other personal privacy information. Further more, an attacker can use to redirect your users to initiate the method of Dos/DDos attacks. 9) DoS attacks. VoIP systems use a lot of ports, transfer or call for the establishment of business and system management. The opening of these ports and if authentication protocol of call establishing is not strengthened, which is the target of DoS attacks. It may lead to system instability or even paralysis.

Research on Security of VoIP Network

61

3 VoIP Network Information Security Measures After the analysis of possible security threats of VoIP system, strengthening VoIP system’ security and complexity is necessary. Some main technologies and measures are introduced to protect the safe operation of VoIP systems. A. Firewall Techniques Traditional characteristics of a firewall of its own is an obstacle to deployment of VoIP, because it discards all connection requests of the non-port from outside to inside. And VoIP adopt dynamic port to transmit voice and video. If the firewall open all ports, this means that a firewall exists only in name. In addition, VoIP need the resources based on IP predictable and static used in the network. So when the firewall uses NAT technology, to make VoIP effective pass there is some difficult, thus new technologies must be adopted. 1) Application Layer Gateway Application Layer Gateway is designed to identify the specified protocol (such as H.323, SIP or MGCP, etc.). it is not simple to see information of packet head to determine whether it can pass, but more in-depth analysis of the packet payload data, that is, the application layer data. This technology allows the network to dynamically open and close firewall ports. 2) STUN (Simple Traversal of UDP Through NAT) STUN is a UDP streaming protocol to penetrate NAT, NAT problem solving ideas are as follows: private network access to users through some mechanism prior corresponding export its address on the NAT external address, and then fill out directly on the export of NAT external address, private network rather than the user's private IP address, so that the load of message content after NAT when there is no need to be changed, just the general message NAT conversion process of the IP address first, and at this time IP address load in the message header information and address information are consistent. 3) TURN（ Traversal Using Relay NAT） The thinking which TURN resolve NAT issues is similar to STUN. The address and port of TURN Server are used as address and port of a client receiving the external. that is the package which private network users send must go through TURN Server to Relay transmit. In addition to have the merits of STUN, this application can also solve the problem of STUN’ penetration symmetric NAT means. 4) Deep packet inspection Deep packet inspection technology decide how to handle packets based on fingerprint matching, heuristic techniques, anomaly detection, as well as technologies such as statistical analysis of the rule set. In general, for many malicious acts may hide in data payload, Deep packet inspection technology usually examines each package and other application payload passing the firewall in depth. 5) SBC(Session Border Controller) SBC can be seen as a firewall supporting for VoIP and modify the IP packet header so that it makes IP packets favourably pass network edge equipment. SBC is an the equipment of "identifiable application layer", to identify the fifth and seventh layers

62

X. Liu and C. Tu

information, and also handle the large number of signaling protocols in the fifth session layer, modify the address data in package header, and then achieve "the remote pass the firewall". At the same time, SBC can achieve application-layer anti-DOS attack by limiting the number of sessions. B. Encryption Technology For encryption, you can use IPsec encryption technology to maintain the security of VoIP, encryption may also defeat the need for access to physical infrastructure and other types of attacks. C. VPN(Virtual Private Network) Technology In general, firewall and encryption is the most effective way for information security. VPN technology combines the advantages of both methods and enhance the security of VoIP by coupling gateway VoIP between IP networks and VoIP gateway or coupling host VPN between IP networks and mobile hosts. VPN is the use of open networks as media information transmission through encryption, authentication, packaging, and key exchange technology in the public Internet to open up a tunnel to ensure legitimate users secure communications. The use of VPN security mechanisms ensure the security of VoIP. It is not only provide security of voice service for users, but aslo reduce operating costs by taking full advantage of enterprise existing network facilities. VPN security mechanism is through the tunnel technology to achieve. the original information to be transmitted is encrypted and packaged according to protocol through tunneling technology. After Data package is packaged through PPTP,L2TP or IPSec. Only the source and terminal side users can interpret and process nested information in the tunnel, while it is are meaningless to other users, so as to enhance information security. D. IPS IPS can mitigate attacks from inside. For example, the use of SIP to send a large number of "registered" the request would result in that the server can not process the request, but if the IPS can understand SIP, we can detect these attacks. E. Enhancement Security of Operating System In general, the server supporting VoIP running Linux, Windows and other operating systems, which have different leak and patch to be perfected. VoIP equipment generally operate independently on the engine room and do not require human intervention, but after the equipment is manufactured, if not to apply the latest patch, network maintenance sector will need to continuously track the latest security information, or to maintain contact and equipment manufacturers in order to these backbone equipment upgrades the operating system and to avoid attacks by hackers, while also seriously limit their access.

4 Security Strategy Impact to the Voice Quality VoIP network is based on packet switching networks, not the safety PSTN line, so the need for the deployment of a variety of security policies to create a relatively secure network environment in VoIP networks. In theory, if there is no performance

Research on Security of VoIP Network

63

limitations, any security policy for IP network can be used for VoIP, but the VoIP user experience on the performance requirements of VoIP networks in the deployment of security policies to narrow the scope. Currently security policy applicable to VoIP network also affects voice quality and VoIP performance: 1) Encryption/decryption of voice will increase the general packet delay and even reduce the performance of the entire VoIP network, especially when a number of encryption points is being encrypted. The general use of VPN encryption have lower impact of VoIP system performance and hardware encryption used will minimize the impact of voice quality. 2) A result of signaling packets, voice packets and packet data packets through different paths, respectively, and their own different types of security associations are therefore established, each association must establish a secure key exchange security information, thereby greatly increasing the delay (usually a few seconds). This voice communication can not be tolerated, the delay will seriously affect the establishment and voice call quality. 3) A firewall has two implications to performance of the voice. On the one hand, when the firewall verifies the legality of foreign division, it will increase the voice delay; On the other hand due to the existing firewall may not support some application layer protocol caused VoIP not work properly. 4) NAT is used for private network for internal and external public IP address of the IP address of network mapping to protect the confidentiality of private network IP addresses. NAT in VoIP network must be able to support VoIP communications protocols such as H.323 and SIP protocol, so as to avoid the call being blocked. NAT also have a certain impact performance of the incoming operation. At this stage, the realization of MPLS-based VPN can support QoS, but IPSec-based VPN is not in support of QoS. In data and voice integration in the network, it may affect the voice group real-time. 5) The router of different network segment can handle different MTU. if the client can not know MTUmin in the source, increase the partition of a packet in the transmission path will result in the network packet delay.

5 VoIP Network Information Security Suggestion A. The Deployment of Enterprise VoIP Security Recommendations Prior to the deployment of VoIP systems enterprises need to carry out the overall assessment the security of VoIP networks. It is important in the deployment of VoIP application as well as the special security requirements of VoIP systems require special attention. The deployment of security policies need to base on an assessment of the situation. In the deployment of VoIP security measures to be considered include: the timely installation of operating system patches and update of VoIP software; the deployment of Intrusion Detection System (IDS) to ensure the application layer and network layer security; installation of firewall products to support the network communication protocol used in VoIP; in the trust region and non-trust region the arrangement of

64

X. Liu and C. Tu

application layer gateway (ALG), used in conjunction with a firewall; the use of reliable authentication technology to ensure the security of authentication and authorization; minimize the use of soft phones and to consider the mobile phone (using WLAN , CDMA or GSM technology) security; a selective arrangement of VLAN, the voice traffic and data traffic separation, if we can make voice and data server physically separate the better; the use of encryption transmission technology to ensure the safety of media streams (IPSec, SRTP, etc.); having a choice in the trust region and/or non-trust region to deploy VPN. When the security policy have been successfully deployed, VoIP network administrator need to analyze the monitor log and to conduct regular safety review of abnormal behavior; prohibition unsafe connections, such as, Telnet connection, etc.; propagation the safety requirements of VoIP to employees, a clear network acts prohibited and acts allowed; prevention leakage of administrator password; considering the deployment of the security strategy of the conflict between the security threat. VoIP network is sensitive to QoS, when the deployment of any security strategy, the new strategy should be detected on the network performance and voice quality, to assess the VoIP voice quality parameters, including delay, jitter, packet loss rate, MOS, R-factor and so on. B.

Government Policy Recommendations for VoIP Management

VoIP security issues are related to national and public security. The Government needs to develop a reasonable business to VoIP regulatory policy, to ensure VoIP quality of service for the public and security. Settling of VoIP security issues is a prerequisite for the implementation of market access. VoIP business access policies required by the different stages of the development of VoIP business market characteristics to develop. At this stage, VoIP in safety, service quality, reliability and capacity of emergency services, etc. is not a substitute for PSTN, so we take full account of how the extension of the existing voice business division in market access policies, according to security needs and service quality needs of the business areas to improve access threshold, to prevent too many operators vicious competition; the establishment of healthy competition mechanism for regular operators of VoIP unified national voice and the quality of service assessment, promoting these operators to manage and assess their branches throughout the country; different users have different rates affordability and quality of voice is different, so it is proposed to allow different fees in different voice quality, not to the imposition of administrative measures of service quality and rates; determine policy terms to ensure that basic telecommunications operators and VoIP operators interconnection between, to prevent obstacles to behavior; the charges on VoIP for government intervention to prevent large-scale price cuts and the emergence of vicious competition.

6 Conclusion Now, with a wide range application of VoIP, its security issues are paid more and more attention. VoIP security issues will increasingly become the constraints of its application bottlenecks, and security solutions have become a the key factor to decide

Research on Security of VoIP Network

65

whether VoIP enters the business applications. Therefore, we should further enhance VoIP network security research and communications applications, at the same time combine the characteristics of VoIP and constantly improve the VoIP application security system.

References 1. Rosenberg, J., Schulzrinne, H., Camarillo, G., Johnston, A., Peterson, J., Sparks, R., Handley, M., Schooler, E.: SIP:Session Initiation Protocol. IETF RFC 3261 (June 2002) 2. Gupta, P., Shmatikov, V.: Security Analysis of Voice-over-IP Protocols. In: 20th IEEE Computer Security Foundations Symposium, CSF 2007, pp. 49–63 (July 2007) 3. Feng, C., Malik, S.: Vulnerability Analysis and best practices for adopting IP telephony in critical infrastructure sectors. IEEE Communication Magazine (2006) 4. NIST SP 800-58, Security Consideration for Voice Over IP Systems 5. Rosenberg, J., Schulzrinne, H., Camarillo, G., et al.: SIP:Session initiation protocol [EB/OL] [S.L]. IETF, vol. 6 (2002) 6. Lippmann, R.P., Cunningham, R.K.: Improving Intrusion Detection Performance Using Keyword Selection and Neural Networks. Computer Networks-the International Journal of Computer and Telecommunica-tions Networking 34(4), 597–603 (2000) 7. ITU-T RFC 3015 Megaco Protocol Version 1.0. [S] (November 2000) 8. ITU-T RFC 3525 Gateway Control Protocol Version 1.[S] (June 2003)

The Analysis on Network Security and Protection Zhou Jing Department of Computer Science and Technology Huanggang Normal University Huanggang, Hubei, China [email protected]

Abstract. This paper analyzes Internet sites often present invasion of widespread computer virus, network security has become very prominent, but mainly include infrastructure security, border security, network, network connection security, management of safety in four areas. Good solution to network security, we must start from the four areas. The current firewall technology, vulnerability scanning, intrusion detection, virtual private network technology, encryption and decryption technology, viruses are anti-kill technology to solve a certain level of security technology. As an overall network security protection, a technology is difficult to do alone, must combine a variety of security technologies complement each other. The only way to the need to protect the network put up a barrier, in the normal network access, while security is well ensured accordingly. Keywords: Threats, network, security, method, protection.

1 Introduction With the rapid development of computer networks, global information has become a major trend in human development. However, the diversity of computer networks have linked, uneven distribution of the terminal and network openness, interoperability and other features, resulting in the network more vulnerable to network attacks on a number of misdemeanors, so the safety and protection of online information is to vital issue. Therefore, the network must be strong enough security measures to ensure the network information is protected. Both in the LAN or WAN, there are many factors such as natural and man-made vulnerabilities and potential threats[1]. Therefore, network security and protective measures should be able to target the full range of different threats and vulnerabilities, so as to ensure that the network information confidentiality, integrity and availability. Most computer networks daily business processes, WEB services, email services, database services, the four main functions, the functions complement each other, by a unified network architecture to achieve. Therefore, the computer network must meet the following requirements[2]:

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 66–70, 2011. © Springer-Verlag Berlin Heidelberg 2011

The Analysis on Network Security and Protection

67

(1) reliability: System has some redundancy and backup capabilities, recoverability. (2) stability: The user more sudden flow of large cases, to avoid network bottlenecks, impeding normal operation. (3) security:As computer networks connected to the INTERNET, and the units to transfer data in the WAN, so the network security must be adequate security.

2 Network Secrity Analysis 1. Platform Security Windows NT security is a more glaring weakness. Remote users through intercepted conversations. Obtain system administrator privileges; local users to obtain system administrator privileges cracked tools; any person with a backup copy of the password can be authenticated on the server, and may enter other Windows NT servers; users can take advantage of Windows NT provides Emergency Repair Disk Utility to get all the security information. Windows NT can be seen very serious security vulnerabilities. UNIX operating system to do better in terms of security. But people familiar with UNIX users, but also its attack. UN user password through the console into the attack; users through the adapter software, drive the invasion, and can increase the disk, formatted disk[3]. 2. Physical Security Physical security is the location of the system and its security. System should always be separated with the attacker, but the network itself is an open system, in order to improve the physical security. Require use of physical security equipment. Segmentation can be used routers and network management domain could enhance the security of the host. In addition, should also develop the physical aspects of management practices and measures to ensure network security.

3 Network Threats Threats to computer networks can be divided into two types: first, the prestige of the network information Threat: the second is the threat of network equipment. Many factors that affect computer networks, some factors may be intentional, it can be inadvertent bite; may be artificial, it can be artificial town; may be external hackers on the network resources, illegal to have[4]. To sum up, the main threat for network security: 1. Unintentional human error. If the operator security vulnerabilities caused by improper configuration, user security awareness is not strong, careless user password selection. Users will be free to lend your account to others or to share with others and so will be a threat to network security. 2. Man-made malicious attacks. This is a computer network face the greatest threat to attack the enemy Attack and computer crime fall into this category. Such attacks can also be divided into two: one is active attacks, which in various ways to selectively destroy the effectiveness and integrity of information; the other is passive aggressive, it does not affect the network in the normal work cases, an interception, theft, breaking

68

Z. Jing

for important confidential information. The two attacks on computer networks could cause great harm, and lead to leakage of confidential data. 3. Network software vulnerabilities and the "back door." Network software can not be 100% no defects and no loopholes[9], however, is precisely the mantis loopholes and shortcomings of choice for hackers to attack target, there have been hackers scored within the network of events, most of these events is because the security imperfect measures of the consequences incurred.

4 The Main Method of Network Security Protection 1. Network Firewall Network firewall is a method used to enhance network access control between the special networking equipment, such as routers, gateways. It is transmitted between two or more network data packets, and link means in accordance with a certain security policy checks to determine whether the communication between the network allowed them to be protected network known as the internal network, the other claimed external network or public network, it can effectively control the internal network and external network access and data transfer between, so as to protect the internal network information from external non-authorized users to access and filter the bad information on purpose[5]. 2. Vulnerability Scanning The best way to prevent hacker attacks is to find security holes and hackers to find and fix flaws before use. As computer technology continues to evolve, new vulnerabilities continue to emerge. Must be on the newly discovered security vulnerabilities in a timely manner to repair and regularly tested, so that always one step ahead of hackers. Vulnerability testing services include network security vulnerability detection, the host system security vulnerability detection, database security vulnerability detection and vulnerability detection CGI program four parts. Through the security vulnerability detection software managed customer networks, hosts, databases, and CGI programs to conduct a thorough security vulnerability scanning, can be found in all known security vulnerabilities, including vulnerabilities and newly discovered vulnerabilities. Vulnerability detection tools must be integrated with a variety of automatic detection and security services of engineers and vulnerability detection and analysis of experience. 3. Intrusion Detection Firewall can solve network security problems, but it is not a complete network security protection system. Because the firewall is a passive focus of prevention and protection, and primarily to prevent attacks from the outside, but not all attacks come from outside. To make up for deficiencies in the firewall itself, using intrusion detection technology as a reasonable supplement firewall is firewall security after the second means[8]. The main purpose is to help intrusion detection system against network attacks, expanded the system administrator's security management capabilities (including security auditing, monitoring, attack recognition and response), improve the integrity

The Analysis on Network Security and Protection

69

of the information security infrastructure. Computer network systems from a number of key points to collect information and analyze information to determine whether the network behavior and security policy violation attacks, without prejudice to the case of network performance can be monitored on the network to provide the internal attacks, external attacks and misuse in real-time protection. Through the network, including a monitoring station as host intrusion detection software installed, you can achieve the following functions: monitor, analyze user and system activities; system structure and weaknesses of the audit; do not reflect the activity patterns of known attacks and alert (e e-mail, PAGER information, etc.) [6]; abnormal behavior and the statistical analysis;'s evaluation of the integrity of the system and data files; operating system audit trail management, and identify users who violate security policy behavior. 4. Prevention Virus Throughout the system, prevention is an extremely important part of the virus, especially from e-mail virus attacks in recent years, virus incidents, the decision most of the viruses are spread via e-mail, so the entire network system placed a set of antivirus software is especially important[7]. The main protection system to prevent the virus from the virus destroyed the internal LAN. Placed in the system, a network anti-virus software. In each workstation and server are installed anti-virus client software, a dedicated NT server system management center to install anti-virus software, management center automatically from a central location to the latest anti-virus software, update files and configuration files released to the client and server systems. Prevention of virus in the computer network system in the system to achieve the following features: Clear the current virus, and prevention of future new virus; against rapid spread of macro viruses; immediately clear e-mail attachment virus; centralized management system; provide easy update the virus definitions; with minimal impact on the system running real-time virus scanning and removal.

5 Summary This paper discusses the face of all the computer network security threats, we must take effective measures to ensure safety. Both in the LAN or WAN, the network security should be able to target the full range of different threats and vulnerabilities in order to ensure network information confidentiality, integrity and availability. In addition to reasonable use and configure a variety of security hardware and software products outside should set up a complete security system. Acknowledgment. First and foremost, I would like to show my deepest gratitude to my colleague Dr. Fang Yuan, who has provided me with valuable guidance in every stage of the writing of this thesis. I would also like to thank reviewers for constructive reviews and suggestions that improved the quality of this manuscript. This work was funded by the project of Huanggang teacher Bureau (2009CE19) and the project of Science and Technology of Hubei Province Department of Education research(B20102905).

70

Z. Jing

References 1. Zhou, j.: The Exploration of Data Transfer Mode between ASP and ASP.NET Page. Microcomputer Information 5-3, 114–115 (2006) 2. Zhou, j., Liu, q.: The System Safety Research and Design based on.NET Framework. Communications Technology (May 2008) 3. Wei-yuxin: Network Invasion Examination System Key Technologies Research. Beijing University of Posts and Telecommunications doctorate paper (2008) 4. Jing, Z., Yuan, F.: The component code of each call analyze and compare based on .NET. In: Proc. Int. Symp. Intelligent Inf. Technol. Appl., IITA 2009 (EI 20101012756764), IEEE Computer Society press, Los Alamitos (2009) 5. Wang, W.: Asp.net Techniques. people’s press, Beijing (2005) 6. Yang, K., Meng, F., Wen, C.: Inflammation. Asp.net + SQL SERVER Dynamic Web Development from the Foundation to Practice. Electronic Industry Press, Beijing (2005) 7. Chu,Y.: Asp.net Application Security Flaws and Prevention Strategies. Journal of Anhui: Anhui (2007) 8. Li, X., Shuan, l., Zou, J.: Asp.net Technology Development (January 2005) 9. Jing, Z., Yuan, F.: The examinational technology of invasion analysis based on network security. In: Proc. IITA Int. Conf. Control Autom. Syst. Eng., CASE 2009 (EI 20094712474583), pp. 624–627. IEEE Computer Society press, Los Alamitos (2009), doi:10.1109/CASE.2009.145

The Analysis of the Safety Defects Based on ASP.NET Zhou Jing Department of Computer Science and Technology Huanggang Normal University Huanggang, Hubei, China [email protected]

Abstract. This paper analyzes the study of the ASP.NET application process, three elements of security (authentication, authorization, fake) their own characteristics;Secondly, in detail ASP.NET environment based on common security vulnerabilities and security architecture asp.net environment; Finally, the study of the IIS and ASP.NET authentication mode application, and authorization mechanisms, and their intranet and internet environment to achieve the security policy configuration. As Intemet application developers, we should recognize that ASP.NET applications use a lot of users, a number of potential uses and a variety of different security requirements, so the application process to ensure the appropriate use of defense mechanisms, it also To ensure efficiency. Keywords: Architecture, defects, security, process, strategy.

1 Introduction As Web applications become increasingly widespread, more and more systems and services using B/S structure. At the same time high performance and reliability of the application process has been the goal pursued by the developer, how to make better use of share some resources to better improve application performance and reliability of their developers have become key issues for consideration. With the intranet and internet applications and popular in all walks of life, security is a growing web application developer concerns, but to protect the safety of web applications become more complex, developers using ASP.NET technology, on the one hand by the windows 2000 and IIS of the security features of security[1], on the other hand, ASP.NET technology itself provides authentication, authorization and other security features.

2 ASP.NET's Security Architecture ASP.NET and IIS, .NET Framework and provides the basis for the operating system used in conjunction with the security services, together provide a range of authentication and authorization mechanism, known by the architecture, ASP.NET, M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 71–75, 2011. © Springer-Verlag Berlin Heidelberg 2011

72

Z. Jing

security involves secure communication, authentication and authorization, secure communication technology to ensure the HTTP request, the security of sensitive data, and users to access limited resources must be authenticated and authorized, including the IIS and ASP.NET authentication and authorization, IIS and ASP.NET each contain between, common to good ASP.NET application security[2]. Authentication is the identification from the client to obtain credentials, such as user name and password, and verify those credentials process. Authorization is the process of determining user access privileges, that is to determine the authenticated user access to the requested resource type. The resources required to authenticate as limited resources, does not require authentication is called non-constrained resources of resources, can be anonymous called.

3 ASP. NET Security Process ASP.NET and the Microsoft .NET Framework and IIS is to work which together to provide the security of web applications. First is the Windows operating system and IIS on the user's identity and permissions requests verification, and security is the ASP.NET validation framework[5]. There are three elements are the basis for security implementation: 1. Authentication Authentication is the user credentials from the client to obtain and verify the credentials of the process. The purpose of authentication is to confirm the identity of the client, the identity is verified, the authorization process will determine the identity can access a given resource. windows authentication is completed through IIS, all the web clients through IIS with ASP.NET application, communication, all requests need to go through us and then sent to ASP.NET application to verify the request. If the requirement resourced to allow anonymous access that is not authenticated. If the requirement resourced to requires the user has certain privileges while customers have been verified and authorized, then IIS will send the request to the ASP.NET process to deal with, if the status is not authorized by or are not denied access. IIS always maps to the windows user account credentials and use it to authenticate users. In IIS, there are three different types of authentication: basic, digest and integrated Windows authentication[6]. 2. Licensing The purpose is to determine whether authorization should be granted to a user on a given type of resource access request. There are two basic ways to grant access to a given resource: file authorization and URL authorization. After authentication the user to determine the identity, but also the decision by the authorized processing module whether this user has access to this resource. Authority is divided into "file under" and "URL authorization", and each authorization method is divided into user-based authorization and role-based authorization, role-based authorization can greatly simplify the licensing workload. Document authorized by file authorization module executed by windows operating system access control list (ACL) [7] to control user or group on the file or folder access rights to achieve, windows authentication mode of user or role (group) is authorized by

The Analysis of the Safety Defects Based on ASP.NET

73

file authorization to implement, and document authentication, authorization forms and passpon (passport) does not work even under authentication. Authorization implementation file, the file system must be configured to NTFS format, FAT32 format can not be achieved in the ACL. 3. Fake Fake identification in the context of other users to execute code of the process, disabled by default fake, Win2000 environment, all ASP.NET code is in the Domain / ASP.NET runs under the user account can be set in the web.config <dentity impersonate = "tme" /> to enable fake. The main purpose is to simplify the fake work authorization rather than authentication. Note that only wiIldows authentication mode can use the fake, and so on in the form authentication mode is not fake at all.

4 Implementation ASP.NET Security Policy 1. The security program of intranet application When developing an application is running in the intranet environment, and access to the users windows account, the application authentication on the IIS to perform, and if the client is using Micmsoft Intemet Explorer, then use the integrated windows identity verification. Intranet's security configuration is as follows: Authentication: (1)ASP.NET Web application configured to use windows authentication, no simulation: the virtual path editing application directory, such as web.comfig. element is set to which to ensure that analog is turned off: < identity impersonate = "false"/> (2) by IIS using integrated windows authentication against Web application's virtual root directory for anonymous access[8]. Authorized to:(1)ASP.NET Web application is configured to use the "file under"; (2)to configure the web server user license the right to limit the use of resources, in order to simplify the management of the user to the windows group and the use of groups in the ACL; (3) ASP.NET web application according to documents related to permissions that using the client's identity implementation of the access check. The implementation of the IIS integrated windows authentication to use intemet explorer. In a mixed browser environment, you can use other authentication scheme, such as basic authentication and SSL, client certificates, forms authentication, in these programs, the authentication must use encrypted communications: SSL (Secure Sockets Layer, Secure Sockets Layer). 2. The security program of internet application

①

②

Most Web applications are based on intemet users, the application have the following characteristics: users have many different browser types; anonymous users can browse the unrestricted application page; users must register or log in (through HTML form) to have access to restricted pages; SQL server database according to validate the user credentials[9].

③

④

74

Z. Jing

Based on these features, common safety measures are: Authentication:(1)HS configured to allow anonymous access;(2)ASP.NET web applications configured for forms authentication:Edit the application's virtual root directory web.config. element is set to: ;(3)use the database to store user name and password, but password is not stored directly, but to convert the value of the password hash with a salt value, in order to reduce the threat associated with dictionary attacks to verify. Authority: the ASP.NET Web application is configured to "URL authorization" . Forms Authentication, you must use SSL to protect the initial login credentials, the same time, the resulting forms authentication ticket must be protected, you can use SSL for all pages to protect the votes, it can be web.config surface element protection attribute is configured to All or Encrypt, to encryption. web server URL authorization allows unauthenticated users to view web pages unrestricted, and restricted the page to force authentication.

5 ASP.NET Application, Common Security Flaw ASP.NET programmers to bring a vast new program of space, but because it contains many new technologies, in terms of each There are still a lot of programmers need to learn, programming, they also inevitably some flaws . 1. Excessive trust of user input ASP.NET that page as an intermediary with the user interaction, the user will enter the website legal information, and therefore the user's input does not carry out verification and inspection, in fact, now many hackers will attack with a lot of methods and tools to the input box, enter the specific information with a bad purpose, to achieve its other objectives. This vulnerability is easy to be hackers to SQL injection attacks and XSS attacks, and thus defrauding the trust and access to confidential data on servers and other hazards. This vulnerability is the low level of security loopholes. 2. The use of information leakage caused by Cookie To use the Cookie, do not need to programmatically create and read them explicitly. If you use session state and forms authentication implementation will implicitly use the Cookie[3]. Of course,ASP.NET support without Cookie session state, but if ID can be embedded in the URL, so more vulnerable. 3. Pass parameters from the URL security vulnerability Using a variety of development languages used by Web programmers almost all URL parameters passed by value, with the ASP.NET programming, too, it can easily get to the next page on the page associated with a value, simplify code writing, however, it vulnerable to hacker attack vulnerability. 4. The page directly Script Language Many programmers are accustomed to a web page (that is .Aspx file) [4] to add language to deal with Script pages the user insertion of information (such as form input), without any network transfer data back and forth, so when the user enters a items of information, it need not pass through the server (Server) address, and

The Analysis of the Safety Defects Based on ASP.NET

75

transmits it back to the process, the client directly can be handled by the application. This can speed up access to a good speed. Since it is generally only the client implementation, and its source code client can directly see, with the server client is not necessary connection, but it can be in the client offline, so hackers can easily attacked, so from security considerations should be avoided.

6 Conclusion This paper discusses the asp.net environment based on common security flaws and security architecture asp.net environment. Also studied the application IIS and ASP.NET authentication mode and authorization mechanisms, and their intranet and internet environment, security configuration and did not be related to the background database security issues. But as the intemet application developers, we should recognize that ASP.NET applications use a large number of users, many potential uses and a variety of different security requirements, so the application process to ensure the appropriate use of defense mechanisms, while must also ensure efficient. Acknowledgment. First and foremost, I would like to show my deepest gratitude to my colleague Dr. Fang Yuan, who has provided me with valuable guidance in every stage of the writing of this thesis. I would also like to thank reviewers for constructive reviews and suggestions that improved the quality of this manuscript. This work was funded by the project of Huanggang teacher Bureau (2009CE19) and the project of Science and Technology of Hubei Province Department of Education research(B20102905).

References 1. Zhou, j.: The Exploration of Data Transfer Mode between ASP and ASP.NET Page. Microcomputer Information 5-3, 114–115 (2006) 2. Zhou, j., Liu, q.: The System Safety Research and Design based on.NET Framework. Communications Technology (May 2008) 3. Wei-yuxin: Network Invasion Examination System Key Technologies Research. Beijing University of Posts and Telecommunications doctorate paper (2008) 4. Jing, Z., Yuan, F.: The component code of each call analyze and compare based on .NET. In: Proc. Int. Symp. Intelligent Inf. Technol. Appl., IITA 2009 (EI 20101012756764). IEEE Computer Society press, Los Alamitos (2009) 10.1109/IITA.2009.60 5. Wang, W.: Asp.net Techniques. people’s press, Beijing (2005) 6. Yang, K., Meng, F., Wen, C.: Inflammation. Asp.net + SQL SERVER Dynamic Web Development from the Foundation to Practice. Electronic Industry Press, Beijing (2005) 7. Chu,Y.: Asp.net Application Security Flaws and Prevention Strategies. Journal of Anhui: Anhui (2007) 8. Li, X., Shuan, l., Zou, J.: Asp.net Technology Development (January 2005) 9. Jing, Z., Yuan, F.: The examinational technology of invasion analysis based on network security. In: Proc. IITA Int. Conf. Control Autom. Syst. Eng., CASE 2009 (EI 20094712474583), pp. 624–627. IEEE Computer Society press, Los Alamitos (2009), doi:10.1109/CASE.2009.145

Spatial Distribution and Vertical Variation of Cu Concentration in Guangdong Fang Yuan and Chen Li-yan Department of Computer Science and Technology Huanggang Normal University Huanggang, China [email protected]

Abstract. Based on GIS with Geo-statistics analyst software (Surfer 8.0), total of 261 soil profiles were reported to investigate the Cu spatial distribution and vertical variation in Guangdong province. Cu spatial distribution presented similar patterns that high Cu concentration mainly located in fault, basin, and delta areas, indicating that soil Cu distribution was dependent on regional basin. Moreover, from A- to C-horizon Cu mean concentrations had an increasing tendency. Regional extensive distribution of granite and the fault mainly decided the spatial distribution of Cu concentration. Soil organic matter and clay content also, to a certain extent, affect the spatial distribution of Cu concentration. Keywords: component, Geo-statistics, spatial distribution, Cu Concentration.

1 Introduction Soil Cu is a potentially toxic element of most heavy metals and is present in soils, rocks, water, and the biological chains of animal and plant lives. Soil Cu environmental background value refers to the original Cu content in the soil without obvious pollution and destruction in a certain area during a certain period, which reflects the original condition of Cu element in the soil environment. The study of soil Cu background values is a basic work in soil environment science. Whether seeking the evaluation of soil Cu abnormity and the reference of the pollution degree, or setting up soil Cu pollution control measures should take the original condition of Cu as a reference. The determination of Cu content is of great significance for judging soil Cu pollution degree and developing soil environment quality standards. During the seventh Five-Year Plan period (1986-1990), a large-scale investigation and research of soil environmental background values was launched in Guangdong Province, and a rich basic data of soil environmental background values has been accumulated, based on which, Xu Lianfeng did a preliminary study on zonal differentiation of soil environmental background values and critical content in Guangdong Province[3]. However, the acquired basic data have not been fully excavated due to the objective condition at that time. The soil background value hasn’t been taken as a regionalized variable with spatial structure when considering its spatial M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 76–82, 2011. © Springer-Verlag Berlin Heidelberg 2011

Spatial Distribution and Vertical Variation of Cu Concentration in Guangdong

77

variability, therefore, the information of the spatial structure and spatial distribution of Guangdong soil environmental background values has not been fully utilized. In this paper, the geo-statistical method is used to reveal the spatial distribution and vertical variation of the soil Cu environmental background values in Guangdong, and the factors affecting the variation of Cu background values are also been analyzed.

2 Overview of the Study Area and Research Methods A. Description of the Study Area

～

～

Guangdong Province is located at 20°13′ 25°31′north latitude, 109°41′ 117°20′east longitude, and the Tropic of Cancer is running through the province. From west to east, it is adjacent to Guangxi, Hunan, Jiangxi, and Fujian Province. In the south, it is on Qiongzhou Strait opposite Hainan Province. The total land area is 178,100 square km, accounting for 1.86% of the country's total area. In Guangdong Province, the North terrain is higher than the south. Nanling is lying to the north and the South China Sea is to the south. The mountain has a northeast to southwest trend. ost parts of the province have a subtropical monsoon climate, and some has a tropical monsoon climate. Summer is long, and winter is short and warm. The rainy season is long, and the rain is plentiful. Wet and dry seasons are obvious. The average annual temperature is18~23.2oC, and the annual rainfall is generally 1700 mm, with the coastal areas 1900 ~ 2000 mm. Geological structure is rather complicated. The soil parent material is as shown in Figure 1B. There are granite, sandstone and shale, limestone and basalt, etc. The main soil types include: latored soil, red soil, laterite, mountain yellow soil, red limestone soil and the sea (river) alluvial soil. The distribution of soil elements is highly heterogeneous. B. Data Sources and Research Methods The original data source used in this research is coming from the seventh five-year National scientific and technological issue- "Investigation and Research on Soil Environmental Background Values in Guangdong Province”. The total sampling profiles is 261. The Global Positioning System (GPS) is used to reposition the original data for sampling points. With the support of GIS software, the attribute data is validated, modified and conducted with projection coordinate conversion (mainly for matching with other geo-data), the distribution of samples as shown in Figure 1C. In this study, the main data processing methods are conventional statistical analysis and geo-statistical methods. Samples data statistical analysis adopts SPSS software, and geo-statistical methods use Surfer 8.0 software to fit semi-variance function and to conduct Kriging interpolation. The corresponding spatial analysis is using ArcGIS 9.0 software. Semi-variance function is also known as semi-variogram. It is not only the basis to explain the spatial variability structure of soil properties in geo-statistic, but also can reflect the changes between the values observed from different distances. Therefore, it is the key to the success of spatial interpolation [4] [5]. The semi-variance function is expressed as the following form:

78

F. Yuan and C. Li-yan

r (h) =

1 N (h ) ∑ [ Z ( xi ) − Z ( xi + h) 2 N ( h ) i =1

]2

Where N(h) is the number of pairs of observation points taking h as the distance. The semi-variance function graph of a specific direction is often achieved by r(h) through h. Generally, the value of the semi-variance function becomes larger as the distance between samples increases,

3 Results and Discussion A. Statistical Characteristics of Cu and Soil Properties The analysis of Cu background values and part of soil characteristics in 261 profiles shows that the background values of soil Cu is close to the world average, but lower than the national average level [1]. Soil Cu with the highest background value (146.75 mg kg-1) appears in B layer, and Cu background value of each soil layer shows a positive skew distribution. Data is consistent with the logarithmic distribution, so the logarithmic transform is carried out in the relevant geo-statistics treatment. The content of organic matter in A layer of soil ranges from 1.7 ~ 9.94%, in B layer is 0.07~3.83%, and in C layer is0.03~3.56%. The highest and lowest values of the content of the organic matter appear respectively in A layer and C layer. The particle diameter distribution of each layer in the soil profile is almost in line with the normal distribution. From A to C layer, the arithmetic mean values of sand content are 50.4, 43.4 and 44.6%, and of clay content are 18.4, 20.4 and 20.1% respectively. Soil pH values show a weak growth trend from A to C layer. Both the maximum value and the minimum value appear in C layer. B. Correlation Analysis on Cu Concentration and Soil Properties A large number of studies have shown that the soil containing more clay minerals and richer organic matter tends to have higher level of metal elements, and they have the characteristics of combining with metal elements[9][10]. Because of strong weathering and the rock's mineral composition and structural characteristics, the soil of the study area under hot and humid climatic conditions has a relatively short period of soil age, and the above correlation is not obvious. Through the statistical analysis of the 261 soil profiles in Guangdong, we can see from table 1 that the soil Cu background value has great correlation with the clay content and the organic matter, has no correlation with the pH, and has weak negative correlation with the sand. The correlation between soil Cu background value and the organic matter strengthens as the soil depth increases. The correlation coefficient of C layer is 0.276. The biggest coefficient 0.393 of correlation between soil Cu background values and the clay appears in A layer, while the biggest coefficient(0.114) of correlation between soil Cu background values and the pH appears in B layer. The negative correlation between soil Cu background values and the sand decreases as the soil depth is increasing.

（

）

Spatial Distribution and Vertical Variation of Cu Concentration in Guangdong

79

In general, there is no obvious linear relationship between soil properties and soil Cu background values. It reveals that the organic matter and clay content is not the main factor of determining the variability and spatial distribution of soil Cu background value. The weak correlation between soil Cu background values and the organic matter and clay should be the result of the strong and rapid weathering of rocks in the study area. C. Analysis on the Spatial Distribution and Vertical Variation of Cu Use exponential model fitting variation curve and Kriging interpolation method for interpolation on Cu background values conducted with logarithmic transformation in Guangdong Province. From fig. 2, we can see that the spatial distribution of the variability of A, B and C layer is consistent because of the approximating content. From table 2, we can see that the distribution of soil Cu in Guangdong Province is highly heterogeneous. A, B, C layer show medium spatial correlation, and the ratio between larger pieces of gold block value and base value shows a small-scale variation existing. However, as a large-scale spatial variability research and analysis of influencing factors, it is insignificance to study the small-scale variation. From Table 3 we can see that Cu background value has medium correlation close to the scale of 150km ~ 200km. Greater than this scale, the variation degree becomes stable. Use variable-range and the log-log curve of semi-variance to calculate the fractal dimension D. It is 1.96, 1.94 and 1.91 of A layer, B layer and C layer respectively, which on the whole shows higher heterogeneity of soil Cu background value in a large-scale in Guangdong Province. The topsoil reflects the mutual interaction between the atmosphere, the biosphere and the lithosphere. B layer is usually used to study the process of soil pedogenesis, while C layer, represents lithosphere components of samples, namely, the geological background values [7]. The average soil Cu concentrations of A, B, C layer of the 261 soil profiles are 17.35 mg kg-1, 18.99 mg kg-1 and 20.65 mg kg-1, showing a growth trend. Contour map of Cu concentrations show a similar spatial distribution, which shows that the soil sample with a high concentration of copper is usually located mainly in areas of granite (Figure 2 and Figure 1B). It reveals that in Guangdong Province the spatial distribution of soil Cu is mainly depend on the regional characteristics of rock, and doesn’t have obvious relationship with clay and soil organic matter content. It also proves that the input of Cu is not an important influence factor at the regional scale. The Cu concentration shows an increasing trend from A to C layer in the soil profile, but there is no obvious bottom enrichment phenomenon, which may be closely related to the following factors: the organic matter content contained in the topsoil is low (the average is 2.75%), which cannot function as a natural biogeochemical barrier, and therefore, cannot effectively prevent the soil element from percolation with the downward of water seeping ; At the same time, low soil pH value and high permeability of widely distributed semi-decomposed granite rock can make Cu migrate from topsoil to C layer. In addition, the limestone and sandstone areas are often broken by the cuttings in the study area (Figure 1) , which provides paths for soil Cu downward migration. D. Spatial Variability Analysis of Topsoil Cu Background Values under Regional Geological Context The background value data of Cu in major soil rock in China shows that the soil Cu comes from a variety of rock, the soil Cu background value to a large extent is

80

F. Yuan and C. Li-yan

determined by the Cu content of rock itself[1]. From Figure 1 we can see that the acidic granite is the main rock, followed by limestone and sandstone and shale. As a result of strong chemical weathering and weak water permeability, the layer of soil developed in the limestone and sandstone-shale soil is often very thin, water and soil erosion is more serious, and the weathering profiles of granite with thickness greater than 20m are widely distributed. In view of strong weathering, the influence of regional granite on the Cu content contained in the topsoil in a certain extent is closely related to the role of soil-forming. The impact is likely to cover up the distribution characteristics of Cu in the adjacent areas. Therefore, under the conditions with rich hydrothermal resources, for the relatively young soil in Guangdong, the low content of a variety of mineral elements contained in the widely distributed granite rock is the main factor to determine the attachment and the distribution of soil Cu. With the support of ArcGIS, make an overlay analysis on the geological structural map of Guangdong and the spatial variability map of soil Cu in A layer obtained by Kriging interpolation (Figure 2A). The result show that the spatial distribution characteristics of surface soil Cu are closely related to regional geological setting. As can be seen from the Figure, the overall spatial variability mode of soil Cu in A layer is as follows: the soil Cu background value decreases from north to south; under the natural background, the soil samples with low concentrations are often located in the normal region with no obvious structural features, while soil samples with high concentrations of heavy metals are usually located in fault zone, basin and delta regions; soil Cu samples with high concentrations is distributed along with the regional fault, and is corresponding to the spatial distribution of regional basins. This distribution pattern is to some extent the result of frequent hydrothermal activity caused by the regional fracture during the period of Cenozoic tectonic movement, and also influenced by the negative effects of basin topography during the pedogenesis process. The overall statistical results (table 3) show that the soil Cu concentration in A layer from high to low is: the Pearl River Delta≥ Basin ≥ fault>> normal area. The geometric mean value of soil Cu concentrations in basin and delta region is almost 2.1-3.1 times of that in normal areas.

Fig. 1. Location of Guangdong Province in China (A), geological sketch indicating the distribution of the parent rock (B), and sampling locations (C).

Spatial Distribution and Vertical Variation of Cu Concentration in Guangdong

81

Fig. 2. Spatial distributions of Cu concentrations in A-, B-, and C- B-horizon soil in Guangdong

4 Results The background value of soil Cu is lower than the national average level of soil Cu content. The soil Cu concentration of each layer is in line with the lognormal distribution characteristics. Variogram fitting theoretical model is an exponential model. Geo-statistical analysis shows that the spatial structure of Cu background values has a medium correlation and high heterogeneity as a whole, and the overall spatial variability of A, B, C layer is almost in line. The surface soil Cu background value decreases from north to south. Soil samples with high concentrations of Cu are usually located in fault zone, basin and delta regions, and are corresponding to the spatial distribution of regional basins. From A to C layer the concentration of Cu has an obvious trend of growth. The contour map of Cu concentration displays similar spatial distribution features, but there is no obvious phenomenon of underlying enrichment. Widely distributed granite rock in the region and the distribution of regional faults structure are the main influencing factors to determine the deposit and distribution status of soil Cu. soil organic matter and clay content, to a certain extent, also affect the variability and spatial distribution of soil Cu concentration. layer. Acknowledgment. We thank Professor Wu Zhifeng and reviewers for constructive reviews and suggestions that improved the quality of this manuscript. The work was

82

F. Yuan and C. Li-yan

（

）

funded by the Technologies R&D Program of Guangdong Province 2004B32501004 , the Doctor Fund of Huanggang Normal University (08cd159) and the project of Education Department of Hubei Province.

References 1. Chen, M., Ma, L.Q., Hoogeweg, C.G., Harris, W.G.: Arsenic back-ground concentration in Florida, U.S.A. surface soil: determination and in-terpretation. Environmental Forensics 2, 117–126 (2001) 2. Cressie, C.: Statistics and data analysis in geology, 2nd edn. John Wiley & Sons, New York (1991) 3. Gee, G.W., Bauder, J.W.: Particle-size analysis. In: Klute, A. (ed.) Methods of Soil Analysis, Part 1. Physical and Mineralogical Methods, pp. 377–382. ASA, Madison (1986) 4. Tangestani, M.H., Moore, F.: Iron oxide and hydroxyl enhancement using the Crosta Method: a case study from the Zagros Belt. Fars Province, Iran.. JAG 2(2), 140–145 (2000)

The Quantitative Application of Information Extraction by Remote Sensing in Aranbaotai Area Fang Yuan and Chen Li-yan Department of Computer Science and Technology Huanggang Normal University Huanggang, China [email protected]

Abstract. The study was focused on Aranbaotai Region of Taxkorgan Tajik Autonomous County In Xinjiang. Lineament and circular structures were interpreted from ETM images. According to the spectral characteristics of typical altered rock, mineralized alteration information were extracted by band ratio and principle component analysis. The spatial distribution of remote sensing interpretation results was consistent with known ore deposits, which showed its good application prospect of mineral resources exploration and assessment in Taxkorgan. Keywords: component, structure interpretation, remote sensing alteration information, ore prospecting, Aranbaotai.

1 Introduction (Heading 1) The situation between resources’ supply and requirement contradiction is serious, so it is urgent to find new method for reducing minal exploration cost and time. The study area is abundant in mineral resources and has been found several ore deposites. Adverse natural and traffic conditions bring difficulties in basic geological data development and mineral exploration. The remote sensing technology is the only practical way to obtain data from inaccessible regions, relatively cheap and rapid method of acquiring up-to-date information over a large geographical area.Landsat data have been used for a number of years in arid and semi-arid environments to locate areas of iron oxides and/or hydrous minerals [Abrams et a/, 1983; Kaufman,1988; Ranjbar & Roonwall, 1997;Majid Hashemi Tangestani,2000]which might be associated with hydrothermal alteration zones. The aim of the present study is to use ETM data, in combination with field,mineralogical, and geochemical investigations to define typical characteristics of alteration zones. The ETM image data were used to extract alteration zones using principal components analysis (PCA) of mineralogic indices extracted from the band ratios. Finally, the fractional abundances of significant alteration minerals are detected using a matched filtering technique. The result can provide basis for further prospecting potential prediction and comprehensive exploration. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 83–87, 2011. © Springer-Verlag Berlin Heidelberg 2011

84

F. Yuan and C. Li-yan

2 Geology Aranbaotai district lies between latitudes 74°50’ and 75°20’N and longitudes 37°20’ and 37°50’E at the west part of Taxkorgan Tajik Autonomous County.The geotectonic location of the area lies in karakorum block and exposure strata are paleoproterozoic hebron sarikol group metamorphic strata, Permian and very little quaternary eluvium, river alluvium. Structurally, Taxkorgan fault was on the east of the study area, which was part of karakorum fault. The NNW-trending fault cross cut the west kunlun, Pamirs and karakorum and was composed of several small faults. Magmatic rocks were mainly composed of Yanshan and Himalayan granite. Outcrops are composed of alkaline syenites, subalkaline, aranbaotai, xingungou, buyiale, kuokejiaerwen and gelinale granitoids. There are at lest 4 types of mineralization: siderite type Cu-Ag mineralization produced around granitoids(e.g. kalajieligan deposite,pisiling cu deposite and aranbaotai siderite deposite); quartz vein type Cu mineralization produced in metamorphic schists(e.g. gandadieer deposite);cu-pb-zn mineralization related to granodiorite (e.g. kalaguorumu Cu-Pb-Zn deposite,helewate cu deposite and ganxiangjielie cu deposite); pb-zn mineralization related to carbonate (e.g. akexilake deposite).

3 Structure Interpretation The ETM data must be preprocessed before interpretation. Firstly, remove the effect of snow on displaying useful geological information by the band ratio threshold method. Secondly, fuse the multispectral band and pan band images to improve spatial resolution so that the structure interpretation precision and accuracy are improved. Finally, the false color composited map of ETM743 bands was selected for geological interpretation. Linear and circular structures were depicted using the man-computer interaction interpretation method by comparing geological geometry, color, texture and spatial relationship between bodys. Favorable zones for ore prospecting were delineated by analysing the structural characteristics with geological data in the study area. The structure interpretation result was shown in Figure 1. NW-trending(F5) , NNWtrending(F2) , and NE-trending(F6) main faults controled the distribution of circular and structure and secondary faults. Most of the secondary faults were NW-trending. Circular structures are superimposed compound. The main combination relations among those circular structures were overlapping, intersecting, tangent, and satellite types, which indicated that magmatic activities happened frequently in the study area. A. Classification of Wall-Rock Alteration Intrusive mass was widely distributed in the study area, which provided good conditions for hydrothermal deposits. According to previous research work (e.g. zhaoling,2009;wanghe 2008), the main types of wall-rock alteration were ferritization, chloritization, kaolinization, alunitization, carbonatization, silication and so on. Those alteration types indicated the degree of hydrothermal solution erosion to wall rock and had different geological significance to ore prospecting. Due to wide range of ETM bands, it was difficult to discern all those alteration types above

The Quantitative Application of Information Extraction

85

Fig. 1. The ETM743 image and structure interpretation of the study area

respectively. Wall-rock alteration was classfied into 3 types: ferrous alteration(ferritization for Fe2+,Fe3+); clay alteration(carbonatization for CO32- and chloritization for OH-); silicified alteration(SiO2 enriched). After classfied, wall-rock alteration could be discernd by band ratio and principal component analysis methods.The 3 types of wall-rock alteration extraction could provided decision support for mineral prediction.

86

F. Yuan and C. Li-yan

B. Effective Bands Selection Identification of alteration minerals was based on the wavelength, intensity, and shape of absorption band and by comparison with speatra of the minerals concerned. The typical spectrum of alterated rocks was drawn from the ETM data,and the spectral characteristics were shown in Figure 2 . According to the absorption and reflection features, ETM3/1, ETM5/4 can usde to identify limonitization and ferrous oxide(10) respectively. The methodology for iron oxid emapping by PCA on ETM3/1 and ETM5/4 is to examine the eigenvector loadings in PC1. The PC1 image best discriminates iron oxid -bearing minerals.

Fig. 2. The spectral characteristics of typical altered rock

Extraction of clay alteration can use ETM5/7. The spectral characteristics of vegetation in TEM5,7 were similar to clay altertioan. ETM4/3(vegetation index) was added to control the interferences of vegetation. The PC2 image that best discriminates iron oxid -bearing minerals. The reflection of SiO2 alteration was strong in ETM6. The experimental results showed that ETM6/5 highlighted SiO2-bearing minerals as light pixels, vegetation and shadow as dark pixels. C. The Model of Alteration Information Extraction Statiscal Characteristics of ETM bands and ratio results obeyed nearly the normal distribution law. When doing abnormal slicing ,σ(Standard deviation) expressed normal distribution curve scale, and μ(mean value) expressed the background value. So the formula (μ+kσ) can fix the lower limit.

4 The Spatial Distribution of the Altered Information According to geological data and the understanding of this study, Taheman-Kongmu metallogenic belt, Tarxi-Xiruo metallogenic belt and Kalasu-Mingtiegai metallogenic belt were subdivided. It was shown in Fig 3. Kalasu prospective area, Zankan-Xiruo prospective area and Mingtiegai prospective area were predicated. Two metallogenic targets were determined, which were respectively Zankan-Xiruo cu, Au target and Mingtiegai cu target. The main romate sensing alteration anomaly areas were delineated. They were Tanheman anomaly area, Tizinapu anomaly area, Kalasu anomaly area, Mingtiegai anomaly area and Zankan-Xiruo anomaly area.

The Quantitative Application of Information Extraction

(a)

(c)

87

(b)

(d)

Fig. 3. The distribution of RS alteration information

References 1. Chen, M., Ma, L.Q., Hoogeweg, C.G., Harris, W.G.: Arsenic back-ground concentration in Florida, U.S.A. surface soil: determination and in-terpretation. Environmental Forensics 2, 117–126 (2001) 2. Cressie, C.: Statistics and data analysis in geology, 2nd edn. John Wiley & Sons, New York (1991) 3. Gee, G.W., Bauder, J.W.: Particle-size analysis. In: Klute, A. (ed.) Methods of Soil Analysis, Part 1. Physical and Mineralogical Methods, pp. 377–382. ASA, Madison (1986) 4. Ives, A.R., Cardinale, B.: Food-web interactions govern the resistance of communities after nonrandom extinctions. Nature 429, 174–177 (2004), doi:10.1038/nature02515 5. Tangestani, M.H., Moore, F.: Iron oxide and hydroxyl enhancement using the Crosta Method: a case study from the Zagros Belt. Fars Province, Iran. JAG 2(2), 140–145 (2000)

Research on the Sustainable Development of Export Trade in China Fei Wang School of Business Sias International University Xinzheng, P.R. China [email protected]

Abstract. China’s economy has been guided by export-orientation policy in which export trade has played a very important role in our national economy. This article used econometrics model and deeply analyzed the internal relationship between export trade and economy growth, and inferred that to develop the general export trade is the necessity of developing export trade sustainably. At last some policies for the changing of export trade pattern were also mentioned. Keywords: export trade, sustainable development, trade pattern.

1 Introduction Since the reform and opening up, China’s export trade has developed rapidly. According to the statistics of WTO, the amount of China’s export in 1908 is 18.19 billion dollars, 62.09 billion in 1990 and research 183.76 billion in 1998. At the end of 2008, the total amount of China’s export is 1.42855 trillion U.S. dollars, increased by 17.2%, in which, the amount of general trade is 662.58 billion, increased by 22.9%, and the growth rate is more than that of processing trade for nearly 14 percentage points. During the same period, the value of Chinese processing trade reached 1.05 trillion U.S dollars, an increase of 6.8%, accounting for nearly half of the gross national foreign trade. Among them, the value of export is 675.18 billion, an increase of 9.3%, and the value of import is 378.4 billion, an increase of 2.7%. So the trade surplus in this area is nearly 3000 billion. Clearly, the general trade and processing trade have a tremendous role in promoting China’s economic development and the upgrading of the industrial structure. Based on the above analysis, this article will use the co-integration model to do in-depth study of the relationship between the Chinese export pattern and economic growth.

2 The Relationship between China’s Export Trade and Economic Growth A. Empirical Analysis 1) Preliminary analysis of data In this paper, we select the sample data among 1995 and 2007.Among the data, China’s export status are measured by the total exports, short for X, total exports of general trade, M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 88–93, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research on the Sustainable Development of Export Trade in China

89

short for GT, total exports of processing trade, PT, and other trade exports, OT. The gross domestic product, short for GDP, is the representative of China’s economic growth. Specific data is shown in Table 1 (The Unit is Hundred Million Dollars). Table 1. Data Of China’s Export And Economic Growth YEAR

GDP

X

GT

PT

OT

1995

7002.527

1487.800

620.100

819.200

44.000

1996

8164.899

1510.500

632.500

835.400

44.900

1997

8982.436

1827.900

765.300

1010.800

54.300

1998

9463.009

1837.100

769.100

1015.900

54.600

1999

9913.569

1949.300

815.200

1076.900

57.900

2000

10807.41

2492.000

1043.400

1378.400

74.100

2001

11757.25

2661.600

1116.400

1474.900

79.300

2002

12706.57

3255.700

1362.100

1799.400

94.200

2003

14165.99

4383.700

1820.300

2418.500

144.900

2004

19316.40

5933.700

2436.400

3279.900

217.400

2005

22256.80

7620.000

3150.900

4164.800

304.300

2006

26458.09

9689.4

4162.00

5103.55

423.81

2007

33089.89

12177.8

5384.57

5175.60

617.69

Source: China Statistical Yearbook Of 1995-2008 and website of Commerce Ministry.

In order to remove the impact of price changes on economic variables, we use index of CPI (base period of 1978) to deflate each nominal economic variables on table 1.Meanwhile, in order to eliminate heteroscedasticity that exist in the data, we logarithmic each variable, namely: LGDP = log (GDP), LX = log (X), LGT = log (GT), LPT = log (PT), LOT = log (OT). The corresponding first differential variables and second differential variables were iLGDP, iLX, iLGT, iLPT, iLOT and iiLGDP, iiLX, iiLGT, iiLPT, iiLOT. In Eviews, the data of each variable generate line graph (omitted in article). From the figure, we can see that the line graph has a clear trend. So the data may be non-stationary series, we need a stationary test. 2) Stationarity tests Here, we use Augmented Dickey-Fuller Test to do the smooth tests on variables of LGDP, LX, LGT, LPT, LOT, iLGDP, iLX, iLGT, iLPT, iLOT, iiLGDP, iiLX, iiLGT, iiLPT and iiLOT. The results show that, LGDP, LX, LGT, LPT , LOT and iLGDP, iLX, iLGT, iLPT, iLOT are non-stationary time series, and iiLGDP, iiLX, iiLGT, iiLPT, iiLOT are Stationary time series. So LGDP, LX, LGT, LPT and LOT are second-order integration series. 3) Cointegration test We have identified that all variables are same order integration, then, we use EG two–step method, respectively, to do regression on LGDP and LX, LGDP and LM, LGDP, and

90

F. Wang

LXM, LGDP, and LNX, and do a stationarity test on residual sequence(Figures in brackets are T-test values).The co-integration equation is: LGDP= 5.5261 + 0.4613*LX (19.5446) (12.6024) Adjusted R-squared=0.9293 DW=1.2282

(1)

LGDP= 5.9776 + 0.4539*LGT (25.7041) (13.3848) Adjusted R-squared=0.9369 DW=1.3424

(2)

LGDP= 5.5739 + 0.4948*LPT (14.7030) (9.2727) Adjusted R-squared=0.8763 DW=1.0716

(3)

LGDP= 7.6282 + 0.3376*LOT (84.8303) (16.3470) Adjusted R-squared=0.9569 DW=1.6379

(4)

Here, we order E1, E2, E3, and E4 as the corresponding residuals of the above equations, and then, do unit root test for the residuals of each equation. The results showed that: LGDP and LX, LGDP, and LGT, LGDP, and LPT, LGDP, and LOT have relationship of cointegration, that is, there exist long run equilibrium. 4) Granger causality test To further illustrate the causal relationship between variables, there will be variable Granger Causality Test. The results are showed in Table 2. Table 2. Result of Granger Test Test Variables LGDP does not Granger Cause LX LX does not Granger Cause LGDP LGDP does not Granger Cause LGT LGT does not Granger Cause LGDP LGDP does not Granger Cause LPT LPT does not Granger Cause LGDP LGDP does not Granger Cause LOT LOT does not Granger Cause LGDP

F-value

Probability

Result

0.74346

0.41094

LGDP ⇒ / LX

15.0417

0.00374

LX ⇒ LGDP

0.42071

0.53278

LGDP ⇒ / LGT

15.3189

0.00354

LGT ⇒ LGDP

1.85953

0.20581

LGDP ⇒ / LPT

13.3486

0.00529

LPT ⇒ LGDP

0.7571

0.40684

LGDP ⇒ / LOT

27.3974

0.00054

LOT ⇒ LGDP

Note: Significance level is 1%, GS means Granger Causality

Research on the Sustainable Development of Export Trade in China

91

From Table 2, we can see that for LGDP and LX, the probability is 0.41094 indicating that at significance level of 1%, 5% and 10%, the probability that LGDP is not LX’s granger causality is large, and we can not reject the original hypothesis. The probability of the second test is 0.00374, indicating that LX can be considered as LGDP’s granger causality at confidence level of 99%. By the same token, LGDP is not the granger causality of LGT, LPT and LOT, while at confidence level of 99%, LGT, LPT and LOT can be considered as the granger causality of LGDP. B. Conclusions and Reasons 1) Conclusions First, the stationarity test shows that all variables are second-order integration, and the cointegration analysis shows that there is cointegration relationship between Chinese economy and the total value of Chinese export, total value of general trade, value of processing trade, other trade. Second, the Granger test shows that, at the confidence level of 99%, the total value of Chinese export, total value of general trade, value of processing trade, other trade can obviously promote the Chinese economic growth. Third, equation (1)-(4) can be used for the basis of elastic analysis. They show that China’s economy would grow by 0.4613 percentage points while the Chinese total trade value increased by one percent, and China’s economy would grow by 0.4539 percentage points while the Chinese general trade value increased by one percent, and China’s economy would grow by 0.4948 percentage points while the Chinese processing trade value increased by one percent, and China’s economy would grow by 0.3376 percentage points while the other trade value increased by one percent. So, we can see that China’s processing trade plays a leading role in promoting economic growth, which is a Chinese current reality. Therefore, China’s export is largely a form of “quantitative” and “extensive”, which can not support the sustainable development of export. 2) Reasons Generally speaking, China's economy is export-oriented, except for 1993, China has maintained a trade surplus, and exports have accounted for more than 50% of the foreign trade. However, as China's sustained economic growth, the main drawbacks of the traditional "extensive" mode have increasingly shown a serious constraint on sustainable development of China's export trade. Raising the proportion of the general trade, changing export growth mode and realize the trade pattern transformation from the traditional "quantity" to "efficiency-type" are objective requirements of sustainable trade development and China's economic development. General trade refers to unilateral export trade operated by enterprises with operate right of import and export. The main objective of "Benefit-type" mode is not export volume, but to improve the efficiency, save energy, optimize trade structure, improve trade conditions and promote economic well-being. Based on the above empirical analysis we can find that under the same technological conditions, the processing trade has more contribution to GDP than that of general trade, about 0.04 percentage points higher. This confirms that the trade basis of China's economic growth is engaging in lower economic value-added processing industries based on the theory of comparative advantage in the. Clearly, this should not be sustainable development of China's exports in the long run. The reasons are as follows: First, the processing trade is easy to trigger trade frictions. China's import source and export destination of processing trade seriously dislocate. The import market of China's

92

F. Wang

processing trade is mainly in Southeast Asian, and the export markets, mainly in the United States, Europe, Japan and Hong Kong. Such dislocation is very easy to form China’s trade surplus, and Europe and the United States’ trade deficit, but in the essence it is a false trade surplus, the actual exports and trade surplus is not so large. China’s huge false surplus has become United States’ major bargaining chip, and China is in a very passive position in the negotiations of China-US trade friction. Second, driving effects by the processing trade is less than general trade. A significant portion of China's processing trade is still in the stage of simple processing, and technical content is not high. The chain is short, and production and processing capacity concentrate in the downstream industries. The parts and raw materials rely heavily on import, especially high-tech key component. Local procurement ratio for materials and parts is low and it did not full play the role of stimulating development and export of domestic raw materials and spare parts industries. Many processing trade of foreign-invested enterprises neither use domestic raw material, nor exist demonstration effect and expansion effect for other enterprises, but only use preferential policies to set up processing bases. Some industries and projects are low-level redundant construction. The leading role of this processing trade on China's upstream industry is small, and value-added and value-added sectors of assembly processing are low. It is contrary to the sustainable development of export trade, because sustainable development of export trade requirements for balanced development in different sectors and regions. Third, we are unlikely to get the core technology from abroad through the processing trade, and only positive development of general trade is the fundamental way. Because South Korea, Taiwan, Singapore's development experience has taught us: When a developing country or region made use of global industrial chain upgrade of multinational corporations to get the core technology, the country or region can not be access to core technology through the processing trade. On the contrary, only through general trade exports, the country or region can get its own long-term development.

3 Policy Implication In order to achieve the sustainable development of export trade, the following aspects should be considered: First, development of export processing trade should adapt to the local conditions, in areas where conditions permit can develop deep export processing trade, improving products’ added value, enhancing export quality and efficiency, paying attention to environmental protection. After 20 years of reform and opening up the eastern coastal region has accumulated a certain amount of processing trade experience, the level of industrial base is comparatively high, capital is comparatively abundant. So in the future, we should speed up the upgrade of processing trade of the eastern region, from the traditional labor-intensive into high value-added, technology-oriented mode. As for the central and western regions, in the light of local conditions, make use of the comparative advantages, and take over the processing trade. We should be very careful not to take the old way of "pollution first, treatment later" in the process. Second, follow the development law of export trade. We want the rapid development of processing trade, but we can not one-sided pursuit of volume growth in trade. On the contrary, we should pay attention to the quality pursuit of trade growth. The development of

Research on the Sustainable Development of Export Trade in China

93

general trade is superior to the processing trade not only in the contribution to the GDP but also in the industry correlation, added value, and for the control of environmental protection. Third, make use of strategic trade policies to establish support system of China's general trade export industry. During 1960s, the Japanese government has adopted a range of government measures of indirect subsidies to boost auto exports in order to development of the automobile industry's competitiveness in the international market, such as low-interest loans from government financial institutions, special discounts, tariffs reduction and exemption for the import of necessary equipment and tariffs priority arrangements for the import of the required technology. Under the joint action of the above measures, the Japanese auto industry began maturing after 1960s, and the volume of production and exports are on the rise. There is international trade theory basis when made use of export industrial policy to promote exports, and the theory is strategic trade policy theory whose core idea is that the government should effectively nurture and enhance the export capacity of domestic enterprises to expand its share in the international market, and to improve their welfare. Over the past decade the most prominent feature of the use of strategic trade policy on export industries support for major international trading power is the combination of trade policy and industrial policy, or the integration trade protection and industrial support in the other way, together constituting a policy as a whole. Fourth, establish and improve the promotion of information services function of general trade. It is an inevitable choice to provide financial resources to establish and improve information services functions for export for Chinese government to promote exports of under the new situation. With the globalization of information and social-oriented development, and widespread adoption of information technology in international trade, the information transmission is faster and faster which triggered structural business revolution in the world and made the international trade more depend on information resources. It’s a common choice for all countries to develop and extensively use international economic and information resources, enhance their competitiveness in the international market to promote the exports development. The globalization and information of the world economy required that we must pay more attention than ever to the important of information in international trade, and we must pay more attention than ever to development and utilization of all kinds of information resources.

References 1. Jaleel, A., Somchai, H.: Unit roots and cointegration in estimating causality between exports and economic growth: Empirical evidence from the ASEAN countries. Economics Letters 49, 329–334 (1995) 2. Ma, W.: Cointegration Theory and Application. Nankai University Press, Tianjin (2004) 3. Tao, Y.: The positive and negative effects of processing trade. Economic Aspect 5, 21–24 (2005) 4. Chen, H.: Meet the new round of global element configuration and the transfer of industries. Foreign Trade Practice 4, 59–67 (2005) 5. Zhang, X.: China’s processing trade challenges and responses. Economic Aspect 2, 4–8 (2004) 6. Feng, L.: Economic Globalization and China’s Trade Policy. Economic Management Publishing House, Beijing (2005)

The Game Analysis of the Reasons for Chinese Defeat in Iron Ore Negotiation ——Based on the Bargain Model Xianyong Zheng and Hanmin Huang School of Business Administration Zhongnan University of Economics and Law Wuhan, P.R. China [email protected]

Abstract. Chinese needs of ironstone have been increased sharply since the new century. China has been the biggest buyer in the demanding market since 2003. But it’s puzzling that, the status of biggest buyer hadn’t given China sufficient authority of ironstone pricing since China entered the ironstone negotiation. The reasons are worth pondering. This paper will combine the related theory of bargain model to analyze the mechanism of ironstone negotiation and then to identify some of the reasons of defeat. Keywords: negotiation of ironstone, bargain model, incomplete information.

1 Introduction Because of the quick of China’s economy and the rapid release of another new round of iron and steel production capacity, the needs of ironstone caused expanding sharply since 21st century. In 2003, China’s import of ironstone reached 1.4818 billion tons, surpassing Japan the first time and becoming the biggest ironstone import country. In 2008, China obtained the right to negotiate the starting price. But in contrast with this favorable situation, Chinese enterprises failed the negotiation again and again and fallen into a passive position. No matter how much ironstone was imported annually, China forced to receive the international price of ironstone higher than expected. As the below Table 1 shows, we can see that the international price of ironstone is gradually climbing between the year of 2003 to 2008. In 2009, beside a temporarily relative benefits of 36% decreasing of price from FMG corporation (on December 2nd, 2009, FMG declared to terminate the agreement abruptly and unilaterally), China had to reluctantly accept the facts and bought ironstone from the spot market because the three giants who dominate the ironstone supplying market, which include Vale do Rio Doce Australian Rio Tinto BHP Billiton Ltd, didn’t make a slightest concession for China’s requirement. All the truths above predict that the negotiation in 2010 will be harder. At the meantime we have to think about the following questions: what are the reasons for negotiations’ failure? What measures we should take to deal with these facts? In this paper, it will use bargain model to analyze the theory of ironstone negotiation and try to answer the two questions.

、

、

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 94–100, 2011. © Springer-Verlag Berlin Heidelberg 2011

The Game Analysis of the Reasons for Chinese Defeat in Iron Ore Negotiation

95

Table 1. The Rising Range of the Prices of Ironstone Imported in China FROM 2003 TO 2009 Year

2003

Rising range（ %）

8.9

2004

2005

2006

2007

18.6

71.5

19

9.5

2008

2009

96.5

-32.95

Source: according to the related materials from the website of China Iron and Steel Association

2 The Game Analysis of the Reasons for China’s Failure in Negotiation of Ironstone A. Inpatient Bargain Model on Asymmetrical Conditions We suppose that in the bargain model, buyers and sellers negotiate for one price. The buyers (called B for short) are willing to buy the product at 300 Yuan at highest, while the seller (called S for short) can’t accept the price lower than 200 Yuan. Thus, only there is a positive difference between the highest and the lowest price of them, can the negotiation continue. In our model, we also suppose that these are known by the two sides. 300 Yuan, the highest price B is willing to pay, is the reserve price for B. And the lowest price of S is also the reserve price for S. The difference between the negotiation price and reserve price of each own is the benefit that B and S can receive. Obviously, the benefits’ range is from 0 to 100 Yuan. It’s easily to use a dynamic model to describe the price game between B and S. That is: B presents a bidding price and S has two options. If S receives the price the game is over. If S refuses and puts forward its own bidding price, the same is for B. Supposing the costs of the buyers’ delaying deal is more than the sellers’, then B will be eager for the deal and has “more impatience”. Again suppose that the delay will reduce 6% of B’s benefits from the deal and 3% of S’s. On this occasion, the buyers will be more anxious and inpatient than the sellers. We can say at this time the players have asymmetrical patience. In this situation, we suppose there are 100 times to ask price in turn between B and S. Backward concluding method can be applied. First, consider that the 100th time is for S to ask price and the most suitable bidding price is 300 Yuan. Then S can attain all of the 100 Yuan benefits because he knows that B will accept this price. Then the 99th price is put forward by B and the price will be 397 Yuan. S loses 3 Yuan (100×3%=3) because of the delay and B gets 3% of the benefits (That is to say B obtains a surplus of 3%). If these are back to the 98th time, we should take into account that B has to wait and costs 0.18 Yuan (3×6%=0.18), so the price of S will be 97 Yuan and S obtains last time plus a surplus of 0.18 Yuan. That is to say that the bidding price should be 297.18 Yuan. The backward continues like this. In accordance with the laws above we can use Microsoft Excel to calculate the results in the following Table 2. What we can see from table 2 is that the optimal initial bidding price of B should be 265.66 Yuan, from which he was entitled to 34.34 Yuan. S would accept the bidding price rather than unnecessarily delay for solutions. In the end, B and S spit the surplus in an approximately 1:2 ratio. It’s negative for the more inpatient buyer B. If the model doesn’t change other assumptions, we increase the round time from 100 to 150, the spit unfavorable for B still exists. Therefore, it’s not difficult to find that the predicted results in the inpatient bargain model under the asymmetric condition have something to do with the following factors: the comparison of cost between negotiators and the round times for bidding price. If the cost of

96

X. Zheng and H. Huang

B is higher, B will be more inpatient than S and B will be in an unfavorable position. This can explain partly for China’s defeat in negotiations of ironstone. Chinese enterprises led by China’s Baosteel are always in a passive position. The reason is that they have no more patience and the delay cost is higher, which are totally in line with the bargain model under asymmetrical conditions. Table 2. The Optimal Bidding Price in 100 Times Round 100 99 98 97 96 … 5 4 3 2 1

The price bidder S B S B S … B S B S B

The surplus earning of S 100 97 97.18 94.26 94.60 … 65.60 67.66 65.63 67.69 65.66

The surplus earning of B 0 3 2.82 5.74 5.40 … 34.40 32.34 34.37 32.31 34.34

In particular, Chinese enterprises led by Baosteel of China are inpatient than the ironstone sellers for the following reasons: First, the concentration of the sellers is far higher than the buyers. Through continuous mergers and reorganizations, the ironstone reserves、 production capacity and capital scale increase dramatically. The three biggest ironstone suppliers have controlled over the amount of world’s more than 70% ironstone and kept up a reservation of more than 10 billion tons. On the premise of buyers’ rigid presenting, any seller will reasonably believe the other two sellers will not be easily to reduce the range of price increasing. The three ironstone giants always reach the degree of conspiracy in the negotiating process. As to the buyers represented by Baosteel in our country, the industry concentration is not high enough to form a unified voice. The longer the negotiation delays, the stronger the prediction of ironstones’ price being increased in domestic. In addition, some small and medium steel mills bid up the spot price regardless of the overall situation because of blind imports. The delays costs of negotiations are comparatively high. Second, the buyers are lack of strategic reserves. Although there are also a number of ironstone supply from China’s domestic mines annually, the quantity and quality are far to meet the demands of domestic steel mills in recent years. Then promotion of investment in mines is increasing, but the capacity has been largely in full load operation. Besides, the overseas mining resources controlled by our country are limited. Therefore, once the negotiation has impasse, China will face the stock-out situation of ironstone. B. The Bargaining Model under Incomplete Information According to the results of Fudenberg and Tirode's research, a bargaining model can be established as follows: Suppose there are a seller and a buyer. The utility evaluation of the items purchased by a buyer can be divided into two categories: low utility buyers---B100 and high utility buyers---B150, in which the probability of the buyer belonging to B100 is γ, and the probability that the buyer belongs to B150 is (1-γ). The process of the game is as

The Game Analysis of the Reasons for Chinese Defeat in Iron Ore Negotiation

97

follows: The seller bids first---P1, and if the buyer accepts, the game ends. If the buyer refuses, the seller re-bids---P2, and then the buyer decides whether to accept or not. Since in the incomplete information game at least one participant does not know other participants' payment function, therefore, under the conditions of the incomplete information, knowledge will be changed with the game carried on. The negotiations are likely to continue for more than one round under the equilibrium. The party which is lack of information may identify its type by observing the other party, which has the information, to see which program is accepted and which is abandoned. 1) The high possibility of the buyers is low utility type At this point, we assume that γ is 0.5, and the discount factor δ is 0.9. In the first round, the B100 type of buyers will accept this price in the condition of P1 P(B100)l=100; the B150 type of buyers accepts at Pl P(B150)1=105. In the second round, the B100 type of buyers accepts in the condition of P2 P(B100)2=100; the B150 type of buyers will accept at P2 P(B150)2=150. At this time, the equilibrium outcome is P1=100 and the buyers accept. This equilibrium is the perfect Bayesian equilibrium.

≤

≤

≤

≤

2) The low possibility of buyers is low utility type. Now we assume that γ is 0.05, and the discount factor (δ) remains at 0.9. In the first round of P1=150, the B100 type of buyers will accept this price ifP1<100; the B150 type of buyers will accept P1 with a probability of m P1 . In the second phase, the B100 type of buyers accept the price if P2<100; the B150 type of buyers accept the price when P2<150. At this point the equilibrium outcome is P1=150, which sometimes will be accepted by the B150 type of buyers, but the B100 type of buyers will not accept any kind of bid. The price paid by the buyers is heavily dependent on the seller's equilibrium beliefs. If the seller thinks that the buyer had a high probability of belonging to low utility groups, he will set the low price of 100; and if he thinks it is smaller, he will set the high price of 150. This suggests that if a buyer is considered to belong to high utility groups, he would unfortunately face the high price; even if he actually belongs to low utility groups. Due to his belonging, he would be treated as high utility buyers and forced to accept the higher price of150. This conclusion may explain the relationship between the buyers of iron ore in the world. In the iron ore negotiations, China, comparing to Japan and other buyers is low utility buyer, but it is still regarded as a high utility buyer, which makes its bargaining power relatively low. The reasons are mainly the following points: First, the degree of concentration in the steel industry. The degree of concentration in Chinese steel industry is far not as high as Japanese industry. The large number of steel companies in China makes CR10 was only 35% in 2008. While the output of the two companies---Nippon Steel and JFE accounted for 60% of the market share in Japan. Second, the use of the international market. The Japanese steel mills have an abundance of iron ore companies' shares, and actively invest in equity participation overseas in the fields of iron ore, chrome ore and manganese. All of these give it a reliable raw material supply base overseas. When the iron ore price rises, Japanese companies also face the higher cost issue, but they can be compensated for their loss of profits from the iron ore supplier's stock dividend. Third, the asymmetric information. From the” Rio Tinto Espionage Case" in 2009,we can know that Rio Tinto and other iron ore sellers had grabbed some Chinese major steel companies' confidential information, such as the technical and economic indicators, production technology parameters and bearing capacity of the prices of raw materials, and so on. Therefore, they had mastered the China's

（ ）

98

X. Zheng and H. Huang

bottom line which intensified the situation of the asymmetry information in the negotiation process. After achieving a united front with Japanese companies, the Chinese side did not actively pay close attention to the Japanese new trend that changed their practice half-way, making China a passive caught in the negotiations. Fourth, Chinese domestic steel companies have not paid enough attention to technology research. The products are low value-added, and lack of superior products. After the outbreak of the financial crisis, Chinese iron and steel enterprises are facing a double squeeze from the raw material markets and the product markets. The first response should be, in theory, to reduce capacity when facing pressure. However, in a long time, Chinese steel industry had followed a "scale effect plus low-cost" way. Therefore, reducing capacity would seriously affect the corporate profits. Moreover, in order to expand the scale and reduce the cost before, significant investments had been put into the fixed assets. Depreciation costs had been spread over the next few years. So high costs are inevitable no matter corporations produce or not. The status of "the world's largest iron ore importer" should be the core advantage when negotiating for the price of iron ore, but now it becomes our greatest weakness. When the iron ore prices increase, leading to the costs of steel production rising, the Chinese steel enterprises which are lack of technical advantages, could not shift the bulk of costs to the lower international buyers just like Japanese companies do, and only compress their profit margins.

3 Conclusions and Suggestions The above analysis shows the reasons for the defeat in Chinese iron ore negotiations, including: a vast cost for the Chinese companies to delay in the negotiations; not much patience comparing to the sellers of the international iron ore in negotiations; the information asymmetries in the negotiation process; in high utility buyer groups. Therefore, in order to change the inferior position, we must take appropriate strategies: A. External Strategies 1) Strive for diversified sources of iron ore and change the over-focused situation of the sources of iron ore importing China should use diplomatic means to secure more iron ore resources with other countries, especially the neighbors---Russia, India, Kazakhstan, Iran, and Vietnam, which have rich iron ore resources, Should be kept in well diplomatic and trade relationships. Because it can not only make use of the existing geo-political advantages to improve the security of Chinese iron ore supply, but also can significantly save the cost of maritime transport. It should also establish relationships of replacing resources that are in short supply with the countries exporting these resources. For example, the barter trade between China and India exchanging iron ore for coke, to a certain extent, ease the pressure on prices increasing and achieve mutual benefit and win-win situation. 2) Explore the offshore mining cooperative projects To actively promote the offshore mining, the government should improve the information support and grasp the dynamics of the world's iron ore exploring, including production

The Game Analysis of the Reasons for Chinese Defeat in Iron Ore Negotiation

99

trends, technological development, market changes and so on. Besides, it should also develop short and long term plans to guide the enterprises to buy or to mine the resources jointly. At the same time, the government of the state should set up a developing fund, make some incentive policies to encourage mining offshore, and vigorously support the "going global" strategy of the mining. B. Domestic Strategies 1) Improve mining technology to increase the domestic supply of iron ore Firstly, according to the characteristics of Chinese iron ore–reserves less and resources more, it should develop the methods of exploring the low-grade resources to increase the availability of iron ore resources in China. Secondly, due to the problem of the huge loss and waste of the iron ore resources in China, it should speed up the researches of the system technology of the mining, ore, and smelting. So as to save resources and improve the utilization and the economic benefits, eventually, to reduce the iron ore consumption per ton of steel. Finally, exploit the potentiality of the old mine and try to extend the length of exploitation. 2) Raise the concentration of the steel industry to joint together in the negotiations At present, China must speed up the elimination of the backward steel production capacity and reduce the waste of resources in order to alleviate the pressure on iron ore demand and accelerate the integration of the steel industry. Here are the measures: First Increase industry threshold by raising standards in registered capital, production scale, production safety, environmental protection, and so on. Do great efforts to consolidate small steel mills and encourage large enterprises to merge or restructure the former, so as to strive a significant reduction in the number of the domestic steel enterprises in short term; Second encourage large-scale steel enterprises to become groups and encourage the strong-strong strategic alliance, which would expand the scale of the large enterprises; Third a wide range of cross-shareholdings between the various groups could reconcile the major companies on the issues of importing iron ore. Forth the government and the industry associations should play an important part in supervising the enterprises in the negotiations to form a consistent voice.

，

，

，

，

3) Strengthen the legislation and do well in concealing the negotiation information The definition of "state secrets and intelligence" involving the trading area in China's "State Secrets Law" and "State Secrets Law Conservative Approach" is still not clear enough, so the protection of the country's economic secrets is not enough. The national legislative bodies should expedite the development of legislation, and from the point of view of the "state secrets" to make the strict norms of economic espionage or disclosure of commercial secrets to prevent foreign companies and relevant institutions from taking advantage of this "gray area", where a large number of advanced technology and some critical negotiation information had been stolen. Acknowledgment. The research is supported by the National Social Science Foundation of China, named “Deepen the reform of foreign trade system- based on the perspective of institutional quality of trade policy system ”(07BJL042).

100

X. Zheng and H. Huang

References 1. Shi, X.: Game Theory, pp. 166–168. Shanghai Finance University Press, Shanghai (2000) 2. Xu, B.: The game analysis of the ultimatum of the international iron ore pricing. Journal of Hebei University of Economics 11, 75 (2008) 3. Run, W.: The response analysis of price game in long-term iron ore supply. Land and Natural Resources of Intelligence 6, 8 (2006) 4. Liang, W.: Iron ore talks-why the voice of China lost and lost again. The New Economic, 75 (July 2009) 5. Wang, S.: A synthesis of bargaining theory. Science, Technology and Economy Market 10, 196 (2006) 6. Peng, J.: The international iron ore negotiation mechanism analysis. Price Theory and Practice, 26 (2007) 7. Guo, L.: Chinese imports of iron ore pricing studies. Master’s Dissertation of Tongji University, p. 37, 20

Research on Coal Mine Safety Accident Based on Grey Relational Analysis Xue Yang and WenSheng Li School of Management and Economics North China University of Water Resources and Electric Power Zhengzhou, P.R. China [email protected]

Abstract. The system of coal mine’s people-machine- environment was studied in this paper and grey relation analysis was conducted to research coal mine accident and its relevant factors with the application of grey system theory and observation of coal mine production practice. It shows that this method is easy and applicable and the results it draws are convincible, which provide both theoretical references for the quantitative study of coal mine safety accident and scientific basis for the decision-makings concerning coal mine enterprises’ safety management. Keywords: coal mine, safety accident, grey theory, grey relational analysis.

1 Introduction The developing process of accident is a grey process. Firstly, the influencing factors of accident are uncertain and those influencing factors include people, machine, environment, people-machine matching, people- environment adaptation, etc. It is very difficult to define all influencing factors. The uncertainty of some factors may make it difficult to quantify the same accident consequences and the factors which cause the accidents may be totally different, therefore, defining how the accident would happen is a grey process. Coal mine’s people-machine-environment system is a typical grey system in which some information is known while some is unknown. Compared with those commonly used methods such as questionnaire or interview, grey relation analysis method has an obvious economic advantage in the grey relation analysis of coal mine accident and its relevant factors. Generally, the influencing factors of coal mine safety accident include both qualitative indices and qualitative indices. For a quantitative factor, the father index of its evaluation factor can be considered as reference sequence while its sub index can be considered as comparison sequence. For a qualitative factor, the highest evaluation value of its evaluation factor is usually regarded as reference sequence and the value given by different assessors can be regarded as comparison sequence. Then, a proper model is to be established and analyzed. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 101–108, 2011. © Springer-Verlag Berlin Heidelberg 2011

102

X. Yang and W. Li

2 Establishment of Grey Relation Analysis Model Concerning the Influencing Factor of Coal Mine Safety Level The factors that need to be considered to evaluate coal mine safety level are different. Generally, it is necessary to take production factor U 1 , casualty factor U 2 , mortality of per million tons factor U 3 into consideration and to analyze several factors such as severe injury number factor U 4 , injury rate of per thousand people factor U 5 . Those influencing factors of coal mine safety accident include both qualitative factors and quantitative factors and have an obvious characteristic of multi levels. The goal of conducting grey relation analysis on the influencing factors of coal mine safety accident is to quantify and order factors in the system with incomplete or uncertain information. In terms of the connotation of grey relation analysis, its essence is integral comparison which has reference sequence and is measurable. Such integral comparison of grey relation analysis can make an overall analysis and the measurement comparison of it requires quantitative analysis of the factors in the system. This paper is to apply grey relation analysis to identifying the major and minor factors influencing coal mine safety. The grey relation analysis model established in this paper is an order relation model instead of a function model and the key point of this grey relation analysis is the order relation indicated by numbers instead of mere numbers. In terms of the technical connotation of the model established in this paper, the necessary analyses include: (1) obtaining difference information of sequence and establishing difference information space, (2) establishing and calculating grey relation degree, (3) establishing order relation of different factors. A. Influencing Factors of Coal Mine Safety Level O represents coal mine safety level, U1 , U 2 , U 3 , " , U m represent the influencing factors of coal mine safety and k represents the k th sample, which make O the function of U1 , U 2 , U 3 , " , U m .

O = f (U1 ,U 2 ,U 3 ,...,U m )

(1)

The first level factor U i is supposed to have M i secondary level factors. The influencing factors of coal mine safety accident are listed as in Fig. 1

Fig. 1. Influencing factors of coal mine safety level

Research on Coal Mine Safety Accident Based on Grey Relational Analysis

103

ω 0 = (ω i (1), ω i (2), " , ω i (n)) is supposed to represent the sample value sequence(original reference sequence) of coal mine safety level O, and ω i to represent the sample value sequence(original comparison sequence) of influencing factor U i of coal mine safety level. POL(max), POL(min) and POL(mem) are coefficient maximum polarity, coefficient minimum polarity and coefficient medium polarity. ω0 is generally the coefficient maximum polarity sequence and ωi is multipolarity sequence. B. Dimensionless Form of Influencing Factors’ Value The dimensions of the influencing factors of coal mine safety level are different. These factors need to be dimensionless processing before we analyze their correlation degree with coal mine safety level. There are 3 dimensionless methods listed as the following. 1) Initial value generating Initial value generating is to have sequence ωi ’s initial value ωi (1) divided by each number in sequence ω i and get initial value generating sequence ωi ' . The meaning of it is to analyze matters by taking initial value ωi ' (1) as the basic point (reference point), which means analyzing the developing trend of matters from initial states. ωi ' is supposed to be the initial value sequence of ω i and

ω i ' = INITωi = (ωi ' (1), ωi ' (2),", ωi ' (n)) ⎛ ω (1) ω ( 2) ω ( n) ⎞ ⎟ = ⎜⎜ i , i ,", i ωi (1) ⎟⎠ ⎝ ωi (1) ωi (1)

(2)

Πωi ' (k ) ∈ ωi , k ∈{1,2," n}, i ∈{0,1,2,"m} . 2) Equalized value generating Equalized value generating is to have sequence ωi ’s average value ω i (avg ) divided by all the numbers in sequence ω i and get equalized value generating sequence ω i ' . The meaning of it is to analyze matters’ development from the viewpoint of equalization. ω i ' is supposed to be the equalized value sequence of ω i and

ω i ' = AVGω i = (ωi ' (1),ω i ' (2),", ωi ' (n)) = ⎛⎜ ωi (1) , ωi (2) ,", ωi (n) ⎞⎟ ⎜ ω (avg ) ω (avg ) ωi (avg ) ⎟⎠ i ⎝ i AVG : ωi (k ) =

ω i ( avg ) =

ωi (k ) ωi ( avg )

1 n ∑ ωi (k ) n k =1

Πωi ' (k ) ∈ ωi ' , k ∈{1,2,"n}, i ∈{0,1,2,"m}.

(3)

104

X. Yang and W. Li

3) Interval value generating Interval value generating is to get the distribution values (relative values) of the numbers in sequence ω i in data interval and get interval value generating sequence ω i ' . Interval value generating is to analyze matters from the interval defined by maximum and minimum data. ωi ' is supposed to be the interval value sequence of ωi and

ω i ' = INTVω i = (ωi ' (1), ω i ' (2),", ω i ' (n)) = ⎛ ωi (1) −ωi (min) ωi (2) −ωi (min) ω (n) −ωi (min)⎞ ⎜⎜ ⎟⎟ ,", i , ⎝ωi (max)−ωi (min)ωi (max)−ωi (min) ωi (max)−ωi (min)⎠

(4)

ω i (max) = max ω i (k ) , ω i (min) = min ω i (k ) k

k

Πωi ' (k ) ∈ ωi ' , k ∈ {1,2," n}, i ∈{0,1,2,"m}. C. Polarity Transformation After being dimensionless processing, original reference sequence and comparison sequence still have problem of polarity inconsistency. Therefore, it is required to have polarity transformation. 1) Coefficient maximum polarity sequence Coefficient maximum polarity sequence is to be transformed as the following:

Tu ω i ' ( k ) = x i ( k ) xi ( k ) =

ω i ′ (k ) ′

(5)

max ωi (k ) k

Πxi (k ) ∈ xi , k ∈ K = {1,2,", n} , i ∈ I = {0,1,2,", m} . 2) Coefficient minimum polarity sequence Coefficient minimum polarity sequence is to be transformed as the following:

Tl ω i ' ( k ) = x i ( k ) xi (k ) =

′ min ω i (k ) k

′

ωi (k )

Πxi (k ) ∈ xi , k ∈ K = {1,2,", n} , i ∈ I = {0,1,2,", m} . 3) Coefficient medium polarity sequence Coefficient medium polarity sequence is to be transformed as the following: Tmω i ' ( k ) = x i ( k ) min{ω i′( k ), u 0 } xi (k ) = max{ω i′ (k ), u 0 }

u0 is medium value.

(6)

(7)

Research on Coal Mine Safety Accident Based on Grey Relational Analysis

105

Πxi (k ) ∈ xi , k ∈ K = {1,2, ", n} , i ∈ I = {0,1,2,", m} .

xi , a nonpolarity sequence, is obtained after the transformation. x 0 = (x 0 (1), x 0 (2), " , x 0 (k)) is supposed to be reference sequence and x i = (x i (1), x i (2), " , x i (k)) , ( i ∈ I = {1,2,", m} )to be the comparison sequence after transformation.

D. Grey Relational Degree According to the calculation of the first level factor’s grey relational degree, the value of coal mine safety level is supposed to be the reference sequence x0 and the value of the first level factor to be the comparison sequence xi . Let Δ i (k ) = x0 (k ) − xi (k ) be x i (k) ’s deviation to x 0 (k) , so x i (k) ’s grey relational coefficient to x 0 (k) , r(x 0 (k), x i (k)) , is

r(x 0 (k), x i (k)) =

minminΔi (k) + 0.5maxmaxΔi (k) i

k

i

i

Therefore,

k

Δi (k ) + 0.5maxmaxΔi (k )

(8)

k

x i ’s relational degree to x 0 , r(x 0 , x i ) , is r(x 0 , x i ) =

K

1 K

∑ r(x k =1

0

(9)

(k), x i (k))

Consequently, for m first-class factor U , the grey relational degree vector is (r(x0 , x1 ), r(x0 , x 2 ),", r(x0 , x m )) . Calculation of the second level factor’s grey relational degree should take following steps. For the quantitative factor set (the first and second level factors are both quantitative), the first level factor’s small sample value is taken as reference sequence xi and the second level factor’s small sample value is taken as comparison sequence x ij . For qualitative index, the best score’s standard value is taken as reference sequence xi and the score given by each evaluator who gives his evaluation according to the importance of each influencing factor to corresponding evaluating target is taken as comparison sequence x ij . Let Δ ij ( k ) = xi ( k ) − xij ( k ) be x ij (k) ’s deviation to x i (k) , so x ij (k) ’s grey relational coefficient to x i (k) , r(x i (k), x ij (k)) , is

r(x i (k), x ij (k)) =

min min Δ ij (k ) + 0.5 max max Δ ij ( k ) j

k

j

k

Δ ij ( k ) + 0.5 max max Δ ij ( k ) j

k

Therefore, x ij ’s relational degree to xi , r(x i , x ij ) , is

(10)

106

X. Yang and W. Li

r(x i , x ij ) =

1 K ∑ r(x i (k), x ij (k)) K k =1

(11)

E. Relative Grey Relation Weight Relative grey relation weight is a statistic representation of the relative importance of influencing factor. By calculating relative grey relation, the order of certain level factor’s influence to its next higher level can be drawn and such order can be reflected by the number value. Normalizing xi ’s relational degree r(x 0 , x i ) to x 0 and the result is represented as

ai , which is the relative grey relation in this paper. It can be formulated as the following:

ai =

r ( x 0 , xi ) m

∑ r(x , x ) t =1

0

(12)

t

Vector a = (a1 , a2 ," am ) is regarded as relative grey relation vector of factor U . Relative grey relation aij ' of the first level factor U i ’s second level factor U ij

( j ∈ J = {1,2,", M i }) can be drawn in this way, therefore, vector

α i ' = (α i1 ' , α i 2 ' , " , α iM ' ) is obtained. i

In terms of the highest level target, relative grey relation is the order of importance of the factors in such level. The first level factor’s relative grey relation is its absolute grey relation. Suppose the relative grey relation of the first level factors U 1 , U 2 , U 3 ,…, U M are obtained and the vector made by these statistics is α = (α 1 , α 1 ,", α m ) ,and the vector α i ' = (α i1 ' , α i 2 ' , " , α iM i ' ) which is made by the relative grey relation of the first level factor U i ’s second level factor U ij is obtained, the second level factor U ij ’s absolute grey relation is as the following:

Wij = ai ∗ aij '

(13)

The order of the importance of each factor to the general goal (coal mine safety level) can be obtained by listing the second level factor’s absolute grey relation in descending order.

3 Case Study A. Grey Relational Analysis of Mortality per Million Tons with Mechanization Level and Peasant Workers Ratio in a Coal Group Mechanization level and peasant workers ratio are the most directly perceived factors in the collected data concerning people-machine-environment system. According to the

Research on Coal Mine Safety Accident Based on Grey Relational Analysis

107

statistical information of a coal group from 1997-2005(Table 1), grey relational analysis of mortality per million tons with mechanization level and peasant workers ratio is conducted in this paper. Let x0 represent mortality per million tons sequence, let x1 represent inverted mechanization level sequence which is drawn by taking 1 minus mechanization level value, and let x2 represent peasant workers ratio sequence. Suppose W01 is x0 ’s

x1 and W02 is x0 ’s absolute grey relation to x2 , x0 ’s absolute grey relation to x1 and x2 can be obtained according to formula (10)-(13) absolute grey relation to

：

W 01 = 0 . 90584 ; W 02 = 0 . 55338

The absolute grey relation degree of mortality per million tons and mechanization level is 0.90584,which indicates mechanization level has great influence to mortality per million tons. It also shows mechanization level has much greater influence to mortality per million tons than peasant workers ratio does. B. Grey Relational Analysis of Mortality per Million Tons and Relative Factors in Several Coal Mines of the Coal Group According to the statistics of casualty accidents in several coal mines of the coal group from 1990 to 2005, the grey relational analysis of mortality per million tons Table 1. Statistical information of a Coal Group from 1997-2005 Year

Factor Mortality per million tons(%) Mechanization level(%) Peasant workers ratio(%)

1997

1998

1999

2000

2001

2002

2003

2004

2005

1.157

0.852

0.513

1.625

0.858

0.858

0.429

0.269

0.324

66.94

70.64

77.2

76.69

76.54

77.94

77.79

80.06

82.61

17.4

18.8

20.3

19.3

17.4

18.6

16.5

14.5

12.7

Table 2. Realational Degree of Accidents in Four Coal Mines Coal mine Coal A Coal B Coal C Coal D

mine mine mine mine

Absolute Grey Relation of Mortality per Million Tons and Output

Absolute Grey Relation of Mortality per Million Tons and Severe Injury Number

Absolute Grey Relation of Mortality Per Million Tons and Injury Rate of per Thousand People

0.5846

0.8859

0.5407

0.5153

0.5447

0.6247

0.5337

0.9923

0.6380

0.5158

0.5213

0.7133

and relative factors is conducted. Only the statistics concerning output, death toll, mortality per million tons, severe injury number and injury rate of per thousand people are recorded in the recording forms of casualty accidents, therefore, this paper analyzes

108

X. Yang and W. Li

the relational degree of mortality per million tons with output, severe injury number, injury rate of per thousand people, etc. The relationships of mortality per million tons, output, severe injury number, injury rate of per thousand people are various, therefore, this paper only calculates the absolute grey relation of mortality per million tons with these factors.(Table 2) It can be seen from Table 2 that the relational degree of mortality per million tons and severe injury number is very high in coal mine A and C, which indicates that it is necessary to get severe injury number and injury rate of per thousand people under control in order to control mortality per million tons. Therefore, this method can be used to conduct relational analysis of each accident index (mortality per million tons, injury rate of per thousand people, economic loss of accident, etc.) and relative factors(mechanization level, safety investment, quality of workers, etc.) to help administrators take proper improvement measures.

4 Conclusion The factors influencing the happening of coal mine accident are various. With the relational degree analysis of coal mine casualty accidents, the most primary and influential factors can be spotted, the relationship of different factors can be identified and the key of safety work can be clarified and mastered, which all provide references and evidences for conducting further research and taking preventive measures. Based on coal mine safety accidents and grey system theory, this paper designs a incidence matrix with the help of grey relational degree analysis and develops a grey relation evaluation model to analyze coal mine safety level. By calculating the grey relational degree of each factor and coal mine safety level, the importance of the factor’s influence to coal mine safety level is obtained, which provides reliable decision basis to improve coal mine safety system.

References 1. Ding, Y.: Ergonomics. Beijing University of Technology Press, Beijing (2000) 2. Deng, J.: Grey Theory Foundation. Huanzhong University of Science and Technology Press, Wuhan (2002) 3. Wang, D.: Application of GM(1,1) Model in the Prediction of Safety Accident Rate. Wuyi University Journal (Natural Science Edition) 15, 11–14 (2001) 4. Liu, J.: Research on Methods of Controlling Coal Mine Safety Accident. Mining Industry Safety and Environment Protection 6, 246–247 (2003) 5. Lv, H., Li, W.: Analysis and Prediction of China’s Safety Accidents. China Protective Equipment 3, 8–10 (2004) 6. Zhang, Y., Zhou, Y., Liu, Y.: Method of Identifying Index Weight Based on Norm Grey Relational Grade. Statistics and Decision 1, 20–21 (2006) 7. Lv, P., Zhou, X.: Application of Grey Markov Model in Predicting Coal Mine Safety Accidents. Anhui University of Technology Journal(Natural Science Edition) 26, 10–13 (2006)

E-V Utility Function and Its Application in Shanghai Securities Market Qiang Shao1, Zhongbing Wu1, and Feng Zhou2 1

School of Economics, Huazhong University of Science and Technology, Wuhan, P.R. China, Department of Chengshang 2 Department of Chengshang, Banking Regulatory Bureau of Henan Province, Zhengzhou, P.R. China [email protected]

Abstract. The article points out the weakness of traditional U-R utility function and studies the E-V utility function which is based on the expected profit and variance. We propose the sufficient and necessary conditions to judge the risk attitude by the E-V utility function and give the proof. In the meantime, it does a demonstrative research on the problem of risk attitude in Shanghai Securities Market through E-V utility function. Finally, we draw the conclusions that the investors intend to take risk at the end of Bull Market and avert risk at the end of Bear Market. Keywords: E-V utility function, risk attitude, securities market.

1 Introduction Risk attitude refers to the attitude of investors towards risk. It is widely used in the domain of management science and economic theory. Von and Morgenstern firstly studies the issue of indefinite choice in 1947, and then posed the concept of expected utility. On this basis, people always divide the risk attitude into three kinds: risk aversion, risk neutral and risk preference. All of these attitudes appear under the choice towards indefinite investment project. Generally, the scholars define the risk attitude as follows:

(a) Risk aversion U’>0 U’’<0

(b) Risk neutral U’=a>0 U’’=0

(c) Risk preference U’>0 U’’>0

Fig. 1. Description of E-V utility function’s risk attitude M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 109–114, 2011. © Springer-Verlag Berlin Heidelberg 2011

110

Q. Shao, Z. Wu, and F. Zhou

The traditional ways of judging investors’ choosing behavior try to describe the risk attitude of determiners quantitatively. One of the methods is to seek the utility function. The foundation of Ordinal Utility Theory sets up the precise mathematic method for the description of theory about preference. But since the utility in reality can’t be measured and quantified, the positive research based on the above definition can’t guarantee the preciseness and objectivity. So, in this article, we discuss how to construct E-V utility function on the basis of average revenue and variance, uses it to measure risk-attitude of inventors. Finally we take the Shanghai Securities Market as the research object to demonstrate the risk-attitude of investor at the extremity of Bull Market and Bear Market.

2 E-V Utility Function In regard to the discussion of E-V utility function, Copeland(1992) proved the indifference curve under the condition of risk-aversion as that shows in Fig. 2(a), Xiong Heping (2001) proved the indifference curve under the condition of risk-preference as that shows in Fig. 2(c). We consider the indifference curve under the condition of risk-neutral as that shows in Fig. 2(b). On the basis of others’ researches, we pose following theorems and testify them.

(a) Risk aversion E’>0 E’’>0

(b) Risk neutral E’=0 E’’=0

(c) Risk preference E’<0 E’’<0

Fig. 2. Description of E-V utility function’s risk attitude

Theorem 1: y y y

The sufficient and necessary conditions of risk-aversion is that the first step and the second step derivative of E-V utility function are greater than zero. The sufficient and necessary conditions of risk-neutral is that the first step and the second step derivative of E-V utility function are equals to zero. The sufficient and necessary conditions of risk-preference is that the first step and the second step derivative of E-V utility function are less than zero.

Proof: We use W j to indicate the final value of risk capital j and W0 to express its initial value, its profit is: (1) R j = (W j − W0 ) / W0 Regard the profit of risk capital conforms R j as the normal distribution, its expectation is E ( R j ) = [( E (W j ) / W0 ) − 1] (simplified as E ). The variance is

E-V Utility Function and Its Application in Shanghai Securities Market

111

2 σ 2j = (σ W2 / W02 ) (simplified as σ ). Consider the property of the normal distribution,

we can express the effective function as:

U = U ( R j ; E, σ )

(2)

And the expected effective function is:(to be convenient, we omit the subscript) +∞

E (U ) = ∫ U ( R ) f ( R; E , σ ) dR

(3)

−∞

Standardize R as Z =

R−E

σ

, then,

R = E + σZ , dR = σ dZ

(4)

Put (4) into (3): +∞

E (U ) = ∫ U ( E + σZ ) f ( Z ;0,1) dZ

(5)

−∞

1

Among them, f ( Z ;0,1) =

1 −2Z 2 e dZ . 2π

Because E (U ) = const is indifferent curve, the derivation for is the formula:

σ

equals zero. That

+∞

dE (U ) dE = ∫ U ′( E + σZ )( + Z ) f ( Z ;0,1) dZ = 0 σ dσ d −∞

(6)

Transform it and we get +∞

∫ U ′( E + σZ )Zf (Z ;0,1)dZ dE −∞ = − +∞ = g ' (σ ) dσ ∫ U ′( E + σZ ) f (Z ;0,1)dZ Deriving

σ

(7)

−∞

on the both sides of formula (6) again, we get +∞

∫ [U ′′( E + σZ )(

−∞

dE d 2E + Z ) 2 + U ′( E + σ Z ) ] dσ dσ 2

⋅ f ( Z ;0,1)dZ = 0

(8)

After transformation: +∞

2

dE

∫ U ′′( E + σ Z )( d σ

d E = − −∞ dσ 2

+ Z ) 2 f ( Z ;0 ,1) dZ

+∞

∫ U ′( E + σ Z ) f ( Z ;0,1) dZ

−∞

= g ′′(σ )

(9)

112

Q. Shao, Z. Wu, and F. Zhou

Because density function f ( Z ;0,1) > 0,U ′ > 0 ,the denominators of formula (7) and formula (9) are greater than zero. Sufficiency: because +∞

+∞

∫ U ′( E + σZ )Zf (Z ;0,1)dZ = ∫ U ′( E + σZ )Zf (Z ;0,1)dZ

−∞

0

0

∫ U ′( E + σZ ) Zf ( Z ;0,1) dZ

+

(10)

−∞

and +∞

0

∫ U ′( E + σZ )Zf ( Z ;0,1)dZ = − ∫ U ′( E − σZ )Zf (Z ;0,1)dZ

−∞

(11)

0

So, +∞

∫ U ′( E + σZ )Zf ( Z ;0,1)dZ

−∞

+∞

= ∫ [U ′( E + σZ ) − U ′( E − σZ )]Zf ( Z ;0,1)dZ

(12)

0

In addition, for U ′′ and U ′( E + σZ ) − U ′( E − σZ ) have the same symbol, we can judge the symbols of numerator in the formula (7) and formula (9) by U ′′ . It is shown in Table 1. Table 1. The relation between U ′′ and formula (7) and (9)

U ′′

Numerator of (7)

(7)

Numerator of (9)

(9)

Risk aversion

<0

<0

>0

<0

>0

Risk neutral

=0

=0

=0

=0

=0

Risk preference

>0

>0

<0

>0

<0

Necessity: According to formula (9), it is obvious to make the conclusion. To sum up, we can get the corresponding relationship as show in Table 2: Table 2. The corresponding relation between U-R and E-V utility function U-R Utility Function

E-V Utility Function

U′

U ′′

g′(σ )

g ′′(σ )

Risk aversion

>0

<0

>0

>0

Risk neutral

=a

=0

=0

=0

Risk preference

>0

>0

<0

<0

E-V Utility Function and Its Application in Shanghai Securities Market

113

3 Econometrics Analysis of E-V Utility Function and Its’ Application in Shanghai Securities Market A. Normal Calculation Steps

Step 1: Constructing expected profit and variance series E and σ . Choosing time series p = { p1 , p 2 ,... p m } , regarding m as the length of series and noting the i th expected profit rate of n days as:

E ni (σ ) =

1 n ∑ ( pi×n+ j / pi×n+ j −1 − 1) n j =1

(13)

The variance corresponding is:

σ ni = We

get

1 n 2 ( pi×n+ j / pi×n+ j −1 − 1) 2 − eni ∑ n j =1

the

(14)

E = {E n1 (σ ), E n 2 (σ ),...E nk (σ )}

series

σ = {σ n1 ,σ n 2 ,...σ nk }, k = int(m / n) .

and

Step 2: Constructing fitting function E = g (σ ) , calculating g′(σ ) and g′(σ ) , and getting the range of estimated parameter according to Table 2. The fitting function of this article which we choose is:

E = g (σ ) = ceσ + d + u

(15)

Table 3. The property of risk-attitude and parameter of fitting function

Risk aversion Risk neutral Risk preference

g ′(σ )

g ′′(σ )

the Theoretic Value of c

the Value of c in This Article

>0 =0 <0

>0 =0 <0

>0 =0 <0

>0.1 [-0.1,0.1] <-0.1

Table 4. The risk-attitude in every turning periods Turning Date Point 1992-5-25 1992-11-17 1992-12-3 1992-12-10 1993-2-16 1993-3-31 1993-4-28 1993-7-26 1993-8-16 1993-10-27 1993-12-7 1994-7-29 1994-9-13

Dealing Days 353 123 12 5 43 31 19 63 15 51 29 161 30

I/D

c

I→D D→I I→D D→I I→D D→I I→D D→I I→D D→I I→D D→I I→D

0.424077 0.806038 0.575094 0.626064 -0.74088 0.179878 0.42827 0.574813 0.502299 0.264176 -0.54871 0.583717 0.930555

Turning Date Point 1995-2-7 1995-5-22 1996-1-22 1996-12-9 1996-12-24 1997-5-12 1997-9-23 1998-6-3 1999-5-18 1999-6-29 1999-12-27 2001-6-13 2002-1-22

Dealing Days 94 72 172 216 11 86 94 165 232 30 123 344 151

I/D

c

D→I I→D D→I I→D D→I I→D D→I I→D D→I I→D D→I I→D D→I

0.785269 0.439146 0.539183 -0.74397 -0.67337 -0.63001 -0.33545 -0.49401 0.741974 -0.37694 0.570617 -0.35098 0.172808

114

Q. Shao, Z. Wu, and F. Zhou Table 5. Collection of risk-attitude in every turning periods

c>0.1 c<-0.1 Total -0.1
The first step and the second step derivatives of formula (15) are g ' (σ ) = ceσ and

g ′′(σ ) = ceσ separately. Because e σ > 0 , we gain Table 3 compared with Table 2. Step 3: Using least squares method to estimating the parameter of g(σ ) , and Judging risk attitudes. B. Demonstrative Analysis The scholars always think that the investors intend to be risk-aversion at the end of Bear Market and be risk-preference at the end of Bull Market. In order to demonstration this standpoint, this article choose the close value of Shanghai Securities Index which range from December 19th, 1990 to March 29th, 2002. Firstly we take the turning dates which is no less than 30% as the reference points (total 26). Secondly we construct the data windows around these points which are from 25 days before to 25 days later. Next, constructing series p, letting n=5, and making the regression according formula (15), we get Table 4. In the Table 4, “I→D” shows the index from increase to decease; “D→I” shows the index from decease to increase. Classifying and gathering all the figures, we get Table 5. Because the frequency of c>0 is apparently more than that of c<0 in the first line, we can conclude from Table 5 that the investors’ attitudes incline to be risk-aversion when the Bear Market changed into the Bull Market. On the contrary, the investors’ attitudes incline to be risk-preference.

4 Conclusion We can get mean value and its variance directly in the procedure of measuring effectiveness. So only if we find the function which can fit the mean value and its variance very well by using the method explored in this article, we can judge the risk-attitude of investors quantitatively. This theory is more objective than the traditional theory of Series Utility.

References 1. Copeland, T.E., Weston, J.F.: Financial Theory and Corporate Policy, pp. 85–99. Addison-Wesley Publishing Company, Reading (1992) 2. Fang, S.: A Note on Risk Aversion. Fudan Transaction (Natural Science) 4, 217–219 (2001) 3. Mass-Colell, W.A.M., Green, J.: Microeconomic Theory, pp. 167–205. Oxford University Press, Oxford (1995) 4. Xiong, H.: Attitude and Portfolio Analysis. Forecast 2, 60–64 (2001) 5. Zhang, Y., Chen, H.: Utility Function and its Optimize, pp. 126–130. Science Publishing Company (January 2000)

Bender’s Algorithm for Facility Location Problem with Uncertain Demand Haibin Li1, Jun Yan1, and Mingming Ren2 1 School of Economics, Huazhong University of Science and Technology, Wuhan, P.R. China 2 School of Management and Economics, North China University of Water Resources and Electric Power, Zhengzhou, P.R. China [email protected]

Abstract. Facility location models determine the set of locations on a network that minimize the sum of the costs of investment, production, and distribution to meet a known set of demands. In this paper, we consider a novel kind of location problem in which a firm has to make decision where these facilities are located and what is the size of every selected facility in the case of uncertain demand. We design a 0-1 mixed integer programming model for deterministic problem and a programming model with several scenarios for uncertain demand problem. The problem in its general form is quite complex. A modified Benders decomposition algorithm as a solution method, the computational speed and convergence of algorithm are tested on a set of problems with randomly generated data. Keywords: uncertain demand, facility location, Benders decomposition.

1 Introduction Capacitated fixed charge facility location problem occurs especially in the areas of the location of plants, warehouse, retailing and service equipment, and the capacity expansion of road, telecommunication connection and so on. Facility location and the size of selected facility decision are critical aspect of pursuing strategic objective for many firms, which not only relate to current setup costs in sites and investment facilities for these sites, but also have a long lasting influencing efficient to tactical operations, service quality etc. on the firm. Being well-known, a larger size of facility in the case of economies of scale is more efficient than one or several small scale facilities to gather together and has lower unit production cost due to scientific management, technical communion, as well as common expenses, such as using computers, automated assembly line and modern warehouse management etc. So, it is necessary to optimize the facility location and size of facility selection decision simultaneously. In the traditional capacitated plant location model, treated in for example Cornuejols et al. (1991), Beasly (1993) and Sridharan (1995), the total cost including two parts that were production or transportation costs and fixed costs for building the plants. Holmberg(1997) researched the location problem with staircase costs and presented a Lagrangean heuristic solution methods. Generally, facility location, capacity acquisition M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 115–123, 2011. © Springer-Verlag Berlin Heidelberg 2011

116

H. Li, J. Yan, and M. Ren

and technology selection have been deal with separately. Verter (2002) provided an integrated structural decision model for the problem. Harkness et al (2003) dealt with a new type of facility location model, which unit production costs were increasing when the scale of output exceeded its capacity, and four different formulations for this problem are proposed. Wu et al (2006) pointed out facility setup cost functions were generally non-linear functions, so they modeled that the general setup cost functions and multiple facilities in one site are considered. Landeghem et al (2002) and Santoso et al (2005) proposed stochastic programming model and solution algorithm for supply chain network design under uncertain environments. Based on a comprehensive review, we find that existing facility location models usually ignore size of selected facilities and operation costs at different size of facility, which amounts to assuming that each potential facility has only single size and unit production cost does not vary with the facility and size of selected facility. In addition, research addressing comprehensive design under uncertainty is significantly small in number. Note that the interaction between the location, size of facility decisions, and uncertain demand can be significant, such as global manufacturing companies, supply chain networks. Therefore, it is necessary to incorporate facility location models for simultaneously deciding the optimal location and size of the selected facilities under uncertain demand. This paper presents an integrated two–stage stochastic programming model which incorporates the facility location as well as selecting a proper size of the facilities opened at the site under uncertain demand. We consider the economies of scale cases that the lower unit production cost is, the larger size of facility in the same site is, and introduce penalty cost which is incurred for failing to meet demand for certain realizations of the uncertain demand in our model. In addition, we elaborate a modified Benders decomposition algorithm to quickly compute high quality solutions. The remainder of this paper is organized as follows: In the section 2 and 3, we describe a deterministic mathematical formulation and a two–stage stochastic programming model under uncertainty for facility location and size of selected facility respectively. In section 4, we develop a modified Benders decomposition solution methodology. In section 5, we report on the computational performance of proposed algorithm. Finally, we offer some concluding remarks and suggest some directions for future research.

2 Deterministic Formulation In this paper, we assume that the production capacity of each size of selected facilities in its sites is restricted to scale economies, and the unit production cost for each site declines as throughput increases. Set x 0 is the critical point of scale economies, we do not research the area of x > x0 . The model formulation is based on the following definitions: let I (i ∈ I ) be the set of potential facilities, J ( j ∈ J ) be the set of customers and

ui (∀k ,1 ≤ k ≤ u i ) be the

number of alternative size of facility i . The capacity supplied by the size k in the facility i is denoted by s ik , sik > sik −1 . The fixed setup cost of opening facility i is f i ,

Bender’s Algorithm for Facility Location Problem with Uncertain Demand

117

the investment of size k at facility i is gik , i.e., k equipments or automated assembly lines are installed, g ik ≥ g ik −1 , ( 2 ≤ k ≤ u i ),. The unit production cost of size k at the facility i is cik , according to the assumption in the forward parts cik ≤ cik −1,2 ≤ k ≤ ui , ∀i ∈ I . The unit cost of shipping from facility i to customer j is t ij . The demand of customer j is d j , and the number of facilities to be sited is p . We associate a binary variable z ik to these decisions, zik = 1 , if the size k at the facility i is procured, and 0 otherwise. We let xijk denote the flow quantity of product from the supplier of size k at facility i to customer j . The deterministic facility location and deciding size of selected facility can be formulated as follow: (P1): Min

∑∑ ( f

i

+ g ik ) +

i∈I j∈J

s.t

∑ ∑ ∑ (c

ik

i∈I 1≤ k ≤ui j∈J

∑ ∑x

ijk

= d j , ∀j ∈ J

i∈I 1≤ k ≤ui

∑x

ijk

+ tij )xijk

(1)

(2)

≤ sik zik , ∀i ∈ I ,1 ≤ k ≤ ui

(3)

∑z

(4)

j∈J

ik

≤ 1 , ∀i ∈ I

1≤k ≤ui

∑ ∑z

ik

≤p

i∈I 1≤ k ≤ui

(5)

x ijk ≥ 0 , ∀j ∈ J , ∀i ∈ I ,1 ≤ k ≤ u i

(6)

z ik ∈ (0,1) , ∀i ∈ I ,1 ≤ k ≤ ui

(7)

In the above model, objective function (1) minimizing total cost. The total cost is the sum of opening facilities, the size of facilities opened at these sites, production and transportation costs. Constrains (2) guarantee that each customer’s demand will be fully satisfied. Constrains (3) assure that the output of each size k at selected facility i does not exceed its capacity. Constrains (4) ensure that no more 1 size selected at best at each facility. Constrain (5) enforces the number of facilities to be sited does not exceed P. Constrains (6) are the non-negativity of the continuous variables xijk , while constrains (7) restrict the integer variables zik to be 0 or 1. In the above model, model p1 will be a standard CFLP problem if we assume each potential facility has only single production size. Davis and Ray (1969） had proved that CFLP was a NP-hard problem, so the model p1 that includes CFLP problem must be a NH-hard problem.

118

H. Li, J. Yan, and M. Ren

3 Two Stage Formulation Facility location and deciding the size of selected facilities problems are inherently strategic objectives for many firms. While customers’ demand may be known or estimated with some degree of certain for short-term, the long-term demand is subject to considerable uncertainty. In such case, it is necessary to extend the above model to a stochastic setting. We assume that customers’ demands d are stochastic parameters with known distribution. Given that it may be impossible to meet demand for certain realization of the uncertain environments. In this paper we consider the case where the stochastic demand quantities have a discrete and finite distribution, represented by the scenario set Ω = (1,2,3,", S ) .It can be obtained by sampling from the distribution, see e.g. Dantzig and Infanger (1991). The two-stage models of the facilities location and deciding the size selected facilities with uncertain demand are as follows: (P2): Min

∑ ∑( f

i

+ g ik )z ik + Εϑ[ z , d ]

(8)

i∈I 1≤ k ≤ui

Subject to constraints (4), (5), (7). Where Ε is the expectation operator cost define on some probability space (Ω, ℜ, p ) , and ∀s ∈ Ω , ϑ ( z , ds ) is the optimal value of the following problem. (P3): ϑ ( z , ds ) = min

∑ ∑ ∑ (c

ik

+ tij )xijk +

i∈I 1≤k ≤ui j∈J

∑ ∑x

s.t

ijk

i∈I

+ y j ≥ d sj , ∀j ∈ J

j∈J

ijk

iyi

(9)

(10)

i∈I 1≤k ≤ui

∑x

∑h

≤ sik zik , ∀i ∈ I ,1 ≤ k ≤ ui

xijk ≥ 0, y i ≥ 0 , ∀j ∈ J , ∀i ∈ I ,1 ≤ k ≤ ui

(11) (12)

Note d is a random variable corresponding to the uncertain demands in (8), and the optimal value ϑ z , ds of the second problem (9)-(12) is a function of the first stage

( )

decision variable z and a scenario d s of the uncertain demand variable d . The decision variable y in (10) and the cost component h j y j in (9) corresponds to

∑ j∈J

penalty can be interpreted as the cost of unmet demand. In above the model, the decision to be made at present is called the first-stage decision, which is going to decide the configuration z , and the recourse is called the second-stage decision, which is contingent upon the first-stage decision and on the observed realization of the uncertain demands. The objective is to minimize current investment cost in facility and size of facility and expected future operating cost in all scenarios.

Bender’s Algorithm for Facility Location Problem with Uncertain Demand

119

4 A Modified Benders Decomposition Algorithm Stochastic programs can become huge and very difficult to solve, so many efforts have been invested in devising efficient solution procedures for the problem. Ghosh. et al. (1982) and Daskin et al.(1997) presented the solution methods of minimizing either the sum of the regrets or the sum of the regrets over all scenarios and α − reliable p − minimal regret respectively. Verweij (2003) presented a sample average approximation method to compute stochastic programming. But these methods can not estimate the quality of received solution. Santoso et al. (2005) integrated the average approximation scheme with an accelerated Benders decomposition algorithm. This method not only could compute high quality solutions but also could value it. In this paper we will exert their thought to design a modified Benders decomposition algorithm so as to expedite computation to our formulations. Set U j and Wik are dual variables associated with constrains (15) and (14) respectively. The dual of the model p3 at scenario s (∀s ∈ Ω) may now be formulated as follow: (p4): Max D(U s ,W s | z ) =

∑d U − ∑ ∑s s j

s j

j∈J

s ik z ik Wik

i∈I 1≤k ≤ui

(13)

s.t U sj − Wiks ≤ (cik + t ij ) , ∀i ∈ I ,1 ≤ k ≤ ui , ∀j ∈ J

(14)

U sj ≤ h j ∀j ∈ J

(15)

Wiks , U sj ≥ 0 ∀i ∈ I ,1 ≤ k ≤ ui , ∀j ∈ J

(16)

At each iteration, a new Benders cut is generated as follow:

θ≥

∑ p (∑ d U − ∑ ∑ s W s j

s

s∈Ω

st j

j∈J

ik

st ik zik )

i∈I 1≤ k ≤ui

∀t

(17)

A. Modified Benders Decomposition Procedure

The modified Benders decomposition procedure is formally stated below, where ub is the upper bound, lb is the lower bound. n is the maximum number of Benders decomposition algorithm computational iterations, and m is the iteration counter. The parameter ε denotes the relative tolerance gap between upper bound and estimated lower bound. Step 1: Initialize, lb = 0 , ub = +∞ , m = 0 . Define ε and n . Step 2: If (ub − lb) / ub ≤ ε , m = n or the sequence getting the same configuration decisions z in the process of computation, then stop. Terminate, we have obtained the optimal or approximate optimal solution of the original problem (8)-(12). Step 3: Solve the master problem as below:

lb = Min ∑

∑( f

i∈I 1≤ k ≤ui

i

+ g ik )z ik + θ

(18)

120

H. Li, J. Yan, and M. Ren

Subject to constraints (4), (5), (7)

∑∑

s ik z ik ≥ ∑ d j

i∈I 1≤ k ≤ u i

θ +∑∑

(19)

j∈ J

∑p

s∈Ω i∈I 1≤ k ≤ u i

s Wikst z ik ≥ ∑ ∑ p s d sjU stj ,

s ik

s∈Ω j∈J

t = 1,⋅ ⋅ ⋅, m

(20)

θ ≥0

(21)

Add the Constrain (19) assure that the total output from selected facilities is no less than the sum of average in all scenarios. Solve the problem (18)-(21), obtaining optimal ∗ value lb , and optimal solution z . Set lb = lb , and update z in new sub-problems (9)-(12) and dual problems (13)-(16). Step 4: ∀s ∈ Ω , solve the sub-problem (9)-(12), and dual problem (13)-(16), and obtain optimal solutions of

linear

ϑ ∗ ( z , d s ) and D ∗ (U s ,W s z ) , respectively. From the theory D ∗ (U s , W s z ) ≤

programming,

ϑ ∗ (Z , d s ) ,

∀s ∈Ω

.

If

D (U ,W z) > ϑ ( z, d ) , add a new constrain to the master problem (18)-(21) using (22). ∗

s

s

∗

s

θ +∑

∑

i∈I 1≤ k ≤ui

sikWiks z ik ≥ ∑ d sjU sj

(22)

Step 5: Add a new Benders cut to the master problem (18)-(21) using (17). Step6: If

∑ ∑( f + g i

ik

i∈I 1≤k≤ui

)zik + ∑psϑ∗ (z, d s ) < ub , update the upper bound using

∈

s Ω

(23), set m = m + 1 , then go to step 2.

ub = ∑∑( f i + g ik ) z ik + ∑p sϑ ∗ ( z , d s )

∈

i I 1≤ k ≤ u i

∈

s Ω

(23)

5 Computational Results In this section the modified Benders decomposition algorithm described above is used to solve our problem. In order to test the performance of the modified Benders decomposition algorithm, A set of randomly generated networks are used. The parameters in our network are generated according to the method described as follows: Each facility and customer is randomly located in a 100X100 square. The number ui of potential sizes at facility i is drawn from a discrete uniform distribution between 1 and 4. In the following section, Square brackets denote random number generation from s

a uniform distribution in the range indicated inside the brackets. The demand d j for

Bender’s Algorithm for Facility Location Problem with Uncertain Demand

121

customer j at scenario s :[50,120], The setup cost of a facility and investment in different size of the facility are generated respectively by the following formularies, opening a facility costs f i : [2300,3500] investing at the size k of facility i g ik : k[1000,2000].

The

transportation

costs

tij

are

generated

by

formulary

3+0.04(Euclidean distance from facility i to customer j ). The capacity sik from size

k at facility i is drawn by the formula: u ik * s1[0.4,1] , here s1 = (sum of average demand at all scenario)/(1.5 times preplanning to open facility).The unit production cost is somewhat higher than the transportation. The unit production cost parameters. Table 1. Opening facility, deciding the size of selected facility, CPUs and iterations Scenario

p

Facility

Size

Lower Bound

Upper Gap(%) Iteration Bound

CPUs

30 150

4

7/10/20/30

3/4/4/3/

187240

188010

0.0041

4

15.046

35 200

5

3/9/13/16/35

2/4/3/4/4

276810

276810

0

6

19.469

50 250

5

14/35/45/48/50

4/3/4/2/4

300400

300670

0

8

45.719

60 300

6

354704

355360

0.18

6

42.906

30 150

4

11/12/15/16/

3/3/3/3

187110

187540

0.0023

5

33.456

35 200

4

1/9/12/34

3/3/3/3

242820

242820

0

7

35.985

50 250

4

35/37/40/44

3/3/4/4

297170

297700

0.18

9

34.172

60 300

5

9/24/36/46/55

3/4/4/3/3

309770

310234

0.15

7

58.328

I

J

3 11/13/21/26/38/43 4/3/3/2/4/4

4

Table 2. Comparison of uncertain demand to deterministic demand Scenario

I

J

3 deterministic demand

60 300

Lower Bound

Upper Bound

11/13/21/26/38/43 4/3/3/2/4/4

354704

355360

0.18

6

46.906

11/16/21/26/38/43 4/2/3/2/4/4

354550

355090

0.15

5

35.872

p

Facility

Size

Gap(%) Iteration

CPUs

6

cik are selected using below formulas, ci1 (facility i at the lowest capacity): [ 9 ,12 ] , ciui (facility i at the most capacity): [ 6 ,8 ] , while cik (facility i at the size k ):

ciui + (ci1 − ciui )(l + l[0.1,0.2]) , here l = 1 −

∑s

ik

1≤ k ≤ui

/ siui . The unit penalty cost

y i due to facility i unmet demand, yi : 20(ci1 + max (tij )) .In addition,

ε = 0.04 ,and m = 80 .

j∈J

We implement the algorithm described in Section 3 in matlab7.0, and solve on a HP—AMD notebook PC with 1.79GHz and 224MB of memory.

122

H. Li, J. Yan, and M. Ren

In our implementation, we use I=30, 35, 50, and 60; J=150-300; and scenarios are 2 and 3. We carry out our experiments in sets of problems. Our objectives in performing the computational experiment are to analyze the computational performance of the proposed algorithm, to study CPU seconds with different scenario and network. Also we are going to compare the CPU seconds and convergence of stochastic programming model to that of a deterministic optimization problem. The results of the series of experiments are summarized in Table 1. The Table 1 reveals that facility location and deciding the size of selected facilities are interdependent. Note when the average demand of customers is satisfied, the larger output size always is chosen at each opening facilities so as to take full advantage of the scale economies provide by lower unit production costs. The Table 1 also reflects the computational CPU seconds increase when network broaden, and also show that more scenario has distinct spending CPU seconds due to more sub-problems in each iterative. In the sets of experiments, total time are no more than 60 seconds, and the percent of relative gap between upper bound and lower bound are no more than 1%. Table 2 and Fig. 1 compare the uncertain demand problem solution to deterministic demand problem, here I=60, J=130, P=6, 3-scenario, and the quantity of deterministic demand equals the average of uncertain demand in all scenarios. It is clear that the gap and the number of iteration in the case of deterministic demand is always smaller than that of uncertain demands, and has different deciding result to opening facility and size of selected facility.

Fig. 1. Effect of convergence for uncertain demand and deterministic demand （ S=3, I=60, J=300, p=6）

6 Conclusion In this paper, we have presented an analytical approach for the problem of simultaneously optimizing the facility location and deciding size of selected facilities with uncertain demand. In our problem the unit production cost in each facility do not a constant, while it dependent economies of scale. We also designed a modified Benders decomposition algorithm, and our algorithm has shown to be great engineering tool for our problem. Further extension of this model should attempt to capture multiple time periods and incorporate the production of multiple commodities to the facility location design models.

Bender’s Algorithm for Facility Location Problem with Uncertain Demand

123

References 1. Beasly, J.E.: Lagrangean heuristics for location problem. European Journal of Operational Research 65, 383–399 (1993) 2. Verweij, B., Ahmed, S., Kleywegt, A.J., Nemhauser, G., Shapiro, A.: The sample average approximation method applied to stochastic routing problems: A computational study. Computational Optimization and [3] Applications 24, 289–333 (2003) 3. Cornuejols, G., Sridharan, R., Thizy, J.M.: A comparison of heuristic and relaxation for the capacitated plant location problem. European Journal of Operational Research 50, 280–297 (1991) 4. Davis, P., Ray, T.: A. Branch-and-bound algorithm for the capacitated facilities location problem. Naval Research Logistics Quarterly 16(3), 331–343 (1969) 5. Dantzig, G.B., Infanger, G.: Large-scale stochastic linear programs: Importance sampling and Benders decomposition. Technical Report SOL 91-4, Operations Research Department, Stanford University, Stanford, CA (1991) 6. Geoffrion, A.M., Graves, G.W.: Multicomodity distribution system design by Benders decomposition. Management Science 20, 822–844 (1974) 7. Gendreau, M., Laporte, G., Séguin, R.: A tabu search heuristic for the vehicle routing problem with stochastic demands and customers. Operations Research 44, 469–477 (1996) 8. Ghosh, A., McLafferty, S.L.: Locating stores in uncertain environments: a scenario planning approach. Journal of Retailing 58, 5–22 (1982) 9. Ghosh, A., McLafferty, S.L.: Locating stores in uncertain environments: a scenario planning approach. Journal of Retailing 58, 5–22 (1982) 10. Van Landeghem, H., Vanmaele, H.: Robust planning: A new paradigm for demand chain planning. Journal of Operations Management 20, 769–783 (2002) 11. Harkness, J., ReVelle, C.: Facility location with increasing production costs. European Journal of Operation al Research 145, 1–13 (2003) 12. Jacobsen, S.K.: Heuristics for the capacitated plant location model. European Journal of Operational Research 12, 253–261 (1983) 13. Holmberg, K., Ling, J.: A lagrangean heuristic for the facility location problem with staircase costs. European Journal of Operational Research 97, 63–74 (1997) 14. Kamath, K.R., Pakkala, T.P.M.: A Bayesian approach to a dynamic inventory model under an unknown demand distribution. Computers & Operations Research 29, 403–422 (2002) 15. Wu, L.-Y., Zhang, X.-s., Zhang, J.-L.: Capacitated facility location problem with general setup cost. Computers & Operations Research 33, 1226–1241 (2006) 16. Daskin, M.S., Hesse, S.M., Revelle, C.S.: α-reliable. P-minmax regret: A new model for strategic facility location modeling. Location Science 4(4), 227–246 (1997) 17. de Camargo, R.S., Miranda Jr., G., Luna, H.P.: Benders decomposition for the uncapacitated multiple allocation hub location problem. Computers & Operations Research 7, 1–18 (2006) 18. Sridharan, R.: The capacitated plant location problem. European Journal of Operational Research 87, 203–213 (1995) 19. Santoso, T., Ahmed, S., Goetschalckx, M.: A stochastic programming approach for supply cgain network design under uncertainty. European Journal of Operational Research 67, 96–115 (2005) 20. Verter, V.: An integrated model for facility location and technology acquisition. Computers & Operations Research 29, 583–592 (2002)

A Kind of Coal Mine Safety Control Model Based on Cybernetics Lixia Qi and Xue Yang School of Management and Economics North China University of Water Resources and Electric Power Zhengzhou, P.R. China [email protected]

Abstract. A kind of coal mine safe production modeling method is studied in this paper. Unlike traditional regression analysis, this method is based on state equation of modern Cybernetics. The model thoughts and parameter identification method are discussed in detail. An example of actual coal production was given and analyzed by this method. The results prove the validity of the model. Keywords: model, Cybernetics, state equation, parameter identification, coal mine, safety production.

1 Introduction It is one of the important tasks that making reasonable safety goal to the coal production enterprises management. Effective way to solve this problem is to establish a safety production model and predict and develop the next phase safety management objectives base on it. However, the reality is very bad because of the theoretical research lack. The actual production safety management goal is often based on the wishes of managers. It is or adopted last year data directly, or derived in accordance with linear regression. These make the safety management objectives are ridiculous and will not achieve their proper role. In this paper, a coal production safety control math model and its calculation are researched. Mine safety production is a very important issue in China. Coal resources occupy more than 75% in the primary energy production and consumption structure. And coal mine safety issues become more prominent along with the increasing volume of coal mining. As it is a complex system involving the "man - machine - environment management" four factors, the build of coal mine security model is very difficult. Therefore, the existing control of coal mine safety is usually concerned about the qualitative analysis. The lack of corresponding theoretical guidance became one of the difficult problems for coal mine safety production management. Some researchers had proposed that G (1,1) model can be used as a modeling tool for mine safety[1], but some studies have also pointed out that under the different development coefficient values, G (1,1) model has various dynamic behavior of convergence, divergence and chaos[2]. With the development of computational science, the methods of modern M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 124–131, 2011. © Springer-Verlag Berlin Heidelberg 2011

A Kind of Coal Mine Safety Control Model Based on Cybernetics

125

control theory were used to study complex systems. German scholar A. Kulman[3] has made the proposition of science safety and cybernetics in "Introduction to Safety Science" in 1981. China's human - machine - environment system engineering experts, Mr. Long Shengzhao[4] also proposed: safety systems is one of a machine control system, control theory can be use to study the security issue, and he put forward a fuzzy control model of man. 1998 "Industrial Safety and Dust" began running a series of research papers “theory of safety control theory and applications" written by Mr. Zhang Yipeng[5-9], These articles can be seen as the rise of China's security control theory. In this paper, the modern control theory is applied to coal mine safety control, and the coal mine production safety control model is built inspired by Mr. Zhang’s thought.

2 Mathematical Models Accidents are of great chanciness in terms of mine production. Thus, it is impossible that working with absolute control to ensure the safety of each person at all the time. However, from the viewpoint of control theory, mine safety system is a multivariate stochastic control system. So, the overall consequences of the accident have a rule to follow in the large-scale production systems. In coal mine safety production, a common indicators of the accident consequences is mortality rate / (million ton*year). Serious injury rate/ (million ton*year), injury rate per thousand workers are often used also. Mortality rate / (million ton*year) is used as the example in analysis in this paper. Other indicators can be calculated in the same way. Mortality rate can be seen as the output of the mine safety production system. But, it is very difficult to establish the mathematical models of its input in accordance with the classical cybernetics. According to materialist dialectics, all systems are in motion, and the motion is the results of the struggle in the system. Coal mine production system can also be seen as the struggle result of the two basic contradiction "dangerous" and "anti-risk". These can be summed into two indicators- H (k) and C (k). Then, the safety state of coal mine production system can be expressed a differential equation as equation (1). ΔY ( k ) = Y ( k ) − Y (k − 1) = [1 − C ( k )]Y (k − 1) + H (k )

(1)

In this formula: k: Time factor; Y (k): Mortality rate /( million ton *year); H (k): Dangerous index; C (k): Anti-risk index; The opposite sign of H (k) and C (k) explain that their relationship was antagonistic. It should be noted that the data Y (k) can be collected is actually its observed value Z(k). Moreover, the statistical variable Y (k) also includes the random error variable W(k). Mine safety control system is generally considered as a one-dimensional linear time-invariant system. That is, the H (k) and C (k) are constants. So the actual coal mine safety model is controlled by the composition of equation (2) and (3). Y (k ) −

H H = (1 − C )[Y ( k − 1) − ] + W ( k ), k = 1,2,... C C

Z ( k ) = Y ( k ) + V ( k ), k = 1,2, "

(2) (3)

126

L. Qi and X. Yang

W(k) is an n-dimensional vector that acting on the system in the k moments, which is an random disturbance. W(k) usually is a Gaussian white noise sequence and it’s mean is equal to 0. V(k) is the observation noise that of a m-dimensional vector. It is a Gaussian white noise sequence as same as W(k). The mean of V(k) is 0 also. Equation (4) is the general solution of equation (2) and (3). It is the presentation of mine safety control model. Y (k ) =

H H + [Y0 − ](1 − C ) k C C

(4)

3 Paramter Identification Algorithms Common method used in the calculation of statistics is the multiple regression analysis. However, there are many factors involved in mine safety, which led the statistics to be disturbed in a large extent. For these reasons, Kalman filter model [10] is used to solve this problem. Hypothesis: X (k ) = Y (k ) −

H C

α = 1− C F (k ) = Z (k ) −

(5) (6)

H C

(7)

On equations (2) (3) for substitution: X (k ) = αX (k − 1) + W (k ), k = 1,2,...

F (k ) = X (k ) + V (k ), k = 1,2,...

(8)

(9)

Then, the following recurrence formulas (10)-(13) can be got according to Kalman filter theory: G(k ) =

P(k ) P (k ) + R ( k )

~ ~ ~ X ( k ) = αX ( k − 1) + G (k )[ F − αX ( k − 1)]

(10) (11)

B ( k ) = (1 − G ( k )) P ( k )

(12)

P ( k + 1) = α 2 B (k ) + Q( k )

(13)

In the above formula: G(k): The gain matrix of the observation noise in k moment; ~ X ( k ) : The filtered estimated value of K-times; B(k): Estimation error covariance matrix(n*n); P(k): The covariance matrix in k moment; Q (k): Covariance matrix of W(k); R (k): Covariance matrix of V(k).

A Kind of Coal Mine Safety Control Model Based on Cybernetics

127

Because coal mine production system is considered one-dimensional linear system, and then Q (k) and R (k) can be regarded as constant. Another, it is can be known according to equation (8) and (9): D(X(k)-αX(k-1))=Q

(14)

D(F(k)-X(k))=R

(15)

Based on the above formula, if the pre-estimated values of H and C and a set estimated of P(0), Q and R to ensure recursive formula effective are given, X (k) can be obtained. Recovery calculated Y(k), P(k), Q and R. Calculated H and C by least squares identification. Repeat iterations until the two calculated results of Y (k) satisfy the error margin. The H and C values are the parameters that we want to get.

4 Applications A. Model Calculations The mortality statistics of a coal industry group is shown in Tab 1. The state equation was established and solved used Kalman filter. The square of the difference between two adjacent calculated values Y(k) -expressed as r2 -was used as the index to evaluate the error. Iteration was terminated when r2 <0.1. The initial parameter values are assumed to be C=0.472， H=0.348. And the final result for the equation after iteration are C=0.653， H=0.178. The results are shown in Tab 2. The security control state equation of the coal industry group should be: Y (k ) = (1 − 0.653)Y ( k − 1) + 0.178

(16)

B. The Application of Security Control Model It is very difficult to understand if the model will be directly applied to coal mine production safety target management. Because the annual production of medium-sized coal enterprises is generally not more than 3 million tons, the result will be much less than 1 if the safety management objective is still measured with the mortality rate per million ton. The form of the calculated model should be changed to adapt to actual production. It is appropriate that using the average time of no fatal accidents as the security management goal. Assumes that the annual production capacity of P million tons, safety management objective that calculated according to the model is M, the average time of no fatal accidents should be T = 365/MP days. Table 1. The mortality statistics of a coal industry group(1997-2006) Year Project Mortality/(million ton*year)

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

1.157

0.852

0.513

1.625

0.858

0.858

0.429

0.269

0.324

0.317

Source: Statistical Yearbook of a Coal Industry Group Company

128

L. Qi and X. Yang Table 2. Iterrative calculation results of the case Y0(k)

Y1(k)

Y2(k)

Y3(k)

…

Y11(k)

Y12(k)

Y13(k)

Y(k)

0

1.157

1.018

1.124

1.136

…

1.142

1.149

1.154

1.154

1

0.852

0.876

0.863

0.851

…

0.849

0.863

0.871

0.871

2

0.513

0.497

0.526

0.510

…

0.712

0.754

0.762

0.762

3

1.625

1.437

1.340

1.278

…

0.886

0.916

0.924

0.924

4

0.858

0.910

0.885

0.861

…

0.876

0.843

0.832

0.832

5

0.858

0.907

0.872

0.859

…

0.803

0.784

0.768

0.768

6

0.429

0.437

0.449

0.457

…

0.493

0.501

0.507

0.507

7

0.269

0.293

0.316

0.324

…

0.352

0.367

0.374

0.374

8

0.324

0.309

0.328

0.332

…

0.324

0.316

0.312

0.312

9

0.317

0.326

0.319

0.317

…

0.309

0.301

0.298

0.298

r

--

0.6155

0.2459

0.0052

0.0037

0.0021

0.0007

--

C

0.472

0.513

0.578

0.600

…

0.651

0.653

0.653

0.653

H

0.348

0.284

0.216

0.197

…

0.176

0.178

0.178

0.178

2

To the coal enterprises, for example, annual production is about 2.6 million tons, then the average of no fatal accidents time T = 365/0.273 * 2.6 = 515 days. This indicator is easy to understand than the above model. C. Comparison with Regression Analysis In the existing production management, many people like to use a simple linear regression or exponential regression to make security control objectives of the next phase. The exponential regression and linear regression is also done used the data in this case, the results are shown in Tab 3. The linear regression model and the exponential regression model are built using the same raw data. Form as equation (17) and (18). Linear regression model: y = -0.0974x + 1.2557

(17)

y = 1.4348*e-0.1554x

(18)

Exponential regression model:

Tab 3 show the original data and recovery data form linear regression, exponential regression and state equation. The difference square between the original data was calculated. It can be concluded from the table: The linear regression model even better than the other two if only considering the proximity to the original data. But from the model, we can draw the conclusion that the mortality rate will less than zero after three years, which is contrary to the actual situation seriously. This also explains the form of security control of coal companies is not a simple linear. From Tab 3, we can see that state equation to be slightly higher than the exponential regression precision accuracy.

A Kind of Coal Mine Safety Control Model Based on Cybernetics

129

Table 3. Comparision with linear and exponential regression No.

Original data

Linear regression

Exponential regression

State equation

1

1.157

1.158

1.435

1.154

2

0.852

1.061

1.228

0.871

3

0.513

0.964

1.051

0.762

4

1.625

0.866

0.900

0.924

5

0.858

0.769

0.770

0.832

6

0.858

0.671

0.659

0.768

7

0.429

0.574

0.564

0.507

8

0.269

0.477

0.483

0.374

9

0.324

0.379

0.413

0.312

10

0.317

0.282

0.354

0.298

r2

--

0.934

1.155

0.580

This shows that the state equation model is more consistent with the actual security control of coal mining enterprises. Another example was used by Mr. Zhang Yipeng in the literature [11] to compare with exponential regression and state equation also, and the same result was got. D. Factors Affecting H and C In order to understand what factors will be in an impact to coal mine safety production, 14 factors were used for gray relational analysis associated with mortality per million ton. The results [12] were shown in Tab 4. Form the associated polarity it can be seen that eight factors such as staff security awareness levels, Mining equipment reliability, Safety training time are negative correlation with mortality. These can be seen as the controlling factors of mortality, that is, the impact factors of C. The other six factors have positive correlation with mortality million ton. They affect the value of index H. From the correlation coefficient it also can be seen: The more complex hydro-geological environment, the greater probability of a fatal accident will be occurred. On the other hand, the staff security awareness levels has the largest associated with mortality in the control factors. This is because raising the level of safety awareness among employees will help to discover and eliminate potential safety problems timely, and employees can protect themselves effectively in advent of danger. It can be effective in reducing the rate discipline and suppressing the occurrence of unsafe behavior at the same time. These all help to reduce mortality.

130

L. Qi and X. Yang Table 4. The results of gray relational analysis

Factors

Staff Safety Reliability Staff discipline Education security training Mechanization of mining Gas levels rate level of staff awareness time equipment levels

Correlation coefficient

0.893

Factors

Hydro-geological Complexity

Correlation coefficient

0.879

-0.821

-0.532

-0.895

Coal Spontaneous Reliability dust combustion of apex Level tendency block 0.864

0.719

-0.768

-0.799

Safety measures

-0.843

-0.883

0.903

Emergency Information mechanism degree

-0.794

-0.657

5 Conclusion Mine safety is the big issue which is restricting the development of China's coal mines and institutionalized. A reasonable goal of coal mine safety management is very important to coal mine management efforts. This paper discusses the safety production modeling method based on state equation under Cybernetics theory. The parameter identification method is discussed also. An actual case of coal mine enterprises was be used to analysis and the following conclusions can be drawn: 1) It is more effective that constructing the mine safety model based on differential equation. Compared to traditional regression analysis, this model is more precise and more consistent with actual production. 2) Kalman filter is an effective filter to exclude the interference of statistical noise in the model parameter identification. 3) Coal mine safety control, in essence, is the result of the struggle between risk factors and anti-risk factors. Improving identification and monitoring capability of production environment hazard, and raising the level of employee safety awareness will be helpful to reduce coal mine casualty. 4) Mine safety control model is designed to help managers develop a more realistic security control goal. We can use the transformation form of the model, for example, the average time of no fatal accidents, to define safety goals. This will be making the model be understood easier.

References 1. Cao, Q., Cheng, W.: Research on Mine safety terget management method and its application software. Industrial Safety and Environmental Protection 2, 73–78 (1999), doi:cnki:ISSN: 1001-425X.0.1999-02-018 2. Chen, Q., Wang, D.: Analysis of the Dynamic Characteristic to G(1,1) Model. Systems Engineering Theory & Practice 12, 129–133 (1997) 3. Kulman, A.: Introduction to Safety Science, Zhao Yunsheng Trans. China Geosciences University Press, Peking (1991)

A Kind of Coal Mine Safety Control Model Based on Cybernetics

131

4. Long, S.: The astronauts fuzzy control model and prospect for its application. Aerospace Control 1, 53–59 (1990) 5. Zhang, Y.: The foundation of the safety control theory and its application (One). Industrial Safety and Dust Control 1, 1–5 (1998), doi:cnki:ISSN:1001-425X.0.1998-01-000 6. Zhang, Y.: The foundation of the safety control theory and its application (Two). Industrial Safety and Dust Control 2, 1–4 (1998), doi:cnki:ISSN:1001-425X.0.1998-02-000 7. Zhang, Y.: The foundation of the safety control theory and its application (Three). Industrial Safety and Dust Control 3, 1–4 (1998), doi:cnki: ISSN: 1001-425X.0. 1998-03-000 8. Zhang, Y.: The foundation of the safety control theory and its application (Four). Industrial Safety and Dust Control 4, 1–5 (1998), doi:cnki:ISSN:1001-425X.0.1998-04-000 9. Zhang, Y.: The foundation of the safety control theory and its application (Five). Industrial Safety and Dust Control 5, 1–4 (1998), doi:cnki:ISSN:1001-425X.0.1998-04-000 10. Qin, Y., Zhang, H., Wang, S.: Kalman filtering and navigation principles. Northwestern Polytechnic University Press, XIAN (1998) 11. Zhang, Y., Qin, J.: Application of contemporary statistical information analysis method in safety engineering—multielement regression analysis. Industrial Safety and Dust Control 2, 1–4 (1999), doi: cnki: ISSN: 1001-425X.0. 1999-01-000 12. Qi, L., Yang, X.: Analysis of factors affecting coal mine accident (unpublished)

The Research and Progress of Global Digital Content Industry Han Jieping1, Cong Rijie2, and Wei Yaqiong2 1 School of Economics and Management, Northeast Dianli University, Ji Lin, China 2 Graduate Department, Northeast Dianli University, Ji Lin, China [email protected]

Abstract. Making digital content industry research and practice of progress that both at home and abroad as the main line, defined the meaning of the digital content industry, analyzed and summarized the basic characteristics of the development situation of digital content industry in various countries and regions, put forward to promote the strategy of China's digital content industry development. Keywords: digital content industry, content industry, industry research and progress.

Content Industry has been proposed in the G-7 information sessions for the first time since 1995, attracted numerous agencies and researchers attention at home and abroad. With the developed countries, the developed regions and cities the rise of the content industry, the construction of the industrial chain continuous improvement, the digital content industry research and development priorities are also changing. Forward digital current content industry supply chain and industrial development model extension continue to the transfer of industrial clusters. Digital content industry value chain around the core or in advantage of information resources, start with a very strong industry penetration, easily integrates with other industries to create derivative products. At the same time the existence of industrial clusters can reduce the production, trade and transportation costs, shared within the cluster of public facilities and services, enhance inter-firm information, knowledge and operational experience in the exchange and sharing, not only detailed the professional division of labor, but also created a scale of effect, cross-enterprise or industry can meet the content needs of users [1]. In this paper, digital content industry at home and abroad to conduct research to explore, with a view to a comprehensive, thorough, systematic understanding of domestic and international digital content industry research and development situations.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 132–142, 2011. © Springer-Verlag Berlin Heidelberg 2011

The Research and Progress of Global Digital Content Industry

133

1 The Definition of Digital Content Industry With regard to the connotation of digital content industry has not yet formed a consensus definition, different countries, organizations and scholars from their point of view of its definition, and some contents are similar, there is some difference in the content. However, digital content industries covered by the contents of the view there is one thing to be consensus: both in the core content, information, or the number as a link, emphasizing the intersection of content and other industries and integration is an emerging industrial fields. Some scholars quoted the country are the EU's Information Society 2000 Scheme to the definition of digital content industry. Some people think that the digital content industry is essentially a broad digitization of cultural information is based on new techniques based on cultural industries. Also expressed that the digital content industry were based on digital information technology, integration of publishing, broadcasting, television, communication network and other media, for general industrial. It includes informa- tion and communication technology industries and cultural industries in the sector, containing the information content, information, culture and information services, reflecting the publishing, film and television, communications and information technology industries cross. "Shanghai Municipal Government Work Report" states in2003: "digital content industry is relying on advanced information infrastructure and all kinds of information products, marketing channels provide users with digital images, characters, images, audio and other information products and services emerging industries type, which includes software, information-oriented education, animation, media, publishing, digital video, digital TV programs, video games and other products and services, is intelligence intensive, high value-added emerging industries[2]. " Ministry of Economic Affairs Industrial Development Bureau of Taiwan Digital Content Industry Promotion Office in the 2004 White Paper on Taiwan's digital content industry will be digital content industry is defined as: "to provide the images, characters, images, audio and other information to be digitized and integrated use of the product or service industry. " The State Council issued the 2006-2020 National Information Development Strategy, the digital content industry are an important part of the information industry. In the context of information networks, culture, publishing, broadcasting, film and television, market information, market surveys, games, animation and so on, any content-processing objects, the product in the form of information form, all belong to the information industry. In our government's current definition, the digital content industry is attributable to information services. In addition to my own country, other countries on the definition of digital content industry as summarized in Tab.1. In summary, this paper argues, the digital content industry is based on digital communications and networking technology, integrating the publishing and printing, radio, television , audio, film, animation, games, Internet and other multi-media form, engaged in the manufacture, production,

134

H. Jieping, C. Rijie, and W. Yaqiong Table 1. In other countries / organizations on the definition of digital content industry

Countries/organi Source zations

Title

European Union

(Digital Information Society Content 2000 Plan (1996) Industry)

Organization of Economic Cooperation and Development

the Contents of the Industry As a New Content Growth Special Industry Report (1998)

U.S. Software and Information Content SIIA website（ 2009） Industry Industry Association （ SIIA）

U.S.A.

North American Industry Information Classification Industry System (1999)

Australia

Australian Digital Digital Content Action Content Charter (2005) Industry

Ireland's National Policy and Advisory Board

A Strategy for the Digital Digital Content Content Industry in Industry （ ） Ireland 2002

United Kingdom： The Department of Trade and Industry, DTI

British Digital Digital Content Industry Content Action Plan for Industry Development（ 2000）

Content Industry connotation Manufacturing, development, packaging and marketing information products and its service industries, whose product range includes a variety of media, printed materials (newspapers, magazines, etc.), electronic publications (on-line databases, audio-visual services, CD-ROM services, and game software, etc.) and audio-visual dissemination (TV, video and broadcast, etc.) From the main production of information and entertainment content offered by the new service industries, specifically including publishing and printing, music and movies, radio and television transmission and other industrial sector. The report further on the topic of "content" is divided into two categories: one is the traditional audio-visual and music content, with "one to many" from a single producer to a large audience spread; another combination of digital text, data, audio-visual content, and multimedia services, through the CD player, or Internet transmission, namely, "the new media[3]", To online content publishers and providers in support of information products and services, marketing and provision of technical and service providers are classified as engaged in the enterprise content industry Refers specifically to the information into a commodity industry, which includes not only software, databases, various radio communication services and cable information services, but also include traditional newspapers, books, films and audio-visual product publishing. The computer, telecommunications equipment and other hardware manufacturers were classified as a branch of the manufacturing sector Including information and communication technology applications and services industry consists of two parts, but also includes the traditional film, entertainment and cultural industries, focusing on the development of creative digital industries[4] Create, design, management and marketing of digital products and services, provide technical support for the above activities, the industry is the traditional content industry, media and entertainment, software and multimedia, electronic hardware and telecommunications to be comprehensive integration of new areas of economic activity[5] Including publishing, software, web production industry, the graphic design industry, gaming industry, radio and television industry, creative industries

The Research and Progress of Global Digital Content Industry

135

Table 1.(continued) New Japanese Economy, Trade Growth and Industry 2006

（ ）

Korea

Economic Strategy Content Industry

South Korea's White Digital Paper on Content Information(2003) Industry

Processing production of text, images, music, games and other information material, through the media flow to the user's information goods, including the instant can receive, after a century of consumer information and have a large number of readers of literary works[6] The use of films, games, animation, music, cartoons, radio, television and other visual media or digital media and other new media, for storage, distribution, enjoy arts and culture content, collectively[7]

stockpiling, dissemination and use of relevant information for general industrial and cultural content. From the digital content industry definition, it could included in each of these industries belong, why should the crown for their addition to "digital content industries," such a new term? The reason has the following three aspects: 1) Internal factors. The rapid development of digital and the Internet, so that information can be digitized, text, images, etc. manifested in different ways, thus information for the gradual reduction of dependence on carrier, and that the traditional content industry modes of production and operating systems has changed, birth of the emerging characteristics of the Internet as a service mode and content. Secondly, due to digitization and internet so that the boundaries between different industries began to blur together, over the past books, movies, games, software, etc. As a result of digitization, so they belong to different industries by a shift have common attribute information, by the composition of the number 0 or 1. 2) External factors. Content industry development and growth is the inevitable development trend of information technology. At the national information technology development process, the determining of the three elements of information technology, information equipment and information resources, and learn from the United States, Canada and Europe, the successful experience of the process of information can be found on the above three inputs were 3:7:12, and both the development of information technology or research information equipment, the final analysis are intended to provide users with better services information resources. Therefore, we in the development of information equipment and information technology at the same time must be to focus on the development and use of information resources, so that the people will be content as a separate industry to extract key research and development. 3) In the marketing patterns， the integration and reorganization of industry which was arising from digital technology and network technology industry make the marketplace which was closely related with the buyers and sellers into the market space. In order to strengthen the core competitiveness, media Group have to adjust strategies, to make the business area focus on "digital content industry" and locate the role in “the content supplier”. In this aspect, the most representative case was the merger between “the US online” (AOL) which is the most large network service provider in the world and “time Warner” which is the biggest media company in the world. Two big giant's merges involve fund 165,900,000,000 US dollars. After the merger, the market value of American Online Time Warner Corporation amounts to

136

H. Jieping, C. Rijie, and W. Yaqiong

350,000,000,000 US dollars. Annual sales achieve 30,000,000,000 US dollars. The merger is a typical "digital content industry" super combination. They respectively depend upon the power-and-power union of original brand effect and the combination of content and network technology thus complete content integration and form a content industry chain which take the content creation – the content conformity – the content distribution as the branch. This formation of industrial chain's value will drive the emergence and development of the content industry.

2 The Practice Progress of Digital Content Industry In recent years, the digital content industry has supported the new economical recovery by the fast development. The rise of broadband technology, multimedia, digital and Internet had the huge impact on the way of traditional economy and the cultural. It gives the birth to the content industries such as new digital multimedia software and so on and it becomes a digital content industry that across the communication, network, entertainment and media and traditional cultural art industry. Meanwhile, a large number of new cultural ways such as the digital movie, the digital television, the digital newspaper, the digital publication, digital art, the digital game are demonstrating the strong vitality. A. The development of the Digital Content Industry in the Global Condition 1)

Status of development

a) Industrial scale and growth The research data indicated that global digital content industry is an industry of a large scale and the rapid growth. The global digital content industry’s scale and growth between 2002 and 2008 are shown in Fig.1. From the scale of global digital content industry, in 2000, its scale was only approximately $60 billion, and the scale of the market continued rapid growth since 2002. Although in 2008 its rate of rise has slows down, but still keep the 29.1% growth. Overall, Industrial growth slowed in the main reason from two aspects, and one is that after many years continue growth ,the industry has formed a larger scale base and came into the stable growth stage gradually, Especially in the developed countries such as Europe, the digital content industry have entered into maturity. On the other hand, under the influence of financial crisis and correlated factors more or less, the industry’s scale and growth has came under certain suppression [8]. b) Industrial segmentation constitution From the perspective of the spread carrier and the form of digital content, digital content industry can be subdivided into mobile digital content, Internet, digital audio, digital animation, digital publication and other major subdivision industry. Among them, Internet digital content mainly refers to the digital content which uses traditional Internet as the carrier, such as digital content of communication portal, network game, and so on. Mobile digital content refers to the digital content which uses mobile network as the carrier, including phone text messages, handset game, color bell, color letter and so .on. The digital video and music is mainly refers to the sound video, and do not include the digital content which use the Internet and mobile network as the main transmission carrier, such as digital TV digitalization, digital animation and so on. Digital publication refers to the static form of digital content, such as newspapers, and so on.

The Research and Progress of Global Digital Content Industry

137

The pattern of global digital content industry in 2008 is shown in Fig.2. From the segments of industrial constitute, the Mobile digital content, Internet digital content and the digital video and music animation were still occupying the absolute share, and their market share occupied more than the 85% of the entire industrial scale. 2) Market Characteristics of Industry a) The Regional Distribution Characteristics of Industry According to the regional pattern of distribution of industries, the Occident occupied the absolute leading position. The global Internet survey about the regional distribution of industry shows that North America held 39%, Europe held 22%, South America held 7%, Japan held 5%,

Fig. 1. The global digital content industry’s scale and growth between 2002 and 2008(Data from CCID August in 2009)

Fig. 2. The pattern of global digital content industry in 2008(Data from CCID August in 2009)

138

H. Jieping, C. Rijie, and W. Yaqiong

Asia-Pacific region except Japan held 19%, and other regions held 8% in 2008(Source: CCID 2009, 08). With the majority of the world's leading product developers and service providers in the Internet content, audio and video animation, digital publishing, the Occident becomes the most developed areas in digital content industry, while other places like Japan, South Korea and Australia are in a leading position in the mobile. Internet applications, games, etc, and form a unique industry advantage. Along with the countries and regions that are more developed in digital content industry, Asia-Pacific, South America and other regions, have begun to show a rapid growth momentum and become a new driving force to promote the development of global industry. Besides, their market position is gradually raised [9]. b) Characteristics of mode that government support industrial development Government support is considered as an important model in promoting the development of the global digital content industry. In recent years, countries around the world bring role of the government into full play in promoting the digital content industry development, promote the continuous upgrading and structural optimization of content industry with strategic plan, and promote the sustainable development of content industry with talent strategy. The government policy support the establishment of Information Industry Base, the digital content industry portals and digital content forum, whose purpose is to provide financial support, establish long-term mechanism, raise the level of imports and exports, and encourage the development of content resources for start-ups and small and medium enterprises. Then, it can promote the industrial development effectively. The government ensures the healthy development of digital content industry from the techniques and legal regulations On the one hand, they move links and means of the content monitoring to standards, hardware and transmission environment through modern technology, and implement the content management to all aspects of the industry chain. On the other hand, they introduce relevant laws and regulations, and establish an effective monitoring system to ensure the digital content industry develop healthily and orderly. The important role of government is also reflected in the macro to guide the digital content industry development, encourage free market competition, promoting the formation of eco-industrial chain, and optimize the industrial structure in the sustainable development of continuously. c) The characteristics of industry supply competition In global terms, the competitive structure of digital content industry is being more and more crossed, complex, and high strength-based. First, it has shown in the supply side that the terminal equipment manufacturers speed up the penetration of the upstream content industry. Moreover, the cross-platform development of the content is increasingly prominent, such as the mutual integration and penetration of traditional Internet content and mobile Internet content, and the growing popularity of mobile communications networks. Thirdly, the mature field such as animation and games has shown the characteristics of monopoly, and the cost of product research becomes higher and higher [10].. The result of industry competition is the increase of industry chain's perfect and collaboration, besides, which leads a promotion of industrial development. Digital content industry has a close link each part of in the full value chain of "user terminal -

The Research and Progress of Global Digital Content Industry

139

internet - marketing - content and services". The user terminal is the carrier for user to abstain content and service, the Internet is the channel for user to applicant and abstain content, marketing is an activity that truly reach content value with integrating and matching user terminals and content. Therefore, the rapid development of industry requires that the enterprises connected with value chain need to complement each other much better. d) The characteristics of industry profit model From the development of digital content industry, the industry profit mode remains to be developed and mature, and gradually develop to be diversified, differentiated. According to the income from basic network access, advertising revenue, direct charges from content, and value-added service extending from content, the differentiated services satisfying the needs of individuals, governments and enterprises have more potential of development [11]. B. The domestic development of digital content industry 1) Development Status a) The size and growth of domestic industry Fig.3 shows Chinese digital content industry scale in 2004-2008. There is some decline in growth rate, however, China's digital content industry still maintained a relatively rapid growth in 2008, the overall scale of which continues to reach 218 billion Yuan, and an increase of 24.9% compared with 2007. With the development potential and value-added space of the digital content industry, it attracts investors to pay more attention. According to the rapid growth and maturing of the domestic network infrastructure, and the increasing integration of broadband network and mobile communication network, it has an obvious increase in acceptance, application level and spending power from government, corporations and individuals for the digital content and services [12].

Fig. 3. Chinese digital content industry scale in 2004-2008(Data from CCID 2009, 08)

b) The breakdown of industrial structure According to the breakdown of the industry composition at present, the Chinese digital content industry has formed an industrial pattern that oriented by Internet digital content, digital audio and video animation, and mobile digital content service, with

140

H. Jieping, C. Rijie, and W. Yaqiong

fast-growing market segments such as digital education and digital publishing. Among them, mobile digital content services hold the largest share, followed by the Internet digital content services. The study data show that the overall scale of the internet digital content services has reached nearly 46 billion Yuan in 2008, and also shows that Internet advertising, online games and search engines become the major driving force for market growth. The scale of mobile digital content services is nearly 1280 billion Yuan; In addition, the size of the digital audio and video animation reached 350 billion Yuan [13]. 2) Domestic industry market characteristics a) All levels of regional policy support, the effect of industrial integration appear As a new industry which just grew in China, the government has the important guidance, the support and the promotion effect for the digital content industry, through strengthen market supervision, creating a good market environment which digital content industry was in motion, constructing the complete industrial chain, and establishing the digital content industry association, aspects and so on. As an important component of present information service industry, the digital content industry get the attention of local government at all levels. Each region gives the preferential policy in the tax revenue and the introduction of talent, and establishes industrial base and the campus to promote the development of digital content industry. Under the various guidance of local authority, the effect of industrial integration already appeared initially, and the regional industrial market displays the respective development characteristic. For instance, Beijing's digital content industry obtains full scale development. In the aspects such as animation, the network game, value-added services, network education and so on have obvious advantages. Especially, in the original content development, it is on the leading position. Beijing gathered large quantities of outstanding content development enterprise and the talented person. In the cartoon and network games, Shanghai has outstanding advantages. In animation, the Shanghai fine arts Motion picture studio is in the leading position for a long time in our country, and simultaneously Shanghai is still “the national animation game industry promotes base” and “the National Animation Game Industry Demonstration Base”. In network game aspect, Shanghai is China's online game operations center, and the digital content industry in the places such as Guangzhou, Suzhou, and Shenzhen is also located domestic leading local [14]. b) The industrial development support environment consummates day by day From the economic environment, the support of economic environment is still strong. During the first half of 2009, although the domestic market continues to slow down under the influence of the global economic, the revaluation of RMB and so on, the overall economic environment remained growth momentum, and have warmed. After years of permeability and fusion the Internet content and mobile content industry has formed a comparatively mature business model, which attracted large enterprises and investors to participate. From the perspective of social environment, the human resources are getting richer day by day. The entire society strengthened the attention for the development of the digital content industry. Many cities established the digital content industrial base one after another, gathered large quantities of enterprises and the talented person, and had

The Research and Progress of Global Digital Content Industry

141

formed a good atmosphere for the digital content industrial development. In the education training aspect, the related digital content's training organization establishes one after another, many institutions of higher learning have also opened the game, the animation and so on related specialty, has trained large quantities of talented people for the digital content industry's development. From technical environment, the pattern which provides for the digital content is becoming richer and richer, and the technical support strengthens day by day. In the network foundation, the development about band width is rapid. The progress of emerging commercial technology such as 3G dealing, VOIP, IPTV and so on will promote the digital content industry powerfully. In recent years, the technologies such as TAG, RSS, API, Ajax and so on obtained the widespread application, and brought huge innovation to the service pattern and the business model. In 2008, SNS has started the upsurge in China, and the following are Widget technology's massive applications and the popularization, and they all enriched the provided pattern of the digital content. At the same time, the promotion and improvement of the network security product and the service provided essential support for the digital content industrial development [15].

3 Conclusion After more than 10 year’s research and practice about digital content industry, people move toward to the content industry's cognition and the understanding gradually. 1) Nowadays, regardless the Academic circle and business community or the government decision-making body, their understanding about the digital industry jumped out of the cognition technical level, and extended to the deep research about the connotation, characteristic, industrial structure, development model and so on of the content industry. 2) As a fast developed industry which is new in the global and due to the change of the information technology as well as its own development, digital content industry will continue to expand and rich. 3) Now, the content industry has entered into the stage of deepening apply and intensive sharing. This stage’s development take the content as a book, the serves as the subject, the industrial chain structure as the master line, and its main difficulty is the industrial chain life cycle, the value flowing, the evolution way and the tendency and so on. From the level, the digital content industry is also shifting from the macroscopic level's national boost development as well as the intermediate level's construction of department into core microscopic level Enterprises and institutions which take providing the information service as the core. 4) The problems including quantitative comparison about industrial localization, quota measure appraisal, industrial pattern optimization development and different development model of digital content industry, the intellectual property protection, as well as the international union legislation, are also the questions that global various countries must coordinate the operation, and face together. To sum up, the digital content industry in recent years, gained national government attach great importance and recognition, not only to develop and digital content industry-related policies and laws, but also implemented a series of national

142

H. Jieping, C. Rijie, and W. Yaqiong

development strategies and planning. The Chinese government and enterprises face a very rapid growth of digital content industries, should learn from other countries and regions in the management system, personnel training, sound regulations, , encourage financial investment, opening up the international market initiatives, to develop a realistic and holistic strategy, refine the existing digital content industry development environment. While also considering how to more accurately grasp the pulse of the global digital content market, more in-depth breakdown of value changes comb track, which requires a regional and country-specific, market segments, distribution channels, competition pattern and competition strategy, quantitative prediction of insight into the industry development trend of various angles, Built up a high-class industrial structure, industry concentration and industrialization of the level of internationalization of modern industrial system.

References 1. Li, X., Sun, J.: Modern content industry and its industrialization pattern analysis. Information and Documentation Services, 9–13 (March 2008) 2. Communication University of China Advertising School. Research on development of Digital Content Industry of China [EB/OL] (December 30, 2008), http://www.diyilu.com/news/vi 3. Li, X., Li, H.: Content Industry Generation and Its Influence. Contemporary International Relations, 54–55 (May 2003) 4. Tsai, H.-H., Lee, H.-Y., Yu, H.-C.: Developing the Digital Content Industry in Taiwan [EB/OL], pp. 60–63 (2006), http://www.interscience.wiley.com (2009-07-06) 5. Zhou, J.: How to promote the development of digital content industry in Irish. Young Technology of China, 40–43 (September 2005) 6. Sun, G.: Japanese content industry development analysis. Japanese Studies, 53–56 (January 2006) 7. Li, J.: South Korea will invest 135 million U.S. dollars for the digital content industry. Satellite TV & IP Multimedia, 11–12 (November 2006) 8. Kho, N.D.: People-content Management [EB/OL]. E Content, p. 32 (August 2008), http://www.ECONTENT.com (2009-7-25) 9. Yu, S.: Japanese content industry changes and fluctuations in the market structure. Contemporary Economy of Japan, 28–32 (March 2009) 10. Dye, J.: News & product briefs [EB/OL]. EContent, pp. 17–19 (July/August/September 2008), http://www.wikipedia.org (2009-07-22) 11. Hou, L.: Internal and external digital content industry Analysis. Software Guide, 6–8 (November 2007) 12. Chandler Collison, Choosing a Digital Audio Solution that Simplifies Workflow [EB/OL]. In: Business Intelligence 2008, pp. 89–90 (2008), http://www.Digitalcontentproducer.com (2009-08-01) 13. Li, J., Li, L.: China’s digital content industry development problems and government regulation. Economic Research Guide, 21–22 (April 2009) 14. Jiang, X.: Development of China’s digital content industry. Chinese Entrepreneurs and High-Tech, 68–69 (August 2005) 15. Saidi network. China’s digital content industry and the 2009-2013 study year development projections in 2008, pp. 12–32 (August 2009)

A Novel Smoothing Method for Symmetric Conic Linear Programming Xiaoni Chi and June Liu College of Mathematics and Information Science Huanggang Normal University Huanggang 438000, Hubei, P.R. China

Abstract. We present a novel smoothing method for solving the symmetric conic linear programming based on the Chen-Harker-Kanzow-Smale (CHKS) smoothing function. Unlike interior point methods, the proposed algorithm can start from an arbitrary point. Our algorithm solves only one linear system of equations and performs only one line search at each iteration. Without uniform nonsingularity, the proposed algorithm is shown to be globally convergent. Numerical results indicate that our algorithm is promising. Keywords: symmetric conic linear programming, smoothing method, ChenHarker-Kanzow-Smale smoothing function, global convergence.

1 Introduction The symmetric conic linear programming (SCLP) problem is typically given by (P)

min{< c, x >: Ax = b, x ∈ K },

(1)

and the dual problem of (1) is [1] (D) Here J is a real

max{< b, y >: AT y + s = c, s ∈ K }.

(2)

n -dimensional Euclidean space with inner product < ⋅, ⋅ >,

K ⊂ J is a symmetric cone, and c ∈ J , b ∈ R m are the data. The sets of strictly feasible solutions of (1) and (2) are

F 0 ( P) = {x : Ax = b, x ∈ int K }, F 0 ( D) = {( y, s ) : AT y + s = c, s ∈ int K }, respectively. Throughout this paper, we assume that F 0 ( P) × F 0 ( D) ≠ ∅. Then by the strong dual theory, both (1) and (2) have optimal solutions and their optimal values are coincident [1]. The SCLP problems have a wide range of applications and include a large class of problems as special cases, such as linear programming, second-order cone programming (SOCP) [2], and semidefinite programming. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 143–149, 2011. © Springer-Verlag Berlin Heidelberg 2011

144

X. Chi and J. Liu

Recently great attention has been paid to smoothing methods (non-interior continuation methods) for solving complementarity problems [3,4] and variational inequality problems[5], due to their encouraging convergent properties and numerical results. However, there is little work on smoothing methods for the SCLP. Moreover, some algorithms available [4] strongly depend on uniform nonsingularity assumptions. Without uniform nonsingularity, most many algorithms available [3] need to solve two linear systems of equations and to perform two or three line searches at each iteration. To more efficiently solve the SCLP, we propose a novel smoothing method for the SCLP based on the Chen-Harker-Kanzow-Smale (CHKS) smoothing function [6] in this paper. This paper is organized as follows. In Section 2, we propose a novel smoothing method for the SCLP. The global convergence properties of our algorithm are established in Section 3. We present some promising numerical results in Section 4 and conclude this manuscript in section 5.

2 Smoothing Method In this section, we present a novel smoothing method for the SCLP and show the welldefinedness of our algorithm. Under the assumption F 0 ( P) × F 0 ( D) ≠ ∅, the SCLP problems (1) and (2) are equivalent to [1] their optimality conditions

x ∈ K, ⎧ Ax = b, ⎪ T ⎨ A y + s = c, s ∈ K , ⎪ x D s = 0. ⎩ Here

(3)

( J , D ) is a Euclidean Jordan algebra [7] with an identity element e, which plays

an important role in the design and analysis of smoothing methods. Perturbing the optimality conditions (3) yields the central path conditions [1]

x ∈ K, ⎧ Ax = b, ⎪ T ⎨ A y + s = c, s ∈ K , ⎪ 2 ⎩ x D s = μ e,

(4)

where μ denotes a parameter. The method to be discussed in this paper reformulates the central path conditions (4) as a nonlinear system of equations, which does not contain any explicit inequality constraints like x ∈ K , s ∈ K or x ∈ K , s ∈ K . Then we apply Newton's method to this system of equations at each iteration. By driving μ ↓ 0, we can find a solution of the SCLP problems (1) and (2). 0

0

To motivate our approach, let μ ≥ 0 be viewed as a parameter in the following analysis. Define the Chen-Harker-Kanzow-Smale(CHKS) smoothing function [6] φμ : J × J → J by

A Novel Smoothing Method for Symmetric Conic Linear Programming

145

φμ ( x , s ) = x + s − ( x − s ) 2 + 4 μ 2 e . Notice that

φμ ( x, s) = 0 ⇔ x D s = μ 2e, x ∈ K 0 , s ∈ K 0 . By [6], the pointwise limit

φ0 ( x, s) := lim φμ ( x, s) μ →0+

(5)

satisfies

φ0 ( x, s ) = 0 ⇔ x D s = 0, x ∈ K , s ∈ K . Let define

(6)

z := ( x, y, s ) ∈ J × R m × J . By using the CHKS smoothing function, we ⎛ b − Ax ⎞ ⎜ ⎟ Φ μ ( z ) := ⎜ c − AT y − s ⎟ . ⎜ φμ ( x, s ) ⎟ ⎝ ⎠

(7)

( x, y, s ) solves the central path conditions (4) if and only if ( x, y , s ) is a solution of the system Φ μ ( z ) = 0. Let On account of (4), (5) and (7),

Φ 0 ( x, s ) := lim+ Φ μ ( x, s ). μ →0

Then it follows from (3), (6) and (7) that Φ 0 ( z ) = 0 ⇔ ( x, y, s) solves (1) and (2).

Φ 0 ( z ) is typically nonsmooth, Newton's method can not be applied to the system Φ 0 ( z ) = 0 directly. Thus we can approximately solve the smooth system of equations Φ μ ( z ) = 0 at each iteration and make ‖Φ μ ( z ‖ ) Since the function

decrease gradually by reducing Algorithm 2.1 Step 0 Choose

μ

σ , δ , γ ∈ (0,1)

z0 := ( x0 , y0 , s0 ) ∈ R × R × R k

to zero.

m

k

β 0 :=‖Φ 0 ( z0 ‖ ) , μ0 := γηβ 0 2 2 Step 1 If

and

be

an

and

k := 0.

η∈

(0,1 2].

arbitrary

point.

Let Set

Φ 0 ( zk ) = 0, stop.

Step 2 Compute

Δzk := (Δxk , Δyk , Δsk ) ∈ R k × R m × R k by DΦ μ k ( zk ) Δz = −Φ μ k ( zk ).

Step 3 Let

λk = max{δ l | l = 0,1, 2, …}

such that

(8)

146

X. Chi and J. Liu

‖Φ μk ( zk + λk Δzk ‖ ) ≤ (1 − σλk ‖ ) Φ μk ( zk )‖, and set

(9)

zk +1 := zk + λk Δzk .

Step 4 If

‖Φ 0 ( zk +1 ) − Φ μk ( zk +1 ‖ ) ⎫ ⎧ ‖Φ 0 ( zk +1 ‖ ) ≤ max ⎨ηβ k , ⎬, γ ⎩ ⎭

(10)

then set

β k +1 :=‖Φ 0 ( zk +1 ‖ ) and choose

μk +1

such that

⎛

⎧ γη ⎫⎤ β k +1 ,ημk ⎬ ⎥ . ⎩2 2 ⎭⎦

μk +1 ∈ ⎜ 0, min ⎨ ⎝

Otherwise, set

β k +1 := β k

and

Theorem 2.1. If the matrix

μk +1 := μk . Set k := k + 1 and go to Step 1.

A has full row rank, Algorithm 2.1 is well-defined.

3 Convergence Analysis In this section, we analyze the global convergence properties of Algorithm 2.1. We show that any accumulation point of the iteration sequence {zk } generated by Algorithm 2.1 is a solution of the system of equations

Φ 0 ( z ) = 0.

Define the index set

S := {0} ∪ {k ∈ N :‖Φ 0 ( zk ‖ ) ≤ max{ηβ k −1 ,‖Φ 0 ( zk ) − Φ μk −1 ( zk ‖ ) γ }} . (11) In the following lemma we show that S is infinite, which will be very helpful in establishing the global convergence of Algorithm 2.1. Lemma 3.1. Suppose that

A has full row rank and {( zk , μk )} is the sequence

generated by Algorithm 2.1. If

{zk } has at least an accumulation point

z := ( x , y , s ), then the index set S defined by (11) is infinite. Proof. Suppose that the index set S is finite. Let k be the largest number in S , which implies that (10) does not hold for all k ≥ k . Then it follows from Step 4 of Algorithm 2.1 that for all k > k the following relations hold : *

*

*

*

μk = μk −1 = μk > 0,

(12)

A Novel Smoothing Method for Symmetric Conic Linear Programming

βk = βk −1 = βk =|| Φ 0 ( zk ) ||,

147

(13)

|| Φ 0 ( zk ) ||> ηβ k −1 ,

γ || Φ 0 ( zk ) ||>|| Φ 0 ( zk ) − Φ μ ( zk ) || . k −1

(14) (15)

According to Lemma 2.1 in [8], it is not difficult to see that Φ is a continuously differentiable function in both z and μ for any μ > 0. Then by (12), we have

lim Φ μk ( zk ) = Φ μ k ( z * ),

k →∞

lim DΦ μ k ( zk ) = DΦ μ k ( z * ).

k →∞

From Step 3, the steplength

λk := λk δ

does not satisfy (9), i.e.,

|| Φ μk ( zk + λk Δzk ) || − || Φ μk ( zk ) ||

λk

By taking the limit k

> −σ || Φ μk ( zk ) ||

(16)

→ ∞ in (16), we have

Φ μ k ( z ) DΦ μ k ( z* ) Δz * ≥ −σ || Φ μ k ( z * ) ||2 .

(17)

Φ μ k ( z * )T DΦ μ k ( z * ) Δz * = − || Φ μ k ( z * ) ||2 .

(18)

* T

Due to (8),

Then using (17), (18) and the fact

σ < 1,

we know

|| Φ μ k ( z * ) ||= 0.

(19)

On account of (12) and (15), we obtain

γ || Φ 0 ( zk ) ||≥|| Φ 0 ( zk ) − Φ μ ( zk ) || k

(20)

≥|| Φ 0 ( zk ) ||− || Φ μ k ( zk ) || . → ∞ in (20) and using (19), we have γ || Φ 0 ( z ) ||≥|| Φ 0 ( z* ) − Φ μ k ( z* ) ||

Taking the limit k *

≥|| Φ 0 ( z * ) ||− || Φ μ k ( z * ) || ， which, together with function

γ ∈（ 0,1）,

implies || Φ 0 ( z ) ||= 0. However, since the *

Φ 0 (⋅) is continuous everywhere in R m + 2 k by Lemma 2.1 in [8], it follows

from (13) and (14) that

148

X. Chi and J. Liu

γ || Φ 0 ( z* ) ||≥ ηβ k = η || Φ 0 ( zk ) ||> 0. This contradiction shows that S is infinite, which completes the proof. As a consequence of Lemma 3.1, we can obtain the global convergence of Algorithm 2.1. Theorem 3.2. Suppose that A has full row rank and

{( zk , μk )} is the sequence

generated by Algorithm 2.1. Then any accumulation point

z*: = ( x* ,y* ,s* ) of

{zk } is a solution of Φ 0 ( z ) = 0 and the sequence {μk } converges to zero. Let ∂G stands for the generalized Jacobian of G in the sense of Clarke [9].

( z* ,0): = ( x* ,y* ,s* , μ* ) is an accumulation point of the iteration sequence {( zk , μk )} generated by Theorem 3.3. Suppose that A has full row rank and that

V ∈ ∂ Φ μ * ( z * ) are nonsingular, we have zk +1 = zk + Δ z k for all sufficiently large k .

Algorithm 2.1. If all

4 Numerical Results In this section, we present some preliminary numerical results to see the behavior of Algorithm 2.1. The program was coded in MATLAB 7.0.1 and the operating system was Windows XP. All the tests were performed on a Intel(R) Pentium(R) 4 CPU 3.00 GHz personal computer with 512 MB memory. We use randomly generated SOCP problems of the size m = 50, k = 100, n = 1. The parameters used in Algorithm 2.1 were as follows:

σ = 0.01, δ = 0.75, γ = 0.1 and η = 0.1.

We used ‖Φ 0 ( z ‖ ) ≤ 10

−6

as the

= 1.0e ∈ R , y0 = 0 ∈ R and s0 = 1.0e ∈ R k be initial points, where e is the unit element in K . As the interior-point method solver, k

termination criterion. Let x0

m

SDPT3 [10] was used for comparison purpose. The results in Table 1. indicate that Algorithm 2.1 is comparable to SDPT3. Table 1. Comparison of Algorithm 2.1 and SDPT3 on SOCP Algorithm 2.1

SDPT3

Iter

Cpu(s)

Iter

6 6 5 6 5 6

0.09 0.09 0.08 0.09 0.09 0.09

8 7 7 8 8 9

Cpu(s)

0.20 0.10 0.10 0.10 0.20 0.20

A Novel Smoothing Method for Symmetric Conic Linear Programming

149

5 Conclusions In this paper, we reformulate the central path conditions for the SCLP as a nonlinear system of equations Φ μ ( z ) = 0 based on the CHKS smoothing function. And we develop a novel smoothing method for the SCLP. The proposed algorithm is conceptually simpler than most existing smoothing methods, since it solves only one linear system of equations and performs only one line search at each iteration. Without uniform nonsingularity, our algorithm is shown to possess global convergence properties. Preliminary numerical results suggest that our algorithm is promising and comparable to interior point methods. Acknowledgment. This research was supported by the Project of Hubei Provincial Department of Education (Q20092701), and the Doctorial Foundation of Huanggang Normal University (08CD158), China.

References 1. Schmieta, S.H., Alizadeh, F.: Associate and Jordan algebras, and polynomial time interiorpoint algorithms for symmetric cones. Math. Oper. Res. 26, 543–564 (2001) 2. Alizadeh, F., Goldfarb, D.: Second-order cone programming. Math. Program. 95, 3–51 (2003) 3. Burke, J., Xu, S.: A non-interior predictor-corrector path following algorithm for the monotone linear complementarity problem. Math. Program. 87, 113–130 (2000) 4. Chen, B., Xiu, N.: A global linear and local quadratic non-interior continuation method for nonlinear complementarity problems based on Chen-Mangasarian smoothing functions. SIAM J. Optim. 9, 605–623 (1999) 5. Qi, L., Sun, J.: A nonsmooth version of Newton’s method. Math. Program. 58, 353–367 (1993) 6. Liu, Y., Zhang, L., Liu, M.: Extension of smoothing functions to symmetric cone complementarity problems. Appl. Math. J. Chinese Univ. Set. B. 22, 245–252 (2007) 7. Faraut, J., Korányi, A.: Analysis on Symmetric Cones. Oxford University Press, New York (1994) 8. Chi, X., Li, P.: A globally convergent smoothing method for symmetric conic linear programming. In: Cai, Z., Li, Z., Kang, Z., Liu, Y. (eds.) ISICA 2009. LNCS, vol. 5821, pp. 136–143. Springer, Heidelberg (2009) 9. Clarke, F.: Optimization and Nonsmooth Analysis. John Wiley and Sons, New York (1983) 10. Toh, K.C., Tütüncü, R.H., Todd, M.J.: SDPT3 Version 3.02—A MATLAB software for semidefinite-quadratic-linear programming (2002), http://www.math.nus.edu.sg/~mattohkc/sdpt3.html

Supply Chain’s Function in Improving the Innovation of Building Industry Zhang Xi ping1 and Zhu Ming qiang2 1 Department of civil engineering, Wuhan Polytechnic University Industrial & Commercial College, Wu Han, China 2 Department of civil engineering, Wuhan Polytechnic University, Wu Han, China [email protected]

Abstract. This paper analyzes the current situation of our country’s building industry, in view of the problems surrounding the building industry; the building industry needs new management method. This paper introduces supply chain and core competitive power, expounding on the significance of supply chain and core competitive power. In order to make a greater contribution to the development of Chinese building industry, it is very necessary to use supply chain. Finally this paper puts forward the measures of using supply chain to improve the core competitive power of building industry. Keywords: supply chain, function, innovation.

1 Introduction With the speed-up of economic globalization as well as China’s joining the WTO, each building enterprise in the country will be faced with the competition and challenges from the big building enterprises both home and abroad. However, it also provides great opportunities for China’s building industry to develop them. Encountered with both opportunities and challenges, Chinese building enterprises must take advantage of the favorable situation to improve their core competitive power. During this process, building and utilizing an effective supply chain will be a key step. However, not many of Chinese building enterprises seem to have realized this, which has become an obstacle of their development. Based on the supply chain theory, this paper will analyze its function in improving the core competitive power of building enterprise.

2 The Current Situation of Our Country’s Building Industry As China used to adopt a planned-economy policy, its building industry got of to a late start. Until the early 1980s, it was not accepted as an “industry”. As an important material production sector, the building industry is becoming one of the backbone industries in China, the production supply of which takes great part of Gross National Product. Although, it promotes the other industries’ growth, such as timbering industry, metallurgical industry, light industry, chemical industry, machine-building industry, transportation industry; in building industry there are many problems, for example, M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 150–155, 2011. © Springer-Verlag Berlin Heidelberg 2011

Supply Chain’s Function in Improving the Innovation of Building Industry

151

chaos, inefficiency, decentralization, small scale, incompetence and so on. How to improve the competence of building industry? But it has long been suffering from inefficiency, particularly those small and medium-sized enterprises in the field. The period from 11th Five-Year Plan to the year of 2010 will mean important for the development and system reform of China’s building industry. After 20 years’ development, especially after the recent system reform, Chinese building enterprises have improved a lot in the sense of projects quality, techniques and management level, but there is still a big gap between our operation system and international rules of the construction industry. Since China’s entry to the WTO, overseas contractors have been allowed to take their share in the domestic market of China, which means fiercer competition in this field, but most small and medium-sized building enterprises in China are not ready to compete with their overseas counterparts, and many of them are not able to do so. That’s why they must build their core competitive power at once. All these have already attracted the great attention of the administrative offices of the building industry. The Guidance on Cultivating Enterprises Majoring in Construction Project Contracting and Administration was issued by Ministry of Construction in 2003, and it has been proved to be effective in improving the core competitive power of building enterprises and quality and extending the scale to meet the demand of the market.

3 The Core Competitive Power of Building Industry Since China joined the WTO, overseas big project contractors have come to take their share in our domestic market, which means that there will be fiercer challenges in the near future. Thus it will be necessary for our building enterprises to improve their core competitive power and strategic management ability. The established concept of core competitive power was offered by two American economists, C.K. Phased and Gary Hamel, in Harvard Business Review, 1990, saying that in a short period of time, the competitive power of a company was determined by the quality and performance of its products, but in the long run, it is the building and improving the core competitive power that matters more. According to McKinsey Consultative Company, the core competitive power of an organization refers to the combination of a series of complementary skills and knowledge that can make one or more of its businesses reach the top level in a certain field and have evident superiorities. In fact, in a competitive environment, it is the core competitive power that makes an enterprise survive, thrive and gain a sustainable development. The sustainable development of an enterprise relies on its competitive superiorities, and the source of its competitive superiorities comes from its core competitive power. Managers of enterprises can be inspired by the concept of core competitive power in the flowing way: the only way to make an enterprise have advantages in competition, its core competitive power must be improved beforehand. The core competitive power is a system that involves various elements. The building industry is a highly specialized example of the manufacturing sector in a complicated and variable environment, thus some of the management reform of manufacturing sector can be effectively applied to the building industry as well to improve its efficiency. At present, most building enterprises involve resemblance with many other industrial enterprises. As for each

152

X.p. Zhang and M.q. Zhu

construction product, it has its exclusiveness and disposableness, and as for its production it has repetitiveness and complexity. Whether the core competitive power can be advanced into the competitiveness is determined by the change-over mechanism and its environment. That is to say, the managers should have a careful evaluation of the detailed conditions of the enterprise before making reforms, including the organization structure, technological process, management style, enterprise culture and resource conditions, to make sure that the core competitive power can be continuously advanced into competitive superiorities. The building and utilizing of supply chain is one of the most important parts of the reform.

4 Basic Principles of the Supply Chain and Its Development Since the 1980s, the competition among enterprises became fiercer and fiercer in the changed enterprise environment, and our research of enterprise strategy should be focus on the ability analysis instead of the market analysis and exterior environment analysis. In the 1990s, it eventually entered the stage of competition strategy theory. M. E. Porter, a Harvard professor, creatively introduced the supply chain analysis model to discuss the situation of enterprises and their competitive advantage. According to M. E. Porter, the supply chain refers to a collection of a series of interdependent supply activities linked by various bonds, a system made up of all kinds of activities, which are linked each other. That is to say, the mode of one activity will affect the cost and the efficiency of other activities in the same supply chain, thus enterprises can modify or optimize the activities and their organization to build an overall cost advantage. Inside an enterprise, there are links among supply chains, links among the supply chains of both enterprises and supplier, the links among the supply chains of client, etc. Such links form the supply system which is necessary for the subsistence of enterprises. To some extent, the competition among enterprises is the competition of supply chains. Studying the supply chains of construction enterprises instead of their management will lead to the discovery of new chances of adding supplies. The supply activities in a supply chain can be categorized into 2: basic add-supply activities and supplementary add-supply activities. The basic add-supply activities can be observed all through the production and operation procedures, including internal logistics (material purchasing, product development, production and processing, of product shipping, etc), production and operation, external logistics (like material and equipment supply), market sale, after-sales service. Supplementary add-supply activities include fundamental facilities, human resources management, technological development and purchasing management. The basic add-supply activities are of vital importance to the subsistence and development of enterprises, while the supplementary add-supply activities indirectly create supply. All the activities in a supply chain are connected to each other, and they are not of the same importance to the realization of the final product supply. Different activities also rely on different production factors. That is to say, an enterprise can only have advantage in parts of the supply chain, but never in the whole system. The costly and inefficient condition of construction enterprises badly needs management reform, for which the techniques and methods of the supply chain

Supply Chain’s Function in Improving the Innovation of Building Industry

153

management provide feasible ways. Supply chain management for an individual organization is an emerging field of research in the construction management discipline, but less attention has been devoted to investigating the nature of the construction supply chains and their industrial organizational economic environment, supply chain management knowledge just show up in construction industry until the mid 1990s. Supply chain management in the construction industry develops slowly than in the manufacture industry, for this reason, the construction industry has more opportunity to learn from the manufacture industry.

5 The Building and Operation of Supply Chains in Building Industry According to the theory of supply chain, the construction group should follow this pattern: with building industry and its related industries as its major field of production and operation; with project contracting or real estate development as its major operating means and its business will involve scientific research and development, project design, material and equipment purchasing, construction installation, etc. All the enterprises of the building industry should cooperate according to labor division, forming a multi-layer, multi-functional and complete economic ally, to improve their core competitive power. In order to achieve these goals, we can have a try in the following ways: A. Building Technological Supply Chain and Improving Its Core Competitive Power Technological innovation is the key part of core competitive power. Modern enterprise system reflects efficient resource allocation, and the efficiency lies in core technology and technological innovation. Building enterprises should take creativity as their principal part, and combine it with the improvement of the skills in their daily operation. Modern construction projects have made great demand on the contractors’ technological levels. Those who possess advanced technologies are more likely to take dominant position in the competition. Technological innovation can also lead to the exclusive capability and exclusive products of an enterprise. China has laid too much emphasis on the building industry as a labor-intensive industry which offers numerous job vacancies, lacking of effective policies to encourage technological advance. Thus there is no incentive mechanism to encourage technological innovation in this field, for enterprises can’t afford it due to its high cost, which has already lowered the competitive power of the whole industry. Enterprises should devote major efforts to apply and popularize new technologies, new materials, new and new equipment to promote the building of an innovative system. B. Building of Organizational Supply Chain and Improving Its Core Competitive Power According to the theory of supply chain, the managers of an enterprise should reorganize the assets of the enterprise to bring about the strategic position of the company, based on the correlation between the enterprise’s business and the business of its parent enterprise, its position in the industry, as well as economic add-supply.

154

X.p. Zhang and M.q. Zhu

Different enterprises of the same group should establish technological, administrative or contract links with each other. The basic activities reflect the basic production and operation procedures in construction enterprises, which make and provide products. Building enterprises should work hard to perfect their organization and management to meet the demand of international competition. Effective management, being a major source of core competitive power, means that an enterprise can be more powerful than the total sum of all its parts, and it can bring extra profit. Local building enterprises should pay particular attention to the building of modern management system that is compatible with the market-oriented economy. C. Building of Information Supply-Chain and Improving Its Core competitive Power According to the theory of supply chain, the rapid development of information technology and its application in the management field leads to a revolution of its communication and coordination means of enterprises. The interconnected and virtualized organization of enterprises gives the word “management” various new connotations and breathes new vigor into it, as the primary level can get more authority, and the structure of the enterprises are usually changed. With the integration of global economy and the decrease of trade barriers, there is a much larger market for Chinese building enterprises, which bring both challenges and opportunities. The managers should adapt themselves to the change of the situation and make the most of the new technology to revolutionize the production procedure periodically. The new labor division, report relations and coordination mechanisms should be built to judge the effectiveness of changes mentioned above. Enterprises should also apply information technology to enhance the communication among the employees of different departments in a brand new way, which will cut the number of middle managers, making the enterprise structure “flatter”. More efficient horizontal links among departments will be built, thus geographical distances will never interfere with communication. Departments of various functions will be able to establish cooperation via cyber communication. This paper makes a prospect on both the supply chain of enterprise management and the method of study. At the same time, it also talks about the problem that the engineering construction enterprises should improve and study the management model of supply chain. All of these are just to enhance the ability of management and market competition of enterprises. The theory of supply chain has not been established for long, and it is quite new to be applied to the Chinese building industry to improve its core competitive power. It will be more useful after careful research has been done. Now it is an important period for the development and reform of Chinese construction industry, and the experience from other countries will be of great reference supply to it, including the theories of supply chain and the core competitive power.

References 1. Haavengen, B., Olsen, D.H., Sena, J.A.: The Supply Chain Componentina Decision Support System:A Case Example. IEEE Transaction on Engineering Management 43(4), 418–428 (1996)

Supply Chain’s Function in Improving the Innovation of Building Industry

155

2. Bon, R., Pietroforte, R.: Comparative Stability Analysis of Demand-side and Supply-side Input-output Models, the Cases of Italy, Japan,UK and USA. Rivista Internazionale di Scienze Economiche Commercialik, 46–48 (1996) 3. Meredith, J.R., Mantel, S.J.: Project Management, A Managerial Approach, 4th edn., pp. 19–27. John Wiley & Sons, Inc., Chichester (2000) 4. Arbulu Roberto, J.: Supply Stream Analysis of A Re-engineered Construction Chain. Building Research and Information 31(2), 59–462 (2003) 5. Diks: Computational Result for the Control of a Divergent N-echelon Inventory System. Journal of Production Econonics, 329–335 (2003) 6. Barney, J.B.: Resource-based Theories of Competitive Advantage:A Ten Year Retrospective on Theresource-based View. Journal of Management 27, 329–335 (2001) 7. Dawar, N., Frost, T.: Competing with Giants: Survival for Local Companies in Emerging Markets. Harvard Business Review 77(2), 119–129 (2004)

On Innovative Impetus Driving China’s Sustainable Economic Growth Wu Yong Dean's Office Guangzhou City Polytechnic Guangzhou, China [email protected]

Abstract. This essay analyses on three main factors which drive China’s economy sustainable speed up in the years to come: the reform and innovation of economic system, the development and innovation of technology, and the innovation of harmonious social environment. These three will contribute to new lines of thoughts for maintaining a steady economic growth in future and planning 11th five-year development program. Keywords: economic growth, system innovation, technological advance, black-hole effect.

1 Introduction From the angle of economic development, the determinant of economic growth is complicated, such as capital, labor, technological advance, human resources and so on. But from the perspective of China’s economic growth since the 1980s, economic system innovation is the first cause promoting economic growth. Average annual growth rate of China’s gross domestic product (GDP) is near 10 percent and China has become the one of the fastest and lasting economic growth in the world. First, it is owed to system innovation. No country in the world can be so long-standing in economic growth that is a miracle beyond the economic law. From the developing experience of the last more than twenty years, to keep a miracle of economic sustainable growth in future time, the author thinks it is necessary to keep creativity in the following three aspects.

2 Innovation of Economic System It is an innovation for China to set up a set of basic economic system complying with the development of productive forces from breaking through the long-term planned economic system. Transformed from unitary public ownership to diverse forms of ownership; forms of distribution changed from the dominant single distribution according to labor only to the distribution system composed of distribution according to labor and distribution according to production factors, it is that stimulate the whole society, especially the fast development of the non-public sectors of the economy M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 156–160, 2011. © Springer-Verlag Berlin Heidelberg 2011

On Innovative Impetus Driving China’s Sustainable Economic Growth

157

which doubles contributions to the national economy. Today, the total production value of private companies has outnumbered the GDP before the reform and opening-up. One of the key point to maintain a steady economic growth in the next ten or twenty years is whether the system innovation can be sustainable. Neoclassical growth theory under the assumption of the stable rate of population growth, when average per capita takes up a steady share of per capita income and without technology progresses, per capita income will stop growing. This opinion can be accepted by someone who is not a neoclassical theorist. Therefore, continuous innovation and perfection of existing economic system in China are necessary for keeping economy steadily grow. But in fact, it’s difficult to set up those precedent conditions even after more than 20 years market-oriented system reform. Across economic development histories of every country, rent-seeking activities exist inevitably with economic development. Moreover, it’s profitable in a rapid economic development period. Our society is facing a fork road: one is to allow legal or illegal rent-seeking activities and direct all innovation ability to power rent-seeking area; the other is a real all-known method to restrain corruption and rent-seeking activities and direct all entrepreneurs’ innovation ability to product realizing economic sustainable growth. Now the power to choose which road is decided by government and it should stop playing CEO of China’s economy and seeking rent activities. After checking and calculating tax burden and fiscal accounting, some economist proposes that the cost of government promote economic growth is too expensive to stand. Statistics showed that there is more than one third of annual wealth of society used to support the government that promotes economic growth. Therefore, government tax is increasing astoundingly. The failure of government is more dangerous than that of market. If we take a look at our economic environment, we can find out that nearly all the important fields ask a series questions like what did the government do? What does the government plan to do? What is the government going to do? The answer is uncertain. No company in the world, no matter how innovative and efficient it is, which allows its CEO takes up one third of company income can avoid being down the wind. The said failure of government is not only focused on failure of policies, but on that will result in social catastrophe. The knowledge structure of politicians and the power to rent-seeking is interlinked that will destroy national economy. Nowadays, college graduates flock to apply for civil servants mostly because they see the opportunity of rent-seeking. Under this value-orientation the cost of government administration is certainly high.

3 Technological Innovation Under the calling of science and technology are the primary productive forces, government and enterprises increase technology input. The contribution rate of technological advance has increased from former 10% to about 35% now which improves the quality and structure of economic development and reduces consumptions. The other impetus driving China’s sustainable economic growth is transforming economic growth mode. To improve capacity for independent innovation, China has to transform from traditional mode of economic development

158

W. Yong

to modern one. The former one relies on material resources input to realize growth goal while the latter one on new product and service, upgrade structure, decreased cost of producing and distributing and efficiency. Although we have been experienced more than 20 years of rapid development, the increase is highly relied on material input. International experience shows that developing countries can achieve high-speed economic growth in a certain period. But if they ignore capacity of technological advance and social reform, the trend to increase will be restrained and the result of social economic transformation will not be entirely satisfactory. As for the improvement of technological advance, there is an opinion that the advantage of our labor-intensive processing has not been fully played while facing huge employment pressure no more resources can be filled in high-tech preferentially. In fact, high or low technological fields, industry, agriculture and service industry all need independent innovation. Science and technology are needed for independent innovation, but under many situations, no direct input of science and technology can also bring about innovation. With abundant resources, our China can improve independent innovation ability with excluding labor-intensive industry development. It focuses on leading labor-intensive industry to high value-added knowledge and skill intensive industry. In recent more than 20 years, China has imports many advanced assembly lines and produced a lot of new product, but there is no obvious boosting to improve our technological ability. In fact, the kind of technology we can get and the result of it are related to our technological capacity, negotiation situation and absorbing ability. We must emphasize on talent cultivation and knowledge accumulation that are carrier and base for absorbing and recreating foreign technology. Besides, we should pay attention to changes of international technology supply structure in economic globalization. Take electronic information and mechanical technology field as examples, technology of complicated product is under modular reform which means product technology design tends to be modular structure. Modular structure differs from former integrated structure in dividing complicated technology into separate simple modules and the connection interface between modules is simplified. Commercialized modules can be easily accessed in the market. After complicated technology is modularized, the terminating and assembly of low-level technology will be transferred to developing countries, while key components of high-level technology are still researched, developed, designed and produced in developed countries. It’s hard for developing countries to know the technology of key module from assembly lines. Promoting economic growth in 21st century can never take enhancing independent innovation ability as a job of science and technology circles. The strategy of innovation policy is the base element of whole economic policies. European Union put forward Lisbon Strategy aiming to turn relative countries into innovational and vigorous knowledge economies. To achieve this, EU countries coordinate widely in technology, education, structure adjustment policy, market maturity, social development and macroeconomic policy. From this, to enhance independent innovation ability, coordination and cooperation between departments in policies of technological, education, investment, export and import, government purchasing, regional development is very vital.

On Innovative Impetus Driving China’s Sustainable Economic Growth

159

4 Environment Innovation of Harmonious Economy and Society Creating harmonious market economic environment is to make sure that reform stays on track. At present time, our market economic system is not perfect and system power is not strong enough, so the possibility of destroying social and natural ecological environment, and economic structure itself. It appears as sharp social conflicts for irrational economic structure, unequal income, large gap between the rich and the poor; city deformation expansion for farmers who lose land rush into cities; marginalized farmers descend to the poor. All those phenomenon and unharmonious market economy have made economic and social conflicts sharper in China, the relationship between economic growth and society more strained arousing doubts about market economy and reform. Development is the solution to all questions in China, but development cannot solve problems automatically. Black-hole Effect is the major factor in promoting economic growth; therefore too much focus on development will worsen the tension between economic development and society sometimes. Experience shows us that divergence of economy and society in economic growth can only be solved by perfecting market economic system. Nowadays Black-hole Effect has caused doubts about developing and reforming social system and shadowed China’s market economy by Not Good Market Economy. It shows that a group with vested interests has formed, which is a huge divergence of absorbing social wealth. To perfect market economic system is to strike this divergence down. Rational Man is the hypothesis of market economy that can make choices of maximum profits rationally. Therefore, individual in market economic activities takes no consideration on equality and fairness. It is unquestionable to focus on efficiency and effectiveness when economists research on individual market entity. So efficiency, rule, contract, rule of law, integrity and so on become the cornerstone of Classical Liberalism. On this cornerstone, individual capacity can be given full play and thoughts to create social wealth emerge so that social productive power can develop rapidly. Take no consideration of equal economic growth, social resources float to more effective groups and fields resulting to Black-hole in economic growth. Once the Black-hole formed, equality will be destroyed which brings severe social conflicts and system crisis. Economic growth should base on Two Justice Principles and Principle of Precedence that reflect social fairness. Two Justice Principles means that national regulation function protects that every citizen shares the same equal political right, that is, equal freedom principle, in the mean time admitting inequality objectively in the society and economy and making efforts to avoid inequality of economy shifting to inequality of opportunity, and to get as many opportunities as possible through government regulation function which helps people of small economic benefits, that is equal opportunity principle. Principle of Precedence means under the objectively existing inequality, equal freedom principle is precedent to equal opportunity principle, admitting difference and still encouraging freely development, showing that the government precedence to how to realize equal opportunity for the disadvantaged groups. Economic growth in harmonious society contains five aspects: balance urban and rural development, regional development, social and economic development, harmonious development between human and nature, domestic development and

160

W. Yong

opening to the outside world; forming scientific development perspective of insisting humanist, setting up comprehensive, coordinated, the sustainable development concept, promoting economic society and person's full scale development. The trinity development concept of economy, politics and culture sublimates into the quaternity of economy, politics, culture and society, which changes dramatically from the guiding line of focusing on economic construction, reform of social equality and fairness out of less important position making up for former reform. Economy and society, efficiency and equality are a whole, mutually conditioned and interacted. When resource allocation biases to the strong and the injustice of wealth creation and achievement increases, unequal economic growth may bring about maximum efficiency but cause Black-hole effect definitely, costing a lot for operating on natural and social ecological crisis. The inequality of start in resource allocation needs to be compensated through national system, which will hold up the increase of inequality. Equality is the key to solve economic and social conflicts and the Two Justice Principles and Principle of Precedence of the Neoliberalism can be taken as guidelines to system reform.

5 Conslusion Economic system innovation, technology innovation, and environment innovation of economy and society harmonious development are the main impetuses to maintain a sustainable economic growth for quite some time after China’s entering into 21st century. Among them, system innovation is the first impetus, technology innovation is the key element for productivity growth and harmonious society construction provides economic development with vital environment.

References 1. Wu, J.L.: China Economic Reform. Shanghai Far East Publishers, Shanghai (2005) 2. Cai, F., Lin, Y.: China Economy. China Financial and Economic Publishing House, Beijing (2003) 3. Salvatore, D.: International Economics, 8th edn., Translated by Zhu, B., Wu, H., Yu, L. Tsinghua University Press, Beijing (2004) 4. Lin, Y.: Applying the Scientific Outlook on Development and reducing the gap between the rich and poor. Expert Forum of Chinese Economists 50 Forum, http://www.50forum.org.cn 5. Yi, G.: Transform Government Function and Sustainable Development. Expert Forum of Chinese Economists 50 Forum, http://www.50forum.org.cn 6. Dornbusch, R., Fischer, S.: Macroeconomics, 6th edn., Translated by Li, Q., Liu, W. China Renmin University Press, Beijing (1997)

Highway Operation Safety Management Decision-Making Model Zhang Huili, Sun Hailong, and Kang Yongzheng Institute of Traffic and Transportation Shi Jiazhuang TieDao Uiversity, sjzri Shi Jiazhuang, China

Abstract. On the basis of the highway operation safety evaluation and prediction, the decision-making technology of static highway operation safety management was studied. The criteria for project-level and network-level management was provided based on the quantitative evaluation and prediction result. The corresponding decision-making models for project-level and network-level management were established by adopting optimization method and Markov decision process. Keywords: safety evaluation, prediction technology, decision-making.

Highway operation safety management decision according to the standard of management thoughts for priority in accordance with the improved selection index to improve the road sections, choose from the countermeasures to improve the optional choose corresponding library, in certain decision-making target, optimization method, so as to provide modeling in maximum security benefits during the analysis of the best management plan. Highway operation safety management, using the method of decision-making level decision-making and project points of two levels decision-making. This research investigate the project level decision-making model of weighted targets for the linear programming model for short-term operation safety management and realize the optimal allocation of resources management, Nets level decision-making model for Markov decision model for long-term management, finance planning.

1 Project Level Road Transport Management Safety Decision Model Project grade highway operation safety management decision-making model considering each section, the countermeasures to improve priority index improvement and budget constraints, determine the ultimate management solutions and resource allocation. Project grade highway operation safety management decision-making model of input variables include: M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 161–165, 2011. © Springer-Verlag Berlin Heidelberg 2011

162

Z. Huili, S. Hailong, and K. Yongzheng

(l) Each section of safety management, improve priority according to project management index determination standards. (2) The cost, the countermeasures for implementation of the measures according to human, material cost calculation; etc. (3) Various measures to improve the effect, after implementation countermeasure, predict comprehensive index of safety operation, the countermeasures to change that improving effect; (4) Project cost management of the budget. Project grade highway operation safety management decision-making model output for optimum allocation in resources under the condition of a group of management countermeasures combined road. Generally speaking, the countermeasures to improve the high level, good effect, the cost is high, therefore, the decision accordingly, in the process of budget constraints in the higher level, and is used for the road less countermeasures to improve, or choose low levels of the countermeasures to improve the road more need to weigh. Here, use according to each target goal programming of important degree, determine the relative weight of weighted targets linear programming model next:

max ∑∑ PI (aik + b )y ik i

k

Constraint conditions:

∑∑ c i

ik

y ik ≤ B

k

∑y

ik

≤ 1, ∀i

k

PI i —Section i improve preferred index； aik —Section i adopted measures to improve the effect of k ； cik —Section i the cost of k yik —0-1 variables, whether in sections i countermeasures k b —The weight coefficient, Set a goal conflict of the relative importance of higher level (i.e., Choose the countermeasures to improve the road is less, or choose low levels of the countermeasures to improve the road more). The higher value high grade

b selection (higher cost of limited) countermeasures to improve road, low value selection of low level of the countermeasures to improve the road more. B —budget

2 Network Transport Management Safety Decision Model Highway operation safety state probability model prediction model is established by the state transition matrix, to determine a management measures adopted after highway operation safety state, the state may be transferred by I, therefore the probability of state

Highway Operation Safety Management Decision-Making Model

163

j according to the present condition and operation safety measures for the management of the expected future operation condition. The countermeasures of cost calculation, and according to the level of safety management standard operation network, can use of Markov state transition matrix analysis, meet the operation safety management standard, make the minimum cost management plan. According to the network security state highway operation level of the prediction model and network management characteristics and application of Markov decision process highway operation safety management level net decision model. Model of input includes: (l) Road safety operation, according to the road safety evaluation model of operation in the network operation state roads rate. (2) Management countermeasures from the library, according to certain rules of countermeasures to determine, (3) State transition probability, sections in the countermeasure. After i moved by the state, and the probability of state j , pij ( a k ) according to the road safety operation of probability prediction model determined, (4) Network security management level, net operating standards of highway operation level of safety management standards in the proportion in a certain state, can allow state provisions in the road safety (the lowest percentage) and did not allow state (risk) of the highest proportion of sections. (5) Countermeasures for implementation countermeasure, according to the cost of human, material cost calculation; etc. Network security management decision-making level highway operation model of target is seeking to the lowest possible cost highway operation safety conditions in the long period of best management standard meet management system, the output of your model for long-term financial planning scheme of network. The network is determined in the road safety operation, and the countermeasures in proportion, the operation after the implementation of the road safety divert probability calculation, can take a countermeasure in the state of each section of the expected ratio q i .The decision a variable is selected in the first period began to adopt management countermeasures have

t for the state of a k ratio Wik/ section, and then

qi = ∑ Wik/ . Objective function is minimum cost management during the k

analysis. For C ik are state roads by the unit cost management countermeasures a k . In middle management, objective function is minimum cost management of next year, namely:

min : ∑ Wik C ik ik

Constraint conditions:

Wik ≥ 0 (For all i and k )

164

Z. Huili, S. Hailong, and K. Yongzheng

∑W

= ∑ Wik ⋅ pij (a k ) = q j

jk

k

i ,k

∑W

(For all j )

=1

ik

i,k

Wik = 0 ( If a countermeasure k , i don't apply) ∑Wik ≥ ε , (i ∈ s) ——At the lowest section allows state s s ,k

∑W

ik

≤ γ , (i ∈ u ) ——In the state of do not allow the highest proportion of

u ,k

section. u For a long time management, objective function is the next cycle (5) in the second period t=1,2,3,4,5 period Daniel, namely minimum total cost

min : ∑ Wik/ d t C ik i , k ,t

Type:

d t —for current coefficient.

Constraint conditions:

Wik/ ≥ 0 (For all i and k ， t = 1,2,3,4,5 )

∑W

= qi1 (For all i )——The first period t = 1 start the proportion of

1 ik

k

different sections

∑W

t jk

k

= ∑ W ikt −1 ⋅ pij (a k ) = q tj (For all j ， t = 1,2,3,4,5 ) i,k

——The first period began in j state of end of the road i state

t time before must equal ratio (t-1) is at the

Wik = 0

∑W

t ik

≥ ε , (i ∈ s) （ For t = 1,2,3,4,5 ） ——The state allows t period in the

s ,k

s ∑W ik ≤ γ , (i ∈ u ) （ For t = 1,2,3,4,5 ） ——In the first period t the highest

lowest sections t

u ,k

state

u don't allow sections.

3 Summary In highway operation safety status evaluation and forecasting technology research, on the basis of this paper for static highway operation safety management decision-making techniques are studied.

Highway Operation Safety Management Decision-Making Model

165

According to the highway operation safety management of static decision-making, proposes the static highway operation safety management measures and countermeasures for library of process. Based on the state highway operation safety of the evaluation and prediction results, the author proposes the project and network security management level of highway operation standard. Using optimization method and the theory of Markov decision process was established and nets grade highway project operation safety management decision-making model.

References 1. Harwood, et al.: Temporal transferability and updating of zonal level accident models. Accident Analysis Prevention 38, 579–589 (2006) 2. Nodari, C.T., Landau, L.A.: Proactive Method for Safety Evaluation of prediction Two-bane Rural Highway Segments. In: TRB 2006 Annual Meeting (2006) 3. Chassiakos, A.P., ASCE, A.M., Panagolia, C., Theodorakopoulos, D.D.: Development of Decision-Support System for Managing Highway Safety. Journal of Transportation Engineering, ASCE (May 2005)

Question and Countermeasure Existing in the University Finance Informationization Chen Liyu1 and He Zhonglin2 1

Financial Deputy Commissioner, Huanggang Normal University, Hubei 438000, China 2 Computer College of Science and Technology, Huanggang Normal University, Hubei 438000, China [email protected]

，

Abstract. College financial information system College financial information system, an important part of management of information technology in higher education , strengthening which is the requirements of the epoch development ,and the necessary conditions of branding universities and improveing the efficiency of schools. Keywords: network environment, Financial Information suggestions.

,

strategies and

1 The Current University Financial Information Problems A. The Concept of Financial Management Constraints College financial information of the main obstacles to the implementation process is the lack of scientific and effective management, and management of the key factors affecting is the decision-making group of college bound concept.Many school leaders thought prevalently exist "heavy accounting, light management" concept, with personal experience and capacity to determine the distribution and use of funds, neglect of the financial information in financial management decision-making role.On the one hand, university administrators with little knowledge of financial information, fear of unsuccessful implementation of the system will bring the risk of personal career.On the other hand, university administrators do not see the financial information is the information technology education an important component, but that the financial information will occupy a lot of information resources, and conflict with the education information.The old, false ideas lead to university decision-making groups do not want to spend too much on the financial information of human, material and financial resources, restricted the construction process, college financial information[1]. B. Financial Information System Security Risk •

Information security risks. In the network environment, the confidentiality of financial information and financial information openness of the characteristics

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 166–171, 2011. © Springer-Verlag Berlin Heidelberg 2011

Question and Countermeasure Existing in the University Finance Informationization

•

167

contradict each other. Network is a double-edged sword, colleges and universities use the network to share the implementation of financial management, but also to themselves exposed to risk. Finance Department staff and external users through the network of data illegal tampering and destruction， financial information leaks and were removed, resulting in paralysis of the entire financial system can not run, or data lost, causing great losses to the school [2]. Unlawful invasion of risk.In the network environment, electronic sign to replace the accounting data, magnetic media instead of paper at, all the information in this environment can be accessed both in theory to, unless they are physically disconnect the link. Therefore, the financial sector in achieving the same network management, it is difficult to avoid unlawful interference with, computer systems increase the probability of infection, a breakdown of the financial system will restore the high cost of treatment[3].

C. Financial Information on the Internal Control Impact University financial information, the scope of financial internal control and internal control focus changed. The introduction of computer and network technology, adding new content to financial work,changing the original authorization and approval system. Internal controls to deal with the traditional object of financial accounting personnel, as long as the development of a corresponding system of personal responsibility and internal check system, we can guarantee the accuracy of accounting information and school safety and integrity of assets. In the network environment, members of the network system development, network maintenance staff and control of network systems administrator are needed to be additional.Network environment, the financial internal control of accounting functions from the main, the transfer for the accounting functions and computer data processing functions mainly focus on the control of digital control information, and information output control, human-computer interactive process control, computer connection between the systems of control and so on. Authorization to change the focus of internal control internal control to colleges and universities has had an impact[4]. D. Shortage of Financial Information Professionals Human resources is a key factor. to success or failure of financial information .Talents in Chinese Universities lack of financial information mainly in two aspects: On the one hand, the lack of compliance requirements of financial information management leader. Implementation of financial information need to mobilize resources to enable the formation of university financial department of an efficient team, play a financial officer of each initiative and expertise, and be step up with school information technology goals. These need to have strong financial leadership and coordination capacity, innovation and insight, but this is the current college financial leaders lack[5]. On the other hand, university officials after the implementation of financial information presents the polarization state of technical knowledge, that is, people who understand computers, the relative lack of knowledge of financial management; have financial management experience in the computer technology not strong enough. With

168

C. Liyu and H. Zhonglin

many colleges and universities often treating financial information simply as a computer project, to bring in more of the computer talents, resulting technicians for technical expertise out of line, essentially limits the financial information-oriented pace. To conduct in-depth financial information, we need to introduce compound talents not only understanding the computer but also understanding the complexities of accounting. E. Lack of Software Features to Challenge the Work of the Financial Network University network of financial software is the basis and prerequisite for financial development, the current financial software is stable but lacks flexibility and focus, can not be directly generated decision-making groups of college financial information and data needs, needs of the export of financial data processing software to complete the financial information analysis and forecasts, reducing the timeliness of feedback from the university financial information falls far short of actual needs. The current college financial information system to share is not high, between various functional departments of university information can not be connected with each other, difficult to reconcile synchronization, can not provide decision makers with timely comprehensive information to support decision-makers make the right decisions, and thus not conducive to effective management and allocation of funds, but also increased the cost of financial sector management. As the network of University of the increasingly fierce market competition, lack of financial software functionality to the financial information system challenges[6].

2 Perfecting Financial Information System in Response A. Formation of Financial Decision Support System Based on the Intranet to the formation of financial decision support system, continuous improvement network of financial professionals, combined with the general function of the financial system and financial needs of modern information technology, and constantly develop new software, to achieve the overall financial system, information technology, promotion of modern network of University Financial system of work, ideas, technology and management of evolution[7]. •

•

Integration of financial and business: The Digital Campus and School allpurpose card systems, the realization of the standardization of information and college campus management information system integration, while the financial system for the network to provide technical support for the implementation. In addition, the financial accounting process and the organic integration of economic and business college, can realize the synergy of financial and business operations to achieve information sharing, the number of out 1. Performance Evaluation and Decision Support: A Decision Support System Evaluation System and the only decision-making model is not enough, data analysis and mining tools is a powerful weapon for supporting the system, the implementation of digital campus for the University evaluation and financial performance decision support information to provide a solid and reliable platform. The use of scientific decision-making model for evaluation of

Question and Countermeasure Existing in the University Finance Informationization

•

169

financial indicators of the university a comprehensive evaluation system that can fully reflect the financial position of universities and trends, decisionmaking group for the college to provide high quality financial services. The sharing of financial information services: In addition to the financial information system server, the re-configure a separate query servers will query the server access to the campus network, by querying the server to the campus network needs public release of financial information to authorized users within the campus network can dynamically about the required financial information to users outside the financial sector to avoid a direct reading system server, ensure data security systems.

B. Innovative Financial Systems of Internal Control System In the internal management of financial information systems should be in strict accordance with the accounting internal control system, implementation of “mutual separation of incompatible duties control” principle, combined with the characteristics of financial information systems to establish a new management system, while credit quality of the training of personnel[8] . •

•

•

Strengthen supervision of financial management positions with each other to plug the loopholes. Authority to operate the system, in accordance with strict distinction between the different positions, different positions perform different functions, so that separation of incompatible duties and mutual supervision among the different sections and contain. Posts set into the system management, monitoring, operation of three parts, are not compatible among each other constraints prevent the use of network and computer fraud, to improve system security and reliability. Strengthen the internal control system management. After college financial information, financial information systems to combine the features of developing a series of internal control system, including network maintenance and management, equipment management system, the machine management system, business processes, operation access control, information management system, internal audit systems, scientific and standardized system of internal control is the security of financial information. Credit quality of the training staff. Needs to be emphasized is that the university financial internal control system and internal control procedures are computer designed by people, in order to prevent fraud, in addition to technical training, financial personnel should also strengthen the integrity of the quality of personnel education and training, while strengthening the supervision and assessment, development of strict penalties[9].

C. Strengthen the Financial Management of the Information Audit Internal Audit is an important part of University Financial Management Work, the audit of financial information on the higher demands, university needs to establish auditing regulations and rules, audit scope, object, objectives must be clear provisions, on the financial information, regular or ad hoc network technology audit. Finance and audit departments should set up a special audit of the financial information system operation group, regularly audit the internal control of accounting information systems, by investigating the soundness of internal controls and the

170

C. Liyu and H. Zhonglin

practical implementation of the test, to identify control weaknesses, proposes to strengthen the internal control measures to improve supervision and internal control systems, and output to examine the authenticity of accounting information, to detect errors and prevent distortion of accounting information. D. Higher Quality Training Complex Talent Today's college competition ,in the final analysis, is the quality of management and talent competition. Management is the base , manpower is the key, effective human resource development in colleges is the center gravity of universities financial culture . Financial information system including hardware and software parts, hardware and software maintenance needs professional and technical personnel, colleges select compound professionals to augment the financial sector, introduce or develop expertise in both accounting and network expertise diverse talents, only proficient in both good accountant and a computer complex talent can we do a good job of financial information. College financial information should always pay attention to the development of financial information ,the backbone of the training of financial information, strengthening the accounting team building, improving the fighting capacity of accountants, financial information to accelerate the process [10]. E. Implementation of the Network Financial Information Security Policy To the importance of network information security status of strategic plans: •

•

The staff run the Security policy . The use of the operating system itself security policies, database management system software security policy, financial accounting software, security policy, establish reasonable user accounts, permissions and passwords to ensure data security. Remind the user according to their own identity and password into the system, avoid using easily cracked passwords and regularly change your password. System maintenance personnel to promptly release system patch installation, upgrade of the antivirus software to enhance the security of the entire system to better ensure the security of data. Control the implementation of security technology. Add the network firewall , the firewall is set up within the Treasury and the campus network interfaces of network access control system, its cross-border information networks to filter, designed to prevent external illegal user access, as data transmission, Conversion set an electronic barrier is effective to prevent outside intrusion and protect the safety and accuracy of financial data.

Financial information is an important means of modern management level to improve the university, only by constantly solving problems in information technology, active maintenance and construction of new platform for financial information, can we full play the advantage and role of financial information network ,and then better Promoting Higher Educational healthy, orderly development. Acknowledgments. Notes:This is the Humanities and Social Sciences in Hubei Province Department of Education research project 2010y100.

Question and Countermeasure Existing in the University Finance Informationization

171

References 1. Lo, F.: Colleges and Universities under the new situation of reform of financial information. China Management Information 10(6), 67–68 (2007) 2. Guo, Y.-f.: Based on the university campus financial public disclosure. Accounting Communications (June 2004) 3. Zhang, H.: Network in the Information age and achieve financial management objectives. Beijing University of Aeronautics 18(3), 26–29 (2005) 4. O’Leary, D.E.: On the relationship between REA and SAP. International Journal of Accounting Information Systems 5(l), 65–81 (2004); Tan, J.J.: Dynamic security reconfiguration for the semantic web. Engineering Applications of Artificial Intelligence (17), 783-797 (2004) 5. Bowen, P.L., Rohde, F.H.: Fifth international research symposium on accounting information systems. International Journal of Accounting Information Systems 6(3), 157– 158 (2005) 6. Choe, J.-m.b.: The relationships among management accounting information, organizational learning and production performance. The Journal of Strategic Information Systems 13(l), 61–85 (2004) 7. Bowen, P.L., Rohde, F.H.: Fifth international research symposium on accounting information systems. International Journal of Accounting Information Systems 6(3), 157– 158 (2005) 8. O’Leary, D.E.: On the relationship between REA and SAP. International Journal of Accounting Information Systems 5(l), 65–81 (2004) 9. Chenhall, R.H.: Management control system design within its organizational context: Findings from contingency-based research and directions for the future. Accounting, Organizations and Society 28(2-3), 127–168 (2003) 10. Boritz, J.E.: Is practitioners’views on core concepts of information integrity. International Joumal ofAccounting Information Systems (6), 260–279 (2005)

Study of the Training for a Financial Informationization Talented Person in Electronic Age* Chen Liyu Financial Deputy Commissioner Huanggang Normal University Hubei 438000, China [email protected]

Abstract. It is well known that financial informationazation talented persons are essential to achieve modernization development for financial department in information age. This paper aims to analyze the characteristics of informitionazation talented persons and the reasons of constraining their development, and then proposes some strategies and suggestions to financial informationization talented persons development. Keywords: financial informationnazation, talented persons, strategies and suggestions.

In the 21st century, informationization has swept through the entire world with the development of booming knowledge-based economy. A new era of informationization has emerged. Informationazation human resources have become the most important factor for financial department in financial areas.

1 The Connotation of the Informationazation Talented Persons Talent is a vital human resource. Informationazation talented persons are a special group of people formed under the development of information technology and information industry. They are top-level experts in the fields of information technology. Informationization talented persons usually have better knowledge of planning and decision-making, coordination, judgments and enforcement. They provide valuable information which supports department’s information construction and the managers who implement strategies[1].

*

This is the Humanities and Social Sciences in Hubei Province Department of Education research project 2010y100.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 172–176, 2011. © Springer-Verlag Berlin Heidelberg 2011

Study of the Training for a Financial Informationization Talented Person

173

2 The Characteristics of Financial Informationazation Talented Persons A. Obtain Good Knowledge and High Technology, Strong Synthetic Abilities With fast change of information resource, it is necessary for informationization talenta to have sensitiveness in the area of information technology and new resource. Only by continuous maintaining knowledge and technology, can informationization talented persons adjust the informationization job in new environment, never resulting in being eliminated in information markets. The whelming change forces informationization talented persons to study continuously. Therefore, they are more knowledgeable and qualified to adopt the information technology[2]. B. High Mobility and High Risk of Investment The competition of information market aggravates the competition of talented persons. In order to recruit qualified talented persons, financial department offers superior treatments and by spending a large amount of costs. With fast growth of information industry, the renewal of information technology market may cause job-hopping owing to various reasons. Financial department might face risks of investing in human resources[3]. C. High Adaptability in New Environment Mobilization in human resources requires employees to gain adaptability in the working environment in short period of time so that they are able to accommodate new environment and be qualified for new requirement. Informationazation talented persons provide information resource efficiently and put knowledge and technology into widely use in different environment[4].

3 Analysis on Reason for Restricting the Development of Financial Informationization Talented Persons A. Backwardness in the Concept of Informationazation Financial informationization promotes advance-ment in the function of financial management, however, the backwardness of informationazation concept imposes restrictions in the process of enforcement. Many financial managers determine the distribution and use of funds by their personal experiences, as a result, they ignore decision-making in management of financial information. Some others lack role awareness. Their sights are only limited to the accounting field. They have no experiences about financial informationization knowledge and financial software and are merely confined to authorize others to use. They are not familiar with the functional modules of software system, imposing direct influences on achievement on its financial management[5]. B. Immaturity of Training Environment of Financial Informationization The training of financial informationization depends upon the training environment. Financial informationization talented persons are special expertise, with the

174

C. Liyu

characteristics of proficient technical skills and high mobility. The training of financial informationization started late in China, the training environment is not yet mature. Therefore, there are shortage of training methods and skills. Financial department adopts traditional financial management, ignoring talent innovation and features of personalization. In the process of training and selection, there is inaccurate positioning and absence of combination of accounting information knowledge. Once we lack training environment, it will lead to the loss of information talented persons. C. The Structure of Professionals in the Financial Area Is Asymmetric. •

•

Financial managers obtain little knowledge of informationization. They are required to have capabilities of information technology management and innovation, so as to bring the potential of human resources into implementing strategies and achieve the unit's financial goals. However, currently most Financial Officers do not understand computer knowledge so that they cannot fully exploit information resources[6]. There are not enough multidimensional high skilled talented persons in companies. The company need more high skilled talented persons in information age . It is necessary for them not only to understand information technology and master accounting knowledge, but also to have the specific abilities of forward-looking and decision-making. However, the intellectual structure of financial officer is asymmetric. The persons who can understand computer network technology always lack knowledge of financial management, on the contrary, the persons who have financial management experiences always weak in computer operations. The situations mentioned above are very common, and they have become the very significant factors to restrict financial information process and construction. If the companies want to be competitive with financial management in information age, they must employ or train multidimensional high skilled talented persons[7].

4 The Strategies and Suggestions for the Development of Financial Informationization A. Make Innovations on Financial Information Ideas and Set Up Scientific Criteria to Evaluate Talented Persons in Companies[8]. First, the companies should update the concepts in the training of talented persons and information management. It is very important for the leaders to realize that updated management concept is the key to the construction of financial informationization. Second, the leaders of the companies should understand that IT applications effect the financial management significantly, and they should pay highly attention to the financial informationization. Finally, the companies should establish advanced selection mechanism and incentive systems, and implement personnel planning engineering of financial informationization as well as setting up a scientific evaluate system for talented persons to grasp the characteristics and law of development. This paper puts criteria such as ideological quality ,abilities and life cycles of financial talented persons into talent performance evaluation.The criteria are showed in the table 1 below[9].

Study of the Training for a Financial Informationization Talented Person

175

Table 1. Criteria of talent evaluation

First grade criteria 1-1 Ideological quality 1-2 Abilities

1-3 Life cycles

B.

Second grade criteria 2-1Teamwork spirit 2-2Loyalty 2-3Communnication Skills 2-4 Learning ability 2-5Types of work 2-6Change of knowledge

Improve the Growing Space and Environment for the Financial Informationization Talented Persons

In order to attract the people who are excellent at IT, most of the financial departments improve their staff growing space and environment, as well as develop a concrete plans and measures. For instance, Giving high priority to the ideology of talented persons, implementing people-oriented policy, and making full use of the potential of financial informationization talented persons as well as setting up salary incentives for the staffs to pay them a higher reward. Some of the financial departments provide the staff with career development gudiance and give them professional training opportunities. There are chances for them to be out standing in financial work so as to enhance the loyalty to the companies[10]. C. Establish Training Plan of Financial Informationization Talented Persons It is necessary for the companies to set up a team with talented persons who can understand both technology, and management. The company should develop their own plans for training and selecting multidimensional high-tech talented persons periodically to enrich the financial departments. Besides, the enterprises can set up information learning groups in order to train some reserved talented persons, strengthen the team, prevent talented persons loss and acceed the process of financial informationazation.

References 1. Dang, F.: The problem and strategies of training of our country’s informationization talented persons. Modern Information 11, 30–31 (2005) 2. Bi, R.: Analysis on Web-based informationization talented persons evaluation. Information Journal 1, 32–33 (2008) 3. Yang, J.: Initial exploration about " project-centric " training of financial informationization in vocational and Technology Institutes. China Management Information 4, 106–107 (2009) 4. Zhang, H.: Network in the Information age and achieve financial management objectives. Beijing University of Aeronautics 18(3), 26–29 (2005) 5. Luo, M.: A conversation with the Real model based on the accounting information system. Computer Engineering 31(8), 215–217 (2005)

176

C. Liyu

6. Zhu, c.b.: Wuhan iron and steel group company financial information of the case studies. Computer Engineering 33(2), 257–258 (2007) 7. Bowen, P.L., Rohde, F.H.: Fifth international research symposium on accounting information systems. International Journal of Accounting Information Systems 6(3), 157– 158 (2005) 8. Boritz, J.E.: Is practitioners’ views on core concepts of information integrity. International Joumal of Accounting Information Systems 6, 260–279 (2005) 9. Bowen, P.L., Rohde, F.H.: Fifth international research symposium on accounting information systems. International Journal of Accounting Information Systems 6(3), 157– 158 (2005) 10. Chenhall, R.H.: Management control system design within its organizational context: Findings from contingency-based research and directions for the future. Accounting, Organizations and Society 28(2-3), 127–168 (2003)

The Impact of Technology Acquisition Mode on Innovative Performance of Listed Companies Chengyu Wen and Zhixin Liu School of Economics and Management Beihang University Beijing, China [email protected]

Abstract. Using the negative binomial regression model, this paper analyses the impact of the technology acquisition mode on firm's innovation performance. With the panel data of 124 listed companies of the high-tech industries in China, we find that enhanced technology acquisition have a nonsignificant effect on the post-M&A innovation performance of the acquiring firm. The complementary strengths technology acquisition has a positive effect on the innovative performance of the acquiring firm. This paper confirms the relationship between the technology acquisition mode and innovation performance, which gives empirical evidence on how to make technological M&As decisions of listed firms. Keywords: technology acquisition mode, technological M&A, innovative performance.

1 Introduction Generally Chinese companies to obtain and master the key to technology are four paths: independent R&D, cooperative R&D, technology transfer and technology acquisition. Independent research and development need a long cycle, high-risk investment, Cooperative R&D has a good many restrictions; Technology purchasing is difficult to introduce the core technology; Technology M & As can not only more rapidly has access to the acquired firm which has the right to use technology, as well as all the property, but also can rely on the control of the acquired firm, gain the target company possess knowledge, especially the recessive knowledge transfer to our initiative. Thus it becomes a more efficient and effective way to ascend company technology innovation ability and arouse people's attention. Scholars from different points of views decide the models of mergers and acquisitions. Cho and Yu（ 2000） [1] according to the company's various R & D divide the models of mergers and acquisitions into three models: internal research and development, R&D cooperation and technology purchase. Wang Hui and Xu Bo (2005) [2] two dimensions from the technical and industry analysis, will strengthen the model into cross-border mergers and acquisitions, integration, and progressive M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 177–183, 2011. © Springer-Verlag Berlin Heidelberg 2011

178

C. Wen and Z. Liu

mode of the four break model acquisition modes. Wan-Li Wang (2009) [3] according to the company's access to technology through the acquisition of the type of perspective, the core technology to industrial areas and the range of standards, technology acquisition is divided into enhanced mode, complementary and breakthrough three M&A modes. Foreign scholars focused on the influencing factors in technology M&As mode of selections. Results indicate that the impact of technology acquisition mode of the main factors depend on the company's technical capabilities, company size, past experience and the correlation with the core competencies（ Cho and Yu, 2000 [1], Hung and Tang, 2007 [4] ） . Domestic M&A mode for technology selection focused on cross-border mergers and acquisitions. Cross-border mergers and acquisitions is a major means of acquiring technology companies. Whether transnational M&As as the means for technical capabilities suited to China's national conditions, domestic scholars views differ.. Wang Yu et al（ 2007） [5] study that Shanghai Electric Group's acquisition of selecting printer company in Japan Akiyama case, this case analysis showed that the Multinational technology mergers and acquisitions is suitable for China's capacity .It is a path to gain the ability of independent innovation . Fang Lin, Song Dahai (2007) [6] by analyzing the cross-border M&As success factors and core technical features, they thought that most of the existing technology of Chinese companies did not have cross-border M&As experience and ability. Different technology acquisition modes of technological innovation on the impact of acquired companies are also different. Whether in China or abroad there is no study about technology innovation performance impact on technology mergers and acquisitions mode. By analyzing the acquired company and the acquiring company's industry relevance, divide technology mergers and acquisitions into enhanced and complementary strengths of two acquisition modes. Using the data of publicly listed companies, empirical analysis of different models on acquisition of company mergers and acquisitions affect innovation performance, taking into account company size, corporate growth, corporate sector, technical knowledge base and innovation performance of the role of acquired companies. This helps the company carry out technology acquisition more efficiently, provide a new perspective for the company to improve the innovation performance.

2 Empirical Hypotheses After acquisition of the acquired company's technology related degree of innovation performance has a significant effect. Cohen and Levinthal (1990) [8] think the acquiring company which effectively uses the relevant technical knowledge from the target company can bring more positive effects to the company merger than the independent of external technical knowledge . The reason is that the absorptive capacity of the company depends on its technical expertise in specific areas of the level (Duysters and Hagedoorn, 2000 [9]). In other words, technology acquisitions for the acquiring firm of the acquired firm owns reserve-related knowledge, otherwise it will be difficult to make the right judgments on the acquired firm and the possession of technology. It will be more difficult to absorb and develop further the goal of

The Impact of Technology Acquisition Mode

179

technology innovation. In view of the technical knowledge relevancy between acquiring firm and acquired firm affects innovation performance after M&As factors, we can make the following inferences: Strong technical relevance of enhanced acquisition of technology company mergers and acquisitions will bring positive influence innovation performance, whereas less technology-related advantages of technology mergers and acquisitions of complementary companies on the acquisition of innovation performance is negative. Thus, we propose the following two hypothesis. Hypothesis 1: There is a positive relationship between the enhanced technology acquisition and post-M&A innovative performance of the acquiring firm. Hypothesis 2: There is a negative relationship between the complementary strengths technology acquisition and post-M&A innovative performance of the acquiring firm. Some scholars argue that the acquired company and its technology was too similar to the technical knowledge, technical innovation and the contribution the company is relatively limited, obtained technical differences with the company's new technology and bring out the company's innovation capability. The reason is that, on the one hand, between companies with different levels of technical capability differences can enrich the knowledge acquired company's technology base and create new learning opportunities to create new technologies faster(Cohen and Levinthal, 1989 [10]; Hitt, 1996[11]） . On the other hand, through technology access and acquisition of core technology companies in different technical knowledge, to acquire the company to better facilitate the absorption of external new knowledge, with different R & D perspective, expanding the company economies of scale and scope economies, and increase technological innovation （ Ahuja and Katila, 2001 [7]; Myriam, John and Hans, 2006 [12]） . In summary, complementary technologies can expand the company's acquisition of technical knowledge scale, and increase technological absorptive capacity, improve the company's technology and innovation performance. Based on the above analysis, a third hypothesis: Hypothesis 3: There is a positive relationship between the complementary strengths technology acquisition and post-M&A innovative performance of the acquiring firm.

3 Research Method and Empirical Design A. Technology Acquisition Mode About technological M&As criterion mainly select Ahuja and Katila (2001) [2] method in China and abroad, Ahuja and Katila identify technological M&As in two ways. One is the acquired firms whether obtain the patent in the first 5 years. Second, the main purpose is to obtain a technology mentioned by M&As bulletin, eet any of the above, so named as technological M&As. In china mainly select the latter approach, because of the difficulties in searching the company patent, scolars don't use it as alternative of innovative performance. This article obtain the number of patents by hand collecting, while use two diagnostic standard of Ahuja and Katila, solve results deviation caused by missing data, and expand the samples of technological M&As.

180

C. Wen and Z. Liu

By analyzing the acquisition with the acquired firm's industry relevance and CSRC on the industry standard of listed companies., divide acquisitions of technology into enhanced and complementary strengths of two acquisition modes. When the acquiring and acquired companies are in the same industry, the technology received from the acquired firm is deepened and strengthened. The company possesses more industry competitive advantages. This type of technology acquisition is called strengthening type technology M&As Mode. When the acquiring and acquired companies are in different industries or the same industry in different industries, acquiring company uses technology mergers and acquisitions to gain the company core technology, achieves reciprocal advantages and strengthens technical achievements to the market. This type of technology acquisition called complementary advantages of technology acquisition modes. B. Technological Innovative Performance There are many ways in the respect of innovation performance measure at home and abroad, such as adopting a new product sales revenue, patent number and invention patent quantity etc R&D output index., selecting market indicators and financial indicators as a measure. Selecting market indicators and financial indicators to measure innovative performance has some limitations. First, using market indicators to measure innovative performance is not accurate, market indicators not only effected by company management and operating performance, but also at the same time market factors can cause fluctuations, not one-sided innovative performance decide the market index changes. Second, the profit of the financial indicators is often manipulated by the company, listed company providing the false financial information is often severely punished. This paper selects the number of patents as a proxy for innovation performance, mainly consider for originality, exclusivity and exclusive. First of all patents need a rigorous evaluation process, patent is awarded by only just have a certain technical level and propose new technology program for products, methods or improvement. After the company was awarded a patent, other companies can not repeat to apply the patent for the same kind of technology. Second, without the permission of the patentee, they can not use the patented technology. Because of this, the patent can be a good measure of a company's technological innovation. C. Negative Binomial Regression Model This paper we use the number of patent to measure the company technology innovation performance. As a non-negative count variable number of patents, violating the linear model residuals follow a normal assumption, Hausman, Hall and Griliches (1984) [13] proposed method can be applied to such data, Poisson regression. Consider the above factors, we refer to Ahuja and Katila (2001) [7] of the negative binomial regression, econometric models are as follows:

Pit = exp( X it -1γ + Ait β ) pit is dependent variable ,company i obtain the number of patent at t year, to measure innovative performance after M&As.

The Impact of Technology Acquisition Mode

181

Ait is independent variable, in the sample period, the acquiring firm had any enhanced and complementary strengths technology acquisition during the five years preceding the acquisition. X it−1 is control variables, including the investigation into the sample before the year of company size, company growth, company's technology knowledge base and affiliated industries and other influences factor. Company size is the natural logarithm for total assets; Growth of the company we use to measure the value of Tobin's Q. Company technical knowledge base for the acquisition of companies to enter the sample inspection of the sum of the first three years patent; Industry is dummy variables, this accounts for the number of samples selected the top three sectors, namely pharmaceutical manufacturing, electronic and communications equipment manufacturing and medical equipment and meters.

4 Data This paper select the listed companies with high technology which were recognized by accrediting agencies as a sample , according to National Bureau of Statistics 2002, promulgated the "high-tech industry statistics Category", selected four high-tech industries, including pharmaceutical manufacturing, electronic and communication equipment manufacturing, medical equipment and instruments manufacturing, chemical industry information. Listed companies data from WIND information, select all listed companies in Shenzhen and Shanghai Stock Exchange A as a research sample. In total, we identified 1259 M&A events for our sample firm in period 2000-2008. Of the total amount of M&As, 364 met the above-mentioned criterion and they are classified as technological M&As. Among them, mergers and acquisitions of complementary technologies are 160. Acquiring and target company's patents are from the Intellectual Property in China. Financial data used in China's economic and financial database are from CCERDATA. The final panel for the regression analysis amounts is from 2005 to 2009.

5 Empirical Result In this paper, quantitative analysis software Stata panel data random effects negative binomial regression model checking technology acquisition mode of listed companies in China innovation performance. Empirical regression results are shown in Table 1. Table 1. Test Result Variable No. of enhanced technology acquisition No. of complementary strengths technology acquisition Size（ t-1） Growth（ t-1） technical knowledge base (t-1) Pharmaceutical Electronics and communications Medical equipment and meters

＜

＜

＜

* express P 0.10; ** express P 0.05; *** express P 0.01

coefficient -0.0042102 0.0392836** 0.2975705*** 0.1091927** 0.0087037*** 0.3968025*** 0.3041686*** -0.1156689

182

C. Wen and Z. Liu

From the regression model results, the number of enhanced technology acquisition coefficient of -0.004212, p>0.10, show that the enhanced technology acquisition did not significantly affect innovation performance, hypothesis one does not hold. The number of complementary strengths technology acquisition coefficient 0.03708, p<0.05, show that the advantage of complementary technology acquisitions on innovation performance has a significant positive impact that this inference and hypothesis 3 is consistent. Therefore, the technology company mergers and acquisitions in the choice of the acquired company should examine the target company and its industry relevance, technical knowledge related to the extent that, choosing a lower degree of technical knowledge related to the company's innovation performance will bring positive effects. From the control variable regression results, company size, growth and technical knowledge base of the acquired company after the merger innovation performance is significantly affected. Therefore, the larger the company, growth better, stronger technical knowledge base, the stronger the company's innovation capability will be . In addition, the regression results show that the pharmaceutical industry and the electronic and communication equipment manufacturing industry after the merger of two industry innovation performance has significantly improved, while medical equipment and instrumentation manufacturing innovation performance after M&A is not significant and negative effect. Technology company mergers and acquisitions targeting companies choose to make a good trade performance of technological innovation.

6 Conclusion This paper study the technology M&A samples of high-tech companies in China 2000-2008, use patents to measure the performance of M&A technology innovation, according to the target acquisition of the company's industry-related degree, divide technology acquisitions into enhanced complementary type two kinds of technology acquisition modes, study the impact of technology acquisition modes on innovation performance of listed companies. This study shows that enhanced technology acquisition and innovation performance did not significantly affect acquisition of complementary, technologies and innovation performance has a significantly positive impact. After the acquisition, including company size, growth, technical knowledge base and industry sector on the acquisition of the company's innovation performance , those all had a significant positive impact. From the actual situation in China, Chinese companies generally ignore the technology M&As mode. When company enhances technological innovation, accelerates the change of the development mode, selects the M&A target , it should pay attention to the company's technology related degree, gains the new different technology which it doesn’t have , implementation of the acquisition of complementary technologies can increase the company's innovation performance. In addition, when the company chooses the target company ,it should also consider the size of the company, growth, technical knowledge base and industry sector , realizes the development strategy and strength about themselves, judges the development of industry technology trends accurately, analysis the situation of the target company deeply, makes correct evaluation of merger activity, avoids blind decision.

The Impact of Technology Acquisition Mode

183

References 1. Cho, D.-H., Yu, P.: Influential factors in the choice of technology acquisition mode: an empirical analysis of small and medium size firms in the Korean. Technovation 20, 691– 704 (2000) 2. Wang, H., Xu, B.: Technology-based Chinese enterprises to seek cross-border M&A Analysis. International Business Research 4, 56–60 (2005) 3. Wang, W.-L.: Empirical research on performance and research on modes of technological M&A of chinese public companies. Masteral Dissertation, Beijing university of technology (2009) 4. Hung, S.W., Tang, R.H.: Factors affecting the choice of technology acquisition mode: Anempirical analysis of the electronic firms of Japan, Korea and Taiwan. Technovation 10, 5–12 (2007) 5. Wang, Y., Zhai, Q., Xia, W., Wang, D.: The path of independent innovation and technology value chain integration after M&A: Shanghai Electric Group acquired Akiyama Printing Machinery Company of Japan Case Study. Management Modernization 3, 38–41 (2007) 6. Fang, L., Song, D.: Cross-border M&A VS Core Technology. Science of Science and Management of S.& T 2, 136–141 (2007) 7. Ahuja, G., Katila, R.: Technological acquisitions and the innovation performance of acquiring firms: a longitudinal study. Strategic Management Journal 22, 197–220 (2001) 8. Cohen, W., Levinthal, D.: Absorptive capacity: a new perspective on learning and innovation. Administrative Science Quarterly 35, 128–152 (1990) 9. Duysters, G., Hagedoorn, J.: Core competences and company performance in the worldwide computer industry. Journal of High Technology Management Research 11, 75–91 (2000) 10. Cohen, W.M., Levinthal, D.A.: Innovation and learning: The two faces of R&D. The Economic Journal 99, 569–596 (1989) 11. Hitt, M.A., Hoskisson, R.E., Johnson, R.A., Moesel, D.D.: The market for corporate control and firm innovation. Academy of Management Journal 39, 1084–1119 (1996) 12. Myriam, C., John, H., Hans, V.k.: Mergers and acquisitions: Their effect on the innovative performance of companies in high-tech industries. Research policy 35, 642–654 (2006) 13. Hausman, J., Hall, B., Griliches, Z.: Econometric models for count data with an application to the patents–R&D relationship. Econometrica 52, 909–938 (1984)

Institutional Arrangements for Knowledge Sharing in R&D Team Tu Jing1 and Zhang Wenping2 1

School of Management, Wuhan University of Science and Technology, Wuhan, China, 430081 2 School of Management, Wuhan University, Wuhan, China, 430072

Abstract. Effective knowledge sharing is the key to successful establishment of R&D team. This paper studies from the view that institutional arrangements affect the game results. We build a knowledge sharing game model and then obtain equilibrium results under different institutional arrangements. On these equilibrium results, we propose institutional arrangements about formation, performance incentives, knowledge transfer methods, organizational structure and team incentives level of R&D team to get effective knowledge sharing. Keywords: R&D team, Knowledge sharing, Game, Institutional arrangements.

1 Introduction Organizations rely on collaborative groups to develop products, improve services, and manage operations [1]. A team-based structure is one kind of collaborative groups designed to improve organizational performance. Teams are believed to increase individual commitment and performance [2]. Research and development (R&D) is the core activity that sustains organizational innovation and is now moving towards teambased structures. R&D teams develop innovative technologies and products in the organizations. R&D is knowledge-intensive work and specialized knowledge is increasingly required from all team members for the development of new technologies or products. When R&D members have knowledge acquired through the sharing process, the best possible solution to a problem can be achieved [3]. Teams must develop mechanisms for sharing knowledge to accomplish their missions successfully. Knowledge sharing includes the dissemination of existing knowledge among team members and bringing new knowledge into the team from the external environment. Knowledge sharing in R&D team is a typical game problem. Game theory shows that rational participants in a game always follow the principle of maximum benefit. When institutional arrangements are given, the institutional arrangements influence the strategy of participants in the game. So when the institutional arrangements change, participants in the game will choose a different strategy and the game results are certainly different. Therefore, only effective institutional arrangements can influence the strategy of team members and generate the optimal equilibrium. The purpose of the M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 184–190, 2011. © Springer-Verlag Berlin Heidelberg 2011

Institutional Arrangements for Knowledge Sharing in R&D Team

185

study is to get institutional arrangements which help the R&D team to share knowledge effectively. Our paper is organized as follows. In the next section, we present a game model about the payoff and interaction among the R&D team members. In Section 3, we analyze these possible results of the game model. Section 4 draws institutional arrangements from the game results while section five concludes the paper.

2 Model Setup Goal of any knowledge-sharing activities are transferring knowledge resources available from the provider to the recipient successfully. Knowledge-sharing process includes transfer from the provider and absorption of the recipient [4]. Assumption 1: R&D team is composed by two equal team members: A and B . Their knowledge contribution to the team is of the same value. K is knowledge value of the team member before they share their knowledge with others, that’s the monopoly value of knowledge. Assumption 2: α is the absorption capacity of the knowledge recipient and 1 ≥ α > 0 which means the knowledge that absorbed by the recipient is no more than the knowledge that transferred by the knowledge provider. Assumption 3: I is benefit of the team member get from the increase of team performance brought by knowledge sharing. Knowledge sharing not only brings increased personal income, more importantly it increases team performance. Therefore, team members are inspired by both individual performance and team performance. Assumption 4: Ct is the transfer cost of knowledge provider and Ca is the absorption cost of knowledge recipient. Knowledge sharing not only brings benefits to the team member, it also brings sharing costs. Knowledge sharing costs are the human, material and financial resources consumed in the process. For the knowledge provider, it is transfer costs. For the knowledge recipient, it is absorption costs. Team member A and B may act the provider and the recipient if they both choose to share his knowledge. Assumption 5: The strategies that the team member can choose is either sharing his knowledge or not sharing his knowledge. According to the above assumptions, the payoff matrix of the team members is in the table 1.

3 Model Analyses In this section, we analyze the possible outcome of the knowledge sharing game in R&D team based on the payoff matrix. A. When α K < Ca , That Is, the Knowledge Value Absorbed by the Recipient Is Less than the Absorption Cost, (not Sharing, not Sharing) Is the Only Nash Equilibrium (not sharing, not sharing) equilibrium exists for the following reasons. when knowledge value absorbed by the recipient is less than the absorption cost, even if the

186

T. Jing and Z. Wenping

provider is willing to transfer knowledge, but (1 + α ) K − Ca < K the recipient’s payoff when he chooses to absorb the transferred knowledge is less than when he chooses not to, so the recipient’s optimal strategy is not sharing. When the recipient’s strategy is given, the provider’s optimal strategy is to choose not to transfer knowledge. So (not sharing, not sharing) is consistent with the efficiency strategy of the game under this situation. B. When Ct > I ≥ 0 , That Is, Team Members Do Not Receive Incentives of Team Performance or the Team Performance Incentive Level Is Less than the Knowledge Transfer Cost, (not Sharing, not Sharing) Is the Only Nash Equilibrium

(not sharing, not sharing) equilibrium exists for the following reasons. Given a situation that A chooses not sharing, B ’s payoff is K when he chooses not sharing and is K − Ct when he chooses sharing, so the optimal strategy of B is not sharing. The same will happen under a situation that B chooses not sharing, the optimal strategy of A is not sharing. And (not sharing, not sharing) is also a dominant strategy of both sides, that is, whether the other party choose sharing or not sharing, the individual optimal strategy is not sharing. C. If I > Ct , That Is, if the Increase of Team Performance Caused by Knowledge Sharing Is Greater than the Knowledge Transfer Cost, There Are Two Possible Nash Equilibrium (sharing, sharing) and (not Sharing, not Sharing

(Sharing, sharing) equilibrium exists for the following reasons. Given a situation that A chooses sharing, B ’s payoff is (1 + α ) K + I − Ca − Ct when he chooses sharing and is (1 + α ) K − Ca when he chooses not sharing, so the optimal strategy of B is sharing. The same will happen under a situation that B chooses sharing, the optimal strategy of A is Sharing. (not sharing, not sharing) equilibrium exists for the following reasons. Given a situation that A chooses not sharing, B ’s payoff is K when he chooses not sharing and is K − Ct when he chooses sharing, so the optimal strategy of B is not sharing. The same will happen under a situation that B chooses not sharing, the optimal strategy of A is not sharing. Table 1. Payoff matrix of knowledge sharing in r&d team B Not sharing A

Not sharing

K

Sharing

K  Ct

K (1  D ) K  Ca

Sharing

(1  D ) K  Ca (1  D ) K  I  Ca  Ct

K  Ct (1  D ) K  I  Ca  Ct

As there are two possible Nash equilibriums, in this situation Nash equilibrium does not completely solve the game problem. To conclude which Nash equilibrium will happen, we have to depend on Pareto optimal equilibrium. Despite under the

Institutional Arrangements for Knowledge Sharing in R&D Team

187

situation that I > Ct two Nash equilibriums exist, the two Nash equilibriums have differences of superior. Under Pareto optimal equilibrium the payoff of all the game players are greater than the payoff when they not to other strategies. This leads all the game player choose Pareto optimal equilibrium strategy. When the team members choose (sharing, sharing) strategy, the payoff of each one is (1 + α ) K + I − Ca − Ct . When the team members choose (not sharing, not sharing) strategy, the payoff of each one is K . If I > Ct and α K < Ca are satisfied, the payoff of each one when they choose (sharing, sharing) strategy is greater than when they choose (not sharing, not sharing). So (sharing, sharing) is a Pareto optimal equilibrium. When the each team member chooses sharing strategies, personal benefits and collective benefits can both be achieved optimal. D. If I > 2Ct , Team Member Will Choose the Only Nash Equilibrium (Sharing, Sharing)

Pareto optimal equilibrium is efficiency optimal, but not a forcing law. For a team member who is risk aversion, we should consider the risk factors. A rational game player who is risk aversion may not choose Pareto optimal equilibrium. To make (sharing, sharing) as the only equilibrium outcome, (sharing, sharing) will be a risk optimal equilibrium. Risk optimal equilibrium strategy satisfies that the strategy each game player favors when the other game players choose the two Nash equilibrium strategies with the same probability. According to this condition, (sharing, sharing) is a risk optimal equilibrium strategy should satisfy 1 1 [(1 + α ) K + I − Ca − Ct + ( K − Ct )] > [ K + (1 + α ) K − Ca ] , by solving it we get 2 2 I > 2Ct . The risk optimal equilibrium excludes the team member’s opportunistic choice.

4 Discussion of Institutional Arragements Through the analysis of game model results, we conclude that different institutional arrangements led to different game results. Thus we discuss the following institutional arrangements from the game results. A. From Game Result 1, We Learn That α K ≥ Ca Is a Prerequisite for the Building of R&D Team The prerequisite shows that only the knowledge value the recipient get is more than knowledge absorbing costs, knowledge sharing is an efficient process. Cummings and Teng (2003) found the similarity of overlapping knowledge between knowledge provider and recipient is a direct impact on the absorptive capacity of knowledge [5]. When team members understand one another’s knowledge domains, knowledge can be shared and exchanged more effectively. If the field expertise and knowledge structure of team members are different quite a lot, even if knowledge transfer sides take a lot of time and energy to explain to knowledge recipient, the recipients may still absorb a little or has no incentive to absorb. Then the knowledge transfer sides find themselves

188

T. Jing and Z. Wenping

no effect and not willing to transfer knowledge. Knowledge sharing in the R&D team becomes an inefficient process and team member will choose not sharing strategy. It is essential knowledge recipient and knowledge source have similar overlap of knowledge. Therefore, we can increase the amount of overlap knowledge among members by choosing team members of some overlap knowledge and building team public knowledge. Conclusion 1: R&D team members should be composed of individuals with similar knowledge structures and expertise. While building team public knowledge is helpful to increase overlapping knowledge which will enhance knowledge absorption capacity of team members. B. From the Game Result 2, We Learn That Focusing on Only Individual Incentives Instead of Team Incentives in R&D Team Will Make Knowledge Sharing Impossible

The evaluation of R&D team performance may often consider the main responsible persons and pay attention to incentive mechanism only for a few persons while ignoring the contribution of other team members. When team members feel that their contributions to the team task may be unfairly scrutinized, they may limit the knowledge they share. This evaluation and incentive mechanism can not motivate knowledge sharing among team members. Members will only attach importance to their individual performance and make knowledge sharing happen for reciprocity needs among members. But short-term opportunistic interests will go beyond the benefits of reciprocity needs, which will lead to knowledge-sharing dilemma. The introduction of team performance incentive is possible to break the deadlock and encourage team knowledge sharing. Moreover, benefits of knowledge sharing will further strengthen long-term team cooperation. Conclusion 2: The performance incentive of R&D team should turn from short-term individual incentive to long-term team incentive. C. From the Game Result 3, We Learn That the Efficiency of R&D Team Knowledge Sharing Is Related to Knowledge Transfer Costs

In order to achieve individual optimal and collective Pareto optimal, knowledge transfer cost should be reduced in the process of knowledge sharing till the level that the increase of team performance is greater than knowledge transfer cost. Tacit knowledge and explicit knowledge are quite different in transfer. According to the definition of Nonaka and Takeuchi (1995), tacit knowledge is personal, context specific and therefore hard to formalize and communicate and explicit knowledge can be described as knowledge that is transmittable in formal, systematic language[6]. Different type of knowledge should be transferred in different ways to achieve efficiency. Otherwise it will increase the transfer costs. Explicit knowledge can be transferred through formal documentation and formal knowledge-sharing communities. Tacit knowledge is based on the experience of individuals and is deeply implicit in the team relationship. Conclusion 3: R&D team should create a different mechanism for explicit knowledge transfer and implicit knowledge transfer.

Institutional Arrangements for Knowledge Sharing in R&D Team

189

Knowledge transfer costs in R&D team are also affected by the position and reliability of knowledge source in a specific organization environment. When the knowledge source is not considered reliable or prestigious, knowledge transfer from the source would be very difficult[7]. Then in the traditional hierarchical organization, knowledge transfer from top to down is easy and knowledge transfer costs is high from down to top. In order to reduce knowledge transfer cost, a horizontal organizational structure is needed. It will make each team member express their ideas freely and knowledge be extensive spread in the team. Conclusion 4: Hierarchical organizational structure should be fuzzy and turn to horizontal organizational structure in R&D team. D. From the Game Result 4, the Level of Team Performance Incentives Depends on Knowledge Transfer Costs

It’s common that team which is of high profits and easy to distribute profits among members is easy to be built. While team which is of low profits and difficult to distribute profits among members is hard to be built. An incentive level is critical to knowledge sharing in team. Team member’s unanimously choosing knowledge sharing strategy is affected not only by efficiency factors but also by risk factors. Opportunism of game player does not rule out of some team members’ inconsistent choice. They possibly hold back knowledge if they believe this will bring them into a better position to have an advantage in future competitions for resources in their field. In many instances, R&D workers selectively share knowledge, while monopolizing other knowledge. Team members of risk aversion may adopt a more insurance strategy rather than the Pareto optimal strategy. This concern of risk will spread to the whole team. In order to make all the team members choose knowledge sharing strategy to achieve efficiency and risk on the optimal, appropriate levels of team performance incentives is needed. Conclusion 5： The prerequisite that ensures all team members choose knowledge sharing strategy is that the incentive level of R&D team performance is more than twice of knowledge transfer costs.

5 Concluding Remarks We build game model to describe R&D team knowledge sharing strategy, in which consider the factors of knowledge sharing costs, individual incentive and team performance incentive. We get Nash equilibrium, Pareto optimal equilibrium and optimal equilibrium under different institutional arrangements. By analyzing the model results, the paper proposes institutional arrangements to make knowledge sharing strategy the choice of all members in R&D team. Of course, the background in this study doesn’t discuss differences on knowledge value of team members, which is the extension of this research. Acknowledgments. This research has been supported by the 2010 Educational Science Eleventh Five-Year Plan Research Foundation of Hubei Province, China.

190

T. Jing and Z. Wenping

References 1. Cummings, J.: Work groups, structural diversity, and knowledge sharing in a global organization. Management Science 50(3), 352–364 (2004) 2. Ramesh, B., Tiwana, A.: Supporting collaborative process knowledge management in new product development teams. Decision Support Systems 27, 213–235 (1999) 3. Galletta, D.F., Marks, P.V., McCoy, S.: What leads us to share valuable knowledge? An experimental study of the effects of managerial control, group identification, and social value orientation on knowledge-sharing behavior. In: Proceedings of the 36th Hawaii International Conference on System Sciences. IEEE, Hawaii (2002) 4. Davenport, T.H., Prusak, L.: Working Knowledge. Harvard Business School Press, Boston (1998) 5. Cummings, J.L., Teng, B.S.: Transfer R&D knowledge: The key factors affecting knowledge transfer success. Journal of Engineering and Technology Management 20, 39– 68 (2003) 6. Nonaka, I., Takeuchi, H.: The Knowledge-Creating Company. Oxford University Press, New York (1995) 7. Szulanski, G.: The Process of Knowledge Transfer:A Diachronic Analysis of Stickiness. Organizational Behavior and Human Decision Processes 82(1), 9–27 (2000)

Study on the Forming Mechanism of Brand Alliances Based on the Brand Community Wang Chujian School of Economics and Management ZhengZhou University of Light Industry ZhengZhou, P.R. China [email protected]

Abstract. The brand alliance is an important area within the brand sector. Prior research on the brand alliance has focused either on alliances between one unknown brand and one established brand or on alliances between two wellknown brands, this implies that the brand community plays a key role in the brand alliance. This paper explores the specific forming mechanism of brand alliances based on the brand community. This forming mechanism analysis can provide some theoretical guidance and recommendations for brand alliances. Keywords: brand community, forming mechanism, consumer tendency, life style.

1 Introduction In an era when the cost of introducing new brands is high and success rates are low, the advantages of brand alliances become more important (Aaker and Joachimsthaler, 2000; Keller, 2003) [1][2]. Brand alliances are becoming more frequent in a wide variety of industries (Levin and Levin 2000; McCarthy and Norris 1999) [3][4]. However, a review of brand alliance literature shows that most research has focused either on alliances between one unknown brand and one established brand or on alliances between two well-known brands (e.g. Simonin and Ruth, 1998; Rao et al., 1999) [5][6]. This is consistent with the main line of marketing, in various research streams in marketing such as brand extensions, co-marketing alliances, sponsorships, and brand alliances, perceived fit generally leads to a positive effect on attitudes (e.g., Aaker and Keller, 1990, Bucklin et al., 1993, Rifon et al., 2004 and Simonin and Ruth, 1998) [7][8]. It is expected that fit potentially will have a positive effect on attitudes and purchase intentions. When the new brand is introduced to consumers, the evaluation of consumers may be affected by consumers’ attitudes towards the original brand（ Broniarczyk and Alba, 1994） [9]. Simonin and Ruth（ 1995） examined the growing and pervasive phenomenon of brand alliances as they affected consumers’ brand attitudes, and proposed consumer attitudes toward the brand alliance influence subsequent impressions of each partner’s brand (i.e., “spillover” effects) [10], Rao et al. (1999) proposed that weak brands should join alliances of strong brands. Similar effects were M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 191–197, 2011. © Springer-Verlag Berlin Heidelberg 2011

192

W. Chujian

reported by Washburn et al. (2004) [11], who found that consumers rated cobranded products more positively than each individual brand. Keller and Aaker (1992) maintained that a prior, successful extension increased consumer evaluation of not only a proposed brand extension but also of a core brand itself [12]. By contrast, a poor brand extension diluted consumer evaluation of a core brand (Loken and Roedder John 1993; Sullivan 1990) [13][14]. These research results represent that the success of brand alliances is dependent on the consumer. This will inevitably involve another concept: brand community, the recognition and loyalty of brand community on the existing brand provides just the basis for fit and understanding and evaluation of the consumer towards brand alliances, so we must survey and analyze opinions of the brand community before brand alliances in order to make the personality of the new product and brand fit the community’s life style and value, at the same time, this can lay the foundation for the expansion of the brand community, and thus plays a positive role in the loyalty and brand equity of the existing brand community. In a word, many studies have shown that the brand community has a positive effect on brand alliances, since there are many enterprises adopt advantages of brand community to carry out brand alliances in reality. It would be necessary to study on the forming mechanism of brand alliances based on the brand community which can offer theoretically basis for brand alliances.

2 Brand Community A community is made up of its member entities and the relationships among them. Communities tend to be identified on the basis of commonality or identification among their members, whether a neighborhood, an occupation, a leisure pursuit, or devotion to a brand. Through communities, people share essential resources that may be cognitive, emotional, or material in nature. The idea of communities developing around consumption extends back to Boorstin (1973) who argued that advertisers have been responsible for the development of ‘‘consumption communities’’ since the civil war. These consumption communities were described as groups of people with feelings of shared well-being, shared risks, common interests and common concerns centered on the consumption of a common object (Boorstin, 1973) [15]. Consumption communities have also been referred to as consumption sub-cultures (Shouten & McAlexander, 1995), brand clubs (Langer, 1997) and most recently brand communities (Muniz & O’Guinn, 2001) [16]. A “brand community” as introduced by Muñiz and O’Guinn (2001) is understood as a “specialized, non-geographically bound community, [that is] based on a structured set of social relations among admirers of a brand”. Based on that concept, this study defines a brand community as a group of consumers who share their passion for a specific brand and develop the community based on their own norms, rituals, and traditions. Since it was first introduced, the BC (brand community) concept has attracted many scholars from different fields. Brand communities are composed of people who possess a social identification with others who share their interest in a particular brand (Algesheimer, Dholakia, and Herrmann 2005; McAlexander, Schouten, and Koenig 2002) [17][18].

Study on the Forming Mechanism of Brand Alliances Based on the Brand Community

193

Muniz and O’Guinn (2001) identified three markers that contribute to the development and maintenance of the brand community: consciousness of kind, shared rituals and traditions, and a sense of moral responsibility. Each of these markers represents a latent state formed by a variety of antecedent processes that Muniz and O’Guinn (2001) identified as mechanisms. For example, consciousness of kind refers to the bond that exists between customers of a brand-a close connection that is experienced between customers who may live at great distance from one another and who might not have even met. This connection is commonly defined not in terms of who is ‘‘in’’ but rather, by who is ‘‘out,’’ with community members often viewing marginal members and members of competing brand communities with disdain (Shouten & McAlexander, 1995). Brand communities also feature shared rituals and traditions that are embedded in symbols, events, celebrations and activities that are unique to that particular brand and that serve as reminders of what the brand stands for (McAlexander et al., 2002; Muniz & O’Guinn, 2001). McAlexander, Shouten, and Koenig (2002) defined brand community as, “communities whose primary bases of identification are either brands or consumption activities, that is, whose meaningfulness is negotiated through the symbolism of the marketplace. A brand community is a specialized, non-geographically bound community, based on a structured set of social relations among admirers of a brand. It is specialized because at its center is a branded good or service.” Because they are nongeographic, brand communities can exist anywhere or even virtually. Brand communities may take the form of local clubs based on direct interaction (Algesheimer, Dholakia, and Herrmann 2005), or they may exist entirely on the Internet (Granitz and Ward 1996; Kozinets 1997; Muniz and Schau 2005). Furthermore, brand communities may be based on a wide array of products, including cars, motorcycles, and computers (Algesheimer, Dholakia, and Herrmann 2005; Belk and Tumbat 2002; McAlexander, Schouten, and Koenig 2002; Muniz and O’Guinn 2001; Schouten and McAlexander 1995). Following them on, McAlexander, Kim, & Roberts (2003) explored the brand community integration and its importance to the customer loyalty equation [19]. Their research offers evidence that “the accumulation of consumption experience among customers that express a willingness to engage in marketing relationships leads to a shift wherein other forces, in their case, brand community integration, become more powerful in building loyalty than does overall satisfaction”. They suggested that more research was necessary to establish the boundaries of the brand community conceptualization. The recent research in the brand community includes Fournier and Lee (2009) [20]; Thompson and Sinha (2008); Ouwersloot and Oderkerken-Schroder. As marketers seek to increase marketing efficiency, customer loyalty and brand affinity by building brand communities, they must understand what brand communities require and how they function (Fournier and Lee, 2009). Thompson and Sinha (2008), in their study of participation in multiple brand communities devoted to competing products, concluded that longer-term brand community membership and higher levels of participation in that brand community increased the probability of adopting a new product from the preferred brand and decreased the probability of adopting a product from an opposing brand [21]. Ouwersloot and Oderkerken-Schroder (2008) discussed the importance of understanding the composition of the brand community population for purposes of segmenting based on varying consumption motivations [22].

194

W. Chujian

3 Forming Mechanism of Brand Alliances Based on the Brand Community According to the above discussion, in reality, based on the brand community, it is so easy and quick to establish the right brand alliance. However, it should be noted that companies using this model has two possible reasons: one is the new company or brand, the other is strong or famous brand, two reasons come from two goals. If it is the new brand, the brand community of the brand has not formed, well, the goal of brand alliances is to contract an alliance with a strong or well-known brand, and then this can gradually develop its own brand community and attract new customers at the same time to enhance the marketing clout and market share. If it is a strong or famous brand and has become the relatively stable brand community, the goal of brand alliances is to bring in the new partner whether a new brand or famous brand and then increase the customer value of the brand community and brand equity to get more marketing clout and market share. The forming mechanism of brand alliances based on the brand community is shown in the figure1. Enterprise strategy and culture

Define goals

Determine the leading brand

Brand community positioning

Brand alliances

Implementation and evaluation

Fig. 1. Forming Mechanism of Brand Alliances based on the Brand Community

A. Defining Goals of Brand Alliances Based on Strategic Objectives and Enterprise Culture Different enterprises have different strategies, strategic objectives and enterprise culture. According to the strategy and culture, the firm should define goals of brand alliances, such as develop new products, open new market. B. Determine the Leading Brand Based on the above review, if you are new brand, you will analyze on the fit between your own brand and product and the existing strong brand (one or more) according to your product characteristics, brand personality, core value, customer value and other

Study on the Forming Mechanism of Brand Alliances Based on the Brand Community

195

factors, consequently, you can determine the partner and the leading brand. If you are a famous brand in the market, you will are the leading brand, given this, and establish brand alliances by finding cooperate partners. C. Brand Community Positioning Brand can bring high returns and a stable income fundamentally because of it affecting consumers’ psychology and behavior. The value of the brand is not in itself, but in the minds of customers. Therefore, the choice of brand alliances strategy should be based on customer perception. Products by brand alliances should be both advantages together and meet consumer habits. Therefore we should exactly position the brand community. Brand community positioning includes determining the characteristics and life style of the leading brand’s brand community. The characteristics of the brand community include the size, composition, consumption power, consciousness, ritual and tradition, and moral responsibility of the community. Then we should investigate and analyze shared consumer attitude, consumer behavior, hobby, attitudes, lifestyle habits, media contacts and determine the life style of the community. D. Choosing the Right Partner and Establishing the Brand Alliance Party selection is about to consider above all the brand image in the market. Cooperative brand culture, popularity level and similarity degree of their products are always affected the future of co-brand. Pullig et al. (2006) stated that even partners of similar product categories could harm each other if they were positioned on dissimilar attributes [23]. But also a high degree of similarity instead does not protect brands from negative spillovers. Dahlén and Lange (2005) found out that a brand can be affected by a crisis of another brand in the same product category [24]. The effect is stronger the more similar the brand associations of the brand are. Good partners adjust timely coordination of their brands and strategy which can reduce the risk. According to, as previously stated, the life style of the brand community, on the basis of basic necessities of life, for the purpose of meeting the material needs and spiritual needs, you should find out which brand fits your brand personality, product complementarity and brand equity, and build brand alliances. E. Performance Evaluation of Brand Alliances In order to adjust brand alliances strategies in time, we should implement brand alliances strategy and follow up the effectiveness of implementation. Two parties should integrate all devoted resources, in order to ensure efficiency and integration, two partners must establish the appropriate communication and coordination mechanisms. Moreover, two enterprises should establish evaluation mechanisms to ensure the smooth realization of its goal of brand alliances strategy.

4 Conclusion As we all know, in the times that the environment of market competition is complex on the up-and-up， the success rate of introducing new brands is very low, the

196

W. Chujian

proposal of the brand alliance provides a better solution. However, a review of brand alliance literature shows that most research has focused either on alliances between one unknown brand and one established brand or on alliances between two wellknown brands, the reasons for this is another concept, brand community, playing a key role. At the same time, in reality, the brand alliance based on the brand community will achieve indeed an unexpected effect. The paper maintains that companies using this model have two possible reasons: one is the new company or brand, the other is strong or famous brand, two reasons come from two goals. Then this paper explores the specific forming mechanism of brand alliances based on the brand community. This forming mechanism analysis can provide some theoretical guidance and recommendations for brand alliances, and ultimately contribute to reducing the risk of brand alliances.

References 1. Aaker, D.A., Joachimsthaler, E.: Brand Leadership. Free Press, London (2000) 2. Keller, K.L.: Brand synthesis: The multidimensionality of brand knowledge. Journal of Consumer Research 29, 595–600 (2003) 3. Levin, I.P., Levin, A.M.: Modeling the role of brand alliances in the assimilation of product evaluation. Journal of Consumer Psychology 9, 43–52 (2000) 4. McCarthy, M.S., Norris, D.G.: Improving competitive position using branded ingredients. Journal of Product and Brand Management 8, 267–283 (1999) 5. Simonin, B.L., Ruth, J.A.: Is a company known by the company it keeps? Assessing the spillover effects of brand alliances on consumer brand attitudes. Journal of Marketing Research 35, 30–42 (1998) 6. Rao, A.R., Qu, L., Ruekert, R.W.: Signaling Unobservable Product Quality through a Brand Ally. Journal of Marketing Research 36, 258–268 (1999) 7. Aaker, D.A., Keller, K.L.: Consumer Evaluations of Brand Extensions. Journal of Marketing 54, 27–41 (1990) 8. Rifon, N., Choi, S., Trimble, C., Li, H.: Congruence effects in sponsorship. Journal of Advertising 33(1), 29–42 (2004) 9. Broniarczyk, M.S., Alba, J.W.: The Importance of the Brand in Brand Extension. Journal of Marketing Research 31, 214–228 (1994) 10. Simonin, B.L., Ruth, J.A.: Bundling as a Strategy for New Product Introduction: Effects on Consumer’s Reservation Prices for the Bundle, the New Product and Its Tie-in. Journal of Business Research 33, 219–230 (1995) 11. Washburn, J.H., Till, B.D., Priluck, R.: Brand alliance and customer-based brand equity effects. Psychology & Marketing 21, 487–508 (2004) 12. Keller, K.L., Aaker, D.A.: The Effects of Sequential Introductions of Brand Extension. Journal of Marketing Research 29, 35–50 (1992) 13. Loken, B., John, D.R.: Diluting Brand Beliefs: When Do Brand Extensions Have a Negative Impact? Journal of Marketing 57(3), 71–84 (1993) 14. Sullivan, M.: Measuring Image Spillovers in Umbrella-Branded Products. Journal of Business 63(3), 309–329 (1990) 15. Boorstin, D.J.: The American: The Democratic Experience. Vintage, New York (1973) 16. Muniz Jr., A.M., O’Guinn, T.C.: Brand Community. Journal of Consumer Research 27, 412–432 (2001)

Study on the Forming Mechanism of Brand Alliances Based on the Brand Community

197

17. Algesheimer, R., Dholakia, U.M., Herrmann, A.: The social influence of brand community: Evidence from European Car Clubs. Journal of Marketing 69(3), 19–34 (2005) 18. McAlexander, J.H., Schouten, J.W., Koenig, H.F. (2002) 19. Building brand community. Journal of Marketing 66, 38–54 20. McAlexander, J.H., Kim, S.K., Roberts, S.D.: Loyalty: The influences of satisfaction and brand community Integration. Journal of Marketing Theory and Practice 11(4), 1–11 (2003) 21. Fournier, S., Lee, L.: Getting Brand Communities Right. Harvard Business Review 87(4), 105–111 (2009) 22. Thompson Scott, A., Sinha Rajiv, K.: Brand Communities and New Product Adoption: The Influence and Limits of Oppositional Loyalty. Journal of Marketing 75, 65–80 (2008) 23. Ouwersloot, J., Odekerken-Schröder, G.J.: Who’s who in brand communities and why? European Journal of Marketing 42, 571–585 (2008) 24. Pullig, C., Simmons, C., Netemeyer, R.: Brand Dilution: When do New Brands Hurt Existing Brands? Journal of Marketing 70, 52–66 (2006) 25. Dahlén, M., Lange, F.: A disaster is contagious: How a brand in crisis affects other brand? Journal of Advertising Research 46(12), 388–396 (2006)

Arrangement of Venture Enterprise Financing Contract with Taking Entrepreneurs as Center Contractors Fumin Wang Business School Central South University Changsha, P.R. China [email protected]

Abstract. The innovative production of venture entrepreneurs is a logical starting point of enterprise, and the venture entrepreneurs are the original "center contractors". So this paper tries to investigate the arrangement of financing contract of venture enterprise from the perspective of entrepreneurs. I try to build a financing contract model to explain the phenomenon of asymmetric distribution between residual claims and controls over venture enterprise. In fact, venture entrepreneurs obtain more residual claim than the proportion of their capital or physical assets, and venture capitalists obtain great controls relative to their residual claims. By model analysis and taking venture entrepreneurs as center contractors, the solutions of the best distribution of residual claims and controls are gained. This paper explains the reasons of state dependent of the ownership distribution of venture enterprise and the limitations of the realization residual claims of venture entrepreneurs. Keywords: fiancing contract, venture enterprise, reaidual claims, entrepreneurs, capitalists.

1 Introduction Venture capitals generally invest in the enterprises without revenues or formal product and with very few tangible assets. Compared to the funds of venture capitalists, the proportion of funds of venture entrepreneurs is very low. However, the residual claims of entrepreneurs are greater than their shares of investment. Compared to the tend of residual claims allocating to the venture entrepreneurs with low proportion of own funds or assets, another phenomenon of ownership distribution is that venture capitalists hold more controls than their shares, that is to say the "one share one vote" does not hold in the venture enterprise(Kirilenko,2001) and there is a so-called strong "control lever" effect(Black and Gilson,1998). Entrepreneurs get more residual claims than their proportion of funds and venture capitalists get more controls than the proportion of their residual claims, which are broad phenomenon in venture enterprise. Venture capitalists also set some terms or agreements to limit the realization of residual claims of entrepreneurs. For example, an agreement of shares ownership signed by venture capitalists and entrepreneurs makes the shares of entrepreneurs to M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 198–205, 2011. © Springer-Verlag Berlin Heidelberg 2011

Arrangement of Venture Enterprise Financing Contract

199

be fully vested in him after a period of time(such as 5 years), the fired entrepreneurs will give up their residual shares and sometimes their own shares must be repurchased at a lower price(Hellman,1998). In addition, when the enterprise is liquidated, the venture capitalists often get the priority claims on the residual value, which makes the residual claims of entrepreneurs can be realized after the principal and interest of venture capitalists compensated, in many cases it means that entrepreneurs can not achieve their residual claims. This paper attempts to establish venture enterprise financing model to explain the phenomenon above and draw some relevant corollaries.

2 Model A. Assumptions The every stage before and after the sign between venture entrepreneurs(abbreviated to “E”) and capitalists(abbreviated to “C”) is shown in Figure 1. Assume the capital required to realize the ideas of entrepreneurs is the amount of 1 and the entrepreneurs own funds are a (0
Periond 3˖Signal Screening in good state˖C doesn’t implement (1-c) in bad state˖C implement (1-c)

Period 0˖Selecting E˖(e0,em,a)

Period 2˖Investing E˖sK

C˖(ev,1-a)

C˖(1-s)K

Period 4˖Project ending

Fig. 1. Timing diagram of venture enterprise financing model

200

F. Wang

So this paper makes the following assumptions. (1) The venture entrepreneurs and capitalists are risk neutral and the responsibility of them is limited to their investment bear. (2) The risk-free rate of return of venture entrepreneurs and capitalists is the same value r0. (3) The implementation of ideas requires the venture entrepreneurs and capitalists to work together and the contribution of entrepreneurs to human capital is greater than that of capitalists, that is eoem>vm. B. Participation Conditions of Venture Entrepreneurs and Capitalists Firstly, I discuss the requirement of venture capitalists on the control. The risks of venture enterprise mainly come from entrepreneurs, including the uncertainty of business opportunities quality and the moral hazard of entrepreneurs. The control grasping aims to implement the control to lower occurring probability of moral hazard behavior of entrepreneur and replace the low-ability entrepreneurs. The control is the primary means to avoid investment risks and its ultimate goal is to reduce the investment losses. Clearly, the lower the proportion of entrepreneurs own funds, the greater the likelihood of moral hazard occurrence and the losses of capitalists. Based on the analysis above, in order to effectively control the risks, the control of venture capitalist must satisfy the following equation

1 − c ≥ 1 − ( 12 )

( 1a −1+ e1 −1) m

= 1 − ( 12 )

( a1 + e1 − 2 ) m

(1)

Then I analyze the minimum requirements of the residual claims of venture entrepreneurs and capitalists. Assume the residual claims of entrepreneurs and capitalists are s and 1-s respectively, then the probability of successful implementation of ideas is

e0 em s + vm (1 − s)

(2)

1 − [ e0 em s + vm (1 − s )]

(3)

And the probability of failure is

The implementation of control of venture capitalists makes that entrepreneurs the decision-making power and control of enterprise. Without loss of generality, I let the loss of entrepreneurs equate (1-c)/a. In addition, the main function of the control of venture capitalists is to control the moral hazard of entrepreneurs and replace the entrepreneurs with weak decision-making ability to reduce the investment losses. Their control will help to improve the residual value of enterprise. the greater the control of venture capitalists, the smaller the loss of enterprise liquidation. The residual value is λ(l-c). Through the analysis above I know that the utility function of entrepreneurs is

U E = s[e0em s + vm (1 − s )]K − {1 − [e0 em s + vm (1 − s )]}a − ar0

(4)

Arrangement of Venture Enterprise Financing Contract

201

The utility function of capitalists is

U = (1− s)[e e s + v (1− s)]K 0m V m −{1−[e0ems+vm (1−s)]}(1−a)+(1−c)λ −(1−a)r0

(5)

The participation conditions of entrepreneurs are

U E = s[e0 em s + vm (1 − s)]K − {1 − [e0 em s + vm (1 − s)]}a − ar0 ≥ 0

(6)

The participation conditions of capitalists are

1 − c ≥ 1 − ( 12 )

( 1a + e1 − 2 ) m

(7)

U V = (1 − s )[e0 em s + vm (1 − s )] K − {1 − [ e0 em s + vm (1 − s )]}

(8)

× (1 − a ) + (1 − c ) λ − (1 − a ) r0 ≥ 0 C. Solutions On the basis of the conditions of venture entrepreneurs and capitalists involved in cooperation, next I will analyze the distribution results of residual claims and controls. The object of principal-agent theory, GHM theory and its second-generation models is the existed enterprise and takes investor as the starting point of enterprise, contract designer and centre contractor. The solutions of financing contract model are obtained usually by taking investor utility maximization as objective function. However, the venture enterprise is significantly different from the one described in mainstream enterprise theory. It may be established only after the business opportunities enterprises are found by venture entrepreneurs, therefore the entrepreneurs are prior to investors and the entrepreneurs are the enterprise founder. When the entrepreneurs and capitalists negotiate the financing, the center contractors are the entrepreneurs, not the capitalists. The entrepreneurs will consider how to transfer the residual claims and controls to meet the participation conditions of the capitalists and to maximize their own interests. We know that the controls grasped by the capitalists will form a strong control on the entrepreneurs and at the same time the capitalists can fire the entrepreneurs through the exercise of control over unsatisfied operating performance and behavior and ability of the enterprises. In short, the controls of the capitalists form a strong constraint on the entrepreneurs, so the entrepreneurs will transfer controls as little as possible. Therefore, the solutions of financing model should meet the following conditions max U E = s[e0em s + vm (1 − s )]K − {1 − [e0 em s + vm (1 − s)]}a − ar0

(9)

202

F. Wang

s.t. 1 − c ≥ 1 − ( 12 )

( 1a + e1 − 2) m

(10)

(1 − s)[e0 em s + vm (1 − s)]K −{1 − [e0 em s + vm (1 − s)]}

(11)

×(1 − a) + (1 − c)λ − (1 − a) r0 ≥ 0 The solutions is

s* = (λ a 2 + 1 − a + K ) /[2 K (1 − λ a)] − vm / 2(e0 em − vm ) c* = ( 12 )

(12)

( a1 + e1 − 2 ) m

(13)

3 The Analysis and Inference of the Model From the equation (12) and (13), we can see s* a and c*≺ s* , which mean that the residual claims of entrepreneurs are greater than the proportion of their own funds, but the controls is less than the residual claims. There is not "one share one vote" and from the results of model we can conclude "double separation" of the distribution of venture enterprise ownership. Further analysis of c* shows that for the entrepreneurs with first venturing the existing problems are the lack of own funds and successful experiences. Even if the funds at first financing round are not large, entrepreneurs often are required to transfer a high proportion of controls because of the little a and em. With the further development of enterprise, the assets gradually increase and the operating ability of entrepreneurs is shown. From the results of model above, we can see that the controls required by per unit fund will reduce. In addition, derivate (4) and (5) can get ∂s* 0 ∂s* 0 ∂s* 0 ∂s* ≺ 0 ∂c* 0 ∂c* 0 , ∂e , ∂a , ∂v , ∂e . So I can get the following corollaries. ∂e0 ∂a m m m

Corollary 1: Venture entrepreneurs need to focus on operating ability. In general, entrepreneurs tend to have strong technical background and business sensitive, but if their operating abilities(such as the successful operating experience, etc.) are weak, that is a small e0, they must transfer larger residual claims and controls to venture capitalist. Corollary 2: Reputable entrepreneurs tend to retain great residual claims and controls. Good reputation means the abilities of strong business opportunities finding and management decision-making, that is a large e0 and em, then entrepreneurs may retain great residual claims and controls. Kaplan and Stromberg(2000,2004) found that the greater the risk of management team, the higher the market uncertainty, and the greater the proportion of residual claims received by venture capitalists. Capitalists have a low degree of control on the

Arrangement of Venture Enterprise Financing Contract

203

entrepreneurs with numerous venturing and successful experiences. Even enterprise are not in the ideal state temporarily, capitalists do not immediately intervene. Corollary 3: Reputable venture capitalists have access to a large residual claims. Venture capitalists are not limited to provide a contribution on the venture capital, and management supporting is an another important contribution. Therefore the residual claims of capitalists are affected by the management supporting level, which often depends on the historical performance of capitalists (such as IPO, M&A, liquidation and the evaluation of entrepreneurs of invested enterprise, etc.), that are their reputation. Good reputation of capitalists means the ability of strong management support. In the same amount of investment, entrepreneurs will transfer large residual claims. Zhang(2002) found that in Silicon Valley, for the same amount of investment venture enterprise are generally willing to sell more shares to a good venture capital firms. Corollary 4: The higher the uncertainty of venture enterprise, the greater the residual claims and controls required by per unit financing fund. At the early stage the funds of science and technology venture enterprise are mainly used in R&D and product marketing, and there are relatively few physical assets, that is a small λ. The uncertainty of operating and decision-making capacity of entrepreneurs is not strong too, that is a small em, then the residual claims and controls retained by entrepreneurs is small. Gompers(1995) have studied on 794 enterprises with the support of venture capital. He suggests that if venture enterprises have a lower proportion of intangible assets to total assets, a higher proportion of market value to book value, a stronger R&D intensive, venture capitalists have the stronger controls of the enterprises. Kaplan and Stromberg(2003) show that the controls of venture capitalists on the venture enterprises without sale revenue are higher than that with realized sale revenue.

4 Explanation of State Depend of Ownership Distribution in Venture Enterprise The distribution of residual claims of venture enterprise is separated with funding ratio of both sides, in addition it has some characteristics as follows. (l) State dependent. The residual claims and controls of venture enterprise are subject to the impact of performance. When performance reaches the intended target(satisfied state), entrepreneurs will get more residual claims and controls. If the enterprise is liquidated, entrepreneurs will lose their residual claims. (2) The realization of residual claims of entrepreneurs need to meet certain conditions, and non-compete clauses and shares agreement make entrepreneurs suffer the loss of residual claims from leaving the enterprise. This paper argues that the reasons for the phenomenon above are the uncertainty, weak mortgage and opportunistic behavior of entrepreneurs human capital. A. Weak Mortgage and Uncertainty of Entrepreneurs Human Capital In equation (12) and (13), the main factors influencing s* and c* are e0 and em, which are the forecast results of entrepreneurs human capital before the signing of two sides.

204

F. Wang

Entrepreneurs human capital is uncertain, and the business opportunities with prior high quality will be low-value or even worthless after the event. Furthermore, its high operating decision-making capacity may be also proved to be low. The important basis for residual claims of entrepreneurs, the quality of business opportunities(e0) and operating decision-making capabilities of entrepreneurs(em) are required after-proof. Enterprise performance is a critical evidence to show the quality of human capital, that is, if the enterprise achieves satisfactory state, it indicates entrepreneurs human capital is consistent with the estimated results, and if not, then the entrepreneurs human capital is low. According to equation (12) and (13), at this time the proportion of residual claims and controls of entrepreneurs will drop. For an extreme case, if the enterprise fails, the entrepreneurs human capital has been fully depreciated(excluding external uncertainties, in fact entrepreneurs with strong decision-making ability often can change the enterprise's operating strategy according to the external environment), that is e0 ⋅em →0 . Compared to the funds provided by venture capitalists(1-a), if non-human capital of entrepreneurs(a) is very smaller (a<<1-a), then the mortgage of its assets is weak. Therefore, entrepreneurs and capitalists sign a contract, in which if the enterprise fails, entrepreneurs will give up residual claims and the priority claims on residual value often belong to capitalists. B. The Opportunism of Human Capital Flight After entrepreneurs create enterprise, their human capital will occur the following changes. Firstly, with the enterprise's development, a part of human capital will be specific capital of enterprise. General proprietary human capital include the ability to find business opportunities, operating decision-making ability, customer relations, relationships with capital providers and good reputation, which will be enhanced with the creation and development of enterprise. With the further cooperation, the relationship between entrepreneurs and other employees will be closed, which introduces the existence of collusion to threat the venture capitalists. Overall, with the conversion from a business finder to a decision-makers, the ability to find business opportunities and the decision-making capacity of entrepreneurs may be enhanced. So there is the possibility of human capital flight of entrepreneurs. In order to prevent the human capital flight, venture capitalists and entrepreneurs are often signing non-competition provisions and share ownership agreement. Noncompetition provisions regulate that entrepreneurs will not be engaged in related work after leaving the enterprise created by them in a given period, while the share ownership agreement make the residual claims of entrepreneurs need to be realized after a few years. When entrepreneurs leave the enterprise, it can purchase the residual shares at a low price. These two terms restricting the realization of residual claims of entrepreneurs increase the costs of human capital flight and resist the opportunistic behavior.

5 Conclusions We have always tried to follow the teachings of Coase, that if theory and reality do not match, need to be reviewed is the theory, not the reality(Williamson, 2000). In this article, I believe that the contractual rights of transferring by entrepreneurs are very

Arrangement of Venture Enterprise Financing Contract

205

rich and are continuous variances, between which there are complex alternative and complementary relationship. They are the rational results negotiated by the related parties. Based on such judgments, I stand on the perspective of venture entrepreneurs and build a general equilibrium model of optimal financing arrangement contract to start a comprehensive understanding on the financing law of contractual arrangements. My job is exploring, but not very complete, especially the understanding on the utility function of entrepreneurs may be not accurate. The model is based on the assumption of center contractor of venture entrepreneurs, but not seriously considers the influence of external capital market conditions on the choice of the financing contract, which in reality is a negligible factor. Limited space, I hope to study these problems in future works. Acknowledgment. The author is grateful to the supports of Philosophy and Social Science Fund of Hunan Province (No. 09YBB169) and General Fund of Hunan Provincial Education Department (No. 09C466).

References 1. Yang, Q.: The review of contract and firm theory. Economic Research 1, 80–88 (2002) 2. Yang, Q.: Wealth, enterpreneurship and the optimal financial contracting. Economic Research 4, 41–50 (2003) 3. Mai, Y., Li, Y.: Matheh relation of controls and abilities of venture enterprise. Science and Technology Management Research 1, 127–129 (2007) 4. Liu, X., Liu, P., Han, W.: Research on contract mechanism in venture investment. Journal of Tianjin University 10, 114–117 (2008) 5. Kaplan, S., Stromberg, P.: Financial contracting theory meets the real world: an empirical analysis of venture capital contracts. Review of Economic Studies 70, 281–315 (2003) 6. Kaplan, S., Stromberg, P.: Characteristics, contracts and actions: evidence from venture capitalist analyses. Journal of Finance 59, 2173–2206 (2004) 7. Gompers, P.: Optimal investment, monitoring and the staging of venture capital. Journal of Finance 50, 1461–1489 (1995) 8. Schramm, C.: Research: key to our entrepreneurial future. In: Ewing Marion Kaufmann Foundation, Understanding Entrepreneurship: Research and Policy (2005)

Knowledge Management’s Functions in E-Commerce Implementation Zhang Xi ping1 and Zhu Ming qiang2 1 Department of civil engineering, Wuhan Polytechnic University Industrial & Commercial College, Wu Han, China 2 Department of civil engineering, Wuhan Polytechnic University, Wu Han, China [email protected]

Abstract. With the recent emergence of business being conducted over the Internet, companies are inevitably using information technology to cut costs, increase productivity, reduce the time required to develop new products harness the collective expertise of their employees, and create an extended enterprise by forging closer relationships with their customers, suppliers, distributors and partners in order to remain competitive. In most companies, knowledge management and e-commerce initiatives have been dealt with independently. This paper introduces a relationship between knowledge management and ecommerce. Looking at how e-commerce can be optimized in a company with knowledge management. Keywords: e-commerce, knowledge management, implementation.

1 Introduction Today, the enterprises have already realized their essential property and competitive advantages’ origin is their effective management and the use of organization’s knowledge. The digital revolution did not only change the way in which the enterprises collect, store up and process the consumer behavior but also change the method the business formulates the price, promoting and retails the products, moreover enhances their ability. The information system and information technology’s development can make the enterprises to accumulate the massive consumers’ data and the information with collecting consumer’s characteristic and the information about their purchase way, which is gradually very beneficial to increase the enterprise marketing ability. The e-commerce enterprises’ appearance along with the Internet’ development, the practice and the research in the knowledge management becomes increasingly more and more important. Except the e-commerce enterprises, the traditional enterprise is also building their e-commerce platform on-line. Although the e-commerce development is very quick, many enterprises have not realized the knowledge management which promote enterprise to long-term development and enhance competitive ability can be taken as the management and operation strategy. This article wants to carry on the discussion. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 206–212, 2011. © Springer-Verlag Berlin Heidelberg 2011

Knowledge Management’s Functions in E-Commerce Implementation

207

2 The Basic Principle and Content of Knowledge Management Theory Traditional economic theory believed that the land, labor force and capital are the basic essential factors which can create the wealth. Now, apart from above essential factor outside, we must add several other more important essential factors, such as technology, innovation, information and so on, in a word, is the knowledge. Since human beings enter the information era, the knowledge’s importance is enhanced to a new altitude, even many scholars call the 21st century “the knowledge economy era”. In this era, the knowledge will become the most important strategic resource and to apply knowledge and enhance the knowledge’s additional value will become the core of the economic activities. The knowledge management can be said to be developing unceasingly with the progress of the human civilization, in the different society phases, people all have different methods to manage the knowledge. But only in knowledge economy era, knowledge management is recognized as a true discipline. As a systemic discipline, knowledge management came into being in US in the 1990s, and has aroused general attention in recent years. The concept of “knowledge management” comes from US manager Peter F. Ducker. In 1988, he thought intellectual worker as the individual making up of the new economy, in this economy the hard currency was the knowledge. Peter F. Ducker’s viewpoint has been generally accepted. Knowledge management enhances the enterprise’s the emergency capacity, innovation ability, survivability and the competitive ability through knowledge sharing and utilizing collective wisdom. Knowledge management is the internal knowledge exchange and sharing, which includes: establishing interior information network for the purpose of the communication among the staff; making stimulating policy to encourage the staff to carry on exchange. The knowledge management project is the individual and enterprise’s knowledge production, staff’s innovation ability is an enterprise’s special resource, and the enterprise should implement the human resource management effectively. Fundamentally, knowledge management is the organization treating processes which unifies the data resource and the information technology information-handling capacity and person’ s creation and innovation ability in constantly changing environment to meet the need of the changes, the survival and the ability.

3 The Connotations and Questions of E-Commerce So-called e-commerce (E-business), using the computer technology, the networking and the long-distance communication, realizing the entire commerce (business) in the process of the electrification, the digitization and the computerization, and develops commercial activity on-line. When the enterprise connects its primary service, through the enterprise’s intranet (Intranet), the networking branch (Extranet) as well as the internet (Internet) with the enterprise’s customers, suppliers and other business sellers, other partners as well as the staff directly, each kind of activity occurring is e-commerce. Macroscopically speaking, e-commerce is the information network’s new-brand application, and establishes one kind of new economic order through the e-method. It

208

X. p. Zhang and M. q. Zhu

involves the e- technology and the commercial trade itself, moreover involves other social stratification such as finance, tax affairs, education. The characteristics of the e-commerce are a broader environment, a broader market, a faster circulation and a lower price, meeting the time requirement. The e- commerce covers services including the exchange of information, the pre-sale and the post-sale service, the company and the trade partners may together have and operate the shared commercial methods and so on. In knowledge economy environment, the uncertainty environment and the unpredictability in the future economic are obvious highly. The enterprise will only depend on installing a set of software and hardware system to indicate that it implements the good e-commerce, which is obviously insufficient, will bring many questions. Generally, the frequent questions in the process of the e-commerce implementation may be divided into two aspects: 1 Technical question. This kind of questions is mainly dominant. When start to implement the e- commerce, many enterprises are often lack of the essential technical force to establish software and hardware system independently, therefore, but the establishment of itself innate talented persons matches actually requires a period of time. Because the e-commerce technology changes each day such as the information technology, the mechanics of communication, the computer technology, and the safety technology and so on, the e- commerce implementation first needs a set of complete software and hardware system. In the installs and the maintenance system’s process, as a result of the system renewal promotion, there is also a certain risk for ecommerce’s security.2 Strategic level questions. This aspect question is mainly recessive, but the risk brought can possibly be larger. In the equipment system establishment process, the enterprise can gain dominant knowledge which is mainly documented, standardized, systematization, like standardization operational procedure, systematization’s document. When the equipment system finishes the official operation, the outside professionals invited will leave with the precious knowledge and the experience—the recessive knowledge which enterprise institute gains with difficulty. But many questions are that the enterprise has not met before, like the systematic error influencing the operation flow, the new operation flows harness the customer service quality, high quota cost to invite the exterior organization to carry on the system maintenance and the system upgrade. The gravity in these questions is also different along with the e- commerce operation different degree, which brings the very big hidden danger for e-commerce success implementation.

4 The Necessity of Knowledge Management in the Process of the e-Commerce Implementation In view of the above facts, it is very necessary t carry on the knowledge management in the process of the e-commerce’s’ implementation. Through the knowledge management, the enterprise may effectively discover, organize and use knowledge, to enhance enterprise technological innovation, response ability, the production efficiency and the skill quality, to prevent and to reduce the risk. Specifically speaking, carrying on the knowledge management in e- commerce implementation process is possible to play the following roles:

Knowledge Management’s Functions in E-Commerce Implementation

209

Knowledge management promotes the technological innovation through the following several aspects :(1) The experiments function. By it the enterprise knows the different factors whether can meet consumer’s needs; the target market locates whether accurate and so on, and forecasts the sale’s status perfectly and manages the product stock more effectively. (2) Timeliness. Because the data analysis and the extraction are carried on through the computer and the network, the material may be gained in the very short time. Knowledge management may be possible to speed up the enterprise speed of response through the following several aspects: (1) test function. The enterprise may judge the different trade activities, the strategies and recognize the effects which different methods produce in the implementation by it. (2) interactive function. Using the knowledge library, the enterprise may carry on the communication directly with each kind of different customers; provide the specific services according to customers’ various requirements and so on. According to the personnel records of the unique situations in the database, the enterprise may easily carry on the personalized communication with the customers, having the very high responsiveness. There are two kind concrete manifestations :(1) adaption function. Through the analysis real-time material information in the database, the enterprise may choose the appropriate opportunity momentarily according to the need for the marketing activity to achieve the anticipated target. (2) intelligence. Along with the artificial intelligence technological development, system will provide the reasonable productive plan according to the database demand in the production process. The modern competition needs innovation speed. The effective knowledge management may provide the way gaining knowledge, and enhance the enterprise’s advantage in the competition. Specifically speaking, the knowledge management has the following functions in this domain: (1) selection function. Through the knowledge management, the enterprise can understand staff’s situation more, therefore, the staff may aim at choosing the effective training and the appraisal channels and so on. (2) studies function. One of the knowledge management’s goals is to promote the internal knowledge flowing in the enterprise. Through knowledge management, the staff may raise the vocational level and the knowledge ability rapidly.

5 The Practices of Knowledge Management in the Process of the e-Commerce Implementation A. Reorganizing the Business Events Flow If the e-commerce enterprise wants to realize knowledge management high effectively, it first should establish the main pipe system of knowledge. The knowledge which is the continuous resources has a very important function to the enterprise’s development. The primary mission of the main pipe of knowledge is to organize the knowledge creation, invent and disseminate in maximization, turn the enterprise’s knowledge into its benefit; next it should establish the organizational structure which matches the knowledge management. The enterprise must draw the support from building the e- commerce system, and reorganize the organizational structure, causing it more suitable the knowledge management’s request. The practice proves that the enterprise can obtain the best benefit from the implement the knowledge management, only in the base of

210

X. p. Zhang and M. q. Zhu

reorganization the enterprise flow. On the organization construction, the enterprise must break the organization rank idea in the knowledge flow, flare out the enterprise’s organizational structure, reconstruct the basic-level organization taking the knowledge exchange as the core, and set up the temporary organization for exchanging knowledge; In the knowledge application, the enterprise also needs make the enterprise’s knowledge resources form the knowledge flow in service reasonably which opens access freely, letting each staff contribute his or her own knowledge, experience and specialty for the enterprise while gaining the knowledge. B. Building the Knowledge Management Platform The enterprises implementing e-commerce first should finish the enterprise information gateway’s construction, to compose the enterprise’s internal and external documents, the database, and the each kind of application systems as well as with further informationization construction to provide the opening platform with the international standard construction. Presently, the enterprise information gateway is extending the development to form the enterprise knowledge gateway. The enterprise knowledge gateway is the integration for the knowledge processes platform, the policy-making platform, the platform to issue and to gain knowledge, causing the enterprise’s various departments staff member’s sharing and exchanging the information more smoothly. The knowledge gateway does not only include the dominance knowledge such as database, documents, the enterprise’s policy orientations and the process procedures, but also include the recessiveness knowledge such as work experience and professional skill existing in the staff’s brains and so on. The information gateway’s key point is collection, reorganization and transmission the information, but the enterprise knowledge gateway’s key point is processing and dealing with the information through the data mining and the data processing technology which causes the scattered information to become the knowledge, policy-making supporting. C. Forming the Enterprise Culture which Adapts to the Knowledge Management in the E-Commerce Environment One kind of good enterprise culture is needed to be established to adapt with the knowledge management in the e-commerce, driving the staff participates, applying knowledge, sharing knowledge and innovating knowledge positively, to promote the knowledge transformation. The enterprise culture in the e-commerce must be advantageous to the effective assignment, flow and sharing the knowledge in enterprise interior. The two things occupy the core status of the enterprise culture in the e-commerce: One is the network culture, after building the enterprise’s interior network; the staffs should be good at collecting information using the network to complete the work. The email culture is an important part in the network culture. The enterprise should promote the e-mail system’s use in the interior, to promote building the network culture. Another is the network effect closely related with the network culture, through each person realizes one resources conformity. Therefore, one important aspect in the knowledge management culture is to encourage the knowledge resources to be shared positively, daily between the staff. Now, a quite popular concept is the enterprise’s intelligence quotient. The height of the enterprise’s intelligence quotient doesn’t lie in

Knowledge Management’s Functions in E-Commerce Implementation

211

the company to have one group of high intelligence quotient staff, lies in whether the staff can share knowledge widely in the company, as well as how the staff makes good use of each other’s wisdom to form the enterprise’s cerebrum truly. There are two important origins to help develop the enterprise’s intelligence quotient. One is the individual study; the other is persons with different ideas studying by overlapping. The staff can carry on the cooperation effectively, form the brain’s storm in the project group, make out the best plan, have the same goal and the clear focal points, carry out the task with high morale, and form the team cohesive force in the enterprise with high intelligence quotient finally. D. Building the Knowledge Management Model Can Reflect the Enterprise Ability The enterprise’s ability information and knowledge have the very great value in the ecommerce enterprise cooperation, which may help the enterprise to judge and grasp the cooperation opportunity accurately. In the establishment of the enterprise cooperation relationship, the question which the enterprise faces is how to exchange each other’s ability information and share knowledge effectively with the latent partner. Furthermore, as for the enterprise own, the enterprise needs to understand whether it does have the enough ability to take some specific management duty or develop some new enterprise’s strategy. In choosing the e-commerce enterprise as the right partner, the enterprise needs to build the corresponded enterprise’s ability and the decision supporting system. Before building the model, according to the enterprise’s application background, the enterprise proposes the basic demand for the model: the supported decision given consider fully. The model should be used widely, independent on specific profession district, consistent and clear. The language for building the model should be understudied by all the users; the model is the structurization for depositing the date easily and can be reused and has the function to exchange information and knowledge with other systems. E. Formulation the Evaluation Rule for the Knowledge Benefit If regarding the knowledge management as the e- commerce enterprise’s innovation project, the enterprise needs exam the process and the result which can be looked as one kind “ management ” of the knowledge management. Three aspects should be emphasized in the effect. First, it is “the knowledge networking” that stresses the management the compiled knowledge, that is to say, the enterprise compile is the various departments and the individual intellectual property rights with other intangible assets, placing them on-line publicly “to take reads” momentarily. Second, it is “the cerebrum networking”, which stresses the concealed knowledge management, trying to link the individual wisdom, researching the organization decision-making and the ability to solve problems effectively through the whole staff’s consideration. Finally it is the networking for “the cerebrum” and “the knowledge library”, its goal lies at making individual concealed knowledge dominant, because only in this way can more people study and absorb which may be regarded as the process of the knowledge production. In brief, as it is not long from the establishment of knowledge management theory to the development, there may be some imperfections in the application process, particularly, to apply it in the E- commerce is a completely new practice. Along with the thoroughgoing research, the knowledge management function will be manifesting more

212

X. p. Zhang and M. q. Zhu

evidently. Our country’s E-commerce is in the essential developing stage. It will have extremely beneficial reference value if we can pay attention to the model overseas advanced management concept such as knowledge management. Our country’s enterprise should combine it with our own situation to enhance the benefit unceasingly and to make a greater contribution to our country economic and social development.

References 1. Pei, X.: Enterprise Knowledge Management System in Knowledge Economy Condition. Management Engineering Journal 25, 26–28 (1999) 2. Zhu, C.: The Research on the Dynamic Balanced Relationship between Financial Technology, Investment and Economic Growth. Science Learning and Technology Management 22, 21–26 (2006) 3. Pitt, M., Clarke, K.: Competing on Competence: A Knowledge Management Perspective on the management of Strategic Innovation. Technology Analysis and Strategeic Mangement 12, 75–76 (2004) 4. Liebowitz, J.: Knowledge Management and Its Link to Artificial Intelligence. Expect Systems with Applications 20, 1–6 (2004)

Research and Practice Based on GIS to Improve Commercial Network Management Li Hengkai and Liu Xiaosheng School of Architectural and Surveying Engineering Jiangxi University of Science and Technology Ganzhou, Jiangxi Province, China [email protected]

Abstract. For application requirements about Commercial network management, this paper discussed the feasibility for GIS to improve commercial network management, and used GIS technology to improve the traditional application models of business network management, According to these models, developed a GIS-based commercial network management systems, and the practical application of the system show that the system can improve network management efficiency and scientific and has important value in applications. Keywords: GIS, commercial network, model, system development.

1 Introduction Commercial network management is an important work in modern city construction, the analysis and planning for commercial network all need business information network to support. With the rapid development of Chinese economy, the numbers of commercial networks increase sharply, new types of commercial networks are emerging, and commercial networks in the spatial form are developing to diversify, to simply rely on documents and spreadsheets for information management of network can not meet the needs, and need a new management model urgently. GIS is the technology of spatial data management, query, analysis and visualization, technical support in GIS, using GIS spatial query and analysis, visualization and integration capabilities to its model, you can query the network information of spatial orientation, manage and analyze network information, forecasts product sales, choose network site and distribute logistics etc. In recent years, some scholars have studied, Wang Yuan-fei [1] design and build a commercial network management information systems based on GIS technology, Lai Zhi-bin [2], Zhuang Xiu-qing [3], Chen Yao [4] studied site evaluation model of the retail business by using GIS, Sun Xue-fei [5] design a planning information system framework of commercial network suiting to national conditions by using GIS. These studies provided the theoretical support for the GIS in-depth commercial network management application, this paper based on these studies, combined with the professional model, developed a commercial network management systems based GIS, and take a certain beer sales outlets as an example, the system has been applied in good condition. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 213–221, 2011. © Springer-Verlag Berlin Heidelberg 2011

214

L. Hengkai and L. Xiaosheng

2 The Juncture of GIS and Business Network Management System A. GIS Offers Visual Data Collection and Management In the network information system, there involves a large number of data collection, management and analysis, including urban infrastructure data, networks own data, customer data, etc, GIS provides the best of ways for managing these data. GIS allows the spatial graphics and attribute data to be integrated for management, establishes the organic connection of spatial and attribute information, can provide related application analysis function for these data, and provide visual expression. B. GIS Offers Integration Capabilities of Model GIS has powerful spatial data management and query analysis capabilities, the same time, these features are easy to integrate the other model, and then to solve practical application problem. There is large data processing of spatial and attribute data in the management of commercial networks, GIS provides support for processing these data, the same time, can make use of the combination of GIS analysis function and other mathematical model to aid to business decisions. For example, The location of commercial networks, a good location is the key factor for the profitability, network site involves many factors, both geo-spatial factors, such as traffic conditions, the layout around businesses, construction area, location premium, etc., but also social and human factors, such as demographic factors, purchasing power, consumption habits, etc. we can use GIS analysis function, first analyze the number of candidate region, and then choose some location points in the candidate region, combine evaluation model, such as fuzzy evaluation, gray evaluation , AHP model, etc. evaluate the various points to be selected and find the best location. Throughout the process, GIS and the evaluation model integrate seamlessly together to complete the site selection decision-making. C. GIS Offers Powerful Space Analysis Capacities GIS spatial analysis functions such as buffer analysis, overlay analysis, network analysis model can be used for commercial network management. Such as using GIS point, line, surface buffer analysis, access to other networks information around a commercial network, analyzes the competitive intensity. Using network analysis functions you can analyze the optimal path of logistics distribution for network. Using population topics data and thematic maps of network to superpose, you can analyze the potential demand for the population around various network locations, and be helpful for you to work out the best marketing strategy.

3 The Design of Application Model Based GIS There involves multiple application model in commercial network management system, mainly including: merchandise sales or sales forecast model, marketing strategy planning model network location models, logistics distribution model, etc. These application models provide decision-making support together for the efficient management of commercial network. This paper took network location model as example, and introduced the design idea of the model.

，

Research and Practice Based on GIS to Improve Commercial Network Management

215

Good location plays a key role on whether the commercial network is profit, and be significant. As the selection process involves many factors, some factors such as demographic factors, purchasing capacity, consuming habits, etc. It may not be possible to accurately acquire all data in the site evaluation process, there is some incomplete and uncertainty information, so can regard network location as a gray evaluated object, at the same time, because the considerations involved in geospatial information, you can use GIS to manage and analyze, so that you can establish grey correlation location model in the GIS environment to carry out on the commercial network site. Among GIS primarily take a platform for data management and model integration, and provides spatial data and attribute data query, analysis, display, convenient location staff use this model on the site to accurately judge various factors involved in the process and generate thematic map. Model logic diagram is shown in Figure 1.

Fig. 1. Logical structure map of location model

In the figure 1, first use GIS spatial analysis function, analyze the suitability of location on the network site. The methods is to do buffer analysis respectively for crossroads, roads, residential areas, bus stops and similar commercial outlets, and then do overlay plus and subtraction operation, divide the city location from space into the five grade levels for most suitable, very suitable, suitable, moderately suitable, basic suitable, and generate grade thematic map. Then select a number of points to be selected in thematic maps, according to GIS query and analysis functions, query the relevant information of point to be selected and the evaluation index, and quantify evaluation indexes according to the information. Since each evaluation index has different effects for the location point, in this model, determine the weights by

216

L. Hengkai and L. Xiaosheng

analytical hierarchy process proposed by American operations research scholar A. L. Saaty. According to quantitative evaluation index and the weight of assessment index get evaluation index matrix. According to its own characteristics of each evaluation index, select the corresponding index maximum or minimum value in evaluation index matrix and get theoretical optimal location vector, and use the vector to make the evaluation index matrix normalization, calculate grey correlation for matrix settled and get grey correlation matrix. Finally, use the correlation matrix and the evaluation index weights to calculate and get correlation coefficient vector, the greater correlation coefficient in the vector, the closer coefficients corresponding to the selected point and the theoretical optimal solution, the corresponding points of the largest correlation coefficient shall be the optimal location, at this point, we can use GIS thematic maps to visually display the appropriate degree of each point to be selected. In this model, the key point is the establishment of site evaluation index, quantization of evaluation index and determination of evaluation index weights. Evaluation index system is evaluatation object that the point to be selected involving in various factors, in order to make the best commercial network site, must establish a scientific and reasonable evaluation index system, which is the basis to compare the merits for site points. Compositing the practice of commercial networks site at home and abroad, the model established the index system shown in Figure 2.

Fig. 2. The index system figure of commercial network site

As can be seen from Figure 2, the element data of network location is divided into two types, one is quantitative data, you can query the data directly from the GIS database or acquire through GIS analysis functions, the other is the qualitative data, you can acquire through expert rating. In order to maintain data consistency, for the

Research and Practice Based on GIS to Improve Commercial Network Management

217

quantitative data in 2 grade index belonging to 1 grade index V1, V2, V3, V4, V5, according to the characteristics of specific indicators, are transformed into an expert score. Experts evaluate the standard shown in Table 1. Table 1. The evaluation criteria of expert index Evaluation index Excellent Good

General Poor

Very poor

Assignment

0.9

0.7

0.5

0.3

0.1

Number of experts

x1

x2

x3

x4

x5

For example, for the number of secondary indicators with the same business, for a specific site location, there are 20 experts participating to score, 15 experts of which considered to be excellent, 3 experts considered to be goog, 2 experts considered to be general, the score value is (15*0.9 +0.7*3 +0.5*2)/20 = 0.83, according to this method,you can quantify all secondary indicators by uniform standards. Evaluation index weights are determined by AHP, use Analytic Hierarchy Process (AHP) to determine the index weights, namely, constructe comparison matrix by comparison between the importance of the indexes, calculate eigenvector and eigenvalue of comparison matrix, and do the consistency test,obtained the weights of indexes.The method is used to calculate secondary index weights for all site index system, and then use secondary index weight to multiplie the score of each secondary index quantified, and get the quantitative scores of first level index. and then use grey relational analysis to establish evaluation model, the evaluation process is as follows: Decision-making based on the domain U is the set of points to be selected, and V is the set of evaluation factor， U = (u1 , u2 ,… um ) V = (traffic conditions, competitive conditions, terrain features, area demographics, land costs) = (v1 , v2 , v3 , v4 , v5 ) According to each point to be selected to calculate the value of index and obtain evaluation matrix F as follow: ⎡ f11 ⎢f F = ⎢ 21 ⎢ ⎢ ⎣ f m1

Among

f12

f13

f14

f 22

f 23

f 24

fm2

f m3

fm4

f15 ⎤ f 25 ⎥⎥ = f ij (m × 5) ⎥ ⎥ f m5 ⎦

(1)

f11 is the value of the point to be selected u1 corresponding v1 , the

remaining analogy. In the evaluation indexes, the traffic conditions, competitive conditions, terrain features, population, the greater the value mean the more favorable conditions, while the land cost, it is the cheaper the better. Therefore, construct the evaluation of vector for optimal model a0 = ( f 01 , f 02 , f 03 , f 04 , f 05 ) ，among f 01 、 f 02 、 f 03 、 f 04 is F matrix the maximum of 1,2,3,4 column,

f 05 is F matrix the minimum of 5

column. For eliminating the influence of different indicators and different dimensions,

218

L. Hengkai and L. Xiaosheng

the indexes of F matrix is done dimensionless treatment, construct standardized structure of assessment matrix, such as formula (2). Calculate and evaluation of program indicators index optimal solution vector and vector theory Grey, calculated as follows formula (3). f12 f13 f14 f05 ⎤ ⎡ f11 ⎢ f01 f02 f03 f04 f15 ⎥ ⎢ ⎥ f22 f23 f24 f05 ⎥ ⎢ f21 / f02 f03 f04 f25 ⎥ = fij/ (m×5) F = ⎢ f01 ⎢ ⎥ ⎢ ⎥ fm2 fm3 fm4 f05 ⎥ ⎢ fm1 f02 f03 f04 fm5 ⎥⎦ ⎢⎣ f01

rij ( k ) =

(2)

Δ min + εΔ max Δ ik + εΔ max

(3)

Among，

Δ min is the minimum of the absolute value that corresponding column / elements subtract 1 in F matrix, Δ max contrary, Δ ik is the absolute value of

，

corresponding column elements subtract 1. Decomposi-tion coefficient ε =0.5 get gray correlation matrix r, such as the formula (4). Consider 5 evaluation indexes are different for the importance. calculate weights with the AHP method in this model.

w = ( w1 , w2 , w3 , w4 , w5 ) , weighted correlation vector is such as formula (5). In formula (5) where, the greater value of r0i , the corresponding model T

Weight vector is that

I shows more close to the ideal optimal model, that is the best results of evaluation.

⎡ r11 r12 ⎢r r r = ⎢ 21 22 ⎢ ⎢ ⎣ rm1 rm 2

r13 r23

r14 r24

rm 3

rm 4

r / =rw = (r01 , r02

r15 ⎤ r25 ⎥⎥ = (rij ) m×5 ⎥ ⎥ rm 5 ⎦

(4)

r0 m )T

(5)

4 System Development and Application A. System Development and Application System was developed by using the popular component secondary development way, which can make development easy and efficient. Take ESRI's ArcEngine as GIS software development platform, take C# as development language, take geodatabase as database for unified management.

Research and Practice Based on GIS to Improve Commercial Network Management

219

B. System Function Design Commercial network management system is mainly used for query information on the commercial networks, management, analysis and management decision support, functional block diagram is shown in Figure 3. The various functional modules, each corresponding to complete the function, at the same time, complement each other to form an organic unity. Among them, the basic information management, network information management, customer management major role in one hand, maintain the current situation of system data, at the same time, provide query, statistics, output services, on the other hand, provide data support for the location analysis, sales forecasts and logistics, marketing decision-making Auxiliary function modules, GIS-assisted analysis primarily provide the necessary methods and means for the auxiliary function module. These auxiliary analysis module provided by system, mainly combine with some mathematical models and GIS-assisted analysis to be complete, a location analysis has been described in detail in front, sales forecast provide a variety of forecasting model, including the gray GM (1,1) prediction model , smoothing forecasting model, autoregressive regression model, regression model, neural network model and so on, for specific commodities, commodity future sales and turnover can be forecast. Location analysis is based on the design idea of the location model to aid site selection decision-making. Sales forecast and logistics analysis, may have the statistics of each commodity according to the historical sales data to predict possible future sales, and thus as a basis to arrange the purchase, make supply and marketing balance to optimize, according to the type and quantity of purchase , can arrange the optimal delivery route between number of outlets [6]. Customer management function can make customer related information expressed visually in the form of integration of graphics and text, and can do spatial statistical analysis to understand the spatial distribution of customers based on customer-related data, performance through the thematic map, and analyze the spatial concentration of customers, in order to provide ancillary support. for expanding the customer.

Fig. 3. The block diagram of system function

220

L. Hengkai and L. Xiaosheng

C. The Practice of System Application Based on the above ideas, take the author take C# 2005 as a programming language, take ArcObjects as GIS software platform, take SQL Server 2005 as a database platform for development, integrate a variety of models, and take geographic data of Foshan in Guangdong and commercial network data of Yanjing beer as application data, developed Yanjing beer commercial network management system, Figure 4 is the schematic diagram to use the system for site analysis. In addition to developing some common factions to conduct routine information management, the system mainly achieved various kinds of auxiliary analysis functions showed in Figure 3, practical application shows that, besides providing daily information management, the system can provide a good decision-making support for beer company's management staff, using the network management system can truly scientific management, scientific decision-making.

Fig. 4. Schematic diagram of location analysis

5 Conclusion In this paper, for the problems and needs in commercial networks management, this paper analyze the combining feasibility between GIS and business network management system, take GIS as a technology platform, make full use of GIS spatial data management and spatial analysis capabilities, analyze and design the network management application model, and take these models as the basis, take Yanjing Beer commercial network data as test data, design and implement GIS-based Yanjing Beer commercial network management systems, obtain a good application value. The system greatly increases commercial network management efficiency and scientific, play a positive role in promoting GIS for industry applications of commercial areas.

Research and Practice Based on GIS to Improve Commercial Network Management

221

References 1. Wang, Y.-f., Liu, L.-m., Yang, Q.-z.: Design and implement of the management information system of retail stores based on GIS for Shanghai city. Journal of East Normal University (Natural Science) (6), 29–37 (2007) 2. Lai, Z.-b., Pan, M.: Research of evaluation model of commercial retail net location based on GIS. Geomatics World (2), 22–27 (2009) 3. Zhuang, X.-q., Wei, D.-x.: Analysis of outlets location of retail market based GIS. Market Modernization (12), 1–2 (2008) 4. Chen, Y., Zhu, T., Li, S.-h.: Study on commercial net location model based on GIS. Yunnan Geographic Environment Research 17(6), 44–49 (2005) 5. Sun, X.-f., Wu, J.: Study on GIS management information system based on the commercial network planning requirements. Market Modernization (9), 42–43 (2009) 6. Zhao, P.: Practice of location selecting for the supermarket allocation central based on GIS. Urban Geotechnical Investigation & Surveying (4), 23–26 (2009)

Pricing and Revenue Sharing Analysis on Platforms and Content Providers under Tri-networks Integration Chonglu Wang, Rong Luo, and Zhanhong Xin School of Economics and Management Beijing University of Posts and Telecommunications, Beijing, China [email protected]

Abstract. We analyze the pricing and cooperation revenue sharing issues between platforms and content providers through developing a three-stage price game model based on the theory of two-sided markets. In the model, the past single pricing mechanism is improved by adding content pricing of the content provider and shared revenue rate of information fees, which makes the discussion to be of practical and instructive significance, especially for trinetworks integration issues in China .The study shows that government’s regulation on monopoly platform is necessary, the number of users and content providers accessing to platform, profits of content providers, surplus of consumers and total social welfare are all increased in equilibrium under government’s regulation. Keywords: tri-networks integration, platforms, two-sided markets, game model, pricing.

1 Introduction In January 2010, the State Council executive meeting of PRC proposed to speed up and promote the integration of telecommunications networks, cable TV networks and the Internet and make a substantial progress in tri-networks integration. The tri-networks integration is accelerated and the mutual access between telecom industry and radio and television industry is imperative. Under this background, two interest groups, telecom companies and radio and television companies, are facing unprecedented opportunities and challenges. The integration business is under rapid development all over the country, particularly the IPTV service representative of the tri-networks integration. The telecom companies provide platforms and obtain the broadband access revenues while the radio and television companies provide content and obtain the advertisement revenues and the information fees but have to share revenues with the telecom operators, which is a prevalent business model. However, the specific shared revenue rate of information fee and its pricing are obviously differentiated. Under this business model, what kind of strategies should the platform provider and the content provider take to maximize their profits? Is the government’s regulation on the broadband access fee and the proportion of shared revenue necessary? This paper will focus on the above issues. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 222–232, 2011. © Springer-Verlag Berlin Heidelberg 2011

Pricing and Revenue Sharing Analysis on Platforms and Content Providers

223

IPTV service is an integration business carried out by cooperation of telecom operators that provide networks and platforms and content providers such as television station and SP that provide contents. According to the related definition of a two-sided market by Armstrong (2004,2006) [1] [2], we can know that the platform, consumer and content provider form a typical two-sided market, in which consumers utility for access to the platform depends on the number of the content providers accessing to the platform, vice versa, the more consumers, the more advertisement revenues for the content providers. The theory of two-sided markets is first proposed by Caillaud, Jullien (2003) [3] and Rochet, Tirole (2003) [4] and is further synthetized and extended by Armstrong (2004) [1], Rochet and Tirole (2004) [5]. And the studies on pricing and revenue sharing problems of two-sided markets become a hot topic in recent years. Rochet and Tirole (2002) [6] concluded that the pricing structure and pricing level should also become the defining characteristics. And the optimal price is not proportional to the marginal cost, because the price at one side may be lower than its marginal cost based on the size of the indirect network externalities. The platform firms may possibly tilt the price towards one side or the other side. Caillaud and Jullien (2003) [3] proposed that if the platform firms can promise a price to each participating part, then the platform firms can apply the pricing strategy of Divide and Conquer to the two sides of the market. Evans and Schmalensee (2005a) [7] proposed that an optimal pricing structure needs to be designed and remained so as to maintain the two sides of the market on the platform for mature two-sided markets, and the pricing plays an important role at the same time. Schiff (2003) [11] analyzed the social welfare of firm behavior and three regimes (open duopoly, monopoly and closed duopoly) in the two-sided market. This paper will discuss the impact of firm behavior and government regulation on social welfare under monopoly. With respects to the analysis on twosided markets in the media field, Simon P. Anderson and Jean J. Gabszewicz (2004) [8] discussed the typical cases of two-sided markets in media and advertisement market and conducted relevant researches by taking the radio and television companies as the platform and by taking the advertisers and audience as interacting parties. However, it is still the two-sided market model under the basic pricing model. The single pricing model is generally adopted among these researches, whereas the pricing model discussed in this paper includes broadband access pricing, content pricing and its shared revenue rate and advertisement revenues. The complexity of the pricing mechanism results in many variations in the strategies for the platform and content providers. The aim of this paper is to set up a two-sided market model to analyze the pricing and revenue sharing issues of cooperative Convergence business between monopoly platforms (telecom operators) and content providers (radio and television stations). Economides, N. and Tåg, J (2007) [9] set up a two-sided market model and discussed the pricing and revenue sharing issues between the monopoly platform and the content provider under net neutrality through extending the model of Armstrong (2006). For reasonable parameter ranges, net neutrality regulation increases the total industry surplus as compared to the platform optimum at which a content provider values an additional consumer more than a consumer values an additional content provider, the content provider has incentives to pay for the platform. This paper extends the model of Economides, N. and Tåg, J (2007) [9] through adding the pricing of the content providers on the content pricing and the shared revenue rate of the information fees,

224

C. Wang, R. Luo, and Z. Xin

which changed the past single pricing mechanism and made the discussion more fit with the current tri-networks integration in China. For the platform and the content provider having some market foundations in the tri-networks integration, the problem of Chicken-and-egg (Evans, 2003a) [10] in the two-sided market access strategy research is ignored in our discussion. We have structured our paper in the following way. We set up a pricing and revenue sharing model of the monopoly platform and the content provider based on the theory of two-sided markets in section 2; in section 3, we analyze the game equilibrium under monopoly platform optimum. In section 4, we analyze the game equilibrium under social optimum. The paper is concluded in section 5.

2 MODEL A. Platform Monopoly Assume that the platform monopoly (Internet access provider) sells broadband Internet access to consumers at a subscription price p and the proportion of shared revenue with the content providers on information fees through contracts is β , that

is, the proportion of the information fees for the monopoly platform is 1 − β . Sharing the information fee between the internet access provider and the content provider is very popular in the market. We assume that the platform monopolist only offers linear fee contracts, meanwhile, the marginal cost per unit information traffic is c when the platform monopolist provides information content transmission services for the consumers and platforms. B. Consumers

Consumers access to the broadband network of the monopoly platform and become users of the content providers. Consumers are differentiated in their preferences for contents. We assume the consumers to be uniformly distributed on the interval [0, 1], i.e., the number of consumers accessing to the platform is xi ∈ [0,1] . A consumer i’s location indexes his/her preference for the Internet, so that consumers with a lower index place a higher value on the service. Consumers pay a transportation cost equal to t per unit of distance “traveled.” The consumer i’s utility is specified as

ui = v + bncp − txi − p − sncp

(1)

where v>c is an intrinsic value that a consumer receives from connecting to the Internet irrespective of the amount of content. ncp is the number of content providers that are active, and b is the marginal value of an additional content provider on the platform for consumers. In the paper, we cited an assumption of Balanced Calling Pattern (Laffont, 2003)[12], i.e., the consumers are interested in all the content providers and each consumer will possibly visit the content provided by each content provider. Assume that each consumer receives one unit flow from each content provider, then the content demand of each consumer is ncp units flow, s is the content

Pricing and Revenue Sharing Analysis on Platforms and Content Providers

pricing of the content provider for unit flow, and

225

sncp is the information fees paid by

each consumer. C. Content Providers We assume content providers to be uniformly distributed on the unit interval of [0, 1], i.e., y j ∈ [0,1] . Content providers are independent monopolists, each in its own market, and therefore do not compete with each other. Content providers are heterogeneous in terms of the fixed costs of coming up with a business idea and setting up their business. A content provider indexed by j faces a fixed cost of fy j , where

y j is the index of the content provider’s location on the unit interval. The

marginal costs for serving advertisements to consumers are taken to be zero. Each content provider then earns anc as advertisement revenue, where nc is the number of consumers paying the platform for access to content providers and a is the advertisement value for a content provider of an additional consumer connected to the Internet. According to the shared revenue rate of information fees specified by the monopoly platform, each content provider receives the information fee β s from each consumer. Thus, a content provider j’s profit is

π j = anc + sβ nc − fy j

(2)

D. Model Solution In this two-sided market, the demand for content depends on the expected amount of content provided since more consumers will connect to the network if more expected content is available. In addition, the provision of content depends on the expected number of consumers. That is, when the expected number of consumers is expected number of content providers is

nce and the

ncpe , the marginal consumers and marginal

content providers, who are indifferent between subscribing to the platform and remaining outside, i.e., ui = 0 , π j = 0 , are

xi = nc =

v + bncpe − p − sncpe

y j = ncp =

(3)

t

ance + β snce f

(4)

Assume that the information is symmetrical in the market, and each side of the market correctly anticipates its influence on the demand of the other side and therefore,

ncp = ncpe , nc = nce . Thus, the number of consumers and active content providers in

226

C. Wang, R. Luo, and Z. Xin

equilibrium is given by the solution to the simultaneous equation systems (3) and (4), which is

nc e =

f (v − p ) ft − (b − s )(a + s β )

(5)

ncp e =

(v − p )(a + s β ) ft − (b − s )(a + s β )

(6)

Given the above assumption, we can obtain the monopoly platform’s profits ∏( p, s, β ) = pnce + ((1− β )s − c)ncpence =

f (v − p)2 (s − sβ − c)(a + sβ ) fp(v − p) + ( ft − (b − s)(a + sβ ))2 ft − (b − s)(a + sβ )

Meanwhile, we know that if

π j = anc + sβ nc − fy j ≥ 0 ,

(7)

the content provider will

e e e , the access to the platform, i.e., only if y j ≤ an c + s β n c = an c + β sn c = n cp f f content provider will access to the platform. Thus, a content provider’s profit is

∏ =

cp

( p, s, β ) = ∫

ncpe

0

(ance + sβ nce − fy)dy

(8)

f ( p − v)2 (a + sβ )2 2( ft − (b − s)(a + sβ ))2

Likewise, we know that if ui = v + bncp − txi − p − sncp ≥ 0 , the consumer will access to the platform, i.e., only

xi ≤

v + bncp − p − sncp t

=

if

v + bn − p − sncpe e cp

t

= nce , the consumer will access to the

platform. Thus, a consumer’s surplus is nce

CSc ( p, s, β ) = ∫ (v + bncp e − tx − p − sncp e )dx 0

(9)

f 2t ( p − v)2 = 2( ft − (b − s)(a + sβ ))2

From (7) (8) (9), the total social welfare is TS( p, s, β ) = ∏( p, s, β ) + CSc ( p, s, β ) + ∏ cp ( p, s, β ) =

f (v − p)2 (s(1− β ) − c)(a + sβ ) fp(v − p) + ( ft − (b − s)(a + sβ ))2 ft − (b − s)(a + sβ ) +

f t ( p − v) f ( p − v) (a + sβ ) + 2( ft − (b − s)(a + sβ ))2 2( ft − (b − s)(a + sβ ))2 2

2

2

2

(10)

Pricing and Revenue Sharing Analysis on Platforms and Content Providers

227

3 Equilibrium Analysis under Monopoly Platform Optimum This paper sets up a three-stage price game model for equilibrium analysis. In the first stage, the monopoly platform firstly determines the proportion of shared revenues β on information fees; in the second stage, the content provider decides the content pricing s to maximize his/her profits after giving the proportion of the shared revenue; and in the third stage, the monopoly platform determines the broadband access price p. This is a typical perfect information dynamic game and the Nash Equilibrium solution is given by using backward induction. Stage 3: The monopoly platform chooses the broadband access price p to maximize its profits after viewing the pricing s specified by the content provider, defined by

∂∏ = 0 , according to equation (7), is given by ∂p p=

v(a(b − 2c + s − 2sβ ) + sβ (b − 2c + s − 2sβ ) − ft) 2(a(b − c − sβ ) − sβ (c − b + sβ ) − ft)

(11)

Stage 2: After the broadband access price p is determined, the content provider chooses the content pricing s to maximize his/her profits, defined by

∂ ∏ cp ∂s

= 0,

according to equation (8), is given by

s=

ft β − a

β

(12)

The relationship between the broadband access price p and the proportion of shared revenue β is given by substituting the equation (12) into equation (11) for simplifying

p=

(a − 2(a + b − c ) β + (b + 2 ft β ) β )v 2( −(a + b − c) β +

ft β (1 + β ))

(13)

Stage 1: The monopoly platform anticipates the results of the second and third stages and chooses the proportion of shared revenues β to maximize its profits by substituting equations (12) and (13) into the equation (7) for simplifying, defined by

∂∏ = 0 , is given by ∂β

β* =

(a + b − c)2 4 ft

(14)

The price on unit content in equilibrium is given by substituting equation (14) into equation (12)

228

C. Wang, R. Luo, and Z. Xin

2 ft (b − a − c) (a + b − c) 2

(15)

4aft + b(a + b − c)2 − (a + b − c)3 (a + b − c)(4 ft − (a + b − c)2 )

(16)

s* = Likewise, we find

p* = v

And the scale of consumers and content providers and the profits of the participating parts in equilibrium are given by ncp* =

(a + b − c)v 2 fv , nc* = 4 ft − (a + b − c)2 4 ft − (a + b − c)2

∏* =

fv2 (a + b − c)2 fv2 , ∏cp* = 2 4 ft − (a + b − c) 2(4 ft − (a + b − c)2 )2

CS * =

(17)

fv2 (12 ft − (a + b − c)2 ) 2 f 2v2t , TS * = 2 2 (4 ft − (a + b − c) ) 2(4 ft − (a + b − c)2 )2

Before the equilibrium analysis, we make the following assumptions: Assumption 1: b > a >> c , that is, a content provider values an additional consumer more than a consumer values an additional content provider. Because the number of the content providers is far less than the number of the consumers in the market, and the increased utility for an additional content provider is greater for the consumers. Meanwhile, the investment of the monopoly platform in the initial stage (fixed cost) is larger and the marginal cost is smaller, i.e., c is a smaller value and can be ignored compared with a and b. Assumption 2: ft − (a + b − c) ≥ 0 , that is, the perceptions of the consumers for non-currency payment and the fixed costs of the different content providers are sufficiently differentiated. And the proportion of shared revenue 2

β* =

( a + b − c) 2 (a + b − c) 2 < 1 in equation (13) and β ** = ≤ 1 in equation ft 4 ft

(21) also can be met. We can reach the following conclusions under the assumption conditions. Proposition 1: The shared revenue rate of the information fees in equilibrium is increasing functions of a and b. That is, the more investment put on content innovation by the content providers, the wider the content covered range and the greater the influence of the content (i.e. b is greater), the higher the shared revenue rage of information fees for the content provider in equilibrium. Along with the increasing number of the platform users, the contribution to advertisement revenues of the platform users to the content providers is greater (a is greater), and shared revenue rage of information fees decided by the platform in equilibrium is higher. Likewise,

Pricing and Revenue Sharing Analysis on Platforms and Content Providers

229

with the increasing of a and b, the scale of balanced consumers and content providers is increased as well as the profits of the participating parties. * * Proof. We can obtain from equation (13) that ∂ β = ∂ β = a + b − c > 0 .We

∂a

∂b

can easily draw the conclusion that n cp*、 n c*、∏* 、∏cp* 、 CS * functions of a and b from equation (17).

2 ft

are all increasing

Proposition 2: The content pricing of the content provider is decreasing functions of a and is increasing functions of b in equilibrium. That is, along with the increasing number of monopoly platform users, the advertisement contribution of platform to the content providers is gradually increasing (a is increasing), the content providers will decrease the content pricing to attract more users and obtain more advertisement revenues. In the initial stage of development, if the proportion of shared revenue

β<

4a 2 , So the optimal strategy for the monopoly platform is to increase the 9 ft

shared revenue rate to motivate the content providers and decrease content pricing.

4a 2 However, if the proportion of shared revenue is increased by β > by the 9 ft monopoly platform, the content providers will choose increasing the content pricing to realize profit maximization, the monopoly platform should properly decrease the shared revenue rate so as to lead the content providers to choose lower content pricing. Proof. We can obtain

* ∂s* 2 ft(a − 3b + 3c) , ∂s 2 ft (3a − b + c) = > 0 from equation = < 0 ∂b (a + b − c)3 ∂a (a + b − c)3

(14). * 2 ∂s* 3 ft β − 2a , if 4 a 2 , ∂s * , if β > 4a , . ∂s > 0 = < 0 β < ∂β 2β 2 ∂β 9 ft ∂β 9 ft

4 Equilibrium Analysis under Social Optimum Assume that the government can regulate all the behaviors of the monopoly platform to maximize the social welfare, such as broadband access fees and proportion of shared revenues. Then the above three-stage game process can be interpreted as follows: Stage 3: The monopoly platform chooses the broadband access price p under the government regulation to maximize the social welfare after the content providers choose the content pricing s, defined by given by.

∂TS = 0 , according to equation (10), is ∂p

230

C. Wang, R. Luo, and Z. Xin

p' =

v(a + b − 2c + s − s β )(a + s β ) (a + 2b − 2c)(a + s β ) − ft

(18)

Stage 2: The content providers choose the content pricing s to optimize their own profits after viewing the proportion of shared revenue β . According to equation (8), defined by

∂ ∏ cp ∂s

= 0 , is given by s' =

ft β − a

β

(19)

Stage 1: The monopoly platform anticipates the results of the second and third stages and chooses the proportion of shared revenue under the government regulation to maximize the social welfare by substituting equations (18) and (19) into the equation (10) for simplifying, defined by

∂ ∏TS = 0 , is given by ∂β (a + b − c) 2 ft

(20)

( c − b ) ft + b ( a + b − c ) 2 − ( a + b − c ) 3 ( a + b − c )( ft − ( a + b − c ) 2 )

(21)

β ** = Likewise, we find

p** = v

s** =

2 ft (b − c) ( a + b − c) 2

(22)

And the scale of consumers and content providers and the profits of the participating parts in equilibrium are given by n cp** =

( a + b − c )v fv , n c** = ft − (a + b − c) 2 ft − (a + b − c)2

∏** = − CS ** =

(a + b − c) 2 fv 2 (a + b − c)2 fv 2 , ∏cp** = 2 2 ( ft − (a + b − c) ) 2( ft − (a + b − c) 2 )2

(23)

f 2tv 2 fv 2 , TS ** = 2 2 2( ft − (a + b − c) ) 2( ft − (a + b − c)2 )

Proposition 3: The government’s regulation on monopoly platform is very necessary, the number of users and content providers in equilibrium are increased through regulation on the broadband access pricing and shared revenues rate of the monopoly platform. Under regulation, profits of content providers, surplus of consumers and total social welfare are all increased. (1) the proportion of shared revenue in equilibrium under social optimum is higher than monopoly platform optimum

Pricing and Revenue Sharing Analysis on Platforms and Content Providers

231

(2) the broadband access price in equilibrium under social optimum is lower than monopoly platform optimum (3) the content pricing in equilibrium under social optimum is lower than monopoly platform optimum It is conclude that consumer’s surplus benefits from the decreased broadband access fees and content prices and content provider’s profit benefits from the increased shared revenue rate of information fees and advertisement revenues from increased users in equilibrium. Although the content price is relatively decreased, the total shared revenue of information fees are increased with the increased number of the platform users in equilibrium. In addition, the increased number of the users also brings about the increased advertisement revenues for the content providers. And we also find that the total social welfare has been increased under social optimum. Proof. We can easily obtain from the assumption from (14)~(17) and (20)~(23) that Δβ = β ** − β * =

(a + b − c)2 (a + b − c)2 − >0 ft 4 ft

Δp = p ** − p * = v

(c − b) ft + b (a + b − c ) 2 − ( a + b − c )3 (a + b − c )( ft − ( a + b − c ) 2 )

4aft + b (a + b − c ) 2 − ( a + b − c ) 3 (a + b − c)(4 ft − ( a + b − c ) 2 ) (c − b − 4 a ) ft =v <0 ( a + b − c )( ft − ( a + b − c) 2

−v

Δs = s** − s* =

ft (b − c ) 2 ft (b − a − c) ft (2a − b + c) − = <0 (a + b − c )2 (a + b − c )2 ( a + b − c) 2

( a + b − c )v (a + b − c )v − >0 ft − ( a + b − c) 2 4 ft − (a + b − c) 2 fv 2 fv Δnc = nc** − nc* = − >0 2 ft − ( a + b − c) 4 ft − (a + b − c)2

Δncp = ncp** − ncp* =

Δ ∏ = ∏** − ∏* = −

( a + b − c )2 fv 2 fv 2 − <0 2 2 ( ft − (a + b − c) ) 4 ft − (a + b − c ) 2

Δ ∏ cp = ∏ cp** − ∏ cp* =

(a + b − c) 2 fv 2 (a + b − c) 2 fv 2 − >0 2( ft − (a + b − c)2 ) 2 2(4 ft − (a + b − c)2 ) 2

2 f 2tv 2 f 2tv 2 − >0 2 2 2( ft − (a + b − c ) ) (4 ft − (a + b − c) 2 ) 2 fv 2 fv 2 (12 ft − (a + b − c)2 ) ΔTS = TS ** − TS * = − >0 2 2( ft − (a + b − c) ) 2(4 ft − (a + b − c )2 ) 2 ΔCS = CS ** − CS * =

5 Conclusions It is proved that a content provider values an additional consumer (value a) and a consumer values an additional content provider (value b) decide the shared revenue rate of information fees in equilibrium. The increasing of the both can increase rate of shared revenue in equilibrium. The content providers have the incentives to add content innovation investment to increase the shared revenue rate of the information fees. At the beginning of business, the optimal strategy of the platform is to gradually

232

C. Wang, R. Luo, and Z. Xin

increase shared revenue rate, which will in turn leads content providers to decrease information pricing to attract more consumers accessing to the platform and maximize their own profits. When the platform users reached a certain scale, shared revenue rate is also located at a higher level. And the content providers will have higher profits for content innovation, which promotes to increase the content price to maximize its profits. So the optimal strategy of the monopoly platform at this time is to decrease the shared revenue rate to let the content providers choose lower information price. It is also proved that the government regulation on monopoly platform is necessary. Under government’s regulation, the shared revenue rate on information fees is increased, the oppression on small content providers by the monopoly platform is under control which promotes the initiative of content providers for content innovation, and the lower broadband access price and information price attract more uses accessing to the platform which increases the number of users and content providers in equilibrium, and profits of content providers, surplus of consumers and total social welfare are all increased. The pulse of the operation and dispatching of resource are hold more quickly which produces high efficiency and safety. Seen from the aspect of customer service, it make the dealing to the complaints and malfunction proceeding in a swift and effective states when make the flow, containing proposing, accepting, dealing and feedback, of them canonical. By this do the company gain the confidence from the customers as well as assess suitably to the employees. This method brought to the company a remarkable worthiness in the feasibility, advanced and scalability.

References 1. Armstrong, M.: Competition in Two-Sided Markets. Mimeo, University College, London (2004) 2. Armstrong, M.: Competition in Two-Sided Markets. RAND Journal of Economics 37(3), 668–691 (2006) 3. Caillaud, B., Jullien, B.: Chicken & Egg: Competition Among Intermediation Service Providers. RAND Journal of Economics 34, 309–328 (2003) 4. Rochet, J.-C., Triole, J.: Platform Competition in Two Sided Markets. Journal of the European Economic Association (2003) 5. Rochet, J.-C., Tirole, J.: Two-sided markets: an overview. Mimeo, IDEI, Universite de Toulouse (2004) 6. Rochet, J.-C., Tirole, J.: Cooperation among competitors: some economics of payment card associations. Review of Network Economics 33, 549–570 (2002) 7. Evans, D.S., Schmalensee, R.: The industrial organization of markets with two-sided platform. Working Paper 11603, NBER (2005a) 8. Anderson, S.P., Gabszewicz, J.J.: The media and advertising: a tale of two-sided markets. In: Handbook on the Economics of Art and .... (2004). Elsevier, Amsterdam (2006) 9. Economides, N., Tåg, J.: Net neutrality on the Internet: A two-sided market analysis. SSRN eLibrary (2007) 10. Evans, D.: Everything you wanted to know about two sided markets. The Milken Institute Review 2, 36–43 (2003) 11. Schiff, A.: Open and closed systems of two-sided networks. Information Economics and Policy 15, 425–442 (2003) 12. Laffont, J.J., Marcus, S., Rey, P., Tirole, J.: Internet Interconnection and the Off-Net-Cost Pricing Principle. RAND Journal of Economics 34(2), 370–390 (2003)

Research on the Application and Development Prospects of Accounting Wang Na School of Economics and Management Shenyang Ligong University Shenyang, China [email protected]

，

，

Abstract. The goal of accounting is to improve businesses through a better understanding of revenues and expenses. Accounting information historically has played a major role in understanding both tactical and strategic quantitative issues. This paper puts accounting systems in perspective and lays out their fundamental relational data structure. Keywords: accounting, financial Accounting, management accounting, human resources.

1 Introduction Accounting information historically has played a major role in understanding both tactical and strategic quantitative issues. Accounting is mainly metrological unit of currency in order to enhance economic efficiency as the main target, using special methods of the enterprises, institutions, institutions and other organizations to fight economic activity comprehensive, integrated, continuous, systematic accounting and supervise, providing accounting information, and with the growing social and economic development, and gradually open prediction, decision making, control and analysis of an economic management activities, financial management activities is an important part[1]. Accounting yes right a unit of economic activity are confirmed, measurement and reporting, forecast, decision-making, exercise supervision, in order to achieve best value for money of one kind of management activities. Accounting objective is to establish and perfect the system of accounting theory the cornerstone of the establishment of cost accounting objective is to establish and develop a cost structure of the primary problems of accounting theory. Accounting financial accounting and management accounting can be divided into two parts. Financial Accounting: preparation of financial statements for internal and external users of information. Financial accounting information is to provide a wide range of users. The focus is to report the financial position and operating conditions[2]. Management Accounting: business management major is to provide information on various departments within the enterprise as a basis for decisions. There is no standard model, not accounting control. Management accounting financial Accounting is often different from, the main difference between the two is that they serve different M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 233–237, 2011. © Springer-Verlag Berlin Heidelberg 2011

234

W. Na

decision-makers. Financial accounting for shareholders, suppliers, banks and government agencies and other external decision-makers, and management accounting compared to high-level organization leadership, department managers, Dean, hospital directors and managers at all levels within the organization's other services. Accounting and control functions of the main economic activity is reflected in the process of accounting information to ensure the legitimate, true, accurate and complete, to manage the economy to provide the necessary financial information and participation in decision-making, to seek the best economic benefits[3]. The basic functions of accounting and business accounting and implementation of accounting supervision. Accounting is the main use of the functions of the form of monetary measurement, through the recognition, measurement, recording and reporting, from the number of continuous, systematic and completes all units to reflect the economic activities, to strengthen economic management and economic efficiency to provide accounting information. Accounting oversight function is the subject of specific economic activities and related accounting legitimacy, rationality review. The object of accounting refers to accounting by the accounting and monitoring of content, that is, subject to specified economic activities in monetary terms. Economic activities in monetary terms the value is usually known as exercise or movement of funds. Capital campaign, including capital investment in a particular subject, such as capital utilization and capital out of the process.

2 Accounting History Accounting has a long history in China. Modern accounting is a product of the commodity economy. 14-15 century, capitalist commodity currencies of the European rapid economic development, promote the development of accounting. The main signs: First, to use monetary measurement of the value of accounting; Second, extensive use of double-entry method to form the basic characteristics of modern accounting and development of the cornerstone. Since the 20th century, especially after World War II, capitalist production has been an unprecedented degree of social development of modern science and technology and economic management of the rapid development of science. By social, political, economic and technological environment, the traditional financial accounting continuously enriched and improved, so that the work of more standardized financial accounting, general and standardized. At the same time, the accounting discipline in the 20th century, 30 years on the basis of cost accounting, work closely with the modern management theory and practice needs, gradually formed for internal management accounting system for information management, thereby accounting from the traditional things After the account, afterwards, reimbursement, prior to the forecast and decision-making, something in the supervision and control, accounting and analysis afterwards. Production and development of management accounting, accounting history of a great change since then, the formation of a modern accounting financial accounting and management accounting are two branches. With the rapid development of modern production, raising the level of economic management, computer technology is widely used in accounting, the accounting information collection, classification, processing, feedback procedures

Research on the Application and Development Prospects of Accounting

235

from the traditional manual operation, greatly enhance the work efficiency to achieve a fundamental change in accounting science.

3 Basic Concepts of Accounting Accounting principles is to achieve accounting objectives, based on the accounting assumptions to determine the basic norms and rules. Human resources cost accounting as with traditional accounting, the accounting principles to practical human resource accounting into the accounting of its scientific and reasonable guidance on human resources in order to deepen the economic resources of the enterprise specific knowledge[4]. Accounting elements to achieve the accounting objective, according to accounting assumptions on the basic classification of the accounting object is the object of specific accounting is the subject of accounting used to reflect the financial position of accounting to determine the operating results of the basic unit, but it is also the accounting treatment and basic accounting procedures, including assets, liabilities, equity, income, expenses, profits six elements. Human resources as a business asset, the accounting elements include the cost and value.

4 Accounting Applications and Development Prospect Specialty of the development prospects of accounting with the social and economic development and financial management standardization, society all types of enterprises unit right greatly increased demands for accounting, accounting will become in the various Indus tries of a popular professional. Network accounting is relying in Internet environment on a variety of transactions and matters of the recognition, measurement and disclosure of accounting activities. It is also established in the network environment based on accounting information system is an important part of e-commerce. It can help companies achieve financial and operational synergies remote statements, accounted for, audit, auditing remote handling, something dynamic and online financial management accounting to support the electronic documents and electronic money, change the financial information of the acquisition and use patterns, to go paperless business accounting work of the stage. Network environment for the accounting information system provides a full range of support, so that the environment and practice with traditional accounting treatment has undergone great changes. In the network economy, the accounting system to computer and network technology and other new types of information processing tools to replacement of the traditional paper, pen and abacus. Such replacement is a simple change of tools is no longer a simple manual accounting simulation, more importantly; its traditional accounting concepts, theory and practical method ever brought a strong impact and reflection. The value of human resources is implied in the human body can bring potential economic benefits the ability to work, ability to work in the use of this process can create new value. Intrinsic value of human ability to work can only speculate, judge can not be measured accurately, but it creates the external value is measurable. Measuring the value of human resources can create value for the last measurement basis, human resource accounting is itself the value of human resources for measuring and reporting.

236

W. Na

It can reflect the value of human resources both in human resources to create value in the past, the future of human resources can create value. Human resource accounting major but not to put value to the value of output value as a basis of measurement of human resources [5]. This makes the measurement of the value of human resources can not absolutely correct, but only using the projection method. Currently, common methods of measurement of economic value method, goodwill evaluation, wages paid discounted auction price method, random reward value method. As the value of human resource accounting measurement is not based on actual cost, and its measurement methods contrary to the traditional accounting principles, which makes the value of human resource accounting in the West has no integration with financial accounting, but rather as a branch of management accounting human resources management accounting information. Therefore, the value of human resource accounting measurement and recognition issues has become a focal point. To solve this problem more practical approach is to abandon the total distribution of profits according to general tradition. The current method of measuring human resource value of ordinary measurement methods can be divided into monetary and non-monetary measurement methods. As the basic assumptions of traditional accounting measurement currency restrictions, currency measurement methods of human resources have been the mainstream though, but in practice there are many limitations. The value of human resources should be quantitative model of history to put into law by the output method, and rationalize the relationship between values and wages, established by the value of a new mechanism for determining wages. That the economic value of a person's body from the formation of its current status and level of knowledge and skills into a variety of consumer goods prices, health care, investment, education and training investment and the decision to give up the revenue. Their wage income, especially wage income should constitute the basic value of human resources in different projects with different time limits are the sum after conversion to decide.

5 Conclusions At present, people-oriented, talent in the community, With the men played in the development of productivity in the increasingly important role, the importance of the Human Resources Cost Accounting for the Women are aware of the future, human resources cost accounting Ye will surely popular enter areas of accounting theory and practice. Accounting can start from the cashier, currency and capital management, notes, securities, etc. and out, fill in and inspect the original documents, skilled work, and the do accounting positions. Of course, after graduating from the accounting profession, directly involved in accounting. If the timely adjustment of their knowledge structure and develop awareness of the management team, summed up the experience of success and failure, continuously improving the work issues, improve the overall quality will be granted for further development. Continuous development in practical use, improve and ultimately into the traditional accounting, make up the traditional accounting deficiencies in human resources, to better play the accounting records, accounting and oversight functions of corporate financial services.

Research on the Application and Development Prospects of Accounting

237

References 1. Li, X.-H.: On the Corporate Finance Theory and Methodology and critical understanding of the limitations. Accounting Research (10), 100–105 (2004) 2. Wang, Y., Wang, J.-y.: Study on Constructing Dual Structure of Accounting Elements in Government Accounting. Accounting Research 4, 24–30 (2009) 3. Zhai, S.: A Study on the Choice of Accounting Policies by Listed Companies from an Ethical Perspective. Accounting research (3) (2009) 4. Huang, S.: Chen arrows deep. ZHANG like to. Wang Xiaojian merger analysis of the economic consequences of accounting. Accounting Research (08) (2004) 5. O’Malley, J.R., McCraw, J.H., Matheson, L.: Internet Enhanced Surveying: Should We Do It. In: Proceedings of the Thirty-second Southeast Decision Sciences Institute, Hilton Head, SC, pp. 150–151 (2002)

Review of Customer Citizenship Behaviors Scales in Service Perspective Song Yang1,2 and Ma Qinhai1 2

1 School of Business Administration, Northeastern University School of Economic and Management, Shenyang Ligong University Shenyang China [email protected]

Abstract. In service industry, customer behaviors are very important for the service delivery. Past research suggested that Customer Citizenship Behaviors will improve service quality and performance of firms. That how to measure Customer Citizenship Behaviors and whether the scales are suitable will influence the accuracy and scientific of empirical study. The thesis made a retrospect about related literatures about Customer Citizenship Behaviors, reviewed applied scales, and throw out suggestions for developing and applying of scales. Keywords: Customer Citizenship Behaviors, Scale, reliability.

1 Introduction The globalization of the service industry and open international economy require service companies to enhance their competitiveness continually. Service companies have recently been paying more attention to customers in order to improve competitiveness[3]. The current service marketing literature focuses on managing customers as human resources (Bettencourt 1997; Dellande, Gilly, and Graham 2004; Groth 2005). In service firms, customers often act partial employees, participating in the service creation process (Bowenand Schneider, 1985) through the application of their knowledge and skills. This participation may be either in the form of in-role and/or extra-role behaviors (Bettencourt and Brown,1997).Customer in-role behaviors are those behaviors required to perform the service delivery. In contrast, extra-role behaviors are voluntary, helpful behaviors enacted towards the firm, service worker, or other customers that are not required for core service delivery. These behaviors can positively affect the performance of service workers, the organization, and even other consumers, and generally help to create a desirable setting for the parties in a service encounter. Examples might include gestures of appreciation to the service worker in the form of thank you notes or gifts, positive word-of-mouth, or suggestions for service improvements. These extra-role behaviors often involve a sacrifice on the customer's part in terms of time, effort, material possessions or even physical welfare ( Staub,1978), and are collectively referred to as Customer Citizenship Behaviors(hereinafter referred to as CCBs), similar to employee OCBs(Bettencourt,1997). M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 238–243, 2011. © Springer-Verlag Berlin Heidelberg 2011

Review of Customer Citizenship Behaviors Scales in Service Perspective

239

At present, many scholars in china and abroad have concerned and been attention to the CCBs, but the research is still at the initial stage, especially in the measurement of CCBs. In order to providing the reference to other scholars in academe and practicing, the thesis compares and analyses some CCB scales by looking back many literatures.

2 Definition of Customer Citizenship Behaviors In recent years, foreign scholar come up with the concept of Customer Citizenship Behaviors draw on the experience of organization Citizenship Behavior. Customers also provide citizenship behavior for a enterprise or employees, just as employees. Bowen(1986) has suggested that the important distinguish between service and manufacturing industry is customers take part in the process of service products producing in service industry, but customers only take part in the consuming in the manufacturing industry. Therefore, customers also are human resources in service organizations as employees. There are some literatures discussed that service organizations should really pay attention to customers, and should count them as members and employees of organization in a sense [5]. The terms used to label CCBs in the literature include(as shown in table1): Customer Voluntary Performance (Bailey et al., 2001; Bettencourt,1997; Rosenbaum and Massiah, 2007); Customer Extra-role Behaviors (Keh and Teo, 2001); customer OCBs (Liliana L. Bove,2008); or Customer Citizenship Behavior (Groth, 2005; Gruen, 1995). Table 1. Terms used to label CCBs Term Customer Voluntary Behavior Customer Extra-role Behavior Customer Organizational Citizenship Behaviors

Customer Citizenship Behavior

Researchers Bailey et al., 2001 ;Bettencourt,1997; Rosenbaum and Massiah, 2007 Keh and Teo, 2001:Liu Wenxiu,2007 Liliana L. Bove, 2008

Groth, 2005; Gruen, 1995; Xie Lishan .2008; Hong Chongrong, 2005

Definition

Helpful, discretionary behaviors of customers that support the ability of the firm to deliver service quality Customers act promoters of firn voluntarily and provide behaviors which are benefit to firm. voluntary, helpful behaviors enacted towards the firm, service worker, or other customers that are not required for core service delivery behavior of customers that is discretionary; not directly or explicitly recognized by the formal reward system; and that, in the aggregate, promotes the effective functioning of the organization

。

Data source: from related literatures

From the table1, the features of Customer Citizenship Behaviors are as follows [6]: 1) The behaviors are discretionary behaviors of customers, not the behaviors enterprises enforcing.

240

S. Yang and M. Qinhai

2) The behaviors are useful to organizations, and promote the effective functioning of the organization. 3) The behaviors are extra-role behaviors of customers, not obligatory behaviors for service delivery.

3 Review of Customer Citizenship Behavior Scales Because Customer Citizenship Behaviors are benefit to firms, can enhance the quality of service and performance, more and more scholars began to pay attention to the behaviors. A large portion of the researches are empirical studies. So it is the crucial that how to reflect Customer Citizenship Behaviors objectively, effectively and accurately. Scale is a measure of Customer Citizenship Behaviors. It will affect the quality of researches. Based on the literatures in the Springer LINK, Science direct, Wiley InterScience and CNKI database for the past fifteen years, the scales were compared and analyzed. There are different scales for Customer Citizenship Behaviors from LANCE A. Bettercourt developed the scale which included three dimensions and seventeen items for grocery retailing in USA in 1997, showing in table 2. Some scales are developed by the scholars by de-contextualization approach; some scales are modified from Organization Citizenship Behaviors by adaptation approach. Some scales are reflection construct, some scales are formation construct. These scales come from different countries, such as USA, Australia, Korea, Taiwan. These scales have different dimensions, such as three dimensions, eight dimensions and four dimensions. The simplest scale includes only three items, the most complicated scale includes twenty-nine items. In some scales, Customer Citizenship Behaviors was as unidimensional construct, in the others, it was as multidimensional construct. The research involved different service scopes, including grocery retailing, medical service, hairdressing and e-service. Table 2. Customer Citizenship Behaviors Scales list1

1 2 3 4 5 6

name CCB-A Customer OCBs CVP CCB-K CCB-T CERB

researchers Groth Liliana L.Bove LANCE A. Bettencourt Youjae Yi Hong chongrong Liu wenxiu

year 2005 2007 1997 2008 2005 2007

country Australia Australia USA Korea Taiwan Taiwan

Data source: from related literatures

The earliest Customer Citizenship Behaviors scale namely CVP was developed by LANCE A. Bettencourt in 1997. Seventeen items were generated based upon conceptual definitions and the literature review to measure the three dimensions of Customer Voluntary Performance. CCB-A was developed in a multistage process using the Q-Sort technique(Stephenson,1953) by Groth (Australia, 2005)a technique that has been 1

The scales were named by the abridge of the English name. Such as CVP was for the Customer Voluntary Behavior, the A, K and T of CCB-A、 CCB-K、 CCB-T stood for the country, namely Australia, Korea and Taiwan.

Review of Customer Citizenship Behaviors Scales in Service Perspective

241

successfully used in the past to develop scales for organizational behavior constructs (e.g.,Greenberg,1986;O’Reilly,Chatman,&Caldwell 1991). The final measure consisted of 12 items, 4 items for each of the three dimensions of CCBs: making recommendations, providing feed back to the organization, and helping other customers. The number of items is moderate, several scholars have used the scale to measure Customer Citizenship Behaviors, including Youjae Yi (2006), Xie lishan(2007), Boris Bartikowski（ 2009） . After drawing scale items of customer OCBs from a number of sources (Bettencourt, 1997; Gruen, 1995), inter-item and item-to-total reliability tests and exploratory factor analyses were conducted by Liliana L.Bove (2008). From this process, 29 items remained for the next step. Three service contexts( pharmacy, hairdressing and medical services) where personal loyalty and customer OCBs are likely to be present, provide the industry back drop for the study. Liu wenxiu(2007) made Customer Citizenship Behaviors as unidimensional construct based on My3q website in Taiwan. CERB includes only three items(the number of items is least) . Hong chongrong(2005) developed CCB-T scale based on grocery in Taiwan. The scale includes four dimension, namely altruistic, conscientious, courteous and civic virtues, and twenty items. Youjae Yi presented two studies to research CCBs. In Study1, he gathered data from customers (students) of an executive-MBA program (i.e., a business-to-customer setting). In Study2, the researcher gathered data from customers (buyers) of organizational products (i.e., busiess-to-business setting). Customer citizenship behaviors was measured with seven-item scales adapted from prior research(Bettencourt,1997). Customer citizenship behaviors was modeled as formative measures. Table 3. Base indicators of ccb scales Name

CVP

Indicator Scope Sample Dimensions Number Reliability/ validity Scope Sample Dimensions

CCB-A

Number

Reliability/ validity

Value Grocery retailing 215 customers Loyalty/ cooperation/ participation 17 Cronbach s values participation 0.85; Loyalty 0.75 cooperation 0.69 CFA χ2 = 199.65, df = 116, p < 0.0001; CFI = 0.92; TLI = 0.91). e-service 191 adults were surveed at a southwestern U.S. county superior court jury pool. Recommendations /helping other customers/ providing feed Back to the organization 12 Almost all items loaded .70 or higher on the hypothesized factor(oneitem loaded.58), whereas almost allcrossloadings were below .30(one item had across-loading of .45). The three factors explained 76.63%of the total variance. Cronbach s values were between 0.8 and 0.93. internal correlation coefficents were between 0.56 and 0.78.

′α （ ： ；

： ）。 （

′α

242

S. Yang and M. Qinhai Table 3. (continued) Scope Sample

Custom er OCBs

Dimensions Number Reliability/ validity

B 2 C CC B-K

Scope Sample Number Reliability/ validity Scope

B 2 B

CCB-T

CERB

Sample Number Reliability/ validity Scope Sample Dimensions Number Reliability/ validity Scope Sample Dimensions Number Reliability/ validity

pharmacy, hairdressing medical ervices 484 customers (at least four visits per year) Positive word of mouth/ Displays of relationship/ afliation/ Participation in firm's/ activities/ Benevolent acts of service/ facilitation/ Flexibility/ Suggestions for service/improvements/ voice/ policing of other customers 29 Cronbach alpha values ranged from .78 to .94, composite reliabilities(CR range from .76 to .97 and average variance extracted(AVE) range from .55 to .80. GFI=.90,CFI=.96,TLI=.95,RMSEA=.048, and=748.50, df=349 P<.001 EMBA 209 EMBA students 7

） ranged from 1.2 to 3.0.

The variance inflation factor(VIF) valuesVIF The buyer firms of organization products 68 buyers 5

The conditioning index was no higher than 10, and the maximum variance grocery 485 customers altruistic/conscientious/ courteous / civic virtues 20 Cronbach

′sα values almost all were higher than 0.7(one was 0.65)

e-service 209 website members ---------------------3 Cronbach

′sαvalue was 0.92，CR was 0.75， AVE was 0.5。 Data source: from related literatures

4 Recommendation The research of Customer Citizenship Behaviors is in primary stage, the scales of CCBs are imperfect. There are some recommendations. First, in order to provide theoretical basis for scales, researchers should research CCBs theory deeply. Second, there are few Chinese authors to measure CCBs, and used the scales of other country. There are some limitations for adopting the West scales[7]. 1) cultural limitation. Because the CCBs theory comes from the west, the scales were developed based on observing and summing up for CCBs in the west. Chinese culture and value is a far cry from the wests, so researchers should consider the uniqueness of Chinese culture in measuring CCBs.

Review of Customer Citizenship Behaviors Scales in Service Perspective

243

2)linguistic limitation. When the west scales are used, the accuracy of translation is a difficulty. Because the different of Chinese and western cultures, it is difficult to translation accurately. If the problems about translation can not solved, the reliability of research conclusion may be influenced. （ Hambleton and Patsula, 1998; Harkness, 2003） ） So it is essential to develop localization scale for CCBs fit for our own national conditions. In the last, past research about CCBs restricted to one context, so the universality of research conclusion is under testing.

References 1. Bettencourt, L.A.: Customer Voluntary Performance: Customers As Partners In Service –Delivery. Journal of Retailing 73(3), 383–406 (1997) 2. Groth, M.: Customers as Good Soldiers: Examining Citizenship Behaviors in Internet Service Deliveries. Journal of Management 31(1), 7–27 (2005) 3. Yi, Y.: The Antecedents and Consequences of Service Customer Citizenship and Badness Behavior. Seoul Journal of Business 12(2), 145–176 (2006) 4. Bove, L.L.: Service worker role in encouraging customer organizational citizenship behaviors. Journal of Business Research 62(7), 698–705 (2008) 5. Yi, Y.: The effects of customer justice perception and affect on customer citizenship behavior and customer dysfunctional behavior. Industrial Marketing Management 37(7), 767–783 (2008a) 6. Xie, l., Shen, w., Liang, x.: The research of the relation of customers perceived service justice and customer citizenship behavior based Internet. Management Review 20(6), 17–24 (2008) 7. Chen, x., Xue, s., Fan, j.: Empirical Method in Organization and Management Research. Peking University Publishing House, Beijing (2008) 8. Fan, j., Kong, j.: The research of customer citizenship behaviors Abroad. Foreign Economic & Management 31(9), 47–52 (2009) 9. Markus, G.: Customers as Good Soldiers:Extending Organizational Citizenship Behavior Research to the Customer Domain. Journal of Management 31(1), 415–433 (2005) 10. Wu, r., Li, d.: Positive consuming behavior——concept and scale developing. Management Science 22(5), 72–80 (2009)

China's Low Carbon Economic Rise and Countermeasures of Research Tao Yu Wuhan University of textiles Hubei Wuhan city Hubei province, China [email protected]

Abstract. With economic development, carbon emissions are multiplied, and the carbon economic development model will be severely restricts the future of economic, social, health development, china should actively develop low carbon the economy and change the mode of economic growth and consumption patterns, to reduce carbon emissions and to improve living conditions of active contribution.

Keywords: low carbon, economic development mode.

1 Low Carbon Economic Background On november 17, 2007, the united nations secretary-general mr ban with the united nations intergovernmental climate change special committee took up a fourth ghinda pachouri of climate change and evaluation report. the picture, the international herald tribune in the united nations secretary-general mr ban on the report of the sum. mr ban: article wrote "i think if we do not act, we will happen." the un's latest assessment report more fully and more specifically related to global warming build. Global warming will cause the weather is more common. tropical storm will be more frequent and more violent. the heat and the weather will endanger world part in the forest fire from spreading, and the consequences. rising sea levels would be a disaster in the coastal areas, land water. some regions had the same time, other regions will be in the agonies, the crops in water quality in production and the lowering of trouble. Build 2007 our consumption of coal for about 23 tons, carbon based in the discharge of co2 fuel 54.3 tons, up in the world. in 2007, the country each built a square metres of housing and release of co2 ； 0.8 per production one degrees, to release a kilo each of co2 ； burning 1 litres of petrol and set out to be 2.2 kilograms of co2. these figures show that China's energy consumption in the "high consumption of coal, coupled with the status of fossil energy sources of energy is 92% of the number of take advantage of 68 ％ coal, power production of electricity, 78 ％ on fuel and energy and steel, automobile and building materials, transportation and chemical six large industry accelerated development of china, has become a high c economy". such a severe

亿

亿

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 244–247, 2011. © Springer-Verlag Berlin Heidelberg 2011

China's Low Carbon Economic Rise and Countermeasures of Research

245

challenge that we will introduce low carbon economic mode strategy and national level to consider. To the global climate change the situation and the world is experiencing an economic and social development of the great changes ： low-carbon energy development of technology and build a low-carbon economic development mode and low carbon social consumer mode, and as a coordinating economic development and protection of the relationship between the basic approach and the principal challenges of climate change of priorities.

2 Low Carbon Defined So, how to decrease the production and consumption of the discharge of co2? in the world, the blame for the climate warming, called the "low carbon economy in 2003 was the concept of about At present, low-carbon economy is not uniform definition. 1.

the british government in the future— creation of a low-carbon energy in the economy of first put forward the concept of "low carbon ： economy implies less and less consumption of natural resources of environmental pollution, more than economic output. 2. By appearances, low-carbon economy is to reduce greenhouse gas emissions, but substantial energy consumption and economic development and human life of a new changes, from fossil fuels are characterized by industrial civilization to ecological civilization of the economy a big leap. 3. low carbon emissions of greenhouse gases is the economy as a low economic development, especially on carbon dioxide the main greenhouse gas emissions to effective control. 4. low carbon economy is in low energy consumption, lower emission pollution and low economic base, the essence is to improve energy efficiency and to create cleaner energy structure, is core technology innovation and institutional innovation and development. development of a low-carbon economy is a mode of production and life style, values and national rights and interests of a global revolution. Energy and environmental problem has become a restraining china's economic development bottlenecks. china's future economic development will get low carbon. However, low carbon economic development? how quickly, give priority to do? no specimen. the western development low-carbon economic core objectives is carbon emissions reduction, but in western low carbon chinese economy, china's current stage of development. our path and goals and the west is also different. for example, if the per capita carbon standards, china is the average world level, with western than to be low carbon ； but if the industry of carbon intensity of china belongs to a high carbon.

246

T. Yu

3 Low Carbon Development of Economic Measures The current global only a few nordic countries on the low carbon development road, including canada, australia, the united states, japan and other countries, including developed countries currently had not completed its promise to greenhouse gas emissions reduction targets, the low economic development of carbon is the road was difficult and different. 1.

2.

3.

4.

5.

6.

china shall be continuously from the industrial structure and clean and development of renewable energy, energy reduction three aspects of development of economy. low carbon in economic development dimension into green, green tax increase by such measures, the support of the green economic growth in the national budget and encourage the ecological environment friendly type of investment and infrastructure development ； to actively encourage technology innovation and encourage low-carbon friendly type of technology research, development and dissemination and application, and low carbon technology information exchange. the low carbon the financing of development, energy prices increased by the cleaner energy market and strengthen the competitive at the low carbon as a national strategy to develop and consolidate the sectors during the energy reduction results of and carbon intensity of energy intensity and other important factors included in the planning, and make relevant planning and the pilot projects for demonstration. china's low carbon the key to economic development on energy production and consumption of energy. energy strategy to make appropriate adjustments. low carbon path including industrialization and urbanization in lower emissions, and high efficiency of urban planning and design （ low carbon city ） . local governments and financial policy to encourage and support by the financing and technology innovation and capital flows to promote effective low carbon. the development of economic, low-carbon of the key task is exploring low carbon industrialization and urbanization road, in the next 10 to 20 years time, energy and efficient use of fossil energy and low carbon types of infrastructure facilities and comprehensive measures to quickly across the heavy industry, the completion of the industrialization of major task conducted intensive, compact city development as possible, avoid in the process of development of carbon "the effect", for the all-round transformation of a low-carbon ideas.

4 Conclusions In short, we should promote the rational and moderate, thrift and clean "ways and consumption patterns. the need for national, being united and downtown. every region, city should hold regional differences and important breakthroughs are difficult, and to explore with chinese characteristics of low carbon economic development.

China's Low Carbon Economic Rise and Countermeasures of Research

247

References 1. Cui, X.H., Kong, X.Z., Zheng, F.T.: Low carbon economy and the forestry policy (2009) [a to z. low carbon economic and forestry the development theory — — china’s forestry academic forum member of the sixth. z, c] 2. Kong, X.Z.: Low carbon economy and our forestry development (2009) [z. a low-carbon economic and forestry the development theory — — china’s forestry academic forum member of the sixth. z, c] 3. Zhang, X.J., Fang, Y.: Forestry is low carbon economic times important choice (2009) [z. a low-carbon economic and forestry the development theory — — china’s forestry academic forum member of the sixth. z, c] 4. He, Q.T.: Low carbon economic and low carbon consumption and forestry (2009) [z. a low carbon economic and forestry the development theory — — china’s forestry academic forum member of the sixth. z, c] 5. Zheng, Y., Li, J.: Low-carbon economic perspective of the city with the development of forestry research paper, ecological zones in tangshan nanhu (2009) [z. for example, a low-carbon economic and forestry the development theory— china’s forestry academic forum member of the sixth. z, c] 6. Hou, F.M.: The european union low carbon economic measures to their forestry sector influence— to increase use as an example of the preliminary analysis and revelations gfpm (2009) [z. a low-carbon economic and forestry the development theory— china’s forestry academic forum member of the sixth. z, c] 7. Zhou, Y.Z.: The city planning, construction of a low-carbon city setting (2009) [a z 2009. the sustainable development forum for sustainable development of the seminar and the annual conference of the theses (appeared) [z, c, a total of 112]

Undergraduate Accounting Major's Main Curriculum's Situation Survey Jin Huixin, Zhao Rui, Guo Yanzhen, and Li Guohong Hebei Normal University of Science & Technology Qinghuangdao, China [email protected]

Abstract. Through investigation in our country’s undergraduate accounting major’s main curriculum and lessons time arrangement’s status, we have a better understanding on undergraduate accounting major’s main curriculum and lessons time arrangement’s status as well as problems. On this basis, we make an effective analysis on current our country’s undergraduate accounting major's main curriculum and lessons time. Keywords: curriculum, Teaching hours, experimental hours.

1 Introduction Chinese economic higher Institutions, basically set up undergraduate accounting major, these institutions play an important role in training professional accountants. Whether undergraduate accounting major’s main curriculum and lessons time arrangement is reasonable, has an important impact on training accounting personnel.

2 Review Our State Issued Documents on Undergraduate Accounting Major's Main Curriculum and Lessons Time •

•

The People's Republic of China Education Ministry higher education secretary wrote in 1998, "common colleges and universities undergraduate course catalog and Introduction", prescribes the main course: management, microeconomics, macroeconomics, management information systems, statistics, accounting, financial management, marketing, law, financial accounting, cost accounting, management accounting, auditing. Main practical teaching parts include curriculum practice and graduation practice, these generally arrange 10 to 12 weeks. In 2005, our country promulgated "Chinese common higher colleges’ undergraduate major overview”, Provided the structure and set of undergraduate major. The main course is consistent with "common colleges and universities undergraduate course catalog and Introduction" wrote in 1998, the main practical teaching parts is also Identical.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 248–254, 2011. © Springer-Verlag Berlin Heidelberg 2011

Undergraduate Accounting Major's Main Curriculum's Situation Survey

•

249

August 2004, common higher colleges’ Undergraduate teaching level evaluation program: Education ministry, "common undergraduate Teaching level evaluation program" (draft) provides four parts: First part: common colleges’ undergraduate teaching level evaluation indicators system; second part: common colleges’ undergraduate teaching level evaluation indicators and rating standards; third part: common colleges’ undergraduate teaching level evaluation’s conclusion and standards; fourth part: common colleges’ undergraduate teaching level evaluation program’s related explanation. Common colleges’ undergraduate teaching level evaluation’s indicators system, set seven first-level indicators and featured project, major, curriculum and practice teaching are in the fourth first-level indicators, "major construction and teaching reform" provides, main observation of second-level indicators " course " is the teaching contents and curriculum reform, there is no provision on undergraduate curriculum and lessons time; Main observation of practical teaching is practice and training, practical teaching content, integrated designing experiments and laboratory opening. Integrated designing experiment provides experimental course’s proportion of the total course.

These three documents is for undergraduate accounting major, there is no corresponding provisions on course numbers and lessons time.

3 Questionnaire March 23, 2008, the authors went to Shanghai to attend the "National Universities second CAAT Education Seminar", used the spare time to do a investigation on undergraduate accounting major’s curriculum and lessons times towards 46 participating meeting’s college professional teachers. The author delivered 40 questionnaires, and recovered 35. April 2010, the authors went to shanghai again to participate in "National Universities fourth computer assisted audit teaching Seminar ", revisited the related colleges and teachers. Questionnaire design undergraduate accounting major’s core Course Hours and experimental hours.

4 Investigation Results Because time is so short, the author is not very satisfied with the design of this questionnaire (some countries provided main courses are not included), but from the information collected ,we can see some issues, such as every schools’ accounting major’s curriculum which is included in the questionnaire, include: accounting fundamentals, intermediate financial accounting, advanced financial accounting, financial management, management accounting, tax, law, economic law, audit, financial audit, economic audit and other (cost accounting). Some courses are not opened in some schools, schools which open those lessons, their lessons time and experimental course hours are different. According to questionnaire’s statistics, the author drawn some sample colleges’ course hours’ arrangement chart, it is shown as follows:

250

H. Jin et al.

(1) Accounting fundamentals college

1

2

3

4

5

6

7

8

9

10

54

48 56 72

68 48 72

64 64 64

12 30

30 16 30

12 30 50

lessons hour Course hours

Experimental Hours 10 Total

64

48 68 102 98 64 102 76 94 114

(2) ntermediate financial accounting college

1

2

3

4

5

6

7

8

9

10

lessons hour Course hours

96 90 90 80 64 96

Experimental Hours Total

16 2

24

108 108 108 96 120

13

60

96 90 90 96 66 120 228 108 121 156

(3) advanced financial accounting college

1

2

3

4

5

6

7

8

9

10

64 489 36

72

64

64

64 48

36

102 64

64

5

7

8

9

10

54

72

108 64

lessons hour Course hours

48 54 51 72

Experimental Hours Total

14 48 54 51 86

30

(4) inancial management college

1

2

3

4

6

lessons hour Course hours

64 54 51 64

Experimental Hours Total

48 64

12

12

30

20

64 54 51 76

48 76

84

92

108 64

5

7

8

9

10

40

64

64

(5) management accounting college

1

2

3

4

6

lessons hour Course hours

48 54 34 54

48 64

72

10

12

30

48 54 34 64

48 76

102 40

64

64

1

5

7

8

9

10

36

72

64

48

36

72

64

48

Experimental Hours Total

(6) tax and law college

2

3

4

6

lessons hour Course hours Experimental Hours Total

48 54 54 54

52 64

10

12

48 54 54 64

52 76

Undergraduate Accounting Major's Main Curriculum's Situation Survey

251

(7) economic law college

1

2

3

4

5

6

7

8

9

10

32 48

0

0

64

48

48 54 34 64

32 48

0

0

64

48

1

5

7

8

9

10

64

48

48

64

64

48

48

64

lessons hour Course hours

48 54 34 54

Experimental Hours Total

10

(8)audit college

2

3

4

6

lessons hour Course hours Experimental Hours Total

64 72 51 54

48 64

10

12

64 72 51 64

48 76

5 Analysis of Survey Results As time is limit, the questionnaire did not include management, microeconomics, macroeconomics, management information systems, statistics, marketing, etc. This paper analyze on national colleges’ undergraduate major’s main Courses included in the questionnaire’s, relating with education ministry’s provision (2005 edition). A. Attitude Analysis Survey results show that, deliver 40 questionnaires to college teachers whose college has opened accounting major , and recovered 35 (26 shares are undergraduate accounting major’s teachers, 10 shares are vocational accounting major’s teachers), response rate is 87.5% and there are two invalid questionnaire (only write the curriculum , lessons hour was not written). As college teachers, some teachers do not take seriously the questionnaire, showing the attitude of unconcerned about this research, it is unsatisfactory. B. Analysis of the Setting Course Education ministry prescribes (2005 edition), national colleges’ undergraduate accounting major’s main courses: management, microeconomics, macroeconomics, management information systems, statistics, accounting, financial management, marketing, economical law, financial accounting, cost accounting, management accounting and audit. (The questionnaire didn’t include Management, microeconomics, macroeconomics, management information system, statistics, marketing, etc.) Survey results show that, the courses listed in the questionnaire, 24 accounting undergraduate institutions all opens accounting fundamentals, intermediate financial accounting, advanced financial accounting, financial management, tax and law, audit these six course; there is one school who has not opened management accounting; there are two schools who have not opened economic law. Some schools do not include all nationwide colleges’ undergraduate major’s Main Courses provided by education ministry (2005) in the training program, One reason

252

H. Jin et al.

from the investigation is, as colleges and universities locate in different economic environment, its regional services objectives are different, so they set appropriate courses according to market’s needs and students’ employment need. Second, the ability of their school commencement Such as teachers faculty and hardware can not meet demand; Third, self-development characteristics’ education concept; Fourth, ignore the provisions of the national system, the courses opened do not Implement education ministry’s provisions on nationwide colleges’ undergraduate accounting major’s main courses; Fifth, schools’ training objectives are not clear. But from another perspective, education ministry’s provisions on nationwide colleges’ undergraduate accounting major’s main courses, should increase flexibility. C. Analysis of Lessons Hour Survey results show that, in 24 undergraduate institutions of accounting, accounting fundamental’s maximum lessons hour is 120 hours, minimum lessons hour is 48 hours, lessons hour gap is 72 hours; Intermediate financial accounting’s maximum lessons hour is 108 hours, minimum lessons hour is 48 hours, lessons hour gap is 60 hours; Senior financial accounting’s maximum lessons hour is 72 hours , minimum lessons hour is 32 hours, lessons hour gap is 30 hours; Financial management’s maximum lessons hour is 108 hours, minimum lessons hour is 48 hours, lessons hour gap is 60 hours; tax law ’s maximum lessons hour is 72 hours, minimum lessons hour is 32 hours, lessons hour gap is 30 hours; audit’s maximum lessons hour is 72 hours, minimum lessons hour is 32 hours, lessons hour gap is 30 hours; management accounting’s maximum lessons hour is 72 hours, minimum lessons hour is 32 hours, lessons hour gap is 30 hours (Among them, a school did not open); Economics’ maximum lessons hour is 64 hours, minimum lessons hour is 32 hours, lessons hour gap is 32 hours (there are two schools who does not open economic law). Each core course’s lessons hour do not have a relatively consistent level, that is mainly because that, Each school, according to education ministry’s training objectives, design their own account major’s training program, training objectives and syllabus. Each school’s training objectives are different, core courses offered are different, results in professional lessons hour scattering high and low and undulating ups and downs. In accounting major, national examination includes accounting qualification, CPA, (early, middle and high) the accounting and the audit, the person who obtained relevant qualifications can be employed throughout the country. However, during the school period, students have acknowledged knowledge’s depth and breadth have a great impact on their ability to successfully obtain the relevant qualifications. Among different colleges and universities, the accounting major’s lessons hours’ gap is too big. Taking intermediate financial accounting and financial management’s lessons hour as an example, the gap between the maximum hours and minimum hours is 60 hours. This is not conducive for students to grasp national’s various ability training standards for accounting major students, this also limits the scope of students’ employment regional range. D. Ratio Analysis of Experimental Practical Lessons Hour and Teaching Hours National education ministry provided 2005 edition national universities’ bachelor’s main course’s main practice teaching parts: including course practice and graduate internships, there is general arranged of 10 to 12 weeks. Survey results show that:

Undergraduate Accounting Major's Main Curriculum's Situation Survey

253

Some schools’ main courses have set up an experimental practice, some schools do not. In 24 undergraduate institutions of accounting, accounting fundamental’s maximum experimental lessons hour is 120 hours, minimum experimental lessons hour is 8 hours, lessons hour gap is 112 hours(7 schools have not scheduled to experimental practical lessons); Intermediate financial accounting’s maximum experimental lessons hour is 300 hours, minimum experimental lessons hour is 2 hours, lessons hour gap is 298 hours (9 schools have not scheduled to experimental practical lessons); Senior financial accounting’s maximum experimental lessons hour is 30 hours , minimum experimental lessons hour is 8 hours, lessons hour gap is 22 hours (19 schools have not scheduled to experimental practical lessons ); Financial management’s maximum experimental lessons hour is 60 hours, minimum experimental lessons hour is 8 hours, lessons hour gap is 52 hours (13 schools have not scheduled to experimental practical lessons); tax law ’s maximum experimental lessons hour is 30 hours, minimum experimental lessons hour is 10 hours, lessons hour gap is 20 hours (20 schools have not scheduled to experimental practical lessons); audit’s maximum experimental lessons hour is 60 hours, minimum experimental lessons hour is 8 hours, lessons hour gap is 52 hours (17 schools have not scheduled to experimental practical lessons); management accounting’s maximum experimental lessons hour is 30 hours, minimum experimental lessons hour is 8 hours, lessons hour gap is 22 hours (Among them, a school did not open, 19 schools have not scheduled to experimental practical lessons); Economics’ maximum experimental lessons hour is 30 hours, minimum experimental lessons hour is 10 hours, lessons hour gap is 22 hours (there are two schools who does not open economic law, 21 schools have not scheduled to experimental practical lessons). Survey results show that, experimental practical lessons hour and teaching hours’ ratio is big. taking intermediate accounting courses as an example: the maximum experimental lessons hour is up to 300 hours(teaching hours are 96 hours), but some schools even have not scheduled to experimental practical (teaching hours are 48 hours). In 24 schools who have opened intermediate financial accounting, experimental practical lessons hour and teaching hours’ ratio respectively is: 96： 0、 90： 0、 90： 0、 5： 1、 32： 1、 4： 1、 0.9： 1、 108： 0、 8.3： 1、 0.32： 1、 108： 0、 1.63： 1、 88： 0、 1： 1、 5.63： 1、 48： 0、 72： 0、 1.06： 1、 1.78： 1、 0.4： 1、 80： 0、 2.1 3： 1、 5： 1、 108： 0. Among them, intermediate accounting courses’ maximum ratio of experimental practical lessons hour and teaching hours is 108:0, and the minimum is 0.32:1. the reason which caused this serious ratio gap ,is that, some schools’ philosophy is "employment-oriented, skills-core", One-sided emphasis on certain aspects of the job market‘s demand for skilled personnel, focus on career-oriented training of accounting personnel; some schools’ development is balanced, train students’ comprehensive ability; Others tend to focus on students’ mastery of theoretical aspects’ knowledge points. Although the training program and the curriculum are different from times, we can not pander to training programs and curricula, the author believes that, on the issue of the ratio of experimental practical lessons hour and teaching hours, education Ministry, should make a guiding document to provide the highest ratio value and the minimum limit, so that all colleges and universities demonstrate their teaching characteristics based on education ministry’s guiding principles.

254

H. Jin et al.

References 1. General colleges and universities undergraduate major’s catalog and Introduction. The People’s Republic of China education ministry’s higher education secretary: Edit: Higher education press (1998) 2. Common higher colleges’ undergraduate teaching level evaluation program: Education ministry (August 2004) 3. 2005 version of National colleges’ undergraduate major setting Summary: Education ministry (2005)

How to Build the Knowledge Resources Framework of Real Estate Enterprises Shen Liang-feng Dept. of Engineering Management Central South Univ. of Forestry and Technology Changsha, 410004, China [email protected]

Abstract. Large studies have shown that knowledge resources have been the real source of innovation and competitiveness of real estate enterprises. Therefore, it is the basic work to establish the real estate enterprise knowledge resources framework for implementing knowledge management（KM），and should be given enough attention. A sort of the real estate enterprise knowledge resources framework system has been built in this paper based on the thought of Clark & Henderson’s enterprise knowledge classification，and the contents have been analyzed and expounded. Thus，the real estate enterprises can grasp clearly the basic contents of its knowledge resources，then depict the knowledge system, in the end the solid foundation should be settled for implementing knowledge management. Keywords: real estate enterprise, knowledge resource, framework.

1 Introduction Knowledge resources are the human knowledge entered into the economic system, which have been found and created by the intelligence labor. Knowledge can bring the tremendous wealth for mankind by materialization, and can be used to promote material production then produce market value, and also can be used directly as a mental consumption object. Enterprise knowledge resources are the kind resources that the enterprise owns which can be used repeatedly and be built on the basic of knowledge and information technology, can bring the wealth growth for the enterprise. Generally three aspects are usually included: intangible assets, information resources, intellectual resources[1]. In the era of knowledge economy, the real estate enterprises have being faced new opportunities and challenges, with understanding their knowledge resources has the extremely vital significance for promoting preferably their knowledge management work. A mass of research haved indicated that knowledge resources are the real sources of the real estate enterprise innovation and competitiveness[1]. But the enterprise knowledge resources general without distinction for study will be not managed effectively. Therefore, the enterprise knowledge resources frame system must be established for the enterprise knowledge map more oriented and more systematic contents of knowledge base and the knowledge management system will have more applicability. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 255–261, 2011. © Springer-Verlag Berlin Heidelberg 2011

256

L.-f. Shen

2 The Knowledge Resources Framework of Real Estate Enterprises A. Construction of the Framework System At present, “tacit knowledge” and “explicit knowledge” are classificated generally for knowledge in theory circle, or called “perceptual knowledge” and “expressive knowledge”, but for knowledge management practice this classification appears any rough. According to the contents knowledge resources can be divided into credit resources (including trademarks, the intangible assets of company’s brand and image), technical resources (development, technics and patent of products etc.), information resources, customer resources (relationship resources), human resources (including the enterprise staff’s professional skills and creativity, the ability to solve problems, the ability of management, enterprise employees mental ability), the basic structure resource (the basic structure mainly refers to the enterprise management philosophy, the enterprise culture, the enterprise internal management system and every basic system arrangement of the enterprise formed with external forces) etc. According to the thoughts of Henderson & Clark (1990) with classification organize knowledge into component knowledge and constructing knowledge[2], included above contents then a real eatate enterprises knowledge resources classification framework model has been built and its basic contents seen fellow figure 1. The component knowledge can be independent of real estate enterprises and exist in the special period, quality, conditions and identity of the enterprise, which has the action of support, promoting and enriching the constructing knowledge. Constructing knowledge which must rely on real estate enterprises should build the work mode and shape the corporate image and will be the foundation of attraction, organization and using the component knowledge. In addition the enterprise knowledge resources should be effected by environmental knowledge resources, which can replenish and expand the knowledge resources. For this classification can include specificly and detailedly the real estate enterprise knowledge resources category in its knowledge management practice without discrimination simple and rough, so it will be able to direct real estate enterprises knowledge management activities as construction the knowledge base. B. The Contents of the Framework System 1） Real estate enterprises construction knowledge resources The real estate enterprises construction knowledge is shown and transferred by the enterprise in the daily operation, and is the reflection of the real estate enterprise organization behavior characteristics, which includes “Commercial purpose”, “management strategy”, “enterprise culture” and “the basic rules” of real estate enterprises[3]. a） Commercial purpose The real estate enterprise commercial purpose is to develop the real estate products in generally speaking in pursuit of the profits or real estate products brand for the purpose which has the different reflection in its different operation stages. The “commercial purpose”knowledge which the real estate enterprise cares about has revealed the task, ideas and target of the enterprise organization, and strongly influenced the knowledge resources of the enterprises have and should have. Because of the guide use of the

How to Build the Knowledge Resources Framework of Real Estate Enterprises

257

The knowledge resources of real estate Enterprises

Dependent of organization

Independent of organization

Construction knowledge

business,

supply,

finance,

human

resources,

Enterprise philosophy,

management,

spirit, image, system,

management and background

Clerks behaviors

duties standards,

Business

plan,

documents,

the

patent

design

and

experts

Norms and operation rules

y

Other

enterprises

databases y

knowledge, etc. y

y

project administrative

External knowledge

marketing,

strategic plan

moral, order etc.

y

Absorption

The

enterprise

spillovers

and

management, quality,

y

Real estate basic knowledge

development

Knowledge

y

KM skills

knowledge

Concept of real estate

Participants

Basic rules

culture

y

Enterprise

strategy y

Management

purpose

Commercial y

Environmental knowledge

Component knowledge

Network

resources,

etc.

products, etc.

etc.

Fig. 1. The Classification Frame Model and Contents of Real Estate Enterprise Knowledge Reseurce

enterprise “commercial purpose” knowledge resource for the establishment of the enterprise strategy and the influence on action of the knowledge, the estate enterprise would formulate the strategy which should have damage to its performance if its such knowledge with vague, inappropriate or without careful evaluation. Therefore the real estate enterprise “commercial purpose" knowledge resources should be considered before its strategic objectives have been formulated. b） Management strategy “Management strategy” is a series of comprehensive plan of the enterprise’s basic rules, culture, knowledge skills and participants knowledge[4], and the “management strategy” knowledge resources refers to the relevant knowledge which define the organization tasks to make it achieve its objectives by the effective ways, which are often independent of the enterprise culture, the purpose, the rules and regulations. Two enterprises may have different strategic plan in spite of the same or similar purposes, such as vanke and gemdale, their purpose is to win a dominant position in the real estate market and the field, but they adopt different “management strategy” because of their different “management strategy” knowledge resources[3]. The strategic of marketing competitive advantages has been adopted by vanke, and its “strategic” knowledge resources connect more with the market (marketing). The “strategic” of gemdale concerns with improvement the production process and the quality, so its “strategic”

258

L.-f. Shen

knowledge resources connect more with production process. The bigger difference has been existed between the two “management strategy” knowledge resources. c） The enterprise culture The enterprise culture is the humanistic management theory which takes the enterprise management philosophy and enterprise spirit as the core, and agglomerates the enterprise staffs belonging, enthusiasm and creativity, and it is also the economy culture which influenced and restricted by the social culture and takes the enterprise rules and physical phenomena as the carrier[5], and the enterprise staff's mission, values and behavior will be directly affected by the enterprise culture which include enterprise philosophy, enterprise spirit, enterprise target, enterprise image, enterprise system, enterprise management, enterprise ethics, enterprise quality and enterprise order etc. Therefore the enterprise culture is the most important intangible wealth effected the enterprise action rules, and the most strategic management thoughts and the methods the modern enterprise possessed, and the key factors which directly affect the enterprise core competitive ability and decide the enterprise hingsue. The enterprise culture contents have constituted the enterprise “cultural knowledge resources” which are independent of any participants (employees, customers, suppliers, etc) and will have the affection to the participants the knowledge application and the knowledge interaction between the participants. As a famous real estate enterprise, vanke’s enterprise culture concered with equality and freedom, which encourages various communication and advocates information sharing. The different opinions can be seen in its business publications and BBS which the staffs express freely to the company leadership, and the executive also attachs importance to communication with the ordinary employees, thus the enterprise knowledge communication atmosphere has been formed. d） The basic rules “The basic rules”is a formal counterpart of “the cultural knowledge resources” of the organization, in fundamentally, the knowledge has decided the participants the rules they complied with and determined the role of them. For enterprises, the rules, the role and the relationship between them are the kinds of knowledge for controlling formal work mode[3]. In enterprise different development stages, the konwledge will also change then, but these construction knowledge still have high stability. Holsapple (1996) has indicated that “the basic rules” not only controls the enterprise daily operation but also designs, prompts, monitorings, evaluates, increases and revises the rules-selves. Such as vanke, for the enterprise staffs behavior criterion has been released, then has reflected the basic requirements of its value and the enterprise and the employees working mode have been guided and regulated. 2） The components knowledge resources of real estate enterprises The component knowledge includes participants knowledge and their knowledge management skills, they are independent of enterprise organization, not only change with time but also die. A participant has the knowledge operation ability to deal with its own knowledge base, just through the participant knowledge operational capabilities its knowledge can be entered into the enterprise organization. Knowledge management skills have more independent than participants knowledge, and the concomitant treatment have not been needed also not been relied on the participants[3].

How to Build the Knowledge Resources Framework of Real Estate Enterprises

259

a） The participants knowledge The real estate enterprise participants include customers, suppliers, employees, partners (builders, design units, intermediary company, sales company, management institution, property management, etc.), expert consultant and computer system (professional consulting database and customer relationship management（ CRM） in general, correspondingly the enterprise knowledge involve real estate basic knowledge, real estate business and marketing knowledge, supply knowledge, financial knowledge, human resources knowledge, project management knowledge, administrative management knowledge, and enterprise background knowledge, etc. The organization participants knowledge resources have been affected by some factors including the participants entering and leaving, participatory learning, the proportion of knowledge of each participant into the enterprise organization operation and the relationship between the participants which the construction knowledge allowed. Due to the project management mechanism has been established in generally so real estate enterprises must establish the upstanding knowledge management and the knowledge accumulation system, or if loss of a good project manager or dissolution of project management team the great changes of the organization knowledge resources will be occured, thus a lot of enterprise organization knowledge will be lost. Of course, the participants not only refer to human resources also may be physical resources, such as the computer network with knowledge operation skills (e.g. decision support system DSS, performance support system PSS, expert systems ES, office automation system OA etc. They are mainly on the basic of the computer, including the knowledge which is stored in the computer system and could be applied in the organization knowledge operation. In practice, besides the famous K3 cost management system which researched and developed by kingdee and vanke, other real estate enterprises which conducted knowledge management activities also trying to apply information management methods to improve their management performance, such as TJ - OA automation system (OA) which researched and developed by Guangzhou guangdian real estate development Co., LTD and Guangzhou TianJian computer system engineering Co., LTD, can help the enterprises to use computer Internet and various advanced information technology to complete electronic collaborative work and knowledge management. Eight sub-systems have been established in this system including enterprise culture subsystem, business management subsystem, daily management subsystem, document management subsystem, personal affairs subsystem, SMS center subsystem, E-mail system, and system maintenance system. With the operation of the system, the enterprise have realized the information exchange network and office automation within the whole company, and integrated with finance, sales, human resources system the company leadership and relevant persons can conveniently inquire the datas through the office-automation system, and the enterprise operation state can be grasped in time, once any problems have been discovered they can immediately be solved through the office automation system. TJ - OA system help the enterprise realize great information transmission, acquiring and management effectively and accurately, then make every employee’s work obtain good electronic collaboration, thus the company production, operation and management efficiency have been effectively improved. b） The knowledge management skills The knowledge skills refer to the methods of transferability or holding knowledge representation which can be clear, tacit or fuzzy. For real estate enterprises, the professional, business plan books, operation manuals, patent documents, planning

260

L.-f. Shen

design, and finished goods, etc have been included in them. The knowledge reflected skills can be the physical form, also be the rights and interests, as the practical new-type patent design with “family with garden or terrace residence”, which embodies the rights and interests knowledge combining residential design expertise knowledge with process knowledge[3]. The organization products also embody its knowledge contents, namely the organization knowledge has been embodied through its products. When a product has been thought with high technical content or low, the level of the enterprise technical knowledge grasped actually has been reflected, which has been incarnated well in the industrial production, also easy understood by people. Therefore, the products are not only the raw material, the capital and labor resources results, but also the knowledge resources, and the enterprises production and operation has shown that raw materials, labor and capital are guided by knowledge resource to transform into products actually. For real estate products, the room has been built is the skill which representes the knowledge for building it. After these products contained knowledge skills have been launched into the market they can be used to exchange other resources (such as reclamation fund), and the exchange prices are affected by their knowledge value the customers willing to pay for. For example the housing products exchang price is derived from the costs of raw materials and construction, later will be even more from the value of design knowledge (room, planning), management (property management services, environment) and environmental protectionion knowledge (saving energy, healthy and sustainable development) etc. 3） The environmental knowledge resources of real estate enterprise Besides its own knowledge resources, the external environment the organization existed has contained the potential knowledge resources. The organization can expand and replenish its knowledge resources through every association with environment, such as the most common shape of establishment knowledge strategic alliance[6-7]. Generally the enterprise organization can bring their knowledge (such as patents, skills, etc) through the spillover input to the environment in order to expand the capacity of the environmental knowledge resources, also can absorb the environmental knowledge resources to expand its knowledge resources. Of course the environment knowledge resources neither belongs to the organization nor controlled by it, but if the organization acquires the knowledge from environmental resources, the knowledge will be become a part of its knowledge resources. So the open system should be established which can exchange knowledge with external environment to reduce the difficulty and the cost of knowledge acquisition. According to the concept of system theory only one open system, an energy exchange system with external can be a sustainable development system. As the most common environmental knowledge resources the world wide web with low cost and simple degree is an important source for contemporary people to obtain external knowledge. For real estate enterprises, the professional standard, the enterprise application demonstrated, spread and exploitation new technology and new material are the environment knowledge resources need always to be exchanged. Another environmental knowledge resources include external expert knowledge, other enterprise database, network resources, etc.

How to Build the Knowledge Resources Framework of Real Estate Enterprises

261

3 Conclusions The basic contents of enterprise knowledge resources can be more clearly grasped by constructing the real estate enterprise knowledge resources framework, then the body of knowledge system can be depicted, and further the enterprise knowledge-base contents will be established and perfected. Therefore, it is the basic work of implementation knowledge management to construct the estate enterprise knowledge resources framework, also its contents need to be adjusted timely according to the enterprise different conditions.

References 1. Shen, L.: The Knowledge Management and Practice for Modern Estate Enterprise. China Architecture & Building Press, Beijing (2009) 2. Henderson, R.M., Clark, K.B.: Architectural Innovation. The Reconfiguration of Existing Product Technologies and the Failure of Established Firms. Administrative Science Quarterly 35, 9–30 (1990) 3. Shu, X.-l.: Research on the real estate development enterprise knowledge management. Zhejiang university of master degree theses, Hangzhou (2004) 4. Charles, D., Daniel, K.: The present and future of Knowledge management. Posts & Telecom Press, Beijing (2004); translation of Liu q. 5. Sun, Y.: Enterprise culture: the core competitiveness of the enterprise. Big Trade 11, 88–89 (2006) 6. Long, Y., Li, Z.Y., Zhang, Z.Y.: Empirical research on skill-based strategic alliance cooperation effect and knowledge acquisition with the learning ability. The System Engineering Theory and Practice 9, 1–7 (2005) 7. Long, Y., Li, Z.Y., Zhang, Z.Y.: Empirical research on skill-based strategic alliances based on trust knowledge acquisition and cooperation effect. Research and Development Management 5, 36–43 (2006)

Explore and Analyse of Computer Network Security Technique and Defence Tactics Wang Fengling and Wang Zhiqiang Department of Computer and Information Engineering Harbin Deqiang Business College of Commerce Harbin, China

Abstract. The paper analyzes the mainly problems of current network information security, and proposed and explained my own strategies to these problems, from the implications, defects and producing causes of the computer network security, the main techniques of network security, and common network attacking methods and countermeasures, etc. Keywords: network security, network attacking, safety strategies, Firewall, Intrusion Detection.

Along with the rapid development of computer network technology, network security protection technology is also inevitable developing with the development of network application and especially along with the widely application of the Internet, though it have brought the unprecedented huge amounts of information, the private information and data were often damaged because of openness and freedom of network. So with the network information security is becoming increasingly important, it has been widely concerned by all fields of information society.

1 The Implications of Computer Network Security The specific implications of computer network security can continuous change with the different users. The different users can have various explains and demands to the network security. From the user's point of view, they can only hope that individual privacy or confidential information on the network transmission can be protected, and avoid being bugged, altered and forged. Besides these concerns, network providers also consider how to cope with sudden natural disasters, military crackdown on network hardware, and how to restore network communication and maintain the continuity of the network communication in the network anomalies. Essentially speaking, network security includes the hardware, software of network system and the network transmitting information safety. So it can not be damaged because of its accidental or malicious attack. The network security includes both technology and management aspect. Both aspects are complement and can not be independent each other. Artificial network intrusion and attack enable network security to be facing new challenges [1]. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 262–268, 2011. © Springer-Verlag Berlin Heidelberg 2011

Explore and Analyse of Computer Network Security Technique and Defence Tactics

263

2 Network Safety Defects and Producing Reasons A. TCP/IP Bugs TCP/IP protocol is the cornerstone of the Internet. Unfortunately, the protocol considers not much for network security. And, because of the TCP/IP protocol’s openness, those people familiar with TCP/IP can use its safety defects to implement network attacks [2]. B. Be Easily Eavesdropped Most of data flow on the Internet is not encrypted, therefore people can easily eavesdrop electronic mail, password and transmitting files on the net using online free tools. C. Network Structure’s Insecurity The Internet is a kind of network to network technology. It is a huge network joined by countless LANs. When using one host to communicate with another’s in LANs the transmitted data flow is normally transferred among many machines. If the attacker using the host of having the user's data flow, he can hijacking user’s data packet [3]. D. Lack of Safety Awareness Although having a lot of network security protection setting, Most of people is lack of safety awareness. So the network security protection measures means non-existing. If avoiding the firewall extra proxy server authentication to directly join using PPP, it can avoid firewall protection.

3 The Main Technologies of Network Security Network security depends largely on the technical improvement, including the technologies of passwords, identification, access control, information flow control, data protection, software protection, virus detection and removal, content classification and filtration, network scanning, and the alarming and auditing of safety monitoring system, etc. A. A Firewall Technology Firewall is mainly to strengthen access control between networks, and to prevent external network users, by illegal means, go into the internal network through external network [4]. B. A Digital Signature Technique A digital Signature is a technique using the sender's private-key to encrypt abstract, then sending the receiver together with the original paper, finally only using the sender’s public-key to decrypt the encrypted abstract. C. A Encryption Technology A data encryption is a technology that changes the sensitive plaintext data into cipher text data difficult to be identified according to the certain password algorithmes.When requirement, you can use different private-key to change the cipher text data into plaintext data. For instance pap or chap [5].

264

W. Fengling and W. Zhiqiang

D. A Digital Timestamp Technology The timestamp is a voucher document after encrypting, including the timestamp digest, the received date and time by DTS, and DIS digital signature. First users need to use HASH code to encrypt the document with time to form digest. Then send the digest to DTS. Finally DTS encrypt the document with date and time, and send back to users. E. The Intrusion Detection Technology An intrusion Detection System (IDS) is a network security system that collects information from a variety of computer systems and network systems, and analyzes intrusion characteristics through the information. An intrusion detection technology is a kind of technology that can ensure the security of computer system, timely find and report unauthorized or abnormal phenomenon of the system. And it is also a kind of technology that can detect computer network that breach security strategy behaviors [6]. F. An Anti-virus Technology As the development of computer technology, computer virus becomes more and more complex and poses a great threat to computer system. Commonly used anti-virus software can be divided, by the function, into the network anti-virus software and single anti-virus software. Single anti-virus software installs on the single PC commonly, namely detects and removes various viruses, by means of analyzing and scanning, of the local resources and remote resources connected to local workstation. The network anti-virus software is mainly working on the network. Once the viruses invade into network or by network into others, the network anti-virus software will immediately detect and remove the viruses.

4 The Common Methods of Network Attacking The network security vulnerabilities exist everywhere. Even the old security vulnerabilities are restored, new security vulnerabilities will emerge constantly. Network attack can attack the system and system’s resources using these vulnerabilities and safety defects. A. Password Invasion Password invasion refers to that it can use legitimate user account and password to login host, and then carry out attack actions. This method must firstly obtain some legitimate user’s accounts, and then decipher the legitimate user’s password [7]. B. The Web Deception Technology Users can visit various web sites by browses as IE to read newsgroups, consult product price, subscript newspapers, and deal with e-commerce. But the common users never think of such problems as the web page being visited has been tampered by hackers. And information on the web is false. For instance, the hackers can rewrite the web page’s URL that will be browsed by users into their own servers. When users browse the web page, it actually can send a request to the hackers’ server. So the hackers will realize the web deception.

Explore and Analyse of Computer Network Security Technique and Defence Tactics

265

C. The E-mail Attack An E-mail is a kind method of communication widely used on the Internet. The attacker can use some bomb software or CGI programs to send some repeated, useless junk E-mail to the target mailbox. So the target mailbox will be exploded and unused. When being large junk e-mails in mailbox, the e-mail system will work slowly, even be paralysis to the normal action Relative to other attacking means, this attacking method is simple, rapid, etc. D. Use Trojan Program Trojan program can directly invade into the computer and then carry out destruction. It is often disguised as a tool or game program to tempt users to open the E-mail attachments with Trojan program, or download directly from network. Once the users open these E-mail attachments or execute these procedures, the Trojan program will exist in your computer, and install a hidden program executed as Windows startup. When online, the program will notify the attacker to report your IP address and predefined port. After receiving the information, the attackers will use the lurked program to rewrite computer's parameter setting, copy files, and peep at all hard disk content so as to control your computer. E. Security Bugs Attack Many systems have various security Bugs. Some of them are located in operating system or application software. For example, buffer overflow attacks. Because of not detecting the changes between procedure and buffer, directly accepting any length data input, and letting the overflow data in the stack, many systems can execute instructions as usual. So if the attackers send instructions’ length beyond instruction’s length handled by buffer, the system will be instability. If configuring a string of characters used to attack, the attackers even can access the root directory. So the attackers will have the whole absolute control. F. Network Monitoring Network monitoring is a working mode of host. In this mode, the host can receive all of the information of the same physical channel in local part of network, unnecessary know sender and receiver. When users login the system by the password, the password must transmit from the client to the server. So the attackers can monitor data between the client and the server. Then if the information of transmitting is without encryption, the attackers can use some monitoring tools (such as NetXRay for Windows95/98 / NT, Sniffit for Linux, Solaries etc.) to easily intercept the information that includes password and account. Although the user’s accounts and passwords, obtained by network monitoring, that have certain limitation, the network monitor often can obtain all of the user’s accounts and passwords in this section of network.

5 Network Security Protection Strategy On the base of analysis and recognition of network attack, we should make targeted strategy. For instance make clear security object, set the strong security protection system, install security protection systems in each network layer. So it can enable each layer to implement its function and become a hurdle so as to the attackers not to carry out any attacks. Besides, firstly we also must consider prevention, and backup the important data and concern system operation condition.

266

W. Fengling and W. Zhiqiang

A. To Configure Firewall A firewall, in communicating, can perform an access control, allow users who are agreed by the firewall and their data to visit its internal network., however not allow users who are not agreed by the firewall to visit its own network, and so maximize prevent hackers to access the networks, arbitrarily rewrite, move, even delete the important information of network. A firewall is an effective and widely used network security mechanism, which can prevent the unsafe factors to visit the inner of LAN. Therefore, A firewall is an important link of network security. B. The Bugs Scanning System To solve the network layer security problems, we first make clear the network’s unsafe factors and unstable positions. Because of the large network’s complexity and easily changing, it is unrealistic to detect network bugs, carry out risk assessment only by the network administrator’s technology and experience. The best solution is to find network security scanning tools that can detect network security bugs and carry out risk assessment, and put forward some improved suggestions, and then use the systemoptimizing configuration and patching techniques to repair the latest security bugs as soon as possible and remove unsafe factors. If network security level is not high, we can use all sorts of hacker tools to attack network so as to exposes network bugs. C. Use the Intrusion Detection Systems Intrusion detection technology is a kind of technology that can protect the security of computer system, timely find and report the unauthorized or abnormal phenomenon in computer system. And it is a kind of technology for detecting the activities of breaching computer network security strategy. In intrusion detection system, using audit records, it can identify any unnecessary activities so as to limit these activities and finally protect the system security. In the campus network, it is best way to carry out the mix intrusion detection technology: based on the network and host intrusion detection system, so as to form a set of active and three-dimensional defense system. D. IP Embezzlement’s Solutions IP and MAC address are bound together on a router. When an IP connects the Internet through a router, the router will check out if the MAC address of radio station of sending the IP is same with the MAC address of router's. If same, it will be allowed to through the router. Otherwise it will not be allowed to through the router. At the same time, the router will send a warning message to the radio station. E. Using Network Monitoring to Maintain Subnet Security By installing firewall to prevent unsafe factors to invade from outside of the network, but it does have any methods for the unsafe factors to invade from inside of the network. In this cases, we can make a audit file for each subnet, which can provide working information for administrators [8]. Then a monitoring program only for subnet is designed to monitor the interaction of between computers among subnets, and carry out backup for audit files of every server in system. F. Web, Email, BBS Security Monitoring System Using security monitoring system in Web and Email server to keep timely track to and monitor network, intercepted the transmitting information on Internet, then retrieve the

Explore and Analyse of Computer Network Security Technique and Defence Tactics

267

information into Web, Email, FTP and Telnet, and finally create a database to save the records. Besides, the security monitoring system also find the illegal information of network, and timely submit it to security network management center so as to carry out methods. G. Network Virus Prevention Under the network environment, the virus spread quickly, only single-machine antivirus product has been difficult to eradicate network virus, so the comprehensive antivirus product must be used suitable for the LAN. Campus network is a kind of LAN, which need one anti-virus software based on server’s operating system, and various anti-virus software based on desktop operating systems. If connected to the Internet, it will need a gateway anti-virus software to strengthen the security of computers online. In the internal network, if using email to exchange information, it will also need a set of anti-virus software based on the mail server so that it can identify the virus hidden in the email and attachments. So it is best to adopt all sides of anti-virus product to guard all the possible positions easy to be attacked. through all-sides, multi-level anti-virus system configuration, and regularly or irregularly automatic update, the network will be prevented to attack from the virus.

6 Complimentary Close Network security products’ requirement are brought by the network economic development. Firewall, antivirus software, information encryption, intrusion detection and security authentication products and so on, will have great market prospect. While firewall and high-end antivirus software will occupy the major share of the market. At the same time, the existing defense techniques will develop gradually from passive to active. An intrusion detection system is a kind of active network safe protection technique. So it is anticipated to grow rapidly for the demand of the product. Anyhow, network security is a system engineering. It will not just rely on the single system such as firewall. It will need consider carefully system security requirement, and integrate various safety technology together. So it will form a generate, efficient, safe network system. Acknowledgment. The author thanks to the support from the Project of Humanities and Social Science Research Financed by the Education Department Heilongjiang Province under Grant No. 11554071, and the Project of Science and Technology Research Financed by the Education Department Heilongjia-ng Province under Grant No.11553040.

References 1. Li junyu, M.: Information security technology infrastructure, pp. 158–178. The publishing house of metallurgical industry, Beijing (2004) 2. Wang lihui, J.: The network security and the related technical. The Journal Science and Technology Institute of Agriculture 19(2), 120–122 (2005)

268

W. Fengling and W. Zhiqiang

3. He wanmin, J.: The network information safety and prevention technique. Gansu Agriculture (1), 97–99 (2005) 4. Zhang jian, D.: Network security system design and implementation of defensive. University of science and technology the master’s degree the paper, Chengdu (2001) 5. Huang hu, J.: To hacker attack precautions. Computer Security (9), 76–78 (2005) 6. Zhang xiaolei, M.: The diagnosis and the fight against computer viruses, pp. 60–100. China the environmental sciences press, Beijing (2003) 7. Zhu lisen, M., Zhang, s.: Computer network application technology, pp. 180–200. Patent document press, Beijing 8. EricMaiwald, M.: Willi Education, Security Planning & Disaster Recovery, pp. 86–94. Posts & Telecommunications Press, Beijing (2003)

On the Countermeasures of Consummating Bank Internal Accounting Control Xiaohui Wang1 and Yong Zhang2 1

School of Computer & Information Engineering, Shandong University of Finance, Jinan, China 2 Economy & Management College, Shandong Agricultural University, Taian, China [email protected]

Abstract. As part of internal control, internal accounting control ocupyies a pivotal position in bank internal control. This paper firstly analyzes the present situation of bank internal accounting control from four aspects, and then proposes concrete countermeasures on strengthening bank internal accounting control from five points, with expectation that it would be of help to the improvement of bank internal accounting control level. Keywords: Internal control, Bank, Countermeasures.

1 Introduction With the continuous progress of commercial banking reform and the deepening of the marketization, the internal control of domestic commercial banks, especially the construction of internal accounting control, has made considerable progress. However, as bank business continuously develops, there have been many new risk factors, such as the new challenge in internal accounting control caused by the wide use of electronic technology. According to CBRC statistics, of the various 309 cases outbroke in the field of banking in 2008, 89 of which involve over 1 million yuan. The formation of these cases is mostly because of the big loopholes caused by the inadequacy of bank internal control, especially the internal accounting control. This paper attempts to put forward specific countermeasures to complete the bank internal accounting control, based on its current situation.

2 Analysis on the Current Situation of Bank Internal Accounting Control A. The Phenomenon of Ambiguous Understanding of Internal Control at the Primary-Level of Commercial Banks According to the Guidelines on Strengthening Internal Controls of Commercial Banks issued by the China Banking Regulatory Commission, internal control refers to a dynamic process and mechanism for commercial banks to achieve their objectives by M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 269–274, 2011. © Springer-Verlag Berlin Heidelberg 2011

270

X. Wang and Y. Zhang

means of developing and implementing a series of systems, procedures and methods in order that thay can deal with risks by forecasting beforehand , controlling during the process and supervising and rectifying at the end. It is obvious that, from this definition, when in terms of content, internal control is a collection of a series of systems, procedures and methods; when in terms of control process, it involves forecasting beforehand, controlling during the process and supervising and rectifying at the end; and when in terms of control representation, it is a continuous developing and evolving dynamic process and mechanism. However, when talking about banking risks and internal control at the primary-level of commercial banks, there exists a misunderstanding, that is to replace internal control with internal control system. This deviation of understanding makes it difficult for internal control to play an effective role in risk management in commercial banks. If we simply consider internal control as internal control system, we would easily be contented by establishing a wide variety of systems and their existence; If we consider internal control as a mechanism, then we would take a variety of ways and means to strengthen the effectiveness of this mechanism and continuously improve it in the whole process. If we guide the practice of bank risk management and banking supervision by the different understanding of internal control, the consequences would vary greatly. B. There Exists the Phenomenon of Emphasis on Operating Results and Contempt for Internal Control, with Low Awareness of Internal Accounting Control. Some leaders and accountants of the primary-level banks do not treat internal accounting control seriously, holding that internal accounting control is simply the establishment of mechanism and accounting is for business service. The first-line workers bear heavy annual operating targets such as deposits, loans, intermediary business and operating profit which increase every year. In this case, when there are conflicts between marketing and internal control, it would be easy for the first-level workers to emphasize on marketing which leads to overstaff and inefficient execution on internal accounting control. C. The Setting-Up of Bank Internal Accounting Control Is not Scientific and Rational Enough. As mentioned earlier, bank internal accounting control is a overall and all-round control process and a dynamic process including analysis on business, establishment and implementation of system, regular feedback and constant amendment. The current bank internal accounting control, however, due to its wide variety of business involved as well as different branches of department concerned, exhibits numerous and contradictory internal control system. This, to some degree, provides great difficulties for the first-line workers' complying with the latest internal control system comprehensively and specifically. It even happens that several internal control systems are ascended just to find the source of a problem. On the other hand, it is frequent that the banks put a set of common rules and regulations to use nationwide, ignoring the local characteristics of the business. This phenomenon, accordingly, would lag the construction of system behind business development, resulting in some impractical systems which lack maneuverability. Thus, some of the accounting personnel can only complete their daily work with their nebulous

On the Countermeasures of Consummating Bank Internal Accounting Control

271

understanding of the high level's stipulation and the sketchy comprehension of the current system which, however, runs most easily into risks. D. Accounting Supervision and Inspection Are not In Place. Though most banks have been comprehensively implementing the principle of regular or irregular accounting supervision and inspection system, other banks' accounting supervision and inspection systems lack depth and breadth, with poor inspection tools and methods and blind spots and dead ends over certain businesses and personnel. It turns the accounting supervision and inspection system into a sideshow. The phenomenon has mainly manifested in the following aspects: concentrating on traditional business supervision while ignoring new business and computer business; focusing on the supervision and inspection over compliance while neglecting the supervision and inspection over legitimacy and risk of operation; thinking highly of afterward supervision and inspection while overlooking proactive supervision and controlling during the process. In addition, lacking of communication and connection between accounting supervision department and auditing department conduces to poor comprehensive supervision and low efficiency because of supervision overlaps or vacuum.

3 Measures Which Should Be Taken to Strengthen the Bank Internal Accounting Control According to the Guidelines on Strengthening Internal Controls of Commercial Banks, commercial banks' internal control objective is to ensure the implementation of national laws and banks' internal rules and regulations, the full operation and real realization of commercial banks’development strategy and management target, the efficiency of risk management system, the timeliness, authenticity and integrity of the business records, financial information and other management information. This is the overall objective for bank internal control, so does the bank internal accounting control which is one important part of it. In order to strengthen the bank internal accounting control, measures as follow ought to be taken. A. Commercial Bank's Internal Accounting Control Should Also Implement the Four Principle of Generality, Circumspection, Effectiveness and Independence. Generality means that bank internal accounting control should include all of the commercial banks' business processes and operation procedures, covering all the personnel of all accounting-related departments and positions. Any decision or operation should be checked against files. Circumspection refers to the requirement that bank internal accounting control should based on the principle of guarding against risks and prudential management. Business accounting and financial index should reflect the requirement of “internal control by priority”. Effectiveness means that the bank internal accounting control should have a high degree of authority which can be conscientiously implemented. No rights could be gained to be against restrictions of internal accounting control and any questions existing in internal accounting control should get timely feedback and correction. Independence refers to the supervision and evaluation departments of internal accounting control should be isolated to the construction and

272

X. Wang and Y. Zhang

executive departments, further more, the departments should also possess the channel to report to the board of directors, board of supervisors and senior management. B. To Effectively Improve the Internal Accounting Control to the Important Level of Banking Management. Internal accounting control takes an important place in banking management since all the operating results can only reflect under the measurement of accounting in accordance with the relevant rules and regulations. However, when there are conflicts between bank performance and internal control, the bank decision maker tends to sacrifice internal control to save the bank performance, which, accordingly, leads to the embarrassing status of bank internal accounting control. Faced with this kind of condition, banking leaders of all levels and banking stuff should change mentalities and intensify education. The banking managers must be fully aware of the importance of internal accounting control in guarding against operational risks and measuring banking operating performance, and elevate it to the position as important as marketing and control of non-performing assets. Only in this way can we avoid the phenomenon of internal control giving way to marketing when conflicts among various banking objectives rise. Banking stuff should continue to intensify education to abide by regulations and disciplines, keeping “guarding against risks” in mind. C. Design a Scientific and Rational Internal Accounting Control System. The so-called scientific and rational internal accounting control system should achieve the goal of apropos, comprehensive and inadequate, that is, this system should meet the demands of banks' rapid development, cover all-round banking business and possess an excellent comprehensive assessment system. •

•

•

Establish a timely internal accounting control system. In recent years, banking business has gained very rapid development, hence it is necessary that production innovation keeps pace with accounting rules and, on the other hand, refresh the existing rules and regulations regularly in the meanwhile in order that the banking managers and stuff can master and apply clearly. Thus, the basic accounting rules can advance with the times by keeping in line with various business and production accounting rules, and reflect that it is up to date. Emphasize the comprehensive coverage of the internal accounting control system. The bank has various banking services, and each involves many important aspects of processor. In order to play the part of regulation, the internal accounting control system should cover all of the banking services and the operation aspect of each. In practice, we can test by the business process planning’s coverage on the internal accounting control or refine the internal accounting control by the business process planning. Carry a scientific internal accounting control system. After the establishment of internal accounting control system, we also need to build up a scientific synthesized assess system, by which we can give positive stimulation to the person who can strictly implement it. On the contrary, we not only treat those who can’t strictly implement according the system, but also give the negative stimulation to them. For example, rise and bonuses is link to it and so on.

On the Countermeasures of Consummating Bank Internal Accounting Control

273

D. Strengthen the Construction of Implementation Force of the Internal Accounting Control System. If a good system is not operated well, it's useless at all. Concerning the construction of its operation, we should make great efforts. •

•

•

Set the post scientifically and reasonably, and build the post responsibility system. During the process of setting posts, the principle of mutual restraint, effective restraint and exclusion should be involved. Make it clear what’s the scope of the job, the limit of authority and the responsibilities so as to achieve the determined posts, fixed duty and persons. Furthermore, establish an accountability system for post which can clearly define responsibilities of the staff in vital post. This system can make them go about their respective terms, have the co-operation based on division of work and supervise each other in order to prevent violations or any illegal behaviors. The strict authorization system should be strictly carried out according to the business operation process and property. At present, the relation between internal control and business operation in each bank is not close enough, and the business link is not continuous. So we must start with the business operation process under the principle of regulated, practical, safe, and effective to set an standard operation process which can cover the whole accounting process and carry out the strict authorization system according the business property. As for the business beyond power, we must be authorized by the superior clerk or more senior officer. For the major accounting issues, such as wrong account, expense account, adjustment of product number, large cash payment, reporting loss and freeze and so on, requires the approval beforehand. Intensifying the efforts to investigate the phenomenon of violating the bank internal accounting control system. As for the case which is against the bank internal accounting control system, it may be detected by internal examination as well as by the external inspection. In either case, the bank will trace back to the source of the problem according to the internal accounting control system and clearly define responsibilities of relevant persons who would be persecuted according to the regulations.

E. Further Enriching Examination Measures of the Bank Internal Accounting Control System. •

•

Combine the comprehensive checkup with specific inspection. When talking anout the inspection, the accounting supervision and inspection should focus on the specific inspection on specific cases based on the general checkup and the key link on specific inspection. As comprehensive checkup requires a lot of manpower and resources, its frequency of inspections should be less. Instead, the specific inspection can seize the priority cases and the key link, so it requires less manpower and material resources, gaining specification timeliness. It can be carried out according to business needs. Combine On-site inspection with off-site inspections. With the increasing development of bank’s electronic levels, we can check the units with off-site inspection through information systems or business systems which once need to be done on-site. In this way, through on-site inspection combined with off-site

274

X. Wang and Y. Zhang

•

inspections, we can strengthen the checkup strength to the subordinate units without burden. Establish the supervision and inspection system involving finance and accounting, auditing, discipline inspection, wide-ranging supervision and multi-level. The departments can coordinate and work closely with each other in order to achieve the goal of sharing information, and forming supervision resultant force. Then we can improve the efficiency of supervision and inspection to prevent the creation of violations, major accidents and economic cases.

Acknowledgment. This research was supported by the Social Science Foundation of Shandong Province under Grant 06CJJ011.

References 1. Kurtzig, J.: Coping with the accounting standards and central bank transparency. Central Banking Journal XII (2), 76–81 (2001) 2. Gibbs, J., Keating, P.: Reengineering Controls. Internal Auditor, 46–49 (October 1995)

Analysis on Strategy of Human Resource Management in Economy Hotel Xuan Fuhua School of Tourism and Cuisine Harbin University of Commerce Harbin, China little_left2011@hotmial

，

Abstract. The competition of economy hotel includes management concept, environment and facilities marketing strategies, investment of funds, orientation of prices,etc. All these factors can be fully revealed by the quality and quantity of the qualified personnel. With the globalization of management, ehangeable demands of customers and the intensification of trade competition, the position and function of economy hotel has become increasingly important. However present human resouree management is far from enough to meet the need of quick development of market because of laggard traning, uncompetitive salary system, lack of high level manager and career planning. Effective countermeasures have been put forward, such as esteblish active mode of human resource management, strenthen the training and career planning on staff, expand cooperation with universities and create growing environment for human resource in economy hotel to promote the sustainable and leap-frog development of economy hotel.

，

Keywords: economy hotel, human resource management, strategy, career planning.

1 Introduction In recent years, human resource management (HRM) has assumed greater importance in organizations, as it has been recognized as contributing to overall effectiveness. As Nankervis et al put it, the human resource is almost always the key ingredient for organizational success. If the success of an organization depends on the calibre of its employees, it is crucial that they be managed effectively so as to help the organization to achieve its objectives. In order to provide highquality service to the customers, to improve productivity and profitability, organizations need to utilize their human resources effectively.

2 Characteristics of Human Resource Management in Economy Hotel The survival and devepoment of economy hotel has been affeted by many factors. Human resource, laborer in enterprise, is the most valuable resource in all the M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 275–279, 2011. © Springer-Verlag Berlin Heidelberg 2011

276

X. Fuhua

resources. Human resource management is a scientific way which train, organize and distribute manpower combined with material resource so as to keep the optimal proportion of them, meanwhile, it also guide, control and coordinate man’s thought and behavior to make full use of man’s subjective initiative to achieve organizational goals. A. Humanity The substance of humanity in human resource management is bring into full play the potential of the staff and find appropriate post for them. For example, someone is good at communicating with customers; someone has rich experience in dealing with matters; someone owns strong strain capacity, etc. The manager can give them suitable jobs according to their traits which will enable them display their abilities and bring the economy hotel vigor and vitality. In addition, system of reward and punishment has been established. Crisis awareness will make staff improve service quality which will affect their salary. When it comes to economy hotel, the measures often rely mainly on inspiring staffs’ autonomous ability while making material reward subsidiary. And every employee has promotion chance and development space. B. Fluidity The goal of economy hotel is provide best service with lowest price. Most of the employees are low cultural quality and not professionals. And before starting work some employees even have no experience and no skill training. That’s the reason why so many economy hotels tempt excellent employees from other hotels and disregard the development and utilization of employees in their own hotels which make the staffs groove jumping frequently. C. Economy The staffs in economy hotels should be versatile person. The proportion of rooms and attendants is commonly lower 0.5 and thereby the operating cost and the human resource cost are all low. In addition, the economy hotels often hire informal employee in season so as to cut costs furtherly. Because the informal employees have no welfare and medical insurance like formal employees. D. Pertinence The posts were designed according to staffs’ characteristics and so they can arouse the initiatives of the personnel and satisfy their emotional need. Periodic work changes can not only avoid the employee loss and find the advantages of them in the process, but also help the employees know service procedures of different posts and master various service skills which help to improve the coordination in departments.

3 Pobelms in Human Resource Management in Economy Hotel A. Uncompetitive Salary System The most important factor among which determine the resignation of staff is salary. The whole salary system lacks of competitiveness will lead to staffs’ job-hopping because of the difference in wages. The development of staff in hotel is particular, on one hand, new hires have no experience and so have little development space, on the

Analysis on Strategy of Human Resource Management in Economy Hotel

277

other hand, many skilled staffs have no high academic qualifications and as well have little promotion opportunities. This is the main reason of employees’ turnover. B. Lack of Staff Training and Career Planning The staffs in economy hotels have little chance to receive training. Training channel rely mainly on internal training in hotel, which is obviously nonstandard. Meanwhile, there is no uniform training on theroy research, brand maintenance, service product development, etc. Besides, the staffs in economy hotel have poor career planning. From the development of economy hotel point of view, it is crucial to guide the career planning for management personel, technical personnel and employee so as to keep talent. At present, new hires with great fluidity accounts for the vast majority of the team for the above reason. An alarming phenomenon is the senior managers in economy hotels commonly have long-time training and the new hires wih high academic qualifications have little development space. C. Laggard Traning in Human Resource Management Although many schools offer course on human resource management, it cannot meet the economy hotel market demand due to the imperfect teaching plan,theory research and teachers. What’s more, the number of economy hotel increases exponentially, while the training of human resource management needs 2-4 years at least. It is evident that the training of huamn resource management lags far behind the demand. Compared with star hotels, the structure of economy is more simple and the number of staff is less. So what economy hotes need is complex talent. D. Deficient High Level Manager What economy hotel need most is high quality manager. In order to meet the greatly increased demand of human resource management, the economy hotel is always trying to attract professional managers from star hoetls. The two kinds of hotel are different in management mode, marketing mode, strategy and profit model, and so a successful professional manager in star hotel is not necessarily successful in economy hotel. moreover， low loyalty, weak sense of belonging to hotel, gap between expectation and reality, all these are hinder hindrance of human resource management.

4 The Strategy of Human Resource Management in Economy Hotel A. Esteblish Active Mode of Human Resource Management Huaman resource in economy hotel usually focus on recruitment, contract management, and attendance and disregard the inovation of performance evaluation, salary system, transfer, training, etc. In this situation, new human resource management mode should be estebilished. To begin with, human resources strategy should be made so as to realize profit sharing between enterprise and staffs. The economy hotel should pay attention to improve employee satisfaction and help them make career planning. Secondly, it can develop human resources constantly in study and management. Learning organization formation is help in continuous increment of manpower capital. In learning organization, everyone will break his ability limit and

278

X. Fuhua

form new ways of thinking and try his best to achieve the goal. Last but no least, the economy hotel has to improve the human resource management level while studying. In the background of economic globalization, the duty of human resource managers has changed from administrative work to strategic human resource management. With the continuous improvement of technology, the status of staff in the enterprise has become more and more important and meet the life quality requirements of staff has been one of the core objectives of human resource management. Staff in economy hotel should get not only resonable reward, securing occupational safety, but also the development space and promotion opportunity. Furthermore, the economy hotel should concerntrate on the formation and improvement of the human resource policy, educantion and training of staff, salary incentive mechanism and so on to provide human resources support for the development. B. Strenthen the Training and Career Planning on Staff For one thing, the economy hotel should strenthen the training of comprehensive quality on staff. Economy not means low service quality. Both service quality and room price are what consumers think about before check in at hotel. The simple structure of economy hotel requires the staff can be competent at a variety of work. Employee in economy hotels should undergo rigorous training, including appearance and professional skills in order to provide the same quality service in any branch. Meanwhile, in order to meet the special needs of the economy hotel, training of comprehensive quality on the staff should be strenthened. For another, it is of great importance to arrange the introduction talent and make proper career planning. Human resource in economy hotel differs from that of star hotels. Professionals come from star hotels have rich experience and comprehensive capability. However, they are not familiar with the characteristics and business of the economy hotel. So what they should do is adapt to new jobs and involve in new enterprise culture as soon as possible. Make good career planning and improve salary system can provide fair and competitive promotion opportunity which is the best way to keep talent. C. Expand Cooperation with Universities The economy hotel can cooperate with universities and colleges and train human resource together for talents reserves and human resource supply. The universities and colleges should also improve subject set-up of economy hotel management and train management staff and service personel hierarchically according to the demand of market development. As far as service industry in economy hotel concerned, practical experience is particularly important. Therefore the universities and colleges should strenthen the ties and cooperation with economy hotel and recommend students to the hotel to practise. Meanwhile, the economy hotel should pay attention to the training of basic knowledge, basic sill, which are the foundation of high quality silled personel. D. Create Growing Environment for Human Resource in Economy Hotel The core of human resource management is know humanity, repect humanity, and emphasize “people oriented ”. In an organization, “people oriented ” includes man himself, relationship between people, relationship between people and work, relationship between people and invironment, relationship between people and organization, etc. Just like high star hotels, human resource in economy hotel is also the carrier of intelligence and accumulation of knowledge, skill and experience.

Analysis on Strategy of Human Resource Management in Economy Hotel

279

Appropriate environment is needed to play the role of human resource capital. What the economy hotel should do first is cteate innovation environment and adopts reasonable suggestions of employees. The employees face the customers directly and know the consumer’s demand best. Then, give priority to employee satisfaction and establish the "guest is God, the staff is the master" concept. There are no department manager and section chief in economy htel which can reduce the cost of human resource and improve competition ability. Humanistic management in economy hotel should not only create favorable environment for staff growing but also create human resource datebase which can ensure the economy hotel develop harmoniously.

5 Conclusions Huaman resource management in economy hotel has become a new field which is worthwhile to pay more attention in hotel industry. However, problems, such as laggard traning, uncompetitive salary system, lack of high level manager, career planning and so on have prevent the economy hotel from developing rapidly. Effective measures and strategies should be taken to solve the problems. Esteblish active mode of human resource management can improve the human resource management level. Strenthen the training and career planning on staff can not only help staffs make career planning and provide high quality service but also a good way to keep talents. Expand cooperation with universities can reserve and provide human resource for society. And create growing environment for human resource in economy hotel can stimulate work enthusiasms of staff. Only in this way can human resource management in economy hotel get rapid development.

References 1. Ferris, G.R., Russ, G.S., Albanese, R., Martocchio, J.J.: Personnel/HRM Unionization and Strategy Determinants of Organizational Performance. Human Resource Planning, 215–227 (1991) 2. Nankervis, A.R., Compton, R.L., McCarthy, T.E.: Strategic HRM Thomas Nelson, Melbourne (1993) 3. Qiang, W.: Analysis on stragety of development of economy hotel. China Tourism News (March 4, 2002) 4. Zhangwu, C., Zhaohui, L.: Scope Economy: a Way to Win Competitive Advantages. Economic Management 12, 18–24 (2002) 5. Jian, T.: The economy hotel, when do you not vague (November 3, 2005) http://www.dalu.com/news.htm7k 6. Shenghua, Z.: Motel-new field of chinese hotel industy. Business Economics and Administration 3, 34 (2001) 7. Yanping, X.: The comparative study on management of famous hotel groups in the world. China Travel and Tourism Press (2004) 8. Lei, H., Guisheng, W.: Service innovation:research state, concept definition and character discription. Science Research Management 2, 1–6 (2005)

Research on the Index System and the Evaluation Method of Logistics Service Quality Mai Ying Tour and Public Management College Guangzhou City Polytechnic Guangzhou, China [email protected]

Abstract. For logistics enterprises, logistics service quality is the key factor which let the enterprise not be out of the market, and get a good reputation and then gain profit. To obtain reasonable evaluation indexes of logistics service quality, the research chooses the level of logistics services etc as evaluation indexes and uses DEA method for the first time to evaluating the service quality of 16 logistics enterprises in China. The result shows that the costs of human resources inputs, management resources, and material resources are too much yet lack of services quality and intangible resources. Finally, the article brings forward some suggestions for improvement to the above problems. Keywords: DEA, logistics service quality, evaluation, service level, delivery level.

1 Introduction The competitions among enterprises consist in the production prices, quality and customer service. The customer service means the activities of satisfying customers in selling. Generally, it starts with the input of order form and ends with delivering of productions to customers. Sometimes it will go on and on with the forms of valueadded services or some other technical support. For logistics enterprises, logistics service quality is the key factor which let the enterprise not be out of the market, and get a good reputation and then gain profit. So it is significant to evaluating the services level in logistics enterprises in the system view. The common evaluating methods are AHP, network AHP, Delphi method, analysis of multi-level relationship, neural network, fuzzy evaluation and so on. Some researchers have already used the above methods to evaluate the economy system or the society system. The article puts forward DEA method to overcome the disadvantages of some blurry and unquantifiable indexes in evaluation system. The method is inclined to use objective data to reduce subjectivity. It has the reliable characteristic and is easy to manipulate. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 280–287, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research on the Index System and the Evaluation Method of Logistics Service Quality

281

2 Selection of Model Input-output analysis widely uses in the economy system analysis as a quantity method and is improved and enriched constantly in practices. Especially in mensuration of input-output efficiency, A. Chames, W .W .Cooper and E. Rhodes present the DEA (Data Envelopment Analysis) method in the late 1970s. They enriched the methods in economy system analysis. DEA is a method which can evaluate the relative validity among the same type DMUs (Decision Making Units) that have multiple input and multiple output. It compares the elements in the same type DMU set. The method is an effectual way to evaluate the “manufacture department” with multiple input and especially multiple output (the promotion of production function) to be both “scale validity” and “technology validity”. Consequently DEA method has the unique advantage in evaluating the relative validity (of scale and of technology) among departments. The DEA method constructs the target function skillfully without uniform dimension of the indexes or without prior to the scheduled weight distributed among the input and output indexes. It can also transform fractional programming problem into linear programming problem. It determines the weight by the optimization process so that it is more objective to evaluate the decision making unit. The basic model is formula (1).

⎧min θ = VD ⎪ n ⎪∑ X j λ j − S − ≤ θX 0 ⎪ j =1 ⎪ n ( D ) ⎪⎨∑ Y j λ j − S + ≥ Y0 ⎪ j =1 ⎪ λ ≥ 0 , j = 1, 2,...,n ⎪ j ⎪ S − ≥ 0 ,S + ≥ 0 ⎪ ⎩

(1)

In the above model, Xj and Yj are respectively the set of input-output elements in the decision making unit Uj and λj shows the composition proportion of the decision making unit j when restructuring an valid DMUj by linear combination. θ denotes the optimization of the amount of radial or “distance” between DMUj and the valid frontier. θ is more valid when closer to 1. S- and S+ are slack variables. The non-zero S- and S+ make the invalid DMUj extend to the valid frontier along the horizontal or vertical direction. Model results show that when θ=1 and S-=S+=0, the DMUj is DEA effective; when θ=1 and Sor S+ , the DMUj is DEA weakly valid; when θ<1, the DMUj is DEA invalid.

≠0

≠0

282

M. Ying

3 Construction of the Index System A. Output Index It needs to determine the input indexes and output indexes firstly when evaluating the production efficiency of logistics services in China by using DEA method. Index system is the base factor which determines whether the evaluation results are scientific. To construct scientific evaluation index system, above all it must ensure the index item fully reflecting every input and output in logistics service process and meeting the requirements of systemic. Secondly it must ensure the unity caliber of input and output. Finally the availability and accuracy of index data must be considering. In the view of the ultimate goal of logistics services, the overall objective quality indexes (data obtained mainly from internal customers) are as follow: 1) Service Level Index Service level index is the ratio of the times of satisfied customers or Out of stock to the total service times. It denotes by punctual shipment rate. Punctual shipment rate is the percentage that the loading of goods leave the designated place according to the required, appointed or agreed shipment date. 2) Satisfaction Index Satisfaction index is the ratio of the times of meeting the requirements to the total service quantity. It denotes by selection accuracy ratio, inventory accuracy ratio and category completion ratio. 3) Delivery Level Index Delivery level index is the ratio of the times of punctual delivery to the total delivery quantity. It denotes by punctual delivery ratio. Obviously, evaluation of service quality will be more objective for internal customers. The above quality indexes of the total goal are designed mainly from the perspective of internal customers. B. Input Index The input indexes are divided into measurable index and difficult to measure index. The measurable index means the cost that input into logistics service production processes. The difficult to measure index means the enthusiasm and service attitude of the staff and so on[2]. For the purpose of calculation, considering the positive staff with good attitude, the article only uses the cost as input index. The logistics service costs are divided into 6 parts as follow: 1) The cost of human resource It means the salary that pays for the staff that directly or indirectly provides logistics services, such as the pay for the staff like warehouse workers, handling workers, ordering workers, drivers, order entry clerks and so forth. 2) The cost of material resources It means the direct and indirect consumption flowing material resources in providing logistics services, the cost of the consumption flowing material resources in providing logistics directly, and the cost of the fixed material resources in providing all kinds of logistics services. The characteristic of the flowing material resources is that the current input consumes in the current period. The flowing material resources

Research on the Index System and the Evaluation Method of Logistics Service Quality

283

mainly includes the cost of transport and handling tools, packaging materials, distribution processing equipment in providing logistics services, and includes the cost of utilities, routine maintenance of fixed assets, insurance etc. The characteristic of the fixed material resources is that the input during one period consumes in multiple periods. The fixed material resources mainly includes the depreciation of fixed assets, logistics equipment repair costs, the prepaid rent of housing equipment, and other prepaid expenses. 3) The lost cost of Intangible resources It particularly means the intangible resources in logistics organization. It is hard to measure and control the loss of intangible resources in every function (warehousing, transportation, distribution, etc) logistics service center. Therefore we limited the intangible resources to be the specific logistics service resources of enterprise-class logistics service center. It reflects the running situation of the whole logistics organization. And it can be credited directly to the current profit and loss from a financial point of view. 4) The lost cost of resources risk It specially means the lost resources because of the risk. The risk of logistics services primarily occurs in direct services; therefore we limited the risk resources to be the specific logistics service resources of direct services. 5) The cost of management resources It means the cost of all the fixed resources except item 1-4 above, such as the cost of manager, office resources, business resources and so on. 6) The cost of logistics service quality It means the cost that inputs to improve the quality of logistics service, except item 1-5 above.

4 Application Case The data in the article comes from 16 medium-scale and large-scale logistics enterprises in China. Data is processed by using LINGO10.0. A. General Analysis of Service Quality Put the data into the above model and obtain the total efficiency value of the each decision making unit. The run results show in table 1. Table 1. Run result of Total Efficiency Enterprises

Total Efficiency Enterprises

Total Efficiency

Shen Yang Shang Nan Jing Kun Ming Bei Jing Guang Hu Bei Chu Yun Hai Bai Fu Xia Xiang Run Zhong Ji Zhou Jun Man Yuan (a) Chen (c) (d) (e) Hong (g) (b) (f)

0.857

0.954

Guang Yi Hun Zhou Chen (j) Jun (i)

1.000

0.856

0.893 Bai Sui (k)

0.840

0.985

1.000

0.987

1.000

Quan Cheng (h)

0.983

Shen Cai An Tai Da Wu Han Guang Guang (l) (m) Ke Wei (n) Zhou Ying Dong Shun Hong (o) Chang (p)

0.941

0.981

1.000

1.000

1.000

284

M. Ying

According to the run results in table 1, decision making units such as Shen Yang Chu Yun(a), Shang Hai Bai Chen (b), Nan Jing Fu Xia(c), Kun Ming Xiang Run(d), Guang Zhou Jun Hong(f) ,Quan Cheng(h), Yi Hun(j), Bai Sui(k), Shen Cai(l) and An Tai Da(m) are DEA ineffective. And decision making units such as Bei Jing Zhong Ji(e), Hu Bei Man Yuan (g), Guang Zhou Chen Jun(i), Wu Han Ke Wei (n), Guang Zhou Ying Shun(o) and Guang Dong Hong Chang(p) are DEA effective. The DEA effective decision making units account for 37.5% of the total. There are 4 DEA ineffective enterprises with efficiency of 90% or less. B. Decomposition of Total Efficiency We can make out the composition of the total efficiency by decompounding and find the main reason of the change of the total efficiency. Then the decision-making and measures will be more efficient and pertinent. Due to the formula of “total efficiency (ZC)=scale efficiency (SC)×technology efficiency (TC)”, we decompounded the total efficiency into two parts of scale efficiency and technology efficiency. Put the n

condition of

∑λ j =1

= 1 into the above formula and then obtain the technology

j

efficiency of every decision-making unit. The decompounded results of the total efficiency show in table 2. Table 2. Decompounded Result 0f Total Efficiency Enterprises

ZC

SC

TC

Enterprises

ZC

SC

TC

a b c d e f g h

0.913 0.957 0.857 0.878 1.244 1.026 1.045 0.897

1.021 0.966 0.957 1.025 1.272 1.075 1.045 0.897

0.894 0.991 0.895 0.857 0.978 0.954 1.000 1.000

i j k l m n o p

1.242 0.753 0.693 0.918 0.939 0.753 1.124 1.254

1.242 0.886 0.854 0.958 0.987 0.925 1.124 1.254

1.000 0.850 0.811 0.958 0.951 0.814 1.000 1.000

According to the analysis of table 2, it shows that the scale efficiency indexes of effective decision-making units are greater than the technical efficiency indexes and greater than 1. It follows that the scale efficiency is very important. Most of the businesses of logistics companies are of small or medium size and without sufficient scale. And the input of productive resources does not reach the best scale yet. Some Companies have strong efficiency advantages profit from their fast store expansion this year. C. Adjustment of Invalid DMUs and Analysis of Results The equations are an exception to the prescribed specifications of this template. You will need to determine whether or not your equation should be typed using either the Times New Roman or the Symbol font (please no other font). To create multileveled equations, it may be necessary to treat the equation as a graphic and insert it into the text after your paper is styled. For the decision-making units of invalid DEA, the adjustment target will be found by using the production frontier surface projection of these decision-making units. And

Research on the Index System and the Evaluation Method of Logistics Service Quality

285

then transform these invalid decision-making units into valid ones. The adjustment formula is below: （

Xˆ 0 , Yˆ0 ） =（ θ X 0 − S − , Y0 + S + ）

(2)

According to formula (2), the adjustment target of adjustment from invalid DMUs to valid DMUs show in table 3. Table 3. Adjustment Target of Adjustment from Invalid DMUs To Valid DMUs Index Name

a

b

c

d

f

h

j

k

l

m

61.6 65.3 64.3 68.0 63.9 58.4 52.5 54.0 52.8 52.7 Human Resource Cost 57.9 58.5 60.5 70.6 63.0 62.5 59.5 52.4 59.7 52.7 Risk Cost

9.7 10.9 8.1 10.8 5.0 7.5 7.6 5.1 10.0 2.7

6.9 9.2

5.2 5.9

4.2 4.5

5.6 3.7

6.3 4.9

Resource 15.6 16.9 25.9 20.5 26.8 26.7 26.5 27.5 34.3 35.6 Management 16.4 16.6 22.3 20.3 28.7 26.5 23.8 24.7 30.8 24.9 Cost Material Resources Cost

49.5 48.1 67.6 51.0 54.7 52.0 54.1 53.3 53.8 54.5 46.8 47.3 52.6 54.3 55.0 55.2 54.1 52.5 54.6 52.5

Intangible Resources Cost

6.3 7.9 8.5 12.6 13.2 14.2 17.8 16.5 20.2 19.4 8.6 8.7 15.1 15.2 15.7 15.6 15.3 14.7 14.3 19.7

Quality Cost

8.2 8.8 9.2 9.1 9.4 7.6

8.2 7.3

6.4 7.2

9.2 6.2

5.6 2.6

3.9 5.4

6.8 2.3

8.5 5.2

Service Level

29.8 23.8 28.8 23.1 22.9 2.6 29.8 23.8 26.2 21.6 28.6 0.6

5.1 5.1

7.2 10.4 28.8 7.2 10.4 18.5

Satisfaction

95.7 86.2 87.3 85.4 95.6 93.2 97.8 79.1 83.6 84.1 97.3 88.6 90.0 91.3 93.4 92.2 95.4 80.3 83.6 84.1

Delivery Level

88.7 85.8 92.1 93.2 98.3 96.9 95.2 89.6 98.5 92.7 93.4 95.1 92.2 96.6 98.3 93.5 96.4 91.4 95.3 91.7

Table 3 presents the adjustment target of adjustment from invalid DMUs to valid DMUs. Adjustments are necessary to the input indexes of all decision-making units due to the economic implications of the slack variable. Adjustment quantity is the input resources which the decision-making units can save. The labor input of the logistics enterprises is surplus according to table 3. The main reason lies in the high staff turnover owing to low salary in logistics enterprises. The enterprises recruit more workers on reserve to keep the service level, and that leads to excess personnel. The other reason is that the logistics companies can not measure the effort and the output of the staff.

286

M. Ying

The input costs of material resources and management resources are relative surplus. Because of the bloated administration there is no effective performance evaluation and the inadequate utilization of many resources also causes the relative surplus. We know from table 3 that the output indexes are not always invalid in every decision-making unit, especially the economic indexes. The negative impact of the output indexes to the logistics services efficiency is less than that of the input indexes, relative to the invalidity of the input indexes in every decision-making unit. Consequently it should focus on the input indexes to improve the efficiency of logistics services. And improve the overall efficiency of logistics services by improving the quality and using efficient of the input factors. It is too little input of intangible resources and quality costs. The reason is lack of seriously considering the input of brand, reputation and other intangible resources and lack of emphasis on quality.

5 Conclusions and Recommendations A. Conclusions The article adopts the traditional DEA (data envelopment analysis) and the expansion DEA model to and establishes the index system which synthetically considers service levels, customer satisfaction and delivery levels. And then analyze the input-output of the 16 logistics companies in China. Finally draw the following conclusions: 1) The service level of the logistics companies is inferior overall. But some largescale companies have already be aware of this and have taken measures. 2) After distinguishing the effective and ineffective unit, it is found that the low size efficiency of the effective decision-making unit is the important reason of low total efficiency. Most logistics companies have not evaluated the performance of human resources, management resources and material resources. This leads to excessive input, and did not increase the corresponding service level. B. Recommendations 1) Construct scientific performance evaluation index system to evaluate the logistics indirect services and human resources. Reduce the organizations and staff in indirect services department. 2) Raise the payment of staff direct service department and keep the staff motivation. Accordingly reduce staff turnover. 3) Pay more attention to the input of intangible resources, like patents, brand, reputation, etc. 4) Attach importance to service quality and increase the input in improving service quality.

Research on the Index System and the Evaluation Method of Logistics Service Quality

287

References 1. Hao, H., Gu, P.-l., Lu, Q.: Extended data envelopment analysis model based on C2GS2 modle- EC2GS2. Journal of Systems Engineering (2) (2004) (in Chinese) 2. Chen, J., Wei, X.-j., Zhu, D.: On the Composition of Logistics Capability of Third-party Logistics Service Provider. Finance & Economics of Xinjiang (12) (2008) (in Chinese) 3. Yu, B., Zheng, C.-p., Liu, G.-j.: The Core of Modern Logistics Service System is Logistics Informatization. Logistics Technology (12) (2008) (in Chinese) 4. Zheng, B., Dong, D.-h., Jin, Y.-f.: Review of the Foreign Study on Logistics Service Quality. Chinese Journal of Management (3) (2007) (in Chinese)

Social Benefits Evaluation of Reverse Logistics －Case of the Automobile Recall System Jiang Chengcheng1,2 and Li Congdong1 1

Management School, Jinan University 2 Guangzhou City Polytechnic Guangzhou, China [email protected]

Abstract. The paper establishes a social benefits evaluation system of automobile recall system by using qualitative and quantitative approach. And the social benefits grades of automobile recall system are calculated by using AHP and GIOWA. The method can eliminate the lack of experts' experiences and knowledge to some extent. And the calculation process is relatively simple and practical. Furthermore the evaluation is more objective. Keywords: Social benefits evaluation, reverse logistics, automobile recall system, GIOWA.

1 Introduction From October 2004 to June 2009 when the management regulations of the defective automobile recall carried out, there were more than 2.36 million automobiles recalled all over China [1]. About 540 thousand were recalled in 2008. And the number in the first half of 2009 is approximately, which is close to the number of the whole year in 2008. It is clearly that the probability of the defective finished product would increase continually under the conditions of more abundant automobiles products, much more new technologies adopted by enterprises and the reduction of product life-cycle. Therefore, the establishment of the administrative system of defective products would be not only the mature management tools in developed countries, but also be the inevitable choice of the development of social economy and technology. The recall of defective automobile not only wins the reputation and improves customer service levels for the enterprise, but also increases customer satisfaction and saves the society resources then contributes to sustainable development of society [2]. The article attempts to establish the social benefits evaluation index system and evaluation method of automobile recall system from the perspective of social benefits.

2 The Establishment of Social Benefits Index System In order to make the social benefits index system of automobile recall more perfect and reliable the article uses the interview survey methods to visit some relevant experts and managers of automobile manufacturers. Thus obtain the three level index system. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 288–294, 2011. © Springer-Verlag Berlin Heidelberg 2011

Social Benefits Evaluation of Reverse Logistics

289

The second level has 4 indexes and the third level has 13 indexes, which show in figure1. Social impact index (H1) includes the lower level indexes in figure1: logistics service level (H11), contribution of the social sustainable development (H12), contribution of driving related industries (H13), and customer satisfaction (H14). Economic impact index (H2) includes three lower level indexes: abandonment rate of the recycling product (H21), re-utilization rate of recycling product (H22), and consumption rate of non-renewable resources (H23). These three indexes can be reflected by the actual data. Technology impact index (H3) includes 3 lower level indexes: recycling technology level (H31), automobiles research and development level (H32), and recycling resources' technology level (H33). Environmental impact index (H4) includes 3 lower level indexes: pollution emissions level (H41), green logistics level (H42) and energy saving level (H43). No objective data can be collected to indicate the lower level indexes of H1, H3, and H4, which rely on expert assessment [3]. Consequently, we can assign the indexes values or interval values by using uncertain language decision-making methods. H H1 H11

H12

H2 H13

H14

H21

H22

H3 H23

H31

H32

H4 H33

H41 H42 H43

Fig. 1. Social benefits index system of Auto Recall

3 Construction of Evaluation Model A. Selection of Evaluation Method The indexes are mostly qualitative, so there is no clear discrimination between good and bad. Accordingly we generally use expert evaluation method, AHP, fuzzy comprehensive evaluation method or fuzzy AHP method etc. These methods quantify the indexes by using expert evaluation. Hence the index values are restricted to the following factors of experts: their knowledge and experiences; the preference, the depth and breadth of understanding to the object of evaluation; insufficient estimation of future trends. So, the article chooses the multi-attribute decision-making method which includes generalized induced ordered weighted averaging (GIOWA)[4] and the analytic hierarchy process (AHP) . B. Construction of GIOWA Model Let H be the set including three levels index, D be decision-maker set, S be the language set, W be the weights of the third level indexes obtained from AHP (generally, the weights of second level indexes are counted to the weights of the third ones, R be the evaluation set. The language evaluation value rj(k) in the index set hj H is given by decisionmaker dk D.

∈

∈

290

J. Chengcheng and L. Congdong

Suppose

a j to be the corresponding triangular fuzzy numbers of rj. The result

shows as follow according to GIOWA calculation rules: Z k = GIOWA ," , < z

(k ) m

ω

( < r1( k ) , h1 , a1( k ) > , < z 2( k ) , d 2 , a 2( k ) >

, d m , a m( k ) > )

= ∑m ω j b (j k ) j =1

(1)

bj(k) is the third component of ternary data of the largest element in rj(k) . '

Let the weight of decision-maker be w and then use GIOWA operators to summarize the comprehensive attribute value z (w' ) given by the t-th decision-maker. The comprehensive attribute evaluation values z ' ( w) of the evaluation objects given by the decision-maker group are obtained. Z ′(ω ) = GIOWAω ′ (< z1(1) , d 1 , a1(1) >, < z 2( 2 ) , d 2 , a 2( 2) >," , < z t( 2 ) , d t , a t( 2 ) >)

= ∑t ω k b (j k ) j =1

(2)

C. AHP（ Analytic Hierarchy Process） Analytic hierarchy process (AHP) is a structured technique for dealing with complex decisions. Rather than prescribing a "correct" decision, the AHP helps the decision makers find the one that best suits their needs and their understanding of the problem. Based on mathematics and psychology, it was developed by Thomas L. Saaty in the 1970s and has been extensively studied and refined since then. The AHP provides a comprehensive and rational framework for structuring a decision problem, for representing and quantifying its elements, for relating those elements to overall goals, and for evaluating alternative solutions. It is used around the world in a wide variety of decision situations, in fields such as government, business, industry, healthcare, and education. The calculation steps are as follow: 1) Formation of judgment matrix Above all, compare the importance among all the indexes under the same higher level index to reduce the influence of subjective factors, And then the judgment matrix is formatted. For example, the judgment matrix of Bj (j=1, 2,… ,m) under index A is a mdimensional matrix that shows in table I. bij means the importance degree of Bi relative to Bj in table I. The importance degree generally uses the scale of 1-9 advanced by Saaty. Table 1. The of general form judgment matrix A B1 B2 … Bm

B1 b11 B21 … Bm1

B2 b12 B22 … bm2

… … … … …

Bm b1m B2m … bmm

Social Benefits Evaluation of Reverse Logistics

291

2) Calculation of ranking value The ranking value methods include power method, sum product method and square root method. The article uses the square root method to calculate ranking value. a) Calculating the product of each line in judgment matrix: M i = bi1 × bi 2 × " × bin (i, j)=1, 2， …， n

(3)

b) Calculating the n-th root of Mi: Wi Wi = n M i

(4)

c) Generalization of the root vector: n

W i = Wi / ∑ W i i =1

(5)

d) Calculating the largest eigenvalue of the judgment matrix: λmax n

λ max = ∑ [( AW ) i / nWi ] i =1

(6)

(AW)i is the i-th element of vector AW in formula (6). 3) Consistency check Consistency check is usually applied to every judgment matrix so as to ensure the obtained weight reasonable enough. CR =

λ max − n ( n − 1) RI

< 0.1

(7)

RI means the average random consistency index in formula (7).

4 Case Study An automobile company recalled 1182 Pentium cars, which were produced from March 5, 2009 to March 30, 2009. The reason of expanded recall lies in: the general contracting suppliers of skylight glasses have not established product traceability management system, which affected the determination of the automobile recall scope. The skylight glasses of recalled automobiles would have cracking rubber and then cause abscission, which would lead to potential safety hazard. Chongqing Chang'an Ford Mazda Automobile company and FAW Car company provide free inspection to those automobiles in expanded recalled range to eliminate hidden dangers. 13 experts respectively evaluate the social impact of the recall. The evaluation matrix shows in table 2. Let the triangular fuzzy numbers of the positive ideal indexes H11-H14, H22, H31H33, H42, H43 be： Low: (0.1, 0.2, 0.3); Lower: (0.3, 0.4, 0.5); General :( 0.4, 0.5, 0.6);

292

J. Chengcheng and L. Congdong

High： (0.5, 0.6, 0.7); Higher ： (0.6, 0.7, 0.8); Very higher ： (0.7, 0.8, 0.9). Let the triangular fuzzy numbers of the negative ideal indexes H21, H23, H41 be： Higher: (0.1, 0.2, 0.3); High (0.3, 0.4, 0.5); General (0.4, 0.5, 0.6); Low (0.5, 0.6, 0.7); Lower (0.6, 0.7, 0.8); Very lower (0.7, 0.8, 0.9). First step: the experts evaluate the three levels index system and put the result into the software of YAAHP. The calculation result shows in table 3-7. Table 2. Evaluation matrix given by decision-makers Expert 1 2 3 general higher general 1

4 Very high lower high higher high 2 lower higher general Very 3 high Expert 8 9 10 11 high general lower lower 1 high higher general general 2 3

high

general

low

5 lower

6 high

7 general

general high higher lower higher General 12 lower low

13 lower low

lower general general

Table 3. Secondary level index weights H

H1

H2

H3

H4

Wi

H1

1

3

5

5

0.3886

H2

1/3

1

3

3

0.2605

H3

1/5

1/3

1

3

0.1930

H4

1/5

1/3

1/3

1

0.1580

CR=0.0075<0.1

Table 4. The weights of the third level index under the social impact index H1

H11

H12

H13

H14

W1i

W1*W1i

H11

1

1/4

1/4

1

0.1738

0.0675

H12

4

1

3

5

0.3678

0.1429

H13

4

1/3

1

5

0.3012

0.1170

H14

1

1/5

1/5

1

0.1572

0.0610

CR=0.0094<0.1

Social Benefits Evaluation of Reverse Logistics

293

Table 5. The weights of the third level index under the economic impact index H2

H21

H22

H23

W2i

W2*W2i

H21

1

1/4

1/5

0.1981

0.051605

H22

1

1

1/2

0.3610

0.094041

H23

5

2

1

0.4409

0.114854

CR=0.0000<0.1

Table 6. The weights of the third level index under the technology impact index U3

U31

U32

U33

W3i

W3*W3i

U31

1

1/3

5

0.3610

0.069673

U32

3

1

4

0.4409

U33

1/5

1/4

1

0.1981

0.085094 0.038233

CR=0.00386<0.1

Table 7. The weights of the third level index under the environment impact index H4

H41

H42

H43

W4i

W4*W4i

H41

1

1/3

1/4

0.2318

0.036624

H42

3

1

1/2

0.3458

0.054636

H43

4

2

1

0.4224

0.066739

CR=0.000<0.1

The second step: use the GIOWA operators to gather the evaluation information of the evaluation value R and then obtain the comprehensive attribute evaluation rj(k) given by decision-makers dk. Firstly, obtain the comprehensive attribute evaluation given by decision-makers d1. The reason shows as below: r1(1)= general, r2(1)=high, r3(1) =general, r4(1) =higher, r5(1) =lower, which is negative ideal. Corresponds to the ideal target is high; r6(1)=high, r7(1)=general, which is negative ideal. Corresponds to the ideal target is general; r8(1) =high, r9(1) = general, r10(1)=lower, r11(1)=lower, which is negative ideal. Corresponds to the ideal target is higher; r12(1)=lower, r13(1) =lower, r4(1)› r6(1) = r8(1) ›r2(1) = r5(1) = r11(1) ›r1(1) = r3(1) = r7(1) = r9(1) › r10(1)= r12(1) = r13(1). The corresponding triangular fuzzy numbers of the indexes are respectively as follow: a 1( 1 ) = (0.4, 0.5, 0.6); a 2(1) = (0.5, 0.6, 0.7); a3(1) =

(0.4, 0.5, 0.6);

294

J. Chengcheng and L. Congdong

a4(1) = (0.4, 0.5, 0.6)； a5(1) = (0.5, 0.6, 0.7); a6(1) = (0.6, 0.7, 0.8); a7(1) = (0.4, 0.5, 0.6); a8(1) =

(0.6, 0.7, 0.8);

a9(1) =

(0.4, 0.5, 0.6);

a10(1) = (0.3, 0.4, 0.5);

a11(1) = (0.5, 0.6, 0.7); a12(1) = (0.3, 0.4, 0.5); a13(1) = (0.3, 0.4, 0.5).

Use the GIOWA operators and the triangular fuzzy number algorithms and obtain： z (1) (ω ) =GIOWA ω (·)=

∑

m j =1

ω j b (j k ) =(0.4, 0.5, 0.6).

The comprehensive attribute evaluation information given by decision-makers d2 and d3 can be obtained in a similar way, which shows as below: z ( 2) (ω ) =(0.5, 0.6, 0.7),

z (3) (ω ) = (0.4, 0.5, 0.6).

Set the weights of experts be (0.3, 0.5, 0.2). The social benefits of the automobile recall will be

：

3

z ' (w) = ∑ wk' z k (ω ) k =1

= (0.5, 0.6, 0.7)= higher

Therefore, the social benefits grade of the automobile recall is a little higher.

5 Conclusions The article uses GIOWA algorithm decision-making method to calculate the social benefits of automobile recall. The method can eliminate the lack of experts' experiences and knowledge to some extent. And the calculation process is relatively simple and practical. Furthermore the evaluation is more objective.

References 1. Automobile recall net, http://www.qiche365.org.cn 2. Wang, h.: Efforts to significantly improve the Auto recall. China quality news net, http://www.cqn.com.cn 3. Xu, W., Zhou, S.: Research on Social Benefit Evaluation System of Reverse Logistics. Logisitics Technology (June 2009) (in Chinese) 4. Xu, Z.: Uncertain multiple Attribute Decision Making methods and their application. Tsinghua university press, Beijing (2004) (in Chinese)

Study on Trust Model in P2P Gan Zhi-gang College of Information & Electronic Engineering Zhejiang Gongshang University, Hangzhou 310018, China

Abstract. P2P is lack of immunity to several kinds of attacks because of his open and dynamic characteristics. So it is important to construct a safe and reliable trust model. The trust model in P2P can be divided into two groups according to the aggregation of trust value: Local Trust Model and Global Trust Model. Global Trust Model can efficiently restrain cheating from individual node and collaborative cheating from some malicious groups. We compared the current classical Trust Models from the aspects of the computing and the storage management of trust value, based on which we proposed the exiting problems in those Models and research strategy in the future study. Keywords: P2P, trust model, network security, distribute storage.

1 Introduction Peer to Peer (P2P) is a distribute network model springing up rapidly in recent years and independent on server. According to the statistical analysis on Internet traffic by CacheLogic, we can see that P2P traffic kept on rising after appearing in 1990 and had taken up 10% in total traffic until 2004. P2P is the largest consumer in network which not only surpasses Web traffic but also appears in the continuous increasing trend. In P2P, each node is equal in logic and they are not only resource providers but also resource receivers[1]. It allows user in Internet to link to other users’ computer directly and use their files. Different from traditional C/S Model, P2P has characteristics of non-center, scalability, load balancing, high performance price ration and privacy protection etc[2], which make P2P have large potentials in Peep-to-Peer computing, cooperative work, information retrieval and instant messaging but meanwhile, bring about many security problems due to lack of efficient mechanism. Recently, the study on Kazaa[3] shows that there are more than 50% files being polluted[4]. Meanwhile, irresponsibility users suspended file uploading service freely, which can not make sure QOS well. P2P weaken the concept of server, so the traditional secure mechanism based on register, authentication and accredit can not meet the requirements of many networks. Thus, Construct a trust model to solve the problems in security and validity is becoming a research focus in network security field. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 295–301, 2011. © Springer-Verlag Berlin Heidelberg 2011

296

Z.-g. Gan

2 A Brief Introduction to Trust Model in P2P According to the aggregating of trust value, trust model in P2P can be divided into two groups: local trust model and global trust model[5]. In local trust model, the trust value of node is obtained by inquiring finite nodes, usually in broadcasting manner. Classical local trust model includes: P2Prep[6], Xrep[7] etc. The largest disadvantage of local trust model is that the obtained trust value is too simple, and it is easily attacked by malicious nodes. But in global trust model, the trust value of node depends on all interactive nodes, which can just make up the shortcoming of local trust model. The earliest global trust model in P2P is EigenTrust, which was proposed by Stanford University in 2003. Then PeerTrust[8] and SWRTrust[9] is put forward based on EigenTrust.

3 Analysis on Trust Model in P2P The procedure of constructing a trusted and secure global trust model can be divided into two steps: (1) The computing of trust value; (2) The storage management of trust value. So far, many excellent algorithms have been researched out at home and abroad. We discussed the different algorithms in each phase based on the current classical trust models in P2P. 3.1 The Computing of Trust Value The first step of constructing a trust value is to describe and measure the trust relationship, and then the global trust value can be obtained by inducing and aggregating these iterated local trust value or experienced recommendations. According to the different measurement tools, we classified the evaluation and reasoning methods for trust values into the following kinds: trust model based on probability, trust model based on D-S evidence theory, and trust model based on fuzzy mathematics etc. 3.1.1 EigenTrust EigenTrust[10] is a classical global trust model based on simple plus or average operation on dual evaluation, in which the unique global trust value is calculated by iterating satisfaction values among adjacent nodes. In the algorithm, firstly the trust value of node k is obtained from his interactive friends, and then those local trust values are aggregated into global trust value of node k. It can be described as:

Tik = ∑ (C ij ×C jk )

(1)

j

As to any node i, j :

Cij =

Satij − UnSatij ∑ (Satij − UnSatij ) j

(2)

Study on Trust Model in P2P

Where

297

Satij and UnSatij are respectively the number of satisfactory and

unsatisfactory in historical transactions between node i and node j. We can denote the above formulation as matrix: Suppose that C is consisted of vector Cij , and vector

ti includes all t ik , then ti = (C T ) Ci , where n

∑t

ij

= 1 . C is a

j

transfer matrix of n-state Markov chain, from which we can prove that: As to any initial vector

ci , through n iterates where n is large enough, a node can obtain a global trust

value ti more comprehensive than its own experiences by iteratively asking his friends and friends’ friends. Through EigenTrust, the obtained global trust value not distinguishing from private trust relationship. That is to say, as to a special node, the trust value from other nodes is the same. In addition, the global trust value equals the weight of recommendation degree[11], that is, the higher the global trust value node has, the trust degree it possesses. In that case, there are many disguised malicious nodes, and the performance of system will be worse.

Jφang Trust Model Jφang is a classical local trust model based on Bayesian Network and D-S evidence

3.1.2

theory. It regards dual evaluation as input, computes density function pcdf with probabilistic certainty for those dual evaluations through beta dense function, and then calculates the trusted degree of the probability that a node brings about an incident[12]. Suppose that the random variable is θ , r and s are respectively the number of positive and negation incidents, then the pcdf can be defined as:

ϕ (θ | r , s ) = Where

ρ (r + s + 2) θ r (1 − θ ) s , 0 ≤ θ ≤ 1 , r ≥ 0 , s ≥ 0 ρ (r + 1) ρ ( s + 1)

ρ ( r + s + 2)

is the probability of bringing about r+s+2 incidents,

(3)

ρ (r + 1)

is the probability of bringing about r+1 positive incidents, and ρ ( s + 1) is the probability of bringing about s+1 negative incidents. Concept space consists of series of declared subjective trust value. Subjective trust value is defined as a triple w = {b, d , u} . The triple satisfies:

b + d + u = 1 , {b, d , u} ∈ [0, 1]3

(4)

Where b, d, u depict respectively the trusted degree, the untrusted degree and the uncertainty. So, Jφang defines w as the number of positive incidents r and the number of negative incidents s of the deal evaluation.

b=

r s 1 ,d = ,u = r + s +1 r + s +1 r + s +1

(5)

298

Z.-g. Gan

And Jφang holds that w equals to pdcf in the expression of subjective trust value. So, we can describe the subjective trust value using the probabilistic statistical incidents in subjective concept space. 3.1.3 FSTM FSTM is a classical subjective trust model based on fuzzy theory. FSTM measure the trust value by bringing in the concept of fuzzy set and membership, and then solve the problem of the transmission and combining problem by Einstein operator. The algorithm can be realized as following: 1)

Define each node as the responding subject in universe[13], and define the T j ( j = 1,2,3;..., M ) as the subject set with different trust value.

2)

Compute the membership

μ i , j = μ A ( xi )

which represents the membership

xi towards T j ( j = 1,2,3;..., M ) to depict the trust value of subject.

subject

Here μ ij is a trust vector. In real application, when describing the attributes or the characteristics of subject, we can use finite fuzzy parameters subset) to describe the subject, and then vector of subject

T j (that is the fuzzy

V ( xi ) = ( μ i1 , μ i 2 ,..., μ im ) is the trust

xi . So, Applying fuzzy theory, we can present the trust relationship of

every subject about each trust style in the form of trust vector , which can reflect the actual situation of subjective trust more objectively( the fuzzyness of subjective trust), and then finish the constructing of trust model. 3) Apply the subjective trust model to fix the trust vector of each node. Because the trust vector of each node is a trust basis for a node towards other nodes. So, we should take several aspects into consideration. But due to the fuzziness of trust among nodes, there are many potential strategies included in researched problem domain. For example: Suppose that the factor set is

T = {t1,t2 ,..., t n } , the evaluation set is

E = {e1 , e2 , … , em } , the factor appraisal matrix is R = (rij ) n×m . As to a given factor set, the weight is

W = {w1 , w2,..., wn } ∈ Γ(U ) ,

n

∑w

i

= 1 , and the

i =1

comprehensive evaluation is V = W R ∈ Γ(V ) . Then (T, E, R)is called as Fuzzy Synthetic Evaluation Model. T、 E、 R、 W are the four elements of this model. Where, “ ”is the operator for fuzzy transformation. The operation process is n

V j = ∨ ( wi ∧ rij ), j = 1,2,..., m . Where ∨ and ∧ are Zadeh operators and i =1

respectively denoted as max and min operation. The factor set T includes all attributes consisting of all trust style. The evaluation set E is a description of different evaluation level of nodes. The evaluation level have m (responding with level in every set), W is the distribution set of weight for each factor, which denotes the relative importance in synthetic evaluation; The factor evaluation matrix R represents the evaluation

Study on Trust Model in P2P

probability on each factor

299

t i (for example rij represents the probability of evaluation

e j on t i . The constructing manner is to fix the eigenvalue of each attribute according to the concrete condition of each node, then based on the characteristic function of attributees to compute the probability of evaluation on attributes. In other words, that is to build the membership function which can reflect this attribute[14]. 3.2 The Storage Management of Trust Value In trust value, trust values of nodes are allowed to store in local or other nodes. According to the distribution density of place in which values are stored, the storage management of trust value can be divided into centralized and distributed. Centralized storage is to save all trust data in the same trusted center sever. This storage manner is simple and updates conveniently. Although most of the concrete application of trust model and trust management mechanism have applied center-node, that is to say the trust value managed by those authoritative nodes, considering the fact that most P2P application ( such as file sharing) have problems in centerless status, single point failure and maintenance overhead etc. The method with center sever is difficult to accept and hard to embody the superiority of P2P. So, in P2P, we prefer to studying the distributed storage which is to store in the other one or more nodes. 3.2.1 Can and Chord CAN[15] and Chord[16] are two classical distributed one to one storage method for trust value based on DHTs. The main idea is to carry on hash mapping according to the IP address of nodes, so the node with fixed IP address corresponds to the fixed file node. CAN is to choose key from a n-dimension toroidal space. Each node has correlation with a hypercube in the space. His neighbors are the nodes who possesses adjacent hypercube. The route mechanism will inquire the required message and forward to the area more adjacent to the key. CAN has a characteristic distinguish from other 1/ d

algorithm that a node has O (d ) neighbors and the length of path is O (dn ) . Chord apply a one-dimension annular key space. The node responsibility for saving the key is the subsequent node closest to the key ID. This node is called as the successor of the key. Chord maintains two neighbor nodes set. Each set is a successor list including k direct successor. The route mechanism depends on this list, and forwards the request to the node whose ID closest to but not surpass this key, here the hop counts is O (log n) ). Experiment shows that, this one to one distributed storage method can balance the load used for maintaining trust value. But, the reliability of this method depends severely on the reliability of DHT hash function. 3.2.2 Improved Chord Based on Chord, we store the redundant trust value on the rest nodes so that the same trust value can be obtained from any file nodes. It can efficiently avoid the lost of trust data resulted from the single node failure, and also can be used to identify the truth trust value. But this method has disadvantage on large overheads to store and update,

300

Z.-g. Gan

difficulties in keeping several copies in synchronous, which will bring many unnecessary burdens to system.

4 Conclusion All in all, research works have carried on many fruitful studies on trust model base on P2P and proposed many improved model. We integrated the study at home and abroad and mainly elaborated the current classical trust model systematically from the view of the computing and the storage management of trust value. We compared their respective advantages and disadvantages, and then generated the development trend and study strategies for the trust value in P2P. The model should have the following features: 1) Attack tolerant. Because of the increasing of malicious nodes and the renew of attacking behaviors, the requirements on attack tolerant are more and more high. A good trust model can not only deal with the current attacks efficiently, but also adaptively study, analyze, predict, and treat with the attack behavior of future malicious nodes. 2) Scalability. The number of nodes in P2P increases dynamically, which results into more information about trust relationship. Thus the more computation and storage are needed to maintain more trust relationship. Those overheads, besides more index and more information, are all for trust model. The natural result of having many nodes in system is the increasing inquiry about the trust value, which will not only increase traffic in the net, but also increase the computation load of each node in different trust model. So, all the factors determine the scalability of all trust modle. In order to improve the scalability of trust model, we should take into account those costs such as bandwidth, resource storage, and load balance etc. 3) Fault tolerance. Because nodes in P2P will add in or leave out whenever, the topology of P2P will change continuously. In this case, the fault tolerance of system is the ability of adapting instant change in system. When some nodes add in or leave out, not only the new trust relationship is needed to construct, but also the transaction information are needed to copy to make sure the availability of trust value. If the trust value can not be obtained, it will make the node trust the illegal malicious node. However, the copy of trust information will damage the privacy of personal trust value, which will decrease the distributed characteristic. 4) Incentive mechanism. From one side the incentive node give the right evaluation to other nodes. From the other side, the good behavior of node should be encouraged so that nodes will have motivation to accumulate reputation.

References 1. Wang, Y., Vassileva, J.: Trust and reputation model in peer-to-peer networks. In: Proceedings. Third International Conference on Peer-to-Peer Computing (P2P 2003), September 1-3, pp. 150–157 (2003) 2. Feng, J., Yu, J.-g.: Study and Analysis of P2P. Fujian Computer (6), 61–62 (2008) 3. Kazaa(EB/OL) (2006), http://www.kazaa.com/

Study on Trust Model in P2P

301

4. Liang, J., Kumar, R., Xi, Y., et al.: Pollution in P2P file sharing systems. In: Proceeding of the IEEE Infocom 2005, pp. 1174–1185 (2005) 5. Hou, M.-s., Lu, X.-l., Ren, L.-y., et al.: A Trust Model of P2P System Based on Confirmation Theory. Journal of University of Electronic Science And Technology of China 34(6), 806–808 (2005) 6. Damiani, E., Vimercati, S.D.C., Paraboschi, S., et al.: Managing and Sharing Servents’ Reputations in P2P Systems. IEEE Transactions on Knowledge and Data Engineering 15(4), 840–854 (2003) 7. Cornelli, F., Damiani, E., Capitani, S.D.: Choosing reputable servents in a P2P network. In: Proceedings of the Eleventh International World Wide Web Conference, Honolulu, Hawaii, vol. 5, pp. 7–11 (2002) 8. Xiong, L., Liu, L.: PeerTrust: supporting reputation-based trust for peer-to-peer electronic communities. IEEE Transactions on Knowledge and Data Engineering 16(7), 843–857 (2004) 9. Li, J.-T., Jing, Y.-N., Xiao, X.-C., et al.: A Trust Model Based on Similarity-Weighted Recommendation for P2P Environments. Journal of Software 18(1), 157–167 (2007) 10. Kamwar, S.D., Schlosser, M.T., Garcia-Molina, H.: The EigenTrust algorithm for reputation management in P2P networks. In: Proceeding of the 12th Intel World Wide Web Conference, Budapest, Hungary, pp. 640–651 (2003) 11. Li, j-t.: The Research on Trust Model and Replication Scheme in P2P Environments. School of information science and engineering, Fudan University, ShangHai (2006) 12. Knapskog, S.J.: A metric for trusted system. Global IT Security, pp. 541-549. Austrian Computer Society, Wien (1998) 13. Hu, H.-p., Liu, H.-k., Li, R.-x.: FSTM:a Subjective Trust Model Based on Fuzzy Theory for P2P Network. Journal of Chinese Computer Systems 29(1) (2008) 14. Li, B.-n.: Fuzzy Mathematics And Its Application. Hefei University of Technology Publishing House, Hefei (2007) 15. Kamvar, S.D., Schlosser, M.: EigenRep:Reputation management in P2P networks. In: Proceedings of the 12th Int’1 World Wide Web Conference, pp. 123–134. ACM Press, Budapest 16. Zhang, Z., et al.: A P2P Global Trust Model Based on Recommendation. In: Proceedings of the Fourth International Conference on Machine Learning and Cybernetics, Guangzhou (August 2005)

Information Technology and Economic Growth －The Empirical Research Based on Spatial Econometric Model Zhou Qin1 and Zhang Hong-li2 1 The School Of Management and Economics, Southwest Jiaotong University, Chengdu, China 2 The School of Statistics, South Western University of Finance and Economics, Chengdu, China [email protected]

Abstract. With the rapid development of electronic technology and internet, information technology has become one of the important element in economic activities and has great effect on economic growth. This paper attempts to do the spatial exploratory data analysis of IT and economic data, aims at discovering the spatial dependence and spatial clustering of region IT and economic growth in China mainland, and based on it, the paper build the spatial econometric model of IT and economic growth to explore the quantitative relationship between IT and economic growth in China. Keywords: information technology, economic growth, spatial econometrics.

1 Introduction The information technology (IT), with information and communication technology as its core, has been giving complex and profound impact on global economy, social and cultural life. IT has gradually become the key factors of the promotion of world economy and social development. In the past two decades, a large number of domestic and foreign scholars devolved into the research of the relationship between information technology and economic growth. The researches focus on analyzing how information technology affects such factors as output, labor productivity, multifactor productivity, employment and change of wages, mainly using neo-classical growth theory and new growth theory as analytical tools. According to different types of the observed data, research objects are divided into three levels: macro, industry and enterprise levels, which respectively investigate how information technology contributes to aggregate or regional economic growth, to the industry and the performance of micro-economic organization. This paper is mainly concerned with how IT affects the regional economy. Early studies mostly concentrated on the comparative study of the IT effect on the entire macro-level of the national economy and productivity between different sectors, and investigated the correlation between capital deepening of the IT industry and productivity, most of which are empirical studies based on traditional methods of measuring productivity and production function. At the beginning of the research, the results showed that relationship between IT and the productivity of labor force on macro-level was negative or unrelated, which leads to the well-known "IT productivity M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 302–312, 2011. © Springer-Verlag Berlin Heidelberg 2011

Information Technology and Economic Growth

303

paradox" problem (Solow, 1987; Roach, 1991; Bryjolfsson, 1993; Loveman, 1994 ). At the same time, however, there was also no evidence showed that IT was nonproductive factor (Cron and Sobol, 1983; Roach, 1991; Oliner and Sichel, 1994). In recent years, continued researches at the macro level raised objections to the "productivity paradox". Oliner and Sichel (2000) found that labor productivity in the United States, after 25 years of decline, rebounded in the late 1990s, and during the early and late part of 1990s, productivity increased by the adoption of IT was about two-thirds of the whole increase, which made a considerable contribution to the U.S. labor productivity growth. In China, studies of IT and regional economy were mainly focused on the quantity analysis of IT’s impacts on the regional economic growth and the regional disparities of the IT resource allocation in China mainland. Zheng and Zhong (2002) found that the development of information networks significantly accelerated the increase of regional economic growth. Wang and Yu (2004) analyzed how IT spurs the domestic economic growth and how it affects the three major industries respectively and found that IT contributed to industrial growth than other industries. Zhu and Ma (2005) used the method of principal component analysis and cluster analysis and drawn the conclusion that the IT development gap between various provinces in mainland China was huge. Liu and Ye (2006) used the panel data of China’s provinces and took the spatial differences among the eastern, middle, and western regions into consideration. They pointed out that IT is a principal factor that affect the regional economic growth in China and proved that the more developed a region’s economy, faster development of IT the region was, thus more significant effect on the region’s economic growth. In summary, although there were many beneficial discussions and researches between IT and economic growth, but there were still some unresolved problems needed to do further investigate? Firstly, most of the above researches simply took IT as a material resource of inputs factor and assumed that the users of IT were mutually independent, thus ignored the essential characteristics of IT network effects. In fact, the material carrier and the nature of IT both reflect a "network" feature; the wide application of IT would produce network effects (Wen, 2004). Secondly, the welldeveloped IT global network infrastructure increased the regional economic interdependence and interaction. The spatial network effects of IT have become more and more effect on the regional economic growth, thus when investigating the quantitative relationship between IT and regional economic growth in empirical study, it is essential to take network effects into consideration. Thirdly, most previous researches used the method of classical econometric methods with time series or panel data, however the network effects of IT reflected the mutual independence, the above method cannot describe and measure IT network effect which led to the classical econometric modeling and estimation methods are no longer appropriate. Finally, China was vast territory and its regional economic characteristics varied in resources, industrial structure, knowledge innovation, technological level and other aspects. Therefore, spatial heterogeneity between regions was very significant (Wu and Xu, 2004); spatial effects’ (spatial dependence and spatial heterogeneity) impact on regional economic growth cannot be ignored (Lin etc., 2005; Wu, 2006). It is necessary to develop new methods to enhancing the existing research. Spatial econometrics is the frontier approach and an effective method to verify and characterize the network effects between individuals or regions (Goetzke, 2008). Therefore, based on endogenous growth theory and the characteristics of IT network effects, this paper tries to discover the spatial autocorrelation and spatial heterogeneity among 31 provinces of China and its evolution with time change by using the

304

Q. Zhou and H.-l. Zhang

data of the 1997-2007 provincial IT investment and economic indicators, geographic information systems and spatial econometric methods. Based on the aspect of spatial effects on a macro-level, the paper quantitatively analyzed the relationship between the IT and economic growth and the macro-level effects of the IT network effects in China.

2 Data and Model 2.1 The Selection of Indicators and Data Sources In the following, we uses the data of 31 provinces, municipalities and autonomous regions in China to establishment of the classical econometric model and the spatial econometric model. The required data are selected as the following table 1: Table 1. Model variables and indicators Variables

Index

Y

Gross domestic product, GDP

K

Physical capital stock k

L

Number of employees at the end of year

I

IT development level (IT)

Calculation Methods And Data Source "China Statistical Yearbook" "China's GDP accounts of historical data 19522004" Using the perpetual inventory method, basic data sources from "China Statistical Yearbook" "China Statistical Yearbook," "China's GDP accounts of historical data 19522004" "China Information Almanac "

The IT development level uses the information development index reported by Yang et al (2008) in a special report in the "China Information Almanac". The index was a composite of 5 major elements (information technology infrastructure, use of information, knowledge, development environment and effects, and information consumption) that fully reflect the level of development of IT. The index is used to measure the society’s ability of using information and communication technologies to create, obtain, and share of information and knowledge. Meanwhile, in order to eliminate the price factor’s impact on the various indicators, the GDP and the stock of physical capital indicators in the model are base in 1996 and the fixed price in each province. Sample period ranges from 1997 to 2007. 2.2 The Basic Model Specification As a kind of technological progress, the model of IT and economic growth based on the model of technological progress and economic growth. Technological advances’ role in economic growth has always been a key concern to economists, especially after the 1980s when new economic growth theory rose and economists abandoned Solow’s neo-classical growth model where technology is set as exogenous factor. After that, the endogenous growth model was founded. Given the production function

Information Technology and Economic Growth

305

as the Cobb - Douglas form, and given that technical and economic conditions remain unchanged, the relationship of labor and capital outputs and inputs is expressed as: Y = AK α Lβ

(1)

Y represents the social output or gross domestic product(GDP); A represents technological progress factor, which reflects the overall output efficiency; L and K represent labor and capital factor inputs; α and β represent the output elasticity of labor input and capital input. In the Cobb - Douglas production function model, the technological progress factor is a constant, which only examine the performance of the average effect of technological progress during the period. In fact, as information technology advances, the characteristics and performance of productive forces have changed. Technology is no longer a constant exogenous variable but rather an endogenous variable that promotes economic growth as the core components of production factors. And for that reason, revision on Cobb-Douglas production function should be done combining the endogenous economic growth theory. Welfens (2002) factorized of the technological progress as:

A = A0 I γ

(2)

I represents progress factor in information technology, γ represents the output elasticity of IT progress factor, A0 represents progress factors other than the information technology progress factor, which is still assumed to be a constant here. Technological progress factor is decomposed into information technology part and non-information technology part in order to draw out the role of information technology, and thus the Cobb-Douglas production function can be rewritten as follows: γ

Y = A0 K α Lβ I γ

(3)

Take logarithm of both sides, we get the log-log model to be the estimated:

ln Yt = c + α ln Kt + β ln Lt + γ ln It + ε

(4)

Because there is usually multicollinearity between K and L, thus assume the constant returns to scale: α + β= 1, so we get the following regression model that avoids the multicollinearity between K and L:

ln(Yt Lt ) = c + α ln( K t I t ) + γ ln I t + ε

(5)

In the formula above, Yt Lt is the GDP per labor, or labor productivity; K t I t is capital stock per labor. Based on the above analysis, we referenced the spatial econometric modeling approach to build the basic model of IT,IT’s network effect and the GDP. Spatial lag model (SLM): ln(Yt Lt ) = c + ρWy + α ln( K t I t ) + γ ln I t + ε Spatial error model (SEM):

(6)

306

Q. Zhou and H.-l. Zhang

ln(Yt Lt ) = c + α ln(Kt It ) + γ ln It + ε ε = λWε + μ

(7)

Spatial Durbin model (SDM):

ln(Yt Lt ) = c + ρWy +α ln(Kt It ) +α1WK + γ ln It + γ1WL +ε

(8)

These three kinds of spatial econometric models can effectively reveal the spatial spillover effects in IT development and economic growth. These models focus on specific spatial dependence determined by the spatial weight matrix which is resulted from purely exogenous process of spatial patterns.

3 Empirical Analysis 3.1 Exploratory Spatial Data Analysis

We first use the exploratory spatial data analysis (ESDA) to make a spatial analysis of the GDP and IT development among 31 provinces in China. The study uses the global Moran's I for spatial correlation test and local spatial autocorrelation test to inspect the spatial agglomeration of IT development and economic growth. 3.1.1 The Spatial Weight Matrix The purpose of constructing the spatial weight matrix is to accurately describe the spatial interaction. Specifically, when constructing t the spatial weight matrix of the provinces in China, we initially considered relationships of the geographical adjacent provinces. We tried the various methods, such as centric latitude and longitude of the provinces, municipalities and autonomous regions, the first order Rook method and Euclidean inversed distance to construct a spatial weight matrix. By comparative analysis, we found spatial autocorrelation is most significant when using the first order Rook adjacent matrix; therefore the spatial weight matrices in this paper are all the first order Rook adjacent matrices. 3.1.2 Quantiles Theme Map In the quantiles map, every province is sorted according to absolute size of indicators and shadowed by colors of different gradation. The darker the color, the greater the value is. The following figrure1 is the quantiles map of the GDP and IT development level of China’s provinces in 1997 and 2007. Figure1 respectively show the spatial distribution of GDP and IT development level in mainland China. GDP and IT development levels are divided into five equal portions from low to high, which can be distinguished by the depth of color. The darker of the color, the higher level is the development of GDP and information technology, and vice versa. From the Fig1, it is clear that provinces of a high level of IT development gathers along the eastern coastal line, Inner Mongolia, Shanxi and Hubei, while they are mainly in the eastern coastal line, Beijing and Shanghai in 2007. Regions with low level of development are Tibet, Qinghai, Gansu, Ningxia and Guizhou. It is also show in the map that the development level of GDP and IT are great similarities in distribution and aggregation.

Information Technology and Economic Growth

307

Fig. 1. GDP and IT development level quantiles map of 1997 and 2007 in China’s provinces

3.1.3 Local Spatial Autocorrelation Test Global indicators use only separated single values to reflect the autocorrelation within a certain space. Though it can verify the association between the regions, it cannot identify different relation patterns in different regions. Anselin (1998) defined LISA as a set of local indicators that measure local spatial correlations. It analyzes the degree of differences of each region and its surrounding area and reveals the spatial relations between sample cell that has a great impact on the overall and other cells. It can be expressed mainly by Moran scatter plot and LISA cluster map, which give more intuitive clues to interdependence and heterogeneity characteristics of all regions. In the following text, we use the local spatial autocorrelation analysis (LISA) and select data of 1997 and 2007 to test the local spatial autocorrelation model of GDP, shown in Figure2.

Fig. 2. Moran scatter plot and spatial cluster map of GDP in 1997 and 2007

In Figure 2, LISA values have four kinds of result HH, LL, LH, HL. HH means that provinces with high GDP is also surrounded by provinces of the same high level of GDP, which stands for a region of diffusion effects; LL means that city with low GDP is surrounded by provinces of the same low level of GDP, standing for the region of low level of development; LH means that city with low GDP is surrounded by provinces of the high level of GDP, standing for the transition zone; HL means that city with high GDP is surrounded by provinces of the low GDP, standing for areas of polarization effect. HH and LL represent positive spatial autocorrelations, while the LH and HL show negative spatial autocorrelations, which clearly reflect the four types of the GDP association patterns of provinces in China. GDP of the 31 provinces and autonomous regions in mainland China generally shows a positive spatial correlation as most of the data falls into the first quadrant and third quadrant. In the first quadrant there are provinces and municipalities as Beijing, Shanghai, Shandong, Fujian, Guangdong, Henan, Liaoning, Hunan, Hubei, Zhejiang, Hebei, and etc; in the third quadrant there are provinces and municipalities as Tibet, Ningxia, Qinghai,

308

Q. Zhou and H.-l. Zhang

Lanzhou, Yunnan, Guizhou, Xinjiang, Inner Mongolia, and etc.; significantly shown in the second quadrant is Hainan and Sichuan province, as the western region's economic growth pole, is in the fourth quadrant. The local spatial agglomeration map of GDP in 1997 and 2007 in mainland China show few differences, except some lag in Jiangxi Province compared with its neighboring provinces. Next, we select data of 1997 and 2007 to analyze the local spatial autocorrelation model of information technology development, which is shown as figure3, which convey the same information with figure2: China's IT development level has a significant spatial correlation between provinces, which is significantly reflected by the concentration of IT high level of and concentration of the low level as a "dual" feature. The spatial clustering of GDP and the IT development and agglomeration level hasn’t show many changes over the time, indicating a high degree of spatial stability between most of the province and its neighbors.

Fig. 3. Moran scatter plot and spatial cluster map of IT development level in 1997 and 2007

3.2 The Spatial Econometric Model Estimation and Analysis

The above results of spatial statistical analysis show that in China IT development and economic growth has a strong spatial correlation and there is a significant local spatial clustering. Apparently, traditional econometric approach is no longer reasonable. Therefore, we use the spatial econometric analysis to overcome these problems and draw some more credible and more meaningful conclusions. Spatial econometric models include spatial lag model (SLM), spatial error model (SEM) and spatial Durbin model (SDM). We use the data of 1997 and 2007 to do spatial econometric analysis and comparison as to reveal time and space changes of IT contribution to regional economic growth. The regression results are shown in Table 2. From Table 2, we can see that in all models, labor, capital, and IT had been significant positive impact on economic growth. That means the more labor, capital,IT would be invested, the more GDP would grew. Among them, capital input makes the greatest contributions. BP’s tests for residual heteroscedasticity were significant. Moran’ I index is used to test the residuals OLS model. The Moran ‘I index of the residual in 1997 OLS model is 0.1712, which was significantly positive and indicates there is a significant positive spatial autocorrelation in the OLS model residuals. It suggests that there are some deviations in the OLS model specification, which need to be corrected by spatial econometric methods. It also confirms that China's regional economic growth is not independent and isolated, but interrelated and mutually affected. Compared with the OLS model, R2 in both SLM and SEM

Information Technology and Economic Growth

309

Table 2. Results summary of regression models y

g 2 007

199 7 OL S 0 .6 83* ** （ 0.000 ）

SL M 0.70 6** * （ 0.00 0）

SEM 0.652 ** * （ 0.000 ）

SDM 0 .69 6* ** （ 0 .0 00）

0.230 5** *

0.189 ** (0.0177 )

0 .2 19* * (0.011 )

0.20 7

0.317 ** *

0 .2 82* **

0.31 4* **

0.32 8

（ 0 .0 32）

（ 0.00 9）

（ 0.002 ）

（ 0 .0 00）

（ 0.00 0）

（ 0.014 ）

O LS 0.625 ** * （ 0.00 0）

SLM 0 .6 07* ** （ 0.000 ）

0.11 2

0 .1 74

0.15 2*

0.01 7

（ 0 .5 57）

（ 0.065 ）

（ 0.95 0）

0 .4 19* *

L ag .K ）

（ Lag.I）

BP Test AIC Mo ran’s I LM LAG R-L ML AG LME RR R _LM ERR LR Lag LR E rr

0.925 18 .7 06 2.333 (0.311 ) -29.41 2 0.1712 ** （ 0 .0 5） 1.05 13 （ 0.305 ） 0.20 51 0.651 2 .78 73* 0.081 1.94 11 0.132

SDM 0.570 ** * （ 0.00 0）

（ 0.32 2）

0 .2 80 (0 .2 17)

（ 0.038 ）

R2 LIK

SE M 0.58 3* ** （ 0 .0 00）

0.94 8 15.729 2.30 6 (0.31 5) -2 3.459

0.950 19 .46 1.798 (0.407 ) -31 .9 27

0 .36 3* **

0.15 0

（ 0 .2 22）

（ 0.52 6）

0.072 **

0.11 6

（ 0 .6 81）

（ 0.56 1）

0 .9 15 14 .32 4 2 .1 86 (0 .3 10) -21.116

0.92 9 19.464 2.34 9 （ 0.30 9） -1 6.6 36 0.18 95* * (0.02 8) 3.399 4* (0.06 5) 2.914 3* (0.08 8) 0.4889 (0.48 4) 0.0038 (0.95 1)

0.984 21 .1 54 2.689 （ 0.236 ） -16.31 5

0 .9 69 19.89 5 2 .6 28 （ 0 .2 68） -1 6.794

0.96 3 1 7.826 2.45 9 （ 0.27 9） -1 5.3 69

3 .3 800* (0.066 )

1.0013

（ 0.31 7） 2 .5 329 *

（ 0.096 ）

0.862 7 (0 .3 53)

No te: (1) t he n umber o f samp le p ro vi nces an d m u ni ci pal ities is 31 and th ose w it h P valu e les s t han 10% hav e su perscripts m arked as "*" , P v alue und er 5% hav e su perscri pts les s t han 1% are marked as "* **" 。 (2) The res ul ts is given b y t he s oft ware G eo da0.95 i , an d matlab sp atial econ ometri cs mod ul e.

model are improved, which indicates that the model including spatial factors can better explain the economic phenomena. Among them, SEM model has the best goodness of fitness. In order to distinguish whether the residuals of the spatial correlation are derived from endogenous spatial lag or the spatial error terms item, we must use the Lagrange multiplier test and its robustness test. In table 1, LMLGG for 1997 data is not significant, which passes the 10% level of significance test. According to the principle established by Anselin and Florax (1995), we compared LIK, AIC and LR Err of the SEM and SDM. The spatial error model (SEM) has the largest LIC and smallest AIC and LR Err passes the 10% by a significant test, while the spatial Durbin model (SDM) estimations of capital stock and IT were not significant. Other test indicators also suggested that in 1997, spatial error model (SEM) has the best explanatory power. Thus, the appropriate model for China's Provincial Economic Growth and IT in 1997 is as follow.

ln(Yt Lt ) = 0.652ln( Kt It ) + 0.219ln It + ε

ε = 0.419Wε + μ

(9)

The following analysis is based on the above SEM model (9). In 1997, elasticity coefficient of IT development and economic growth is 0.219. That means, given other variables unchanged GDP increases by about 0.219 percent as the IT development

310

Q. Zhou and H.-l. Zhang

index for the contribution to economic growth increases 1%, which is reduced compared with 0.23% in the corresponding OLS model. It indicates that OLS regression model overestimated IT investment’s contribution to economic growth. The estimation of the spatial error in SEM model parameters passes the 5% level of significance test, showing that a region's economic growth is related to the stochastic impact on the economic growth in its neighboring regions. At the same time, > 0, shows that the geographical factors has a positive effect on economic growth; that is the error term of economic growth has a spillover effects on its neighboring regions, which is a combination of indirect effect and induced effect. In the 2007 OLS model, it is also verified that there is significant positive spatial autocorrelation in the residuals. LMLAG and R-LMLAG pass the 10% level of significance test, while LMERR and R-LMERR do not pass the 10% level of significance test. Similar to the 1997 model, the spatial lagged variables capital stock and IT (Lag.K, Lag.I) in the SDM model are not significant. After considering the LIK and AIC, LR, we determines that the space lag model (SLM) is the most suitable model. Thus, the appropriate model for China's Provincial Economic Growth and IT in 2007 is as the follow: ln(Yt Lt ) = 0.152Wy + 0.607 ln( Kt I t ) + 0.282ln I t + ε

(10)

The following analysis is based on the above SLM model (10). The coefficients of Wy represents the impact neighboring regional economic growth on the economic growth in this region. Wy is significantly positive, which indicates that there is a positive spillover effects in economic growth between China’s provinces. Such effect is 0.152; that means the province's economic growth increases 0.152 percent when its neighboring province's economic growth is increased by 1%. In 1997, elasticity coefficient of IT development and economic growth is 0.282. That means, given other variables unchanged GDP increases by about 0.282 percent as the IT development index for the contribution to economic growth increases 1%. It verifies that after "10th Five-year Plan", China's information technology construction has made significant achievements; the IT development is increasingly accelerating speed and its contribution to economic growth is also growing. Another noteworthy phenomenon observed in the analysis results is that, the more appropriate measurement of the relationship between information technology and economic growth in 1997 is SEM model; while with the development of information technology it evolved into a more appropriate SLM model to measure their relationship in 2007. SEM is The different from SLM that, the role of spatial dependence in SEM exists in the error terms which measure the degree of impact that the error of GDP growth in neighboring regions lay on the region’s GDP; in SLM model, the lagged variable is a weighted endogenous variable, the introduction of which indicates that its neighboring region's economic growth and information technology development have impact on this region’s economic growth and the IT development, and that the coefficient the of lagged variables represents the influence "direction" of space effects. When ρ> 0, it means that the impact is complementary; ρ < 0, indicates that there is a mutual competition. In 2007 SLM model in this article, ρ = 0.152 (it passes the 10% level of significance test), which shows that there is a mutually reinforcing relationship between regions. There is mutual promotion

Information Technology and Economic Growth

311

relationship between China's provinces but the role of network effects is not obvious which means that the development of IT around neighbors does significantly promote the provinces own IT development.

4 Conclusions In order to study the characteristics of the relationship between economic growth and IT development of China’s provinces, this paper uses the methods of exploratory spatial data analysis to investigate the spatial distribution and interaction pattern of the economic growth and IT development in 31 provinces based on the data of 1997 – 2007’s. Based on it, we also constructed the spatial econometric model to explain the relationship between these two factors and proposed conclusions and directions as follows. (1) There is significant characteristic of spatial concentration in the economic growth and IT development of China's provinces. It indicates that economic growth and IT development in China’s different provinces maintains a serious and sustained non-equilibrium situation, which is corresponding to the imbalance of China's region economic growth. In China IT and economic growth in eastern and western provinces have obvious and contrasting characteristics of spatial concentration. The eastern provinces are clusters of high level of IT development while most of the western provinces are concentrated by a low level. Sichuan is a growth pole for the economy growth and IT development in western areas, and should be given focus and policy support to promote its lead effect in the west. The central region is still in a equilibrium stage of development of lower level without significant difference. In addition, most of the province and its neighbors have relatively spatial stability, the structure of the detected spatial concentration of power during the entire period does not show evidence that IT development has a strong path dependence. (2) Geographical space is the basic carrier of economic growth. The spatial econometric model shows the mechanisms and effects of IT development and regional economic growth, which makes the model have more explanatory power. In the traditional models without considering the spatial interaction, IT development role in promoting regional economic growth is usually overestimated. In this model, IT has significantly positive effect in promoting regional economic growth and regional aggregation, but still, capital is the main engine of economic growth. There is an apparent spillover effects on economic growth remains among the provinces. But it also demonstrated that IT development plays a limited role in promoting China's economic growth and the network effects of IT are still not obvious. One of the most important issues must be how to promote IT development and its network effects. (3)This study is only an exploration of the impact of IT and its network effects on economic growth. There are still many issues to be discussed in depth later. For example, IT, communications systems and socio-economic effects should be considered together and make an empirical research on communication network’s (including the postal network, telephone network and the Internet) impact on economic development. IT penetration in economy and society and its diffusion effects should be further studied. Moreover, apart sectional panel data, using panel data with spatial effect to make econometric model is also a important content of our following study.

312

Q. Zhou and H.-l. Zhang

References 1. Anselin, L.: Spatial Econometrics: Methods and Models. Kluwer Academic, Dordrecht (1988) 2. Anselin, L.: Local Indicators of Spatial Association-LISA. Geographical Analysis 27(2), 93–115 (1995) 3. Anselin, L., Florax, R.: Small Sample Properties of Tests for Spatial Dependence in Regression Models. In: L. New Directions in Spatial Econometrics, pp. 21–74. Springer, Heidelberg (1995) 4. Brynjolfsso, E.: The Productivity Paradox of Information Technology. Communication of the ACM 36(12), 67–77 (1993) 5. Cron, W.L., Sobol, M.G.: The Relationship between Computerization and Performance: A Strategy for Maximizing the Economic Benefits of Computerization. Journal of Information and Management 6, 171–181 (1983) 6. Goetzke, F.: Network Effects in Public Transit Use: Evidence from a Spatially Autoregressive Mode Choice Model for New York. Urban Studies 45(2), 407–417 (2008) 7. Loveman, G.W.: An Assessment of the Productivity Impact of Information Technology. Mit Management in the 1990s Working Thesis 88-054 (1990s) 8. Oliner, S., Sichel, D.: Computers and Output Growth Revisited: How Big is the Puzzle? Brookings Thesiss On Economic Activity: Macroeconomics 2, 254–285 (1994) 9. Oliner, S.D., Sichel, D.E.: The Resurgence of Growth in the Late 1990s: Is Information Technology the Story? Journal of Economic Perspectives 14, 3–22 (2000) 10. Solow, R.M.: We’d Better Watch Out. New York Times Book Review 7, 12–36 (1987) 11. Wen, M.: E-commerce, productivity, and fluctuation. Journal of Economic Behavior and Organization 55, 187–206 (2004) 12. Wu, Y.: Spatial Analysis on China’s Economic Growth and Income Disparities, vol. 8. Economic Science Press (2005) 13. Zheng, Y., Zhong, C.: An Analysis about the Mechanism of Influence of Information Network on Regional Economic Development. Quantitative & Technical Economics 12, 85–88 (2002) 14. Zhong, G., Wang, F., Xing, X.: Information Technology, Economy Growth and Labor Productivity Growth. Journal of Industrial Engineering and Engineering Management 4, 13–18 (2005)

The Practice Teaching Model of Accounting Research Zhou Xiaona, Zhao Rui, Mao Jiuzhi, and Zhang Yin Hebei Normal University of Science & Technology Qinghuangdao, China [email protected]

Abstract. As social and economic development, particularly in the 21st century, the comprehensive ability is paid more attention for accounting professionals in the market, thus the practice teaching of accounting are also increasingly important. In this paper, all aspects of accounting practice teaching are researched, better teaching methods of accounting are considered. Keywords: practice teaching of accounting, practice teaching system of accounting, elements of the practice teaching system of accounting.

1 The Necessity of Constructing Practice Teaching System of Accounting A. The Practical Aspect With the integration of social and economic development, the environment of accounting profession has changed deeply. Not only a simple accounting operation and the provision of accounting information are needed, but also the availabilities of financial analysis, general management, resourcefulness, solving practical problems are needed for accounting people in the market. Accounting people both have profound theoretical knowledge and strong practical abilities could meet the market demand to promote economic development and make their contributions for the country. Traditional teaching model for cultivating talents have many defects, and it has profound practical significance to build a practice teaching system of accounting for training compound talents to meet the market demand. B. The Theoretical Aspect Accounting is a discipline of close combination of theory and practice, but also a theoretical system which is needed to reform and improve with the development of social economy. Practice teaching of accounting is not just a simple complement and extend to its theory, but also play an active role in promoting theoretical system of accounting. Constructing Practice Teaching System of Accounting is further reform and improvement for the theoretical system of accounting, and promotes the study of accounting theory in our country. Practice is the sole criterion for testing truth, theory achieves a qualitative leap by practice. New theory and method of accounting can be verified through practice and the original hypothesis can be improved and amended according to the results of accounting practice, so as to promote innovation and development of accounting logic. Currently, accounting theory and methods is studied M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 313–319, 2011. © Springer-Verlag Berlin Heidelberg 2011

314

X. Zhou et al.

a lot, but the theory of accounting teaching methods is studied seldom. To build practice teaching system of accounting is great significance for improving and developing accounting theory systems, speeding up the process of accounting reform.

2 The Composition of the Practice Teaching System of Accounting Practice Teaching System of Accounting is a framework which is formed by elements of the structure with a scientific system approach. The practice teaching system of accounting includes the objective of practice teaching of accounting, the content of practice teaching of accounting, teaching the management of practice teaching of accounting, the teaching conditions of practice teaching of accounting and the teaching platform of practice teaching of accounting. practice teaching system of accounting as shown in Figure 1.

Fig. 1. The practice teaching system of accounting

The following is the objectives of practice teaching of accounting: students not only study theoretical knowledge of the accounting profession, but also have accounting skills ; Students not only have ethical, but also have the professional ability to judge; Students not only have the ability to collect right messages solve problem , but also have the ability to communicate and cooperate; Students not only learn innovation, but also have the ability to continuously self-improvement, and ultimately improve their practical ability and competence to practice. The goal of practice teaching of accounting is to establish a precise content of practice teaching of accounting, teaching management, and teaching conditions and other factors based on content.

The Practice Teaching Model of Accounting Research

315

The content of practice teaching of accounting is the content of practical teaching courses in various specific set in order to achieving teaching objectives of accounting practice, including accounting experiment about accounting theory, relevant case studies, research training, graduation design and social attachments. The content of practice teaching of accounting is the core of the practice teaching system of accounting, is the external expression of the objective of the practice teaching of accounting. The management of practice teaching of accounting is a management agency which is established to achieve the goals of practice teaching of accounting, which develops the management system and evaluation about the people, equipment and facilities, laboratories, practice base. It smoothes the basis for the work of practice teaching and protects the outcome of practice teaching. The condition of practice teaching of accounting is related hardware to achieve the objective of the practice teaching of accounting, including teaching faculty about accounting practice, teaching materials, simulation equipment and facilities about accounting and so on. It play a supporting role, is the important factor to impact the practice teaching of accounting.

3 Problems of Practice Teaching of Accounting Sound practice teaching system of accounting is the prerequisite for the effect of accounting practice teaching. There are still some problems about our current practice teaching system of accounting in some areas, which result to the effect of practice teaching accounting is difficult to achieve well. These problems should not show in the following areas: A. The Content about Practice Teaching of Accounting Is Not Quite Reasonable First, the content about practice teaching of accounting is not comprehensive. The accounting profession teaching tends to focus only on the content of practice teaching of accounting, such as the practice of theory courses, the school test and a social practice and ignores a series of professional financial personnel necessary practice habits and work ethics such as honesty, integrity and self-discipline, objective and fair and so on in the process of practice teaching of accounting. Second, the content of practice teaching of accounting is unreasonable. We pursuits excessive standardization and unification in the process of teaching, in order to the accounting practices of teaching content is too simple and idealistic, which is very different with knowledge used in practice business, causing students don't have excellent career ability of judgment and practice. Third, the practice teaching of accounting lacks rich, forward-looking, hierarchical, and focused content. In the process of teaching, test data can not effectively enable students to master a single operational picture of the economy and the content is old that can't follow the social and economic development, related policy, so that students are learning out-of-date knowledge. In accounting practice, each joint has its specific purpose, but information on accounting practice is basically the same, lack of hierarchy and targeted.

316

X. Zhou et al.

B. The Staff Can Not Meet the Requirement of Practice Teaching of Accounting Teachers are the most important practitioners in teaching, teachers almost determine the level of students. The plan of practice teaching, the outline of the development, teaching materials and many other details need teachers' rich practical experience and ability to judge accurately in practice teaching of accounting model. At present, many teachers in the educational system is both the theory and practice of testing teachers, but mostly these teachers directly go to the education career after graduating from college, they don't have participated in the work of the accounting practice. Many of these teachers are lack of accounting skills and experience in practical operation, don't have rich guidance and simulation knowledge of accounting, do not play the guiding role of the accounting test. In addition, many colleges and universities have not conducted continuing education for teachers training and assessment teaching management plan because of the time, funding and other issues, which makes a lot of teachers to be disconnected of theory and practice. Because teachers are lack of accounting practice, that makes the accounting practice teaching lack of knowledge of replicability, the instance cited, even divorced from theory and practice, which seriously affects the quality of teaching of accounting practice. C. The Construction of Accounting Experiment Is Not Quite Reasonable Professional accounting experimental facilities and effective management is critical to promote the combination of theory and practice, to train ability of practical operation, to enhance students' Career awareness, which ensure the effectiveness of practice teaching of accounting. Currently, many schools have related accounting labs, but also show some outstanding issues. On the one hand, many schools focus only on the expense of the hardware and ignore software development in the accounting lab construction. They don't know how to build, what kind of standards, how to play the issue of teaching function. On the other hand, many schools are lack of effective accounting laboratory management system, they are not clear to how to make it an effective laboratory teaching function, which is a barrier to practice teaching in a certain extent. D. The Practice Teaching Platform of Accounting Is Not Good Deeply accounting practice of students in the real business is a very important part in teaching. In this session, students can experience the true accounting of the specific details, and get some work experience, improve job skills, integrate theory and practice closely and schools can learn specific requirements to accounting students from business. However, many schools now have little self-built base for professional practice, school-enterprise cooperation and relatively practice base, can't give students effective practice guidance and management. Currently, the students can practice jobs recommended by the school internships few, many practice jobs are linked by themselves. In this way, on the one hand, the contact does not necessarily correspond to the students, they may only do free jobs in the unit without a professional internship opportunities, and even worked on site, walked around a formality; On the other hand, the contact which is linked by students may not necessarily a formal business unit, students may be cheated. In short, the accounting practice of teaching and learning platform is not good which greatly influences the effect of the accounting practice teaching.

The Practice Teaching Model of Accounting Research

317

4 Related Measures to Improve the Practice Teaching of Accounting A. Rationally Designing Practical Teaching of Accounting First of all, we should enrich the content of the practice teaching of accounting. Teachers should not only explain professional ethics to accounting students, but also make the accounting professional ethics and professional practices throughout every aspect of accounting practice teaching. At the same time, a good moral environment should be built in which students can build a good moral value from the life and values. Second, we should rationally organize content about practice teaching of accounting. In practice teaching of accounting, we should minimize simple and uniform assumptions about practice teaching content, increase true content, leave students more space of learning, thinking and using knowledge, so that initiative and independence of students could be increased overall. Third, we should continuously improve the content of practice teaching of accounting. In order that students can fully grasp the accounting processes and systems operation, the content of practice teaching should involve industrial enterprises, commercial enterprises, public institutions and other comprehensive teaching materials. The content and forms of practice teaching of accounting should be improved with the economic development and the business needs, so that the knowledge that students learned is more practical and useful. In addition, the quality and quantity of practice teaching of accounting should be improved in all aspects. We should prepare and select practical information according characteristics of this session and accounting knowledge, and continuously strengthen all aspects of relevance content of practice teaching. B. Strengthening "double" Teachers Training Only by improving accounting practice teaching faculty level, we can ensure the teaching quality of the accounting practice teaching model. Accounting Practice requires "double" teachers not only understand the accounting theory, but also have the skilled operators, guide and organize students to implement accounting practices. Therefore, educational institutions should adopt scientific and necessary measures to improve the professional quality of teachers, optimize the structure of teachers. First, the level of accounting practice teaching faculty can be improved by regular training in accounting, accounting practice symposium, observing practice teaching accounting lectures, etc. Second, schools can take "go and come in" approach which can make school and community closer together, and increase opportunities for teachers to learn and share experience, so that can improve teachers' professional quality of education. At the same time, effective incentive system should be established in the school. The teachers' ability of practice teaching should be as one of the indicator to evaluate teachers. We should enhance teachers' active learning and sense of self-improvement by incentives, that can improve teaching quality of accounting practice.

318

X. Zhou et al.

C. Paying More Attention to Build Accounting Laboratory, Strengthening Laboratory Management 1) We should pay more attention to build simulation laboratory to provide a good accounting practice teaching environment to students, which can greatly promote the improvement of teaching quality of accounting practice. We should consider simulation, hardware, software and the experimental data to build the laboratory. We should provide real accounting work conditions and working environment to students from the laboratory layout, equipment, tools and other details so that students can have a certain sensibility know about their future work. We should important investment in hardware, such as the large accounting laboratory equipment, computers, projection equipment and other facilities in accounting simulation lab, so that can provide a solid material foundation. At the same time, we should important software building, provide students with wealth accounting information and learning software, become the accounting laboratory to be the second class of students. 2) Enhancing the effective management of the accounting lab, playing full use of the accounting lab and teaching functions a) Open management to accounting lab. We should create conditions for the full use of the accounting lab. Students can use accounting laboratory to review and practice according experimental subject after school hours. Through open management, we should fully mobilize the enthusiasm of students and cultivate the abilities of students, identify problems, think, analyze and solve problems. b) effective management to equipments of the accounting laboratory. We could create the file to record the use of equipment such as using time, returning time, maintenance, updates, etc. D. Strengthening Cooperation with Enterprises, Making a "dual" of Teaching In the educational system of accounting practice , the platform of accounting practice teaching plays an irreplaceable role as the base of training students' practical ability. At present the separation of school and enterprise is not conducive to the quality of students training, we should develop school-enterprise cooperation or cooperation projects in schools and enterprises to strengthen the cooperation of schools and social enterprise education. Colleges, enterprises and educational model shown in Figure 2: School-enterprise education is the business that school and the community together participate the process of personnel training, combine classroom teaching and practical work to cultivate students that meet the social needs. In the schoolenterprise education, we develop a "dual" of teaching mode, the "dual" refers to the school and external training base. In the "dual" of teaching model, students must first study the theoretical knowledge and simple accounting experiments of accounting profession in the school. After finished learning knowledge in expertise, student enter into the enterprise for professional and practical training, So that students can have perceptual awareness to the actual work of accounting, find and correct defects of their knowledge and ability in the practice. This school-enterprise education makes great contribution to cultivate compound, applied accounting personnel that meet the social needs, and ensures the quality of teaching practice of accounting.

The Practice Teaching Model of Accounting Research

319

Fig. 2. The key point of school and enterprise training mode

References 1. Yu, Y.: Accounting experimental study. Economic Science Press (2004) 2. Shi, H.: Information perspective of accounting practice teaching system research and study. China’s Management of Information 14 (2008) 3. Yan, D.: Reform of accounting series courses for the 21st Century teaching research. Economic Science Press, Beijing (2000) 4. Sun, S., Zhang, Z.: Establishment of the accounting practice teaching system. Information Development and Economy 30 (2007) 5. Yao, J.: Elements and development of the accounting practice teaching system. The Meet of Friends 3 (2009) 6. Qu, H.: Enhance the Quality of Internal Control and Management of Teaching Practice and Exploration. China’s Vocational and Technical Education 25 (2007) 7. Zhen, C.: Construction and Implementation of Practical Teaching System Whose Aim Is to Cultivate Innovation Capacity. China’s Higher Education Research 4 (2007) 8. Hu, X.-J., Ma, S.: Analysis and Thinking on the Policy Environment of Our Vocational Education Development. Vocational Education Forum 12 (2006) 9. Zhou, J.: Speech at the Video Conference of Building Program on National Vocational Institutions Model in 2006 (2006) 10. Xiong, S.: To Improve the Teaching Quality of Accounting Practice. Accounting Communications (Social Sciences) 12 (2005) 11. Qin, S.: Teaching Standard of Accounting Practice in the University. Accounting 4 (2006) 12. Fan, Q.: Study on Teaching System of Accounting Practice. Information Development and Economy 30 (2007) 13. Mok, Y.: The Key to Reconstruction of Teaching Quality Control System Combing with Engineering. Education and Occupation 2 (2007) 14. Hu, J., Guan, P.: Optimizing Post Practice Mechanism to Train Professional Quality of students

Research about Broadband Media Distribution Protocol on Media Stream System Jiang Guo-song1 and He Xiao-ling2 1 School of Computer Science and Technology, Huanggang Normal University, Huanggang 438000, China 2 School of Journalism and Communication, Huanggang Normal University, Huanggang 438000, China [email protected]

Abstract. The BMDP is implemented with several modules in the system, Media Stations forms a content distribution hierarchy, Layer 7 protocol for media distribution and roaming, Content are classified with different availability class based on its popularity, Segments of live contents are cached on every Media Station, Each segment is stored in at least two different nodes for redundancy, Contents are duplicated to a node on demand based on an intelligent caching algorithm. Keywords: BDMP, MLR, CM, MAM.

1 Introduction Media Switch[1] system consists of a number of geographically distributed subsystems covering a number of large metropolitan areas or a country. In such a large-scale system, content distribution management is a vital component for effectively managing and distributing the contents[2][3], as well as reducing the operational costs. In Media Switch, the content distribution and tracking are controlled using the Broadband Media Distribution Protocol (BMDP)[4][5][6]. BMDP is implemented with several modules in the system, namely, Media Location Register (MLR[7]) running in the data centers, and MLR agent running on each Media Station. Other modules such as Media Asset Management (MAM[8]) and Content Manager (CM) are also involved in the protocol. Figure 1 shows the physical distribution of the system. It is assumed that the system covers multiple cities. By “city” we mean a metropolitan area network (MAN). All cities have similar configurations except that only one city, the head-quarter, has the MAM module. That is, all new contents are introduced from the head quarter. In the future version, new contents can be introduced into the system from multiple cities. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 320–327, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research about Broadband Media Distribution Protocol on Media Stream System

321

It is MAM’s task to decide when and where to distribute a program, and MLR’s task to distribute the data, and CM’s (Content Manager) task to publish the program at specified time. City 1 (Headquarter)

network MAM

CM

MLR

Home Media Station

Media Station

Media Station

Media Station

subscribers

City n City 3 City 2

network MLR

CM

Media Station

Home Media Station

Media Station

Media Station

subscribers

Fig. 1. Media Switch subsystem distribution

Each subscriber has a fixed Media Station to serve its streaming request. Logically, the content distribution system is a hierarchical system as shown in Figure 2. Header Quarter DC

City 1 DC

Media Station

Media Station

Media Station

Media Station

City 2 DC

City n DC

Media Station

Media Station

Fig. 2. Hierarchical content distribution

The distribution system is partitioned into two parts, the inter-city distribution, and the intra-city or Metropolitan Area Network (MAN) distribution.

322

G.-s. Jiang and X.-l. He

2 Content Distribution A. Inter-city Content Distribution It is assumed that inter-city network connections have limited bandwidth, and have little or no QoS guarantee. Therefore, the content distribution between the cities will be for VOD only prior to the publishing time in a planned manner. There can be ondemand content copy/movement between cities, but it will not be real-time. That is, the operation can be on a best-effort basis. B. Content Distribution within a MAN For MAN distribution, the media stations are logically viewed as a tree, with the Home Media Station as the root. The tree structure reflects the underline network topology, but not necessarily the same. The media stations directly under the Home Media Station are typically connected to the routers at the top-level network trunk of the MAN. The lower level media stations are typically in a network branch that is one or more level below from the main backbone as shown in Figure 2. The hierarchy is used for data distribution policy, not for data flow. Any Media Station can get data from any other Media Stations, including Home Media Station, directly without going through a third Media Station. Data is distributed using two different but related methods: push contents according to the level of the media stations, and pull contents on-demand as in a cache system.

Fig. 3. The Duo Hierachies

C. Content Distribution Based on Due Hierarchy With BMDP, the Media Stations are organized as groups. For example, Figure 3 is a segment of a MAN, in which a group would consist of all the Media Stations that reside on a ring or branch. Each group would have a group leader. The groups form a hierarchy that goes from data center to the major ring, from the major ring to minor rings and branches. This hierarchy is called station topology hierarchy. Logically they form the tree structure as shown in Figure 2, and the root of a substree is the group leader.

Research about Broadband Media Distribution Protocol on Media Stream System

323

Each station is also assigned a subscriber coverage level. The MLR maintains the number of local subscribers for each station. By aggregating the subscriber numbers from the bottom up in the station topology hierarchy, the subscriber coverage number can be calculated for each station in the network. Using the subscriber coverage number, the stations can be classified into different coverage levels with the lowest level being the station with the lowest subscriber coverage and the highest level being the Home Media Station. Stations with different subscriber concentration level form a subscriber concentration hierarchy. This hierarchy is overlaid on top of the station topology hierarchy. D. Content Distribution A content distribution policy can specify either the Media Station topology level, or the Coverage, or both. Contents are distributed from the central site to the Media Stations using these two hierarchies. Each piece of content is assigned to an availability class. The availability classification determines whether the first segment or the full copy of the content will be placed on all Media Stations in the network or just some Media Stations that are higher up in the subscriber concentration hierarchy. A hot content that needs to be instantly available to subscribers will be placed in all Media Stations with its full copy. This is the highest availability class. The second availability class would place only the first copy on the lowest level Media Stations in the subscriber concentration hierarchy and its full copy on the second level Media Stations in the subscriber concentration hierarchy. The third availability class would place the first segment on the second level stations from the bottom and the full copy on the third level stations from the bottom so on and so force. Content with lowest level availability are only stored in the central site. E. Caching A media program or its segments can be copied to a Media Station on-demand. This can happen when a subscriber under the Media Station requests a program but the Media Station does not have the program, or not have the entire program. When a program copy is needed, the MLR agent running on the Media Station will find one or more Media Stations that have the segments of the program. The segments can be copied from one source or several sources. The decisions are made according to distance of the source, bandwidth availability, and other parameters. Generally speaking, the source Media Stations should be in the same topology group as the requesting Media Station to avoid traffic on network trunk of higher topology level. Furthermore, all deletion operations need to get approval from the group leader. A group leader can either approve the deletion, or ask the requesting Media Station to copy the program to another Media Station. The group leader makes decision based on either the distribution policy or a group-wide LRU. If the distribution policy indicate that the group should keep at least one copy of the program, and the copy to be deleted is the last copy, the group leader will direct the Media Station to copy the program to another Media Station, which is often the group leader itself. If the distribution policy does not require the group has a copy, a group-wide LRU is used. If the program is the least recently used program of the group or close to be the least

324

G.-s. Jiang and X.-l. He

recently used program, it is deleted. Otherwise, the least recently used program is deleted, and the program is copied over to the space just made available. F. Media Location Registry (MLR) MLR is the module in which all the content distribution “intelligence” is implemented. MLR maintains a network topology database, a content location database, and a content distribution session database, among other information. The network topology database describes the topology of the Media Stations and the network topology among them. As its name implies, the content location database fully describes the location information of every single piece of content in the system. Content Location Register performs fast look up of the content location information for the Media Director’s in the system. Content is copied from one location to another by creating content distribution sessions between two Media Engines in the two locations. These sessions are created and deleted in the Content Distribution Session Database as it happens. This information is used by the MLR to keep track of the bandwidth usage among the Media Stations and the central site. The network bandwidth is a limited resource in the network. The network is configured to allow certain amount of assured media traffic on each of its internal links. MLR needs to ensure the usage of the bandwidth in the network does not exceed the assured traffic amount at all network segments at all times. G. Dynamic Content Redistribution At each station, content visitation statistics are kept for each piece of content. These statistics are aggregated through the subscriber concentration hierarchy. Based on these statistics, a content’s availability classification can be adjusted. This would result in a redistribution of the content to reflect the actual using pattern of the content. By the same token, a hot content in one geographical/topological areas can be redeployed network wide to cope with an unexpected surge in demand for the content.

3 Protocol Illustration A. Distributing a New Program A new program is loaded and distributed in steps given in Figure 4. MAM 5. Distribution parameter

2. input content 1. metadata Content Engine

CM

3. Program data into HMS

4. update state and publish time MLR

7. Publish the program HMS

6. Distribution messages to Media Stations

Media Media Station Station Media Station

Fig. 4. Initial loading of a new program

Research about Broadband Media Distribution Protocol on Media Stream System

325

B. Push a Media Program Figure 5 shows the sequence of actions taken place when MLR initiates the operation to push a media program to from one Media Station to another. MLR can plan to the push sequence from Media Station to Media Station so the push operation can be done in shortest time to all Media Stations. For example, it can follow the tree structure shown in Figure 2 by asking all Media Stations at the top level to get the segments from Home Media Station, and then ask next level Media Stations to get from their group leaders.

MLR

MS1 MD

MS1 ME

MS2 MD

MS2 ME

BMDP_PUSH_PROG BMDP_FIND_SEG BMDP_NOTIFY_SEG_LOC

BMDP_FETCH_SEG

BMDP_COPY_SEG BMDP_SEND_SEG BMDP_COPY_SEG_DONE BMDP_ADD_SEG_LOC

Fig. 5. Pushing a media program to a top level media station

C. Partial Content Distribution The thought of the scheme is to classify both media interest for media content and subscriber capacity level for media stations. Under the fulfillment of these two preconditions we can work out the best location a media program should be distributed to. Since the media distribution is actually based on a group of segments, we always treat segments as distributed data units for the scheme. D. Get a Program/Segment On-Demand The message sequence shown in Figure 6 are for a Media Station to get a program or segments from another Media Station on-demand by a subscriber.

MLR

MS1 MD

MS1 ME

Subscriber MC

MS2 MD

MS2 ME

Streaming request BMDP_ASK_PROG/BMDP_ASK_SEG BMDP_PUSH_PROG BMDP_FIND_SEG BMDP_NOTIFY_SEG_LOC

BMDP_FETCH_SEG

BMDP_COPY_SEG BMDP_SEND_SEG BMDP_COPY_SEG_DONE BMDP_ADD_SEG_LOC

Fig. 6. Media Station gets a program on-demand

E. Move or Delete a Program by Request of MLR The message BMDP_MLR_DEL_PROG can be sent from headquarter MLR to an MLR in a city to cause the program being delete from all Media Stations in the city.

326

G.-s. Jiang and X.-l. He

MD

MLR

ME

MS MD

MS ME

BMDP_MLR_DEL_PROG Interal deletion msg BMDP_MLR_DEL_PROG_D ONE

BMDP_MOVE_PROG BMDP_FIND_SEG BMDP_NOTIF Y_SEG_LOC

BMDP_FETCH_SEG

BMDP_COPY_SEG BMDP_SEND_SEG BMDP_COPY_SEG_DONE BMDP_ADD_SEG_LOC BMDP_MOVE_PROG_DONE Interal deletion msg

Fig. 7. Delete or move a program by MLR

MD

MLR

ME

MS MD

MS ME

BMDP_DEL_PROG BMDP_DEL_PROG_OK

Interal deletion msg

BMDP_DEL_PROG_DONE

BMDP_DEL_PROG BMDP_MOVE_PROG BMDP_FIND_SEG BMDP_NOTIFY_SEG_LOC

BMDP_FETCH_SEG

BMDP_COPY_SEG BMDP_SEND_SEG BMDP_COPY_SEG_DONE BMDP_ADD_SEG_LOC BMDP_MOVE_PROG_DONE BMDP_DEL_PROG BMDP_DEL_PROG_OK BMDP_DEL_PROG_DONE Interal deletion msg

Fig. 8. Deleting a program

F. Delete a Program by Request of Hosting Media Station This is the sequence of message that started by a Media Station requesting deletion of a program from its storage. It is most likely caused by a clean up operation on the Media Station that is trying to reclaim storage spaces by applying LRU algorithm.

4 Conclusions Media Stations forms a content distribution hierarchy, Layer 7 protocol for media distribution and roaming, Content are classified with different availability class based on its popularity, Segments of live contents are cached on every Media Station, Each segment is stored at at least two different nodes for redundancy, Contents are duplicated to a node on demand based on an intelligent caching algorithm.

References 1. Ofek, Y.: Ultra scalable optoelectronic switching fabric for streaming media over IP. In: Proceedings of the Fifth IEEE International Symposium on Signal Processing and Information Technology, pp. 245–252 (2005)

Research about Broadband Media Distribution Protocol on Media Stream System

327

2. Yoshida, M., Ohzahata, S., Nakao, A., Kawashima, K.: Controlling File Distribution in the Share Network Through Content Poisoning. In: Proceedings of 2010 24th IEEE International Conference on Advanced Information Networking and Applications, pp. 1004–1011 (2010) 3. Liao, K., Xin, Z., Cao, J.: A Novel Design of Internet Digital Content Distribution Platform. In: Proceedings of 2010 Second International Conference on MultiMedia and Information Technology, pp. 25–30 (2010) 4. Luling, R.: Managing Large Scale Broadband Multimedia Services on Distributed Media Servers. In: Proceedings of 1999 IEEE International Conference on Multimedia Computing and Systems (ICMCS 1999), vol. 1, p. 9320 (1999) 5. Lu, J.: An Architecture for Delivering Broadband Video over the Internet. In: Proceedings of International Conference on Information Technology: Coding and Computing, p. 0542 (2002) 6. Chiu, R.-F., Yeh, Y.-S., Chi, S., Lee, R., Wu, A., Chang, H.-J., Chang, L.: Kaohsiung County Broadband Mobile Network. In: Proceedings of 2009 10th ACIS International Conference on Software Engineering, Artificial Intelligences, Networking and Parallel/Distributed Computing, pp. 36–41 (2009) 7. Corbal, J., Espasa, R., Valero, M.: Three-Dimensional Memory Vectorization for High Bandwidth Media Memory Systems. In: Proceedings of 35th Annual IEEE/ACM International Symposium on Microarchitecture (MICRO 2002), p. 149 (2002) 8. Body, M., Cousin, B.: Efficient Media Asset Transfer in a Unified Framework Managing Broadcasting Systems. In: Proceedings of First International Conference on Distributed Frameworks for Multimedia Applications (DFMA 2005), pp. 121–127 (2005)

Research about Media Location Registry and Content Distribution Base on MSA Jiang Guo-song1 and He Xiao-ling2 1

School of Computer Science and Technology, Huanggang Normal University, Huanggang 438000, China 2 School of Journalism and Communication, Huanggang Normal University, Huanggang 438000, China [email protected] Abstract. The Content Location Register performs fast look up of the content location information for the Media Director’s in the system. Content is copied from one location to another by creating content distribution sessions between two Media Engines in the two locations. These sessions are created and deleted in the Content Distribution Session Database as it happens. At each station, content visitation statistics are kept for each piece of content. Based on these statistics, the content’s availability classification can be adjusted. This would result in a redistribution of the content to reflect the actual using pattern of the content. By the same token, a hot content in one geographical/topological areas can be redeployed network wide to cope with an unexpected surge in demand for the content. Keywords: MS, BMDP, MLR, DRM.

1 Introduction Media Switch[1] is a complete end-to-end solution for streaming high quality multimedia data, such as movies and TV program, over broadband networks. The following main criteria and design philosophy are reflected throughout the architecture: Media Acquisition Control

Content Engi ne

Media Asset Mgmt

Content Mgmt

Hom e Media Station

EPG Server

Subscriber Behavior Profiling

Media Application Server

Subscriber Mgm t

Media Location Registry

Customer Self-service

Billing System

Backoffice

SLR PSC

NMS

Authentication Server

Online Support

Media Stations

Media Director Media Engine

Media Station

PC

Media Console

Media Console/Terminal

Fig. 1. Layered Architecture of Media Switch M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 328–334, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research about Media Location Registry and Content Distribution Base on MSA

329

A Broadband Media Distribution Protocol[2][3] (BMDP) carries out content distribution from the central content storage in the data center to the Media Stations and among the Media Stations. At the central data center site, Media Location Registry [4](MLR) is responsible for keeping track of all the content locations in the system. The Media Directors at Media Stations participate in BMDP. The design and implementation of BMDP is network-friendly in the sense that it has data transfer rate control and congestion control.

2 The Duo Hierarchies With BMDP, the Media Stations are organized as group. In the case of BB TEC’s network, a group would consist of all the Media Stations that reside on a ring or branch. Each group would have a group leader. The groups form a hierarchy that goes from central data center site to the major ring, from the major ring to minor rings and branches. This hierarchy is called station topology hierarchy[5].

Fig. 2. The Duo Hierachies

Each station is also assigned a subscriber concentration level. The MLR maintains the number of local subscribers for each station. By aggregating the subscriber numbers from the bottom up in the station topology hierarchy, the subscriber concentration number can be calculated for each station in the network. Using the subscriber concentration number, the stations can be classified into different concentration levels with the lowest level being the station with the lowest subscriber concentration and the highest level being the central data center site. Stations with different subscriber concentration level form a subscriber concentration hierarchy. This hierarchy is overlaid on top of the station topology hierarchy. Contents are distributed from the central site to the Media Stations using these two hierarchies. Each piece of content is assigned to an availability class. The availability classification determines whether the first segment or the full copy of the content will be placed on all Media Stations in the network or just some Media Stations that are higher up in the subscriber concentration hierarchy. A hot content that needs to be instantly available to subscribers will be placed in all Media Stations with its full copy. This is the highest availability class. The second availability class would place

330

G.-s. Jiang and X.-l. He

only the first copy on the lowest level Media Stations in the subscriber concentration hierarchy and its full copy on the second level Media Stations in the subscriber concentration hierarchy. The third availability class would place the first segment on the second level stations from the bottom and the full copy on the third level stations from the bottom so on and so force. Content with lowest level availability are only stored in the central site.

3 Media Location Registry MLR maintains a network topology database, a content location database, and a content distribution session database. The network topology database describes the topology of the Media Stations and the network topology among them. As its name implies, the content location database fully describes the location information of every single piece of content in the system. Content Location Register performs fast look up of the content location information for the Media Director’s in the system. Content is copied from one location to another by creating content distribution sessions between two Media Engines in the two locations. These sessions are created and deleted in the Content Distribution Session Database as it happens. This information is used by the MLR to keep track of the bandwidth usage among the Media Stations and the central site. The network bandwidth is a limited resource in the network. The network is configured to allow certain amount of assured media traffic on each of its internal links. MLR needs to ensure the usage of the bandwidth in the network does not exceed the assured traffic amount at all network segments at all times. A. MLR Overview MLR controls program data distribution in Media Switch, and keeps track of all copies of segment about which media stations hold it. MRL controls to which Media Stations a new program should be distributed according to a set of algorithm. (TO BE FINISHED) MLR maintains a simple database. Each entry of the database has the following format: SegmentID

Size

Bitmap (128 bits)

where the bitmap is used to indicate which Media Station has a copy of the segment. Each bit represents one Media Station, and maximum 128 Media Stations can be represented. The bitmap can easily be extended to large size to represent more media stations. B. Network Topology Map MLR builds a map of the network topology and the bandwidth of each connection. The map is used to decide segment copy target. Both distance (hops) and bandwidth are parameters when deciding copy target. C. Segment Copy Sequence Figure 3 shows the sequence of events taking place when copy a segment between Media Stations.

Research about Media Location Registry and Content Distribution Base on MSA

331

15

MLR agent seg table 10

MLR agent

5

7

4

6 14

MD main thread

MD main thread

EPG/MAS 8

9 12

1

2

ME

3

ME 13

11 MC

Fig. 3. Segment copy sequence

1. MC browses the EPG, selects a program, and goes through the billing check, and eventually starts the player. 2. MC sends streaming request with program ID to MD. 3. MD checks segment table and finds that it does not have the requested program. It replies to MC and asks MC to retry in 200 ms. 4. MD sends a copy request to the MLR agent. 5. The MLR agent checks its database and decides from which Media Station to get the first segment. It sends a request to the remote MD of that Media Station. 6. The remote MD checks its segment table and finds which ME holds the segment, and replies with the IP of the ME. 7. The MLR agent sends the IP and segmentID to the MD. 8. MD decides which ME should receive the segment, and sends the request to that ME. 9. The ME replies to confirm that the place holder of the segment has been set up. 10. MD puts the record into its segment table. At this point, when MC retries, MD will reply with the ME’s IP. 11. MC receives the ME’s IP and sends streaming request with the segment ID over. The request will be delayed until the first frame is copied over. 12. This happens in parallel with steps 10 and 11. The ME sends copy request to the remote ME. 13. The remote ME starts to send data over. 14. Once the copy is done, ME sends a completion notice to the MLR agent. 15. The MLR agent sends a change notice to MLR in data center, which causes the change record being propagated to all MLR agents and their databases.

4 Dynamic Content Redistribution At each station, content visitation statistics are kept for each piece of content. These statistics are aggregated through the subscriber concentration hierarchy. Based on these statistics, a content’s availability classification can be adjusted. This would

332

G.-s. Jiang and X.-l. He

result in a redistribution of the content to reflect the actual using pattern of the content. By the same token, a hot content in one geographical/topological areas can be redeployed network wide to cope with an unexpected surge in demand for the content. A. Centralized Deployment Architectures MediaSwitch solution supports both centralized and distributed architectures. The Central Media Station, generally located at the data center (headend), is the content storage and distribution center for all encoded programs. The Central Media Station also houses the Authentication & Configuration Server, Application Server, EPG Server and the License (DRM) Server. In large scale deployments, these servers can be deployed in a distributed configuration. Program contents are introduced into a MediaSwitch system by loading them into Media Engine Server blades of its Central Media Station. In a centralized architecture, video contents are streamed from the Central Media Station to the customer’s SetTop-Box or PC clients. Figure3 illustrates MediaSwitch centralized architecture. To minimize network impact and user access time, a service provider may deploy series of intermediate tier and edge Media Stations in a hierarchically distributed structure. Intermediate-tier Media Stations hold contents popular in their vicinity as Edge Media Stations store starter segments of most recently accessed contents. In a distributed architecture, the Media Location Register (MLR) server, located at the Central Media Station, is responsible for system-wide location of all available programs. The content distribution between Central Media Stations to Edge Media Stations or among Media Stations is carried out by The patent pending Broadband Distribution Protocol (BDMP). B. Dual Distribution Hierarchy Architecture The Media Switch solution supports a duo hierarchical distributed architecture where Media Stations are classified based on their physical location within the network and their subscriber coverage. The duo hierarchical architecture enables service providers to dynamically distribute video contents using pre-defined distribution policies that are based on attributes such as content classification, subscriber viewing demand, and bandwidth availability. In a distributed architecture Media Stations are organized as groups. Media Station groups form a hierarchy that goes from data center to the major ring, from the major ring to minor rings and branches. This hierarchy is called Media Station topology hierarchy. Logically they form the tree structure as shown in Figure 5. The tree structure consists of Central Media Stations at the root of the tree located at data centers, Intermediate Media Stations as group leaders located at COs, and edge Media Stations located at end stations at the edge of the network. Each station is also assigned a subscriber coverage level. The MLR maintains the number of local subscribers for each station. By aggregating subscriber numbers from the bottom up in the Media Station topology hierarchy, the subscriber coverage number can be calculated for each station in the network. Using the subscriber coverage number, Media Stations can be classified into different coverage levels with the lowest level being the Media Station with the lowest subscriber coverage and the highest level being the Central Media Station. Media Stations with different subscriber concentration level form a subscriber concentration hierarchy. This hierarchy is overlaid on top of the station topology hierarchy. Both topology and

Research about Media Location Registry and Content Distribution Base on MSA

333

subscriber coverage hierarchy are used for data distribution policy, not for data flow. Any Media Station can receive video content from any other Media Stations, including Central Media Station, directly without going through a third Media Station. C. Distribution Based on Content Classification The Media Content Manager (MCM) allows Service Providers to assign an availability class to one or group of programs at time of introduction. The availability classification determines whether starting segments or the full copy of the media content will be placed on all Media Stations in the network or just some Media Stations that are higher up in the subscriber concentration hierarchy. A hot media content that needs to be instantly available to subscribers will be placed in all Media Stations with its full copy. This is the highest availability class. The second availability class would place only starting segments of the media content on the lowest level Media Stations in the subscriber concentration hierarchy and its full copy on the second level Media Stations in the subscriber concentration hierarchy. D. Distribution Based on Subscriber Viewing Demand At each Media Station, content usage statistics are kept for every program. These statistics are aggregated through the subscriber concentration hierarchy. Based on these statistics, the classification of the media content availability can be adjusted. This would result in a redistribution of the media content to reflect the actual usage pattern of the content. Similarly, in order to cope with unexpected demand for media content, the content that is in high demand in one geographical / topological areas can be redeployed network–wide whenever necessary. E. On Demand Distribution A media program or its segments can be copied to the Media Station on demand. This situation happens when a subscriber under the Media Station requests a program that is either partially available or simply not available at the Media Station. When a copy of the program is needed, the MLR running on the Central Media Station will search for one or more Media Stations that have the segments of the program. The segments can be copied from one source or several sources. The decisions are made according to distance of the source, bandwidth availability, and other parameters. Generally, the source Media Stations is in the same topology group as the requesting Media Station to avoid traffic on network trunk of higher topology level. F. Media Station Content Storage Management A media program can be deleted from a Media Station when space is needed. Program deletion decision is used based upon the Simple LRU (Least Recently Used) algorithm. Furthermore, all deletion operations need to be approved by MLR. MLR either approves the deletion, or asks the requesting Media Station to copy the program to another Media Station. MLR makes decision based on either the distribution policy or a group-wide LRU. If the distribution policy indicates that the group should keep at least one copy of the program, and the copy to be deleted is the last copy, the group leader will direct the Media Station to copy the program to another Media Station, which is often the group leader itself. If the distribution policy does not require the

334

G.-s. Jiang and X.-l. He

group to maintain a copy, a group-wide LRU is used. The program is deleted if it is the least recently used program of the group or close to be the least recently used program. When the least recently used program is deleted, and the new program will be copied over to the space just made available.

5 Conclusions The Media Location Register (MLR) server, located at the Central Media Station, is responsible for system-wide location of all available programs. The content distribution between Central Media Stations to Edge Media Stations or among Media Stations is carried out by The UTStarcom patent pending Broadband Distribution Protocol (BDMP). The Media Switch solution supports a duo hierarchical distributed architecture where Media Stations are classified based on their physical location within the network and their subscriber coverage. The duo hierarchical architecture enables service providers to dynamically distribute video contents using pre-defined distribution policies that are based on attributes such as content classification, subscriber viewing demand, and bandwidth availability.

References 1. Ofek, Y.: Ultra scalable optoelectronic switching fabric for streaming media over IP. In: Proceedings of the Fifth IEEE International Symposium on Signal Processing and Information Technology, pp. 245–252 (2005) 2. Le, H.K., Henriksson, D., Abdelzaher, T.: A Practical Multi-channel Media Access Control Protocol for Wireless Sensor Networks. In: Proceedings of 2008 International Conference on Information Processing in Sensor Networks (ipsn 2008), pp. 70–81 (2008) 3. Turaga, D.S., Ratakonda, K., Lai, J.: QoS Support for Media Broadcast in a Services Oriented Architecture. In: Proceedings of IEEE International Conference on Services Computing (SCC 2006), pp. 127–134 (2006) 4. Jeong, E.-J., Lee, G.-Y.: Efficient Location Management Scheme using MLR considering Local Usages. In: Proceedings of International Conference on Information Technology (ITNG 2007), pp. 941–942 (2007) 5. Weiss, K., De Floriani, L.: A High-Level Primitive for Diamond Hierarchies. IEEE Transactions on Visualization and Computer Graphics, 1603–1610 (November 2009)

IUP Modeling Method and Its Application for Complex Information Systems Yingyong Bu, Libin Zhu, and Jinyu Wang College of Mechanical and Electrical Engineering, Central South University, Changsha Hunan 410083, China [email protected]

Abstract. An integrated modeling method was proposed based on IDEF, UML and Petri net (IUP). The IDEF model would be established by IDEF0, IDEF1x and IDEF3. By the mapping rule, the UML model would be transformed from the IDEF model for object-oriented software design. The key processes of the IDEF model and the UML model would be transformed into Petri net to analyze the effectiveness and modify models. For the model transformation could be easier, the mapping rule among IDEF, UML and Petri net was studied in this paper. With this method, a model was designed for a spare part management system in a larger metallurgical company, which is configurable, extensible and reusable. Keywords: IDEF, UML, Petri net, IUP modeling method, mapping rule.

1 Introduction Various methodologies for information systems modeling have been developed in different fields, such as IDEF (ICAM DEFinition Method), UML (Unified Modeling Language) and Petri net. For a complex information system, it’s necessary to build models with different modeling methods in different modeling stages. However, some problems exist here, such like lacking of consistency, complex model transformation and difficult model verification. In this paper, an integrated modeling method, IUP modeling method was proposed to solve these problems. It provided a practical modeling method for complex systems modeling.

2 IUP System Modeling Method IDEF can describe the semanteme of a model accurately, but lacks object-oriented design and software programming. It is appropriate for function analysis, information analysis and process analysis in the early stage [1]. UML supports software engineering in the whole cycle. It is used widely from modeling to software programming. However, it’s difficult to understand for the lack of precise semantic definition. So it fits for detailed design and software programming [2]. Petri net is mainly used for process modeling and simulation analysis in system modeling [3]. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 335–342, 2011. © Springer-Verlag Berlin Heidelberg 2011

336

Y. Bu, L. Zhu, and J. Wang

IDEF, UML and Petri net have some similarities in the modeling mechanism and syntax, existing mapping rule. References [4-11] integrated IDEF and UML modeling method or combined UML and Petri net, so that the modeling process was more concise and flexible. The scalability and reusability of the system model were improved. But the mapping rule among the three models didn’t research deeply. For a complex information system, the model transformation is time-consuming and may generate semantic deviation without detailed and effective mapping rule. Comparing the three modeling methods, IUP system modeling method was proposed for complex information systems. To display the advantages and avoid theirs shortcomings, different methods were used in different stages. The modeling frame was put forward and shown in figure 1. The whole modeling process was divided into four stages: requirement analysis, preliminary design, detailed design and programming. Function

Requirement analysis

Preliminary design

Detailed design

Programming

IDEF0

Action

Information Organization Analysis resource

IDEF3

UML Use Case diagram Sequence diagram Collaboration diagram Activity diagram State diagram

IDEF1x

UML Class diagram

Modeling Petri method of Nets organization and resource

Programming language

Fig 1. Modeling frame of the IUP method

A. Requirement Analysis In the stage of requirement analysis, the function model was established by IDEF0, the process model by IDEF3 and the information model by IDEF1x. To make semantic association of three models, the same thing should be described in a same concept. For the consistency of models and transformation in the next stage, each IDEF3 UOB should correspond to a box of the IDEF0, and each IDEF1x entity should be related to a box of the IDEF0 or a UOB of the IDEF3. The key processes of the IDEF0 model and the IDEF3 model were transformed into Petri net model to analyze the effectiveness and improve models according to the result. B. Preliminary Design In preliminary design, use case diagram, sequence diagram, collaboration diagram, activity diagram and state diagram of UML were transformed from the IDEF model by the mapping rule. Then these would be transformed into class diagrams for the preliminary design of the class.

IUP Modeling Method and Its Application for Complex Information Systems

337

C. Detailed Design In detailed design, the UML model was designed detailedly according to the programming requirement. Then the classes were consummated including its attribute and operation. A further step, made sure the relationship among different classes. In order to analyze the effectiveness and improved models, the key processes of the UML model were transformed into Petri net model. D. Programming In this stage, a database was designed on the basis of the IDEF1x information model. Then a suitable programming language was chose to complete detailed design according to its requirements.

3 Mapping Rule among IDEF, UML and Petri net Mapping relationship among IDEF, UML and Petri net has rule, called mapping rule. The research of mapping rule is beneficial to build the mapping for model transition, so it plays an important role for the coherence of modeling steps [5]. In IUP model method, the overall relationship of mapping rule was shown in figure 2. Therefore, the rule was studied according to the needs of IUP modeling method, which included IDEF mapping onto Petri net, UML mapping onto Petri net and IDEF mapping onto UML A. IDEF Mapping onto Petri net By the analysis of the modeling mechanism and syntax,

User

Requirement analysis

IDEF

UML Use case diagram

IDEF0 Activity diagram Amend

Petri nets

Amend

IDEF3 IDEF3PFN

IDEF3OSTN

IDEF1x

Sequence diagram

Collaboration diagram State diagram Class diagram

Database design

Programming RDB

Software system

Fig. 2. Internal mapping of the IUP method

Petri nets

338

Y. Bu, L. Zhu, and J. Wang

it suggested that tokens’ generation and consumption in Petri net represent on the information in the IDEF0 model. The flow of tokens reflected the running state of a system. UOB of IDEF3PFN corresponded to the transition in Petri net, and the information dealing with UOBs mapped to the flow of Petri net. The IDEF3OSTN object states corresponded to tokens’ production and consumption in Petri net. And the flow of Petri net reflected the transition of system state. The mapping rule of modeling elements between IDEF and Petri net showed in the table 1. B. UML Mapping onto Petri net Activity diagrams are similar with IDEF3PFN. And the function of state diagrams resembles IDEF3OSTN. Sequence diagrams and collaboration diagrams face detail design. So the mapping rule from UML to Petri net was showed in the table 2. C. IDEF Mapping onto UML UML diagrams are the graphical expression of a system, which are usually composed of modeling elements and the connection. UML defines some different functional diagrams that link a number of cases by the connection. Use case diagrams, class diagrams, activity diagrams, state diagrams, sequence diagrams and collaboration diagrams were mapped to IDEF. Table 3 introduced the detailed mapping rule between IDEF and UML. Table 1. Mapping rule from IDEF to Petri net IDEF Models

IDEF0

Petri net

Modeling elements

Modeling elements

Function (Box)

Transition

Information(Arrow)

Place

Input and output

Arc

UOB

Transition

Connection

Arc-Place-Arc

UOB referent

Transition

Entity

Transition

Connection

Arc

IDEF3PFN

IDEF3OSTN

Table 2. Mapping rulefrom UML to Petri net UML

Petri net

Diagrams

Main elements

Modeling elements

Activity diagram

Active state

Transition

Control flow

Arc-Place-Arc

State

Transition

State transition

Arc-Place-Arc

Object

Transition

State diagram

Sequence diagram

Message among different objects Message among the same object

Arc1-Place-Arc 2 Arc-Place-Arc

IUP Modeling Method and Its Application for Complex Information Systems

339

Table 3. Mapping rule between IDEF andUML UML Diagram

IDEF

Main elements

Use case

IDEF0

Actor Use case diagram

Use cases relationship

Actors relationship

Source model

IDEF0 Extension

IDEF0

Inclusion

IDEF0

Generalization

IDEF0

Generalization

IDEF0

Class

IDEF1x IDEF3PFN

Operation

IDEF3OSTN IDEF0

Class diagram

Attribute

IDEF1x Generalization

IDEF1x

Aggregation

IDEF1x

Association

IDEF1x

Dependency

IDEF1x

Association

Activity diagram

Mapping rule

Each IDEF0 box corresponds to a use case Identify actors from the staff category of the ICOM code Identify extension from the top level of the IDEF0 model Produce inclusion by the common part of activities Identify generalization from the analyzing semanteme of IDEF0 model Identify generalization from the analysis of the M code in ICOM Define classes from entities Extract operation from UOB of the IDEF3PFN Extract operation from UOB of the IDEF3OSTN Extract operation from UOB corresponding to boxes of the IDEF0 Define class attribute from entity attribute Extract generalization from categorization relationship Extract aggregation from connection relationship Extract association from connection relationship Extract dependency from connection relationship

Action State and Activity State IDEF3PFN

Correspond to the UOB units

Control Flow

IDEF3PFN

Correspond to connection

Swinlane

IDEF3

Identify swinlane from the referent of object

Synchrononization

IDEF3PFN

Correspond to junction including fan-in and fan-out

Decision

IDEF3PFN

Correspond to the fan-out junction

Name

State State diagram

IDEF3OSTN

Internal transition

IDEF3OSTN

Enter activity

IDEF3OSTN

Exit activity

IDEF3OSTN

Initial State

IDEF3OSTN

Terminal state

IDEF3OSTN

Transition

Event

IDEF3OSTN

Extract name from the name of object state Sketch internal transition from state description condition Analyze enter activity from the entry condition set of OSD Analyze exit activity from the exit condition set of OSD Correspond to the object state of transformation arc Correspond to the object state of transformation arc Produce event from referents of transformation arc

340

Y. Bu, L. Zhu, and J. Wang Table 3.(continued) Guard condition

IDEF3OSTN

Fork

IDEF3OSTN IDEF3PFN

Object and lifeline IDEF0 Sequence diagram and collaborati Message on diagram

Focus of control

IDEF3PFN IDEF3OSTN

Identify guard condition from the semanteme of object state Convert fork from junction of the IDEF3OSTN Extract object and lifeline from the referent of object Extract object and lifeline from ICOM corresponding to UOB Analyze messages from UOBs and control flow Analyze messages from the referent of UOBs and control flow

IDEF0

Analyze messages from ICOM

IDEF

Confirm the range of focus by transfer time and UOBs acting time

4 Case Application In this chapter, we applied the IUP modeling method on a spare part management system in a larger metallurgical company. Taking IDEF0 diagram for an example, it could map onto use case diagram and Petri net model. The relationship among activities could be easily identified from Fig. 3. According the mapping rule, use case diagram and Petri net model could be generated from IDEF0 model. Use case diagram was shown in Fig.4, and Petri net was in Fig.5.

Fig. 3. A part of IDEF0 diagram

IUP Modeling Method and Its Application for Complex Information Systems

341

Fig. 4. Use case diagram generated from IDEF0 model

Fig. 5. Petri net model generated from IDEF0 model

In Fig. 5 each element in Petri net model corresponded to a element of the IDEF0 model: T1 -Plan, T2 -Purchase, T3-Store Management, P1-Anticipated Demand of Spare Parts, P2-Use Demand of Spare Parts, P3-Quaility and Price of Spare Parts, P4Finance, P5-Inventory Information, P6-Purchase Plan, P7-Purchase Contract.

5 Conclusion In this paper, we have introduced IUP modeling method, an integrated method based on IDEF, UML and Petri net. The modeling method could make an accurate definition and support object-oriented software programming. It was used in the modeling of a spare part management system in a larger metallurgical company with good maintainability, scalability and reusability. Based on B/S/D three-tier architecture, the model was built on the platform of LAN and Oracle10g. It was implemented well in practical applications. By the analysis of the modeling syntax, mapping rule of IDEF onto UML, UML onto Petri net and IDEF onto Petri net was obtained. It improved efficiency of the modeling transformation and reduced the loss of the semantic transition, especially for complex information systems. We plan to further validate the method by applying it to more system modeling.

342

Y. Bu, L. Zhu, and J. Wang

References 1. Chen, Y.-l.: IDEF Modeling Analysis and Design Method, pp. 3–181. Tsinghua Univerity Press, Beijing (1999) 2. Rumbaugh, J., Jacobson, I., Booch, G.: The Unified Modeling Language Reference Manual, 2nd edn., pp. 18–78. China Machine Press, Beijing (2006) 3. Yuan, C.-y.: The principle of Petri net, pp. 3–99. Publishing house of electronic industry, Beijing (1998) 4. Kim, C.-H., Weston, R.H., Hodgson, A.: The complementary use of IDEF and UML modelling approaches. Computers in Industry, 35–56 (2003) 5. Shin, K., Park, C., Lee, H.-G., Park, J.-W.: Efficient mapping rule of IDEF for UMM application. In: Gervasi, O., Gavrilova, M.L., Kumar, V., Laganá, A., Lee, H.P., Mun, Y., Taniar, D., Tan, C.J.K. (eds.) ICCSA 2005. LNCS, vol. 3482, pp. 1219–1228. Springer, Heidelberg (2005) 6. Chert, Z.-j., Jian, W., Shao, P.-f.: Research of Mapping UML State. Journal of Hubei Automotive Industries Institute 22(2), 30–34 (2008) 7. Dorador, J.M., Young, R.I.M.: Application of IDEF0, IDEF3 and UML Methodologies in the creation of information models. International Journal of Computer Integrated Manufacturing, 430–445 (2000) 8. Shang, W.-l., Wang, C.-e., Zhang, S.-j., Yin, Z.-w.: System Modeling Method Based on IDEF&UML. Computer Integrated Manufacturing Systems 10(3), 252–258 (2004) 9. Li, L.-s., Hu, Z.-l.: AppIication Analysis and Fomal Modeling of UML Based on Petri Net. Computer Technology and Development 4(4), 76–83 (2010) 10. Lassen, K.B., Tjell, S.: Model-based requirement analysis for reactive systems with UML sequence diagrams and coloured petri nets. In: Innovation System Softwore Engineering, pp. 233–240 (2008), doi:10.1007/s11334-008-0054-3 11. Jiang, J.-l., Zhou, X.-z., Sun, Y.-c., Xu, Y.-y.: Hierarchical Modeling Analysis Method Based on UML and Petri Net. Journal of System Simulation 18(2), 290–293 (2006)

Study on International Competitiveness of Tire Industry Based on Factor Analysis Chen Jing-xin1 and Wang Xiao-ying2 1 2

Langfang Department, Hebei University of Technology, Langfang, China School of Management, Hebei University of Technology, Tianjin, China [email protected]

Abstract. With these years rapid development, Chinese tire industry has become one of the anti-dumping most frequently industry. This paper selected six indices and constructed tire industry international competitiveness evaluation system. Based on Large amount of data gathered, we analyzed the situation of eight major tire produce countries through factor analysis method, particular evaluated Chinese tire industry international competitiveness and drew conclusions. Keywords: international competitiveness, tire industry, industry international competitiveness, factor analysis.

1 Introduction Since 2006, China has become the largest tire manufacturer and exporter in the world. In 2003, Chinese tire production was 193.12 million, and in 2009 it reached to 654.64 million. Except no increasing in 2008, the annual growth rate of other years exceeded 20%. With the rapid growth of export, China attracted more and more anti-dumping trade barriers. Since 2001, nine countries have had anti-dumping investigation launched to China. In September 2009, U.S. President Barack Obama decided to impose restrictive tariff on Chinese tires. In this background, the study of tire industry international competitiveness has important practical significance.

2 The Building of Tire Industry International Competitiveness Evaluation System This paper constructed tire industry international competitiveness evaluation system, as shown in Table 1. Table 1. Tire industry international competitiveness evaluation system The first Level Indices

International competitiveness

The Second Level Indices International market share Competition index Revealed comparative advantage index Revealed competitive advantage index Export contribution rate Export growth advantage index

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 343–350, 2011. © Springer-Verlag Berlin Heidelberg 2011

344

J.-x. Chen and X.-y. Wang

A. International Market Share International market share, Mi, is calculated as Mi =

Xi × 100 % Xw

(1)

In the above formula, Xi is a country's tire export volume (amount), Xw is the world's total tire export volume (amount). The greater the international market share is, the stronger the international competitiveness is. The value of international market share of major tire produce countries are shown in Table 2. Values in the table are percentages. Table 2. The international market share of major tire produce countries China U.S Japan France Germany Italy Korea India

2002 4.92 9.52 12.56 8.44 10.77 4.35 6.44 ----

2003 5.52 7.67 13.42 8.82 10.96 4.18 6.17 1.193

2004 7.18 7.22 12.14 8.34 10.7 4.186 6.06 0.99

2005 9.48 6.98 11.8 7.26 10.48 3.48 6.18 1.05

2006 11.2 6.83 11.08 6.97 10.25 3.01 5.93 1.14

2007 12.72 6.45 10.13 6.71 9.2 3.03 5.47 1.003

2008 13.56 6.72 10.21 6.93 8.85 2.65 5.32 1.03

Source: United Nations Commodity Trade Database, National Bureau of Statistics Web site (hereinafter the same)

Seen from Table 2, except China, other countries' value have been little change. Only China's value has increased year by year, from 4.92% of 2002 rose to 13.56% of 2008. B. Competition Index Competition index, TCi, is calculated as TCi =

Ei − I i Ei + I i

(2)

In the above formula, Ei is a country's tire export volume, Ii is a country's tire import volume. The value of competition index is in the range between -1 and 1[1]. When TC 0, indicating that the product has international competitive advantage. When TC 0, indicating that the product has international competitive disadvantage. The value of competition index of major tire produce countries are shown in Table 3.

＞ ＜

Table 3. Competition index of major tire produce countries China U.S Japan France Germany Italy Korea India

2002 0.92 -0.37 0.73 0.22 0.04 -0.06 0.79

2003 0.88 -0.44 0.77 0.19 0.02 -0.08 0.79 0.9

2004 0.9 -0.44 0.75 0.2 0.04 -0.08 0.78 0.8

2005 0.93 -0.47 0.73 0.17 0.02 -0.1 0.8 0.8

2006 0.91 -0.47 0.71 0.15 0 -0.13 0.79 0.65

2007 0.93 -0.63 0.72 0.11 -0.05 -0.16 0.8 0.5

2008 0.91 -0.42 0.72 0.07 -0.04 -0.16 0.8 0.39

Study on International Competitiveness of Tire Industry Based on Factor Analysis

345

Seen from Table 3, Only United States and Italy's index were negative; India's index has decreased rapidly; China, Korea and Japan's index were at a higher position, the three countries had international competitive advantage. C. Revealed Comparative Advantage Index Revealed comparative advantage index, RCAi, is calculated as RCAi =

Ei E j

(3)

Wi W j

In the above formula, Ei is a country's tire export volume, Ej is a country's total export volume, Wi is the world's tire export volume, Wj is the world's total export volume. The value of revealed comparative advantage index is in the range RCA≥0. When 0＜RCA＜1, indicating that the products have no revealed comparative advantage. When RCA≥1, indicating that the product have revealed comparative advantage. When RCA＞2.5, indicating that the products have strong revealed comparative advantage. The value of revealed comparative advantage index of major tire produce countries are shown in Table 4. Table 4. Revealed comparative advantage index of major tire produce countries China U.S Japan France Germany Italy Korea India

2002 0.982 0.896 2.000 1.664 1.412 1.118 2.590

2003 0.955 0.802 2.158 1.707 1.107 1.060 2.415 1.625

2004 1.117 0.816 1.983 1.702 1.086 1.093 2.206 1.233

2005 1.305 0.808 2.082 1.643 1.132 0.980 2.281 1.123

2006 1.400 0.795 2.067 1.718 1.112 0.914 2.199 1.142

2007 1.462 0.785 1.985 1.703 0.975 0.848 2.060 0.956

2008 1.528 0.840 2.102 1.842 0.974 0.793 2.209 0.936

Seen from Table 4, Korea, Japan and France's index were greater than 1.5, and their products had strong international competitiveness[2]. China's index reached 1.4 in 2006, indicating that the international competitiveness of Chinese tire increased year by year. The index of other countries have remained at around 1. D. Revealed Competitive Advantage Index Revealed competitive advantage index, CAi, is calculated as CAi = RCAi −

Mi M j

(4)

M wi M wj

In the above formula, RCA is a country's revealed comparative advantage index, Mi is a country's tire import volume, Mj is a country's total import volume, MWi is the world's tire import volume, MWj is the world's total import volume. When CA≥0, indicating that the product has revealed competitive advantage. When CA 0, indicating that the product has no revealed competitive advantage. The value of revealed competitive advantage index of major tire produce countries are shown in Table 5.

＜

346

J.-x. Chen and X.-y. Wang

Seen from Table 5, Korea and Japan's index were largest, indicating that the two countries had obvious advantages. In 2008, China reached the third in the world. United States, Germany, Italy's index were all negative, indicating that their tire had no revealed competitive advantage. Table 5. Revealed competitive advantage index of major tire produce countries China U.S Japan France Germany Italy Korea India

2002

2003

2004

2005

2006

2007

2008

0.935 -0.294

0.8925 -0.398

1.053 -0.393

1.245 -0.457

1.317 -0.505

1.393 -0.483

1.438 -0.5

1.6 0.531 0.03 -0.247 2.19

1.798 0.528 -0.273 -0.263 2.094 1.562

1.602 0.534 -0.262 -0.291 1.881 1.127

1.689 0.507 -0.317 -0.28 1.989 1.034

1.661 0.47 -0.363 -0.334 1.913 0.962

1.607 0.425 -0.463 -0.372 1.819 0.729

1.718 0.355 -0.438 -0.374 1.972 0.664

E. Export Contribution Rate Export Contribution rate, Ci, is calculated as Ci = Ai A

(5)

In the above formula, Ai is a country's tire export volume, A is a country's total export volume. The value of export contribution rate of major tire produce countries are shown in Table 6. Table 6. Export Contribution rate of major tire produce countries China U.S Japan France Germany Italy Korea India

2002 0.32 0.28 0.64 0.52 0.36 0.36 0.83

2003 0.31 0.26 0.71 0.56 0.36 0.35 0.79 0.52

2004 0.37 0.27 0.67 0.57 0.37 0.36 0.74 0.4

2005 0.44 0.28 0.71 0.56 0.39 0.34 0.78 0.38

2006 0.46 0.26 0.69 0.57 0.37 0.31 0.73 0.38

2007 0.5 0.27 0.68 0.59 0.34 0.29 0.71 0.33

2008 0.5 0.27 0.69 0.6 0.32 0.26 0.67 0.31

Seen from Table 6, Korea, Japan and France's index were the largest, indicating that their tire export had the largest contribution to total export. Contribution of Chinese tire export has increased year by year. Other countries' index have been little change. F. Export Growth Advantage Index Export growth advantage index, Di, is calculated as D i = ( Ai At ) × 1 0 0 %

(6)

In the above formula, Ai is a country's tire export growth rate, At is a country's total export growth rate.

Study on International Competitiveness of Tire Industry Based on Factor Analysis

347

Table 7. Export GROWTH advantage IndEX of major tire produce countries 2002

China U.S Japan France Germany Italy Korea India

2003

2004

2005

2006

2007

2008

96.67 -92.6 190.52 133.62

177.34 137.41 61.2 112.57

183.81 107.41 233.79 15.4

120.66 66.12 58.68 133.34

141.52 128.13 97.98 126.98

93.71 112.35 104.26 128.48

96.67 -92.6 190.52 133.62

96.1 81.56 72.46

104.96 138.21 74.07 11.95

192.22 -73.22 52.91 72.48

65.39 24.47 51.52 102.61

43.96 65.88 78.73 28.47

44.44 -61 44.44 58.5

96.1 81.56 72.46

The larger the index is, the faster the export growth is. The value of export growth advantage index of major tire produce countries are shown in Table 7. Seen from Table 7, United States 's index of 2003 was negative, Italy's index of 2005 and 2008 were negative.

3 Determination of International Competitiveness Based on Factor Analysis This paper selected eight major tire produce countries for factor analysis using SPSS 16.0. Concrete steps are as follows. A. Calculating the Value of Sample's Original Index We taked above data as the original index value for following analysis. B. Defining Variables and Labels In order to ensure accuracy, this paper selected the previous five indices to carry on factor analysis. We assumed x1=international market share, x2=competition index, x3= revealed comparative advantage index, x4= revealed competitive advantage index, x5= export contribution rate C. Carrying on Factor Analysis Then we carried on factor analysis[3][4]. 1) Testing whether suitable for factor analysis: The data were entered into SPSS 16.0 for windows software system, the outputs were as follows. Table 8. KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx. Chi-Square Bartlett's Test of Sphericity df Sig.

.646 43.371 10 .000

348

J.-x. Chen and X.-y. Wang Table 9. Correlation Matrix

Correlation

x1 x2 x3 x4 x5

x1 1.000 .398 .389 .317 .422

x2 .398 1.000 .717 .953 .719

x3 .389 .717 1.000 .842 .996

x4 .317 .953 .842 1.000 .836

x5 .422 .719 .996 .836 1.000

Seen from the correlation coefficient matrix, most of the correlation coefficients were high and suitable for factor test. The value of Bartlett's Test of Sphericity was 43.371, the probability of P was 0, the value of KMO was 0.646, it was suitable for factor analysis. 2) Extracting factors: The results were shown in Table 10. Seen from Table 10, through principal component analysis, two factors were automatically extracted from the five components. Their cumulative contribution for variance was 90.901%. Therefore, these two factors could be considered provided sufficient information to the final evaluation. 3) Naming factors: Table 10. Rotated Component Matrixa Component 1 x4 x3 x5 x2 x1

.965 .920 .911 .878 .204

2

.112 .219 .256 .207 .978

Seen from the rotated factor loading matrix, competition index, revealed comparative advantage index, revealed competitive advantage index, export contribution rate had higher load in the first factor, they could be defined as the competition index. International market share had higher load in the second factor, it could be interpreted as the market index. Compared with the pre-rotation, factor meaning were clearer. 4) Establishing scoring function: Table 11. Component Score Coefficient Matrix Component 1 x1 x2 x3 x4 x5

-.225 .266 .278 .328 .263

2

1.054 -.035 -.034 -.170 .011

Study on International Competitiveness of Tire Industry Based on Factor Analysis

349

The following factors score function were written according to factor score coefficient matrix. F1=-0.225x1+0.266x2+0.278x3+0.328x4+0.263x5

(7)

F2=1.054x1-0.035x2-0.034x3-0.17x4+0.011x5

(8)

5) Two-factor evaluation: Two-factor evaluation were shown in Figure 1.

Fig. 1. Two-factor evaluation Table 12. Total Variance Explained Initial Eigenvalues Component 1 2 3 4 5

Total 3.746 .799 .434 .018 .003

% of Variance 74.913 15.987 8.683 .360 .056

Cumulative % 74.913 90.901 99.584 99.944 100.000

Extraction Sums of Rotation Sums of Squared Squared Loadings Loadings % of Cumulative % of Cumulative Total Variance % Total Variance % 3.746 74.913 74.913 3.419 68.383 68.383 .799 15.987 90.901 1.126 22.518 90.901

Extraction Method: Principal Component Analysis.

Seen from Figure 1, regarding the first factor, competition index, Korea scored the highest, indicating that Korea had relatively large advantage. Japan followed. United States' score was the lowest. Germany and Italy are very weak. China and France were in the middle. Regarding the second factor, market index, China scored the highest, indicating that China had relatively large advantage. Germany and Japan followed. India' score was the lowest. The others were in the middle. 6) Calculating composite scores: After calculating above two principal components F1 and F2, we could establish international competitiveness evaluation model of the world's major tire produce countries according to two principal components' contribution for variance. Z1=68.383F1+22.518F2

(9)

350

J.-x. Chen and X.-y. Wang Table 13. 2008 Comprehensive ranking of the world's major tire produce countries Countries China U.S. Japan France Germany Italy Korea India

F1 -1.97 -1.48 -0.76 -0.75 -1.99 -0.47 0.47 0.57

F2 13.97 7.16 9.47 7.18 9.37 2.84 4.5 0.93

Z1 179.86 60.02 161.27 110.39 74.91 31.81 133.47 59.92

Ranking

1 6 2 4 5 8 3 7

Seen from above table, the scores of China's tire international competitiveness was the highest, Japan was the second, Korea and France ranked third and fourth, Italy scored the lowest.

4 Conclusion Although the 2008 financial crisis affected countries in tire industry greatly, through above analysis, Chinese tire industry had a good international competitive position, comprehensive international competitiveness ranking was No. 1, developing trends was very well. But at the same time, we should clearly recognize the weakness of tire industry. The world's three giant almost monopolized tire brand market. Chinese tire export were low value-added export[5]. Measures to further enhance the international competitiveness of Chinese tire industry are as follows. First, China should optimize the export product mix and promote the high-grade tire export. Second, China should strengthen their own brands, create international brands, increase product added value relying on scientific and technological progress. Acknowledgment. This research was supported by PhD Foundation of North China Institute of Aerospace Engineering.

References 1. Jin, B.: China Industry’s International Competitiveness: Theory, Method and Empirical Research. Economics and Management Press, Beijing (1997) 2. Zhang, K.: Study on China Auto Industry’s International Competitiveness and Countermeasures. Learned Journal of Yunnan Finance University (Social Sciences) 6, 100–102 (2008) 3. Xue, W.: SPSS Statistical Analysis and Application, pp. 327–349. Electronic Industry Press, Beijing (2009) 4. Ding, G.-s., Li, T.: SPSS Statistics Tutorial: From Research Design to Data Analysis. Machinery Industry Press, Beijing (2008) 5. Cai, W.-m.: The Measures and Recommendations on Chinese Tires Export Trade Friction. Tire Industry 29, 716–718 (2009)

Study on Quantitative Evaluation of Enterprise Core Competence Based on Resources and Capabilities Chen Jing-xin1 and Liu Wei2 1

Langfang Department, Hebei University of Technology, Langfang, China 2 Department of Economics and Management, North China Institute of Aerospace Engineering, Langfang, China [email protected]

Abstract. Quantitative evaluation of enterprise core competence has great theoretical and practical significance for enterprise strategic management. On the basis of studying related literatures, this paper thought that resources and capabilities are the sources of competitive advantage. It constructed evaluation system of enterprise core competence based on resources and capabilities; proposed Nine Grids Chart on evaluation of enterprise core competence referencing General Matrix; innovatively provided a method on quantitative evaluation of enterprise core competence. Keywords: core competence, quantitative evaluation, resources, capabilities.

1 Introduction According to C. K. Prahalad and Gary Hamel's view, core competence can bring about lasting competitive advantage. The practical experience, including 3M, Honda and other successful companies, have shown that enterprises could gain competitive advantage in complex environment through accumulating their own abilities and carrying on successful strategic management. Therefore, theory and business circles has gradually recognized the core competence theory[1]. However, how to identify and nurture enterprise core competence has become a issue faced by many enterprises. In this context, quantitative evaluation of enterprise core competence has great theoretical and practical significance to enterprise strategic management. It makes it possible for enterprises to understand their own core competence. On the basis of studying related literatures, this paper constructed evaluation system of enterprise core competence and made a useful attempt on quantitative evaluation of enterprise core competence.

2 Related Literatures Review A. Concept of Core Competence In 1990, American strategists C. K. Prahalad and Gary Hamel published an article, “Core Competence of Corporation”, on “Harvard Business Review” and first put forward the definition of core competence. Core Competence is communication, M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 351–358, 2011. © Springer-Verlag Berlin Heidelberg 2011

352

J.-x. Chen and W. Liu

involvement, and a deep commitment to working across organizational boundaries. Core Competence is the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies[2]. B. Views of Western Scholars on Core Competence 1) Coordination-based theory: In 1994, C. K. Prahalad and Gary Hamel published a book, “Competing for the Future”. In this book, they provided more specific definition of core competence. First, a competence is a bundle of skills and technologies rather than a single discrete skill or technology. Second, to be considered a core competence, a skill must meet three tests: customer value, competitor differentiation, extendability. A core competence must make a disproportionate contribution to customer-perceived value. Core competencies are the skills that enable a firm to deliver a fundamental customer benefit. To qualify as a core competence, a capability must also be competitively unique. Core competence is that might be applied in new product arenas. Third, core competence is of outstanding technical elements, which includes technology and technologies stream[3]. According to the view of Coyne, from McKinsey, Core competence is the combination of a series of complementary skills and knowledge within the organization[4]. 2) Resource-based theory: Christine Olive (1997) stressed the effect of resources and capabilities to obtain higher returns and sustainable competitive advantage[5]. Barney believed that only when enterprise resources have characteristics of value, scarce, irreplaceable and difficult to imitate, they can create sustainable competitive advantage. Core competence is the unique capability for enterprise to obtain and possess these special resources[6]. 3) Knowledge-based theory: Bart said that core competence was the proprietary knowledge and information which led to enterprise competitive advantage. It had enterprise features and was difficult to trade. It was their own knowledge system to provide enterprise competitive advantage. It included four dimensions, that is, skills and knowledge set, organization technical system, organization management system, organization values system. Learning was an important way to improve their core competence[7]. 4) Combination-based theory: M. H. Meger and J. M. Utterback believed that, to a greater extent, core competence was the capability which bring products to market based on product innovation. Core competence was divided into four dimensions, that is, product technology, manufacturing capability, capability to understand customer needs, distribution channels capability. Many K. Coulter thought that, core competence were the skills and capabilities that shared by more products or business to create main value in a organization[8]. 5) Culture-based theory: Raff and Zorro thought core competence existed not only in the operation subsystem, but also in the culture subsystem of enterprise. The accumulation of core competence embedded in corporate culture, and permeated throughout the organization[8]. C. Views of Chinese Scholars on Core Competence WU Jing-lian(1999), chinese famous economist, said that core competence was an organizational capability to organic fuse the skills, asset and operation mechanism. It was the result of implementation of internal management strategy and external trade strategy[9].

Study on Quantitative Evaluation of Enterprise Core Competence

353

RUI Ming-jie(2000), professor of Fudan University, pointed that core competence was a unique, key capability of giving a series of products or services leading position. This capability was a synthesis of technology and skills. ZHANG Wei-ying, professor of Peking University, thought that, core competence was internal resources and capabilities of an enterprise, and some enterprise core competence was innate. SHI Dong-ming(2002) thought that core competence was formed by variety of abilities. Various kinds of abilities appeared different levels. From inside to outside, the levels decreased layer by layer, including capabilities of core values, organizing and management, knowledge and skills, software and hardware[10]. D. Characteristics of Core Competence About the characteristics of core competence, now a consensus is largely reached. If a capability is core competence, it must meet the following five characteristics, that is, value, difficult to imitate, unique, irreplaceable, scalability. Core competence is the capability to achieve scope economy. Through the overflow, diffusion, radiation and infiltration, this capability can continuously provide innovative products to consumers[11].

3 Methodology With complex nature of external environment, enterprise capability of affecting external environment became weak increasingly. Improving internal resources and capabilities has become the most important controllable variable of corporate strategy. Resources and capabilities are the sources of competitive advantage. This paper constructed a evaluation mode of enterprise core competence based on resources and capabilities. A. Evaluation Principles 1) Evaluating enterprise core competence with two variables: key resources and key capabilities: Core competence is the synthesis of skills, technology, knowledge[12]. In order to accurately evaluate enterprise core competence, this paper defined two variables, key resources and key capabilities. Key resources are the enterprise's resources which have four characteristics, including value, rarity, irreplaceable and difficult to imitate. Key capabilities are enterprise's comprehensive capabilities existing in research and development, manufacturing, marketing and other business processes. 2) Selecting multiple indices to evaluate key resources and key capabilities: According to number, key resources are divided into high, medium and low thirdclass. Acording to size, key capabilities are divided into high, medium and low thirdclass. 3) Drawing Nine Grids Chart: Referencing General Matrix, enterprise core competence can be drawed in Nine Grids Chart according to scores of the two variables.

354

J.-x. Chen and W. Liu

B. Constructing Evaluation System Based on the principles above[13], we construct the evaluation system of enterprise core competence. Evaluation indices system of key resources and key capabilities are shown in Table 1 and Table 2 respectively. Table 1. Evaluation indices system of key resources Variable Type

Specific Indices Adaptiveness of organizational structure (X1) * Organizational Perfection degree of plan, resources control and coordination mechanisms (X2) * The patent situation (X3) Technical resources

Key resources (X) Human resources

The proportion of annually income received from the exclusive intellectual property rights (X4) The proportion of annually income received from new products(X5) Staff loyalty degree (X6)

Managers and staff training and knowledge (X7) Managers and staff experience and insight (X8) * Brand image (X9) *

Corporate image

Corporate culture

Enterprise image industry (X10) *

in

the

Training degree of core values (X11) * Staff awareness degree of core values (X12) *

Content Matching degree of current organizational structure and strategy Whether enterprise system sound; whether the various coordination mechanisms can play a role The number and importance of patent which enterprise owned X4= Annually income received through patents, trademarks, and others /Total income X5=Sales income of new products / Total sales income Staff turnover rate = The number of staff resignation this year / Total staff number of year beginning， Evaluation staff recognition of enterprise and dedication X7= Training cost this year / Total sales income Whether managers and staff have experience and insight matching with their posts Evaluating brand image according to its value, recognition and reputation Evaluating enterprise image in the industry according to relationship between enterprise, distributors and suppliers, influence on the industry value chain Whether enterprise has common core values and to nurture their degree The degree of staff behavior influenced by core values

Table 2. Evaluation indices system of key capabilities Variable

Type

Specific Indices Market share of main products (Y1) Market growth rate of main products (Y2) Key Marketing Advertising promotions capabilities capability capability of new products (Y) (Y3) *

Content Y1= Product sales / Market sales of similar products Y2= Product sales this year - Product sales last year / Product sales last year Enterprise capability for using advertising to promote new product sales

Existing sales network's effectiveness for Effectiveness of new products market, expanding sales distribution network (Y4) * volume and market information feedback

Study on Quantitative Evaluation of Enterprise Core Competence

355

Table 2. (continued) Proportion of R & D personnel (Y5) Research Proportion of R & D and investment (Y6) development New product development capability cycle (Y7) The unique technology of production process (Y8) * Leaders and staffs’ attitudes towards learning (Y9) * Perfect and effective degree of Learning enterprise learning mechanism capability (Y10) * Reaction speed and capability for enterprise to market change (Y11) *

Innovation capability

Capability to integrate

Y5= R & D personnel / Total staff number Y6= R & D investment / Total sales income

The time for New products from pilot production to market The possibility of other enterprises imitating the technology in 3-5 years The learning idea of leaders, staff's attitude towards learning in their work Whether enterprise has mechanism to motivate staffs to learn, whether learning mechanism is effective in promoting organizational learning Enterprise capability to find market demand change, capability timely to adjust products and services Y12=The achievements number which has been Conversion rate of applied and obtained effect / The total achievements achievements (Y12) number Whether innovation mechanism can stimulate Perfect degree of innovation employee awareness of innovation, stimulate the promotion of scientific achievements into mechanism (Y13) * productive forces successfully Effective market-driven relationship between Capability to integrate external enterprise, customers and suppliers, the capability of encouraging suppliers and customers to environment (Y14) * participate enterprise innovation Capability to establish an The ability to cooperate with competitors in order to effective strategic alliance (Y15) innovation * Whether has a sound information management Capability to share information system, strong information analysis and processing (Y16) * capacities

Evaluation indices system of key resources primarily selected intangible resources because they are more potential. From organizational resources, technical resources, human resources, corporate image, corporate culture, this paper selected 12 indices. One with a * is qualitative index. From marketing capability, research and development capability, learning capability, innovation capability, capability to integrate, this paper selected 16 indices of key capabilities. One with a * is qualitative index. C. Evaluation Methods and Process Enterprise core competence is evaluated by using two variables, key resources and key capabilities. X are key resources and Y are key capabilities. X=( X1, X2, X3,……, X12)

(1)

Y=( Y1, Y2, Y3,……, Y16)

(2)

356

J.-x. Chen and W. Liu

1) Determining the weights for each index: According to the degree of importance, we determine the weights for each index by using AHP or gray multilevel evaluation method. The specific process is omitted. It is assumed that the weights of key resources are (a1, a2, a3,……, a12), the weights of key capabilities are (b1, b2, b3,……, b16), then a1+ a2+……+ a12=1, b1+ b2+……+b16=1. 2) Determining the scores for each index according to business condition: This paper chooses Likert five level measurement method. There are both quantitative indices and qualitative indices in the evaluation system of enterprise core competence. In order to ensure evaluation objective and accurate, this paper chooses the advanced standard as evaluation standard. The grade and assignment of evaluation indices are shown in Table 3. For quantitative indices, indices value are direct calculated and compared with the advanced standard. For qualitative indices, due to the difficulty of quantitative description, evaluator's knowledge, ability, experience and level of access to relevant information are important systemic factors of affecting evaluation results. Therefore, we should carefully choose evaluation experts. Experts should have certain theoretical level and practical experience; have certain authority and representation. The members structure should be reasonable. Qualitative indices are scored by experts. 3) Computing scores of key resources and key capabilities: Multiplying the score of each index with its weights, we get to weighted numbers. Summing all the weights numbers, we can obtain specific scores of key resources and key capabilities. The scores of key resources are The scores of X=X1×a1+X2×a2+……+X12×a12

(3)

The scores of key capabilities are The scores of Y=Y1×b1+Y2×b2+……+Y16×b16

(4)

Table 3. The grade and assignment of Evaluation indices Not reached Exceed the At a Great competitive Equal to the the advanced disadvantage advanced advantage advanced level level in the industry level Assignment 1 2 3 4 5 Grade

4) Drawing Nine Grids Chart: According to the scores of key resources and key capabilities, Nine Grids Chart of core competence evaluation is drawed as Figure 1.

Study on Quantitative Evaluation of Enterprise Core Competence

High 3.0 Midd le 1.5 Low Key capabilities

A

B

D

C

E

G

F

H

I

High 3.0

Middle 1.5 Key resources

357

Low

Fig. 1. Nine Grids Chart of core competence evaluation

If the enterprise is located in diagram A, B, C, indicating that its core competence is very high. If the enterprise is located in diagram D, E, F, indicating that its core competence is ordinary. If the enterprise is located in diagram G, H, I, indicating that its core competence is very weak.

4 Conclusions and Limitations This paper have studied related literatures and constructed evaluation system of enterprise core competence. It also proposed Nine Grids Chart on evaluation of enterprise core competence. Shortcoming of this paper was that it only provided a method on quantitative evaluation of enterprise core competence and didn’t use data to verify. Acknowledgment. This research was supported by PhD Foundation of North China Institute of Aerospace Engineering.

References 1. Zhang, Y.-x.: Study on Core Competence-based Diversification Strategy of Company Management. Xi’an University of Electronic Science and Technology, Xi’an (2004) 2. Prahala, Hamel, G.: Core Competence of Corporation. Harvard Business Review 68, 79–91 (1990) 3. Hamel, G., Prahalad, C.K.: Competing for the Future. Harvard Business School Press, US (1994) 4. Coyne, K.P., Hall, S.J.D., Clifford, P.G.: Is your Core Competence a Mirage? McKinsey Quarterly, Number 1, 40–54 (1997) 5. Oliver, C.: Sustainable Competitive Advantage: Combining Institutional and Resource– Based Views. Strategic Management Journal 18, 697–713 (1997) 6. Barney, J.B., Clark, D.N.: Resource-based Theory: Creating and Sustaining Competitive Advantage. Oxford University press, New York (2007)

358

J.-x. Chen and W. Liu

7. Bart, D.B.: Core Competence for Sustainable Competitive Advantage: A Structured Methodology for Identifying Core Competence. IEEE Transactions on Engineering Management 49, 28–35 (2002) 8. Jiang, Y.-l.: Study on Evaluating and Cultivating the Core Competence of the 3PL Enterprises, pp. 2–4. Tianjin University, Tianjin (2006) 9. Song, J.: Construction of Core Competence of Knowledge- based Firm Based on Knowledge Management Theory, pp. 20–22. Shanxi University, Taiyuan (2008) 10. Shi, D.-m.: Core Competence Theory. Beijing University Press, Beijing (2002) 11. Xu, F.: Strategic Management. China Renmin University Press, Beijing (2009) 12. Yang, X.-h., Wang, J.: Enterprise Strategic Management, p. 104. Higher Education Press, Beijing (2010) 13. Wang, L.-z.: A Research on Structure Model and Evaluation System of the Corporation Core Competence. Jilin University, Changchun (2004)

Automobile Insurance Pricing with Bayesian General Linear Model Cheng Gao, Qi Li, and Zirui Guo Institute of Statistics and Actuarial Science, Jilin University, Changchun, China [email protected]

Abstract. This paper applies Bayesian Model to the automobile insurance pricing in the purpose of solving the problem that the Generalized Linear Model (GLM) applied in actuarial pricing cannot reveal prior information and has too much confidence in the information from data. Under the assumption of Squared Error Loss, the estimation of the parameter in the model is the mean of the posterior distribution which was calculated by Markov Chain Monte Carlo Methods (MCMC). Finally, take the auto-insurance of WASA Insurance Company in Switzerland as an example. Run MCMC in WINBUGS software to get the estimation of the parameters, and design the comparative auto insurance tariff for this company. The comparison between the pricing utilizing Bayesian Model and that according to GLM reveals that owing to the function of prior information, the two automobile tariffs differ distinctively. Moreover, the prior information has been elegantly reflected in the Bayesian Model. Keywords: Relative auto insurance Pricing, General Linear model, Bayesian Theory, MCMC method.

1 Introduction In the field of auto insurance pricing, auto insurance pricing method is continuously developing from the early Method of Marginal Totals (MMT) to the latest General Linear Model (GLM). [1]GLM has its advantages. For example, GLM permits appropriate assumptions concerning the nature of the insurance data and its relationship with predictive variables. [2] However, disadvantages also lie in General Linear Model. For instance, it is based on fixed distributed parameter, and the randomization of parameter is not considered. What’s more, it cannot be integrated with other information besides data. Because of such shortcomings, the utilization prospects of the method are not satisfactory in Chinese insurance companies where there is not enough data of auto claim in a single insurance company. Moreover, along with change of time or macro policies, the previous vehicle insurance data cannot represent the current situation, so the pricing methods completely following the data information can cause irrationality of pricing. Therefore, it is necessary to establish a new auto insurance pricing method which is able to consider the prior information as well as data information. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 359–365, 2011. © Springer-Verlag Berlin Heidelberg 2011

360

C. Gao, Q. Li, and Z. Guo

On the basis of Auto Insurance Pricing with General Linear Model, this thesis introduces Bayesian Thought and establishes Auto Insurance Pricing with Bayesian General Linear Model (BGLM). This model can not only remedy the shortage of data amount but also solve the problem of incompletely reliable data in past years due to time effect. Hence, this model will be more suitable to model the Chinese Auto Insurance Pricing.

2 Mathematical Model This thesis mainly focuses on how insurance companies should fairly and reasonably provide different insurance rates for different vehicle insurance applicants. So, this pricing model will only take the influence of claim amount on vehicle insurance rate into account. Meanwhile, this model assumes that each insurance policy is independent and policies of the same type are identical. A General Linear Model Insurance claim amount is the observed response variable in the model, marked as Y

= ( yi )n×1 ; The design matrix of characteristics of insurance bid corresponding to

( )

characterized auto insurance claim amount is X = xij

n× p

； Therein, the row i

characterizes vehicle type, vehicle age and geographic zone corresponding to the ith claim amount; line j characterizes certain characteristics of vehicle insurance claim amount (belonging to some situation marked as 1, otherwise, marked as 0). Suppose parameter vector corresponding to different vehicle types, vehicle ages and geographic zones is

β = ( β j ) p×1 .

According to the basic idea of GLM and the nature of the claim amount, variable Y is reflected by the design matrix X as follows: [2]

Y = EY + ε = e xβ + ε

ε is the error item with mean of 0. From the usual supposition of GLM, each response variable

y1 , y2 ... yn in Y is

independent and follows exponential family of distribution. [1] Besides, claim data are generally positive and have heavy-tailed property, so it is reasonable to assume that yi (i = 1,2...n) has the distribution of Gamma( ai , bi ) , that is:

f ( yi ) =

bia i ai −1 y exp(−bi yi ) τ (ai ) i

Herein, in order to use previous linear supposition, it’s necessary to connect parameter of yi with its mean. According to the property of Gamma distribution we can know that: the mean of

Gamma (ai , bi ) distribution is: u i =

ai ; it also can be known from bi

Automobile Insurance Pricing with Bayesian General Linear Model

previous

u i = exp(∑ j =1 xijβ j ) ; p

assumption:

then

we

can

361

derive

:

bi = θi , ai = θi exp(∑ j =1 xijβ j ) . p

Till Now, under the condition that β , θ are known, the likelihood function is:

L (Y | β , θ ) = ∏ i = 1 f ( y i | β , θ ) n

∏

=

ai

bi

n i =1

ai − 1

γ ( ai)

yi

exp( − bi y i )

∑

, where ai = θi exp(

p

x β j ), bi = θi

j =1 ij

Finally, the method of the traditional general linear model fixes parameter β , θ by maximum likelihood method. Then we can use the parameter to get a reasonable measure of auto insurance pricing. However, as what we have discussed before, this method is not perfect and we could use the Bayesian Thought to improve it. B Bayesian General Linear Model The introduction of Bayesian Thought is to assume prior distribution according to prior information. Then, the posterior distribution is obtained by integrating sample information with such prior information. Generally speaking, information obtained from posterior distribution is closer to true information, because it combines the sample information and expert opinions. In this thesis, suppose there are following rules for the prior distribution of parameters: (1) Assume β1 , β 2 ...β p are independent and β j ( j = 1, 2... p ) follows normal distribution N ( uβ j , σ β2 j ) .That is π ( β j ) ∝

⎧ 2⎫ ⎪ β j − u β j ⎪ . Besides, generally, exp ⎨ 2 ⎬ ⎪ − 2σ β ⎪ 2πσ β2j j ⎭ ⎩

(

1

)

variance value always has something to do with mean value, and the smaller the absolute value of mean, the smaller the variance will relatively be. Therefore, here we suppose variance of parameter is directly proportional to absolute value of mean: that is

σ β2 =| u β | γ β , where γ β is constant. j j

j

(2) Assume

j

θ1 ,θ 2 ...θ n are independent and follows inverted Gamma distribution

θi ∽ IG (mi , ni )

π (θ i ) ∝ θ i−1−m exp(− niθ i−1 ) assumption that β , θ are independent

that is:

i

and the supposition

Therefore, under the above, the prior distribution of the model is: π ( β , θ ) ∝ xp ( − ∑ i =1 n i θ i−1 − n

∑

p j −1

(β j − u βi ) 2 2σ β j 2

) ∏ i =1 n

θ 1− 1 − m σβ

i

2 j

According to Bayesian formula, it can be known that the posterior distribution of parameters β , θ is directly proportional to the product of prior distribution of

θ is fixed: π ( β | θ , Y ) ∝ L(Y | β ,θ )π ( β ,θ ) ∝

parameter and likelihood function of model. Thus, when

362

C. Gao, Q. Li, and Z. Guo

∏

θ i exp(

θi

n i=1

∑

τ (θ i e x p ( ∑

⋅ ex p (− ∑

n i =1

p j −1

x ijθ

p j =1

n iθ i− 1 −

j

)

θi exp(

x ij β j ) )

∑

(β

p

yi j

p j =1

− u βi )2

2σ

j =1

∑

2

β

x ij β

j

)∏

β

e x p (−θ i yi )

n i =1

j

Similarly, when β is known, the posterior distribution of distribution of

) −1

θ

θ i− 1 − m σ

i

2

β

j

is the same as posterior

in form.

C Estimation Method of Parameter Because this model focuses on the fairness of vehicle insurance pricing, the effect of positive and negative error of estimation is the same. Therefore, the model will obtain estimation value of parameter under Squared Error Loss assumption. Under such assumption, estimation of Bayesian Method is the mean of the posterior distribution. In order to get the mean of posterior distribution under such complex posterior distribution in this model, MCMC Method is applied to solve calculation problem of parameter β = ( β1 , β 2 ...β n ) and the concrete estimation can be accomplished by means of WINBUGS software which is specially used for solving Bayesian problems. D Insurance Tariff After parameter β characterizing the influence degree of final claim amount by different vehicle type, vehicle age and geographic zones is determined, concrete insurance tariff could be subsequently fixed. Without the consideration of such factors as claim amount, operation cost, investment income and market competition, vehicle insurance tariff only contains pure premium and the mean of claim amount of insurance bid can be taken as pricing standard for pure premium. [3] It can be known from the model above that the mean of vehicle insurance amount can

be

represented

( )

matrix X = xij

n× p

by

β = ( β1 , β 2 ...β p )

parameter

and

the

. Then, vehicle insurance amount of ith type is: C = i

p

design

∏e

x ij β

j

.

j =1

Until now, the whole model seems to be complete. However, here parametric solution of model

β = ( β1 , β 2 ...β p )

is not single, which can bring troubles to

discussion. For determining solution, we take insurance rate of a certain type of auto insurance object as the basic value b0 and suppose its parameters as 0. Then, we can obtain the relative insurance rate of set type: Ri0 =

p

∏

e

x ij β

j =1

Actual insurance rate is:

Ci = b0 Ri 0

j

Automobile Insurance Pricing with Bayesian General Linear Model

363

3 Application Average sample claim amount data based on 38508 policies and 860 associated claims during 1994 -1999 provided by Switzerland WASA Insurance Company showed in Table 1.2 in [1] are used. Control variables of these data respectively are vehicle type, vehicle age and geographic zone; data of three types comprehensively construct vehicle insurance type Noxyz. Therein, x represents vehicle type: 1 represents vehicle type that has weight over 600kg and more than two gears, and 2 represents others; y represents vehicle age: 1 for less than 1 year, and 2 for 2 years or more; z represents the geographic zone: 1 for central and semi-central parts of Sweden’s three largest cities, 2 for suburbs and medium-sized towns, 3 for smaller cities, except those in 5 or 7; 4 for small towns and countryside, except 5-7, 5 for northern cities, 6 for northern countryside and 7 for island. Meanwhile, we suppose in 2000, vehicle accident rate in three large cities tends to drop because of the completion of road reconstruction in three large cities of Switzerland. The reduction of vehicle claim amount in three large cities is considered as prior information in the model. It can be found by observing data: the average sample claim amount of insurance policies of 3 types is 0 out of 28 types. For application of supposition from Gamma distribution, average claim amount 0.01 is considered to take place of average claim amount 0. Vehicle insurance object located in island with age over 1 year and weight over 600 Kg and have more than two gears is taken as basic value. Then corresponding parameters β 2 , β 4, β11 are 0. Then, when calculating, we can firstly get rid of such variables as vehicle with age over 1 year, vehicle type with weight over 600 Kg and island geographic zone. Then, design matrix X = ( x ij ) changed from matrix n× p

28 × 11 to matrix 28 × 9 . In order to get more information of the parameter and compare the results of the BGLM with that of the GLM, the results of GLM was calculated by SAS software based on the model in the part A of MATHEMATIC MODEL. Table 2 shows concrete parameter β . Taking the reduction of claim amount in three cities and the result of table 2 as prior information, the parameter β in Table 1 was obtained using BGLM and WINBUGS software. By the way, the parameter assumption for the prior distribution of BGLM is as follows: the mean of the distribution of β[5] is assumed as 1 due to the reduction of claim amount and the estimation of parameter by GLM; The mean of prior distribution of other parameters is the predictive value of the parameters in Table 2. γ β j characterizes proportion of

β j ’s variance to its absolute value of mean are all 0.002; θ i

∽ IG(2,10) ;

Then, based on the model presented in this paper and the assumptions above, the program of this model was built in WINBUGS and [4] instructs specific function of WINBUGS used in the model. Run the program to get the mean of the posterior distribution of the model, which is the estimation of parameter shown in Table 1. According to the data from Table 1 and 2, relative insurance rate Table 3 of WASA Insurance Company was designed under two models respectively.

364

C. Gao, Q. Li, and Z. Guo

The result shows that there is distinct difference between two methods. The result of Bayesian Method not only uses available data fully but also completely integrates information about reduction of claim amount after road reconstruction in three large cities, so BGLM can better suit actual situation. Table 1. Parameter Estimation Result of BGLM Variable β[1] β[2] β[3] β[4] β[5] β[6] β[7] β[8] β[9] β[10] β[11]

Predicted value 0.8928 0.000 0.6998 0.000 1.228 0.8159 0.3168 -0.7567 -1.006 -0.7523 0.000

Standard deviation 0.03673 0.000 0.03477 0.000 0.04353 0.03741 0.02443 0.03842 0.03899 0.03854 0.000

MC error 3.147E-4 0.000 2.753E-4 0.000 3.878E-4 3.386E-4 1.981E-4 2.734E-4 3.14E-4 3.261E-4 0.000

Table 2. Parameter Estimation Result of GLM variable β[1] β[2] β[3] β[4] β[5] β[6] β[7] β[8] β[9] β[10] β[11]

Predicted value 0.8435 0.0000 0.7370 0.0000 1.6815 0.8294 0.3059 -0.7620 -0.8612 -0.7533 0.0000

Standard deviation 0.4624 0.0000 0.4880 0.0000 0.8318 0.8501 0.8278 0.8403 0.9074 0.8491 0.0000

Table 3. Relative Insurance Rate Comparison Under Two Models Vehicle insurance type BGLM rate GLM rate Vehicle insurance type BGLM rate GLM rate Vehicle insurance type BGLM rate GLM rate

No111

No112

No113

No114

No115

No116 No117 No121

No122

No123

23.67

10.01

8.53

2.48

0.15

2.26

5.59

10.96

4.63

3.95

26.1

11.13

6.60

2.27

2.05

2.29

4.86

12.49

5.33

3.16

No124

No125

No126

No127

No211

No215

No216

1.15

0.07

1.04

2.59

9.14

3.87

3.29

0.96

0.06

0.87

1.08

0.98

0.98

2.32

11.23

4.79

2.84

0.98

0.88

0.98

No217

No221

No222

No223

No224

2.16

4.23

1.79

1.53

0.44

0.03

0.40

1.00

2.09

5.37

2.29

1.36

0.47

0.42

0.47

1.00

No212 No213 No214

No225 No226 No227

Automobile Insurance Pricing with Bayesian General Linear Model

365

4 Conclusion Considering that vehicle insurance pricing method based on General Linear Model cannot fully integrate prior information and has too much trust in Data, this thesis proposes the improved vehicle insurance pricing method based on Bayesian General Linear Model. The effectiveness of improvement can be seen form example of WASA Insurance Company. Moreover, we think this method should be implemented in actuarial department of domestic insurance company so that vehicle pricing is more reasonable. First of all, this method can fully integrate experiential opinions of actuaries and available vehicle insurance data and is able to make vehicle insurance rate more comprehensively and reasonably. Besides, utilization prospects of formulating method of relative rate based on Bayesian General Linear Model in this thesis are rather broad and it can be easily applied to other vehicle insurance pricing models. Only by changing standard rate, factors such as operation cost, investment income and market competition can be taken into account to establish a new pricing model catering to requirements of different companies. Acknowledgment. We wish to thank Professor Wang in our department who gives us direction when we have problem in our research. We also wish to thank the other members in our group who are Yanfang Li and Haoyu He. Finally, we wish to thank the financial aid for our research from the ministry of education in China.

References 1. Ohlsson, E., Johansson, B.: Non-Life pricing with generalized linear models, pp. 3–5, 9–11, 21–22. Springer, Heidelberg 2. Anderson, D., Feldblum, S., Modlin, C., Schirmacher, D., Schirmacher, E., Thandi, N.: A practitioner’s Guide to Generalized Linear Models, 3rd edn., p. 3, 23–27 (February 2007) 3. Wulan, W.: Risk Theory, 1st edn., p. 144. China Finance and Economy Press 4. Ntzoufras, I.: Bayesian Modeling Using WINBUGS, pp. 83–108. John Wiley & Sons, Inc., Publication, Chichester

Risk Identification Based on Strategic Steps of Brand Alliances Wang Chujian School of Economics and Management, ZhengZhou University of Light Industry, ZhengZhou, P.R. China [email protected]

Abstract. The brand alliance which plays an important informational role for consumers is a double-edged sword. It has positive spillover effects on the individual brands, at the same time, it has potential drawbacks. Based on exploring formation and implementation of the brand alliances strategy, this paper sums brand alliances’ risk factors. This establishes the foundation for formulating the strategy of risk identification and for designing the control mechanism on the risk of brand alliances. Keywords: risk identification, brand alliances, consumer tendency, negative affectivity.

1 Introduction Brands play an important informational role for consumers. However, Prior research on brands has tended to focus on brand portfolio and brand extension in single or multi brand companies which is often called single-brand strategy or multi-brand strategy, rather than on cobrands in more than one different company. Brand alliances are a particular type of strategic alliance which has been growing rapidly in popularity in recent years. With the increasing importance of branding in marketing, companies often seek to enhance their brand power by joining hands with other brands (Spethmann and Benezra, 1994) [1]. Rao and Ruekert (1994) attempted to develop an understanding of the phenomenon of joint branding, to remain consistent with the literature on the strategic alliances [2], they used the term of brand alliances to describe joint branding situations and explore the reasons for such alliances. Then, brand alliances have become a popular brand strategy in practice and are gaining increasing academic attention. In an era when the cost of introducing new brands is high and success rates are low, the advantages of brand alliances become more important (Aaker and Joachimsthaler, 2000; Keller, 2003) [3][4]. Simonin and Ruth (1998) found that the cobranding alliances that were rated positively had positive spillover effects on the individual brands that formed the alliance [5]. Rao et al. (1999) proposed that weak brands should join alliances of strong brands [6]. Similar effects were reported by Washburn et al. (2004) [7], who found that consumers rated cobranded products more positively than each individual M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 366–372, 2011. © Springer-Verlag Berlin Heidelberg 2011

Risk Identification Based on Strategic Steps of Brand Alliances

367

brand. When a high equity brand was paired with a relatively low equity brand, however, the overall equity of the combination did not decline. Thus, there was no negative spillover from the low equity brand to the high equity brand. In general, a second brand provides additional information for potential customers (Abratt and Motlana, 2002) [8]. Brand alliances are believed to have become one means of sharing positive reputations and repairing scandal damages (Becker-Olson and Hill, 2006) [9]. However, does the form of brand alliances only bring about positive spillover effects? Can’t it lead to the risk, this turned out to be premature. While such positive effects of brand alliances are currently being investigated more thoroughly (Gammoh et al., 2006) [10], less attention is paid to the “dark side” of brand alliances that might appear, for example, the current research shows that partnering with high-quality brands may do more harm than good to host brands, and then some authors have acknowledged the negative effects that can derive from brand alliances (Hillyer and Tikoo, 1995; Washburn et al., 2000; Janiszewski and van Osselaer, 2000) [11] [12]. Keller and Aaker (1992) maintained that a prior, successful extension increased consumer evaluation of not only a proposed brand extension but also of a core brand itself [13]. By contrast, a poor brand extension diluted consumer evaluation of a core brand (Loken and Roedder John, 1993; Sullivan, 1990) [14] [15]. Given these potential drawbacks, brand alliances are not necessarily win/win strategies for the alliance partners (Washburn et al., 2000). Pavela and Andre(2006) fount that the blending of luxury and mass-market automobile brands in one corporate portfolio engaged advantages of scale and scope economies, but induced potentially fatal brand corrosion [16]. James’s empirical research on the reapplication of the brand extension framework to brand alliances (2006) indicated that a consumer’s attitude towards brand alliances was up to three factors: quality of original brand, fit and degree of transfer, and difficulty of making, once selecting wrong partner, brand’s character is lack in harmony, it may cause the negative influence toward brand attitude [17].

2 Strategic Steps of Brand Alliances The formation and Implementation of the brand alliances strategy sees Figure 1. A. Defining Goals of Brand Alliances Based on Strategic Objectives and Enterprise Culture Different enterprises have different strategies, strategic objectives and enterprise culture. According to the strategy and culture, the firm should define goals of brand alliances, such as develop new products, open new market. B. Analyzing Consumer Perception and Consumer Tendency Brand can bring high returns and a stable income fundamentally because of it affecting consumers’ psychology and behavior. The value of the brand is not in itself, but in the minds of customers. Therefore, the choice of brand alliances strategy should be based on customer perception. Products by brand alliances should be both advantages together and meet consumer habits.

368

C. Wang

C. Choosing the Right Partner and Brand Party selection is about to consider above all the brand image in the market. Cooperative brand culture, popularity level and similarity degree of their products are always affected the future of co-brand. Pullig et al. (2006) stated that even partners of similar product categories could harm each other if they were positioned on dissimilar attributes [18]. But also a high degree of similarity instead does not protect brands from negative spillovers. Dahlén and Lange (2006) found out that a brand could be affected by a crisis of another brand in the same product category [19]. The effect is stronger the more similar the brand associations of the brand are. Good partners adjust timely coordination of their brands and strategy which can reduce the risk.

Enterprise strategy and culture

Analyze consumer perception and tendency

Define goals

Choose the right partner

Establish operational management

Design cooperative plan

Implementation and evaluation

Fig. 1. Strategic Steps of Brand Alliances

D. Establishing Operational Management and Designing Cooperative Plan The brand alliance is a long process, its success depends on high harmony and cooperation of each member. In this process, the partners have an obligation to bear the cost for fostering co-brand, at the same time, benefit should be justly distributed, that was crucial. If the parties do not coordinate, this will directly lead to the failure of brand alliances. Therefore, it is essential to bind by the system in the strategic brand alliances. E. Implementation and Evaluation of Brand Alliances Strategy In order to adjust strategies in time, we should implement brand alliances strategy and follow up the effectiveness of implementation. Two parties should integrate all devoted resources, in order to ensure efficiency and integration, two partners must establish the appropriate communication and coordination mechanisms. Moreover, two enterprises should establish evaluation mechanisms to ensure the smooth realization of its goal of the brand alliances strategy.

Risk Identification Based on Strategic Steps of Brand Alliances

369

3 Risk Identification Based on Strategic Steps of Brand Alliances Risk identification is discovering, defining, describing, documenting and communicating risks before they become problems and adversely affect a project. Accurate and complete risk identification is vital for effective risk management (see Figure 2). In order to manage risks effectively, they must first be identified. The important aspect of risk identification is to capture as many risks as possible.

Risk Identification



Risk Assessment

Risk Control

Risk Communication

Fig. 2. Process of Risk Management

Based on the strategic steps of brand alliances, we can identify the risks of brand alliances, the main risks are as follows. A. Hurting Strategic Coordination One of the key factors for brand alliances success is to maintain a strategic coordination. However, when a company decided to change its brand positioning in the market or strategy, it is possible to bring about big trouble to the other(Fan Xiucheng and Zhang Tongyu, 2003 ) [20], to avoid this problem, the cooperations must specify probable brand positioning in the future in the agreement in advance. Furthermore, when one party involved in brand alliances is purchased or taken over, this will also have an impact on strategic coordination of brand alliances, then even lead to the end of cooperation. For example, that is unhappy ending for Disney’s happy McMeal. The end of the happy meal partnership comes at a time when the processed and fast-food industries are under fire through growing concerns about expanding waistlines, particularly among children. The chief reason is for respective goals and interests. In 2003, McDonald’s wanted to get children’s recognition, McDonald’s used the new “I’m Lov’in It” taking the place of the slogans “Smile”, “Put a smile on” and “We love to see you smile”. However, the value differs greatly from Disney’s value of “Smile”, the strategic brand alliance of McDonald’s and Disney is no more. B. The Unmotivated Purpose of Brand Alliances A “Strategic Alliance” is a formal and mutually agreed partnership arrangement that links specific facets of two or more enterprises or organizations. The partners pool,

370

C. Wang

exchange and/or integrate selected resources for mutual benefit while remaining separate and entirely independent. It is a cooperative arrangement which enables partners to achieve goals together that they could not achieve alone. Strategic alliances are generally viewed as mechanisms for producing a more powerful and effective mode for competing in a globalized world. The strategic alliances have many types, the brand alliance is one of the strategic alliances, the brand alliance is shown often in the sale alliance, R&D alliance, and produce alliance. The brand alliance is diversified, so it’s easy to bring about the brand confusion by both sides, and most likely to generate the error when implementing the brand alliance. The essence of brand alliances is to expand brand awareness, and increase the profits and market value of their own products, yet without clear purpose or effective cooperation modality, that might really make both sides mistaken for the joint promotion, so brand alliances fall through in advance, the two sides should confirmation the purposes and execute mode in the first, otherwise it will cause the consequences that one false move may lose the game. C. Lacking in Harmony The different brand have separate characteristics, the other brand's personality is not always suited to their mind as people do (Blackett and Boad, 1999) [21]. Fit is particularly important for brand alliances. Brand “fit” reinforces brand position effects. If the wrong choice of a joint enterprise brand, consumers will co-brand a negative impression. James’s empirical research on the relationships of quality of original brand, fit and degree of transfer, and difficulty of making shows that once selecting wrong partner, brand’s character is lack in harmony, it may cause the negative influence toward brand attitude. D. Failed to Meet the Consumer's Psychology Brand alliances can improve the brand characteristics and image, at the same time, it can completely change the brand characteristics. Especially, branding alliances will also cause a series of problems about consumer behaviors, such as, can the new product be accepted by your old consumers? How to frame the relevance between the new product and the original? What do drive consumers to pay attention to the new brand? How can the new products link the live style of consumers? Generally speaking, your old consumers can accept the new product or not. Therefore, the first hurdle of co-branding is customers. As well, the purpose of brand alliances is to enter new markets, develop new consumer groups and increase awareness. Consumer tastes and attitudes are often changing. Consumer attitudes to new product or service by brand alliances either change or not. If consumers do not like the conversion, consumers may produce inverse psychology which will threat to each brand image. E. Inherent Risks of Brand Alliances The inherent risk of brand alliances may directly strengthen the power of competitors, thereby worsen competitive environment in the market. Because two sides are engaged in the same or similar business, or sometimes the relationship between upstream and downstream, two sides must share the certain information or technology through brand alliances, while one side is likely to get the key technological

Risk Identification Based on Strategic Steps of Brand Alliances

371

breakthrough or channels control. In some cases, even one side may get more complementary effects than the other, and then brand alliances will cause to foster a competitor in the market.

4 Conclusion With the increasing importance of branding in marketing, the advantages of brand alliances is paid attention to, however, the style of brand alliances is a double-edged sword. It enhances competitive advantage, at the same time， its risks may generate in the process of the strategy. According to the idea, this paper analyzes the fundamental strategic steps of brand alliances, then identifies the main risks in brand alliances. This establishes the foundation for formulating the strategy of risk identification and for designing the control mechanism on the risk of brand alliances.

References 1. Spethmann, B., Benezra, K.: Co-brand or be damned. Brand Week, 20–24 ( November 21, 1994) 2. Rao, A.R., Ruekert, R.W.: Brand alliances as signals of product quality. Sloan Management Review, 87–97 (Fall 1994) 3. Aaker, D.A., Joachimsthaler, E.: Brand Leadership. Free Press, London (2000) 4. Keller, K.L.: Strategic Brand Management: Building, Measuring and Managing Brand Equity, 2nd edn. Prentice Hall, New Jersey (2003) 5. Simonin, B.L., Ruth, J.A.: Is a company known by the company it keeps? Assessing the spillover effects of brand alliances on consumer brand attitudes. Journal of Marketing Research 35, 30–42 (1998) 6. Rao, A.R., Qu, L., Ruekert, R.W.: Signaling Unobservable Product Quality through a Brand Ally. Journal of Marketing Research 36, 258–268 (1999) 7. Washburn, J.H., Till, B.D., Priluck, R.: Co-branding: Brand Equity and Trial Effects. Journal of Consumer Marketing 17(7), 591–604 (2000) 8. Abratt, R., Motlana, P.: Managing Co-Branding Strategies: Global Brands into Local Markets. Business Horizons 45(5), 43–50 (2002) 9. Becker-Olson, K.L., Hill, R.P.: The impact of sponsor fit on brand equity. Journal of Service Research 9(1), 73–84 (2006) 10. Gammoh, B.S., Voss, K.E., Chakraborty, G.: Consumer evaluation of brand alliance signals. Psychology and Marketing 23(6), 465–486 (2006) 11. Hillyer, C., Tikoo, S.: Effect of Cobranding on Consumer Product Evaluations. Advances in Consumer Research 22(1), 123–127 (1995) 12. Janiszewski, C., van Osselaer, S.M.J.: A Connectionist Model of Brand-Quality Associations. Journal of Marketing Research 37(3), 331–350 (2000) 13. Keller, K.L., Aaker, D.A.: The Effects of Sequential Introductions of Brand Extension. Journal of Marketing Research 29, 35–50 (1992) 14. Loken, B., John, D.R.: Diluting Brand Beliefs: When Do Brand Extensions Have a Negative Impact? Journal of Marketing 57(3), 71–84 (1993) 15. Sullivan, M.: Measuring Image Spillovers in Umbrella-Branded Products. Journal of Business 63(3), 309–329 (1990)

372

C. Wang

16. Pavel, Andre: Brand Corrosion: Mass-Marketing’s Threat to Luxury Automobile Brands after Merger and Acquisition. Journal of Product & Brand Management 15(2), 106–120 (2006) 17. James, D.: Extension To Alliance: Aaker and Keller’s Model Revisited. Journal of Product & Brand Management 15(1), 15–22 (2006) 18. Pullig, C., Simmons, C., Netemeyer, R.: Brand Dilution: When do New Brands Hurt Existing Brands? Journal of Marketing 70, 52–66 (2006) 19. Dahlén, M., Lange, F.: A disaster is contagious: How a brand in crisis affects other brand? Journal of Advertising Research 46(12), 388–396 (2006) 20. Fan, X., Zhang, T.: Brand alliances strategy of multinational corporations. Foreign Economies & Management 09, 2–6 (2003) (in Chinese) 21. Blackett, T., Boad, B.: Co-Branding: The Science of Alliance. St. Martin’s Press, New York (1999)

The Application of Fuzzy Synthesis Evaluation Method Based on ANP in E-Business Risk Zhang Xinzhong and Qin Yamin North China University of Water Conservancy and Hydroelectric Power Zheng Zhou, China [email protected]

Abstract. E-business risk study by the application of the Fuzzy Snapper Evaluation Method based on The Analysis Network Process in project risk, analysis factors of that affect e-business risk. So concerned about the risk of change, in order to take timely measures to prevent risk. Keywords: component, E-Business Risk, risk identification, ANP, Fuzzy Synthesis Evaluation.

1 Introduction This paper draws on the existing risk management thinking and analyzes the meaning of e-commerce risk and characteristics; based on risk management, it focuses on the risk identification in e-commerce risk management and explores the types of risk factors in the process of e-commerce system development. The paper proposes the establishment of e-commerce risk assessment model is based on the evaluation of ANP fuzzy synthesis evaluation approach on e-commerce risk, providing a decision-making method that better reflects the reality of e-commerce.

2 ANP Structure Analysis ANP (The Analysis Network Process) is a decision-making method suitable for non-independent feedback system proposed by Professor T. L. saaty of University of Pittsburgh based on feedback AHP in 1996. ANP generally divides the system elements into two parts; the first part is called controlling factor layer, including issue objective and decision criteria; all decision-making criteria are regarded as independent and only dominated by the target element. The second part is known as the network layer, consisting of elements dominated by the controlling layer, with a mutual-influencing internal network structure. Figure 1 is a typical ANP structure.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 373–379, 2011. © Springer-Verlag Berlin Heidelberg 2011

374

X. Zhang and Y. Qin

target

controlling layer

criteria

criteria

P

P

element

element

element

network layer

element element

Fig. 1. Typical structure of ANP

ċ3 Decision-Making of Fuzzy Synthetic Assessment The mathematical model of fuzzy synthetic model is composed of three elements, with four steps: 1. Factor set U

= {u1 , u2 , ⋅⋅⋅, un }

= {v1 , v2 , ⋅⋅⋅, vn } 3. Single factor assessment f : U → ζ (V ) 2. Assessment set V

ui → f (ui ) = (ri1 , ri 2 , ⋅⋅⋅, rim ) ∈ ζ (V ) . The fuzzy relation R f ∈ ζ (U × V ) can be induced by fuzzy mapping f , that is: R f (u i , vi ) = f (u i )(v i ) = rij Therefore,

R f can be expressed by fuzzy matrix R ∈ μn×m :

⎡ r11 ⎢ r R = ⎢ 21 ⎢ ⎢ ⎣⎢ rn1

r12 r22 rn 2

r1m ⎤ ⎥ r2 m ⎥ ⎥ ⎥ rnm ⎦⎥

R is known as single factor assessment matrix. And (U , V , R ) constitute a comprehensive decision-making model, with U , V , R as the three factors of this model.

The Application of Fuzzy Synthesis Evaluation Method

4. Comprehensive evaluation, use

model

375

M (•,⊕) to calculate the

weight A = ( a1 , a2 , ⋅⋅⋅, an ) , and the comprehensive evaluation can be obtained.

B = Ai R 4 Establishment of Fuzzy Symmetric Assessment Model Based on Network Analysis Method A. Determine Assessment Factor Set Assume a certain thing is determined by

n factors and constitute evaluation factor set

U = {U1 ,U 2 ,

,U i ,

,U n }

B. Determine Assessment Set Assume such thing may have m reviews and constitute assessment set

V = {V1 ,V2 ,

,V j ,

,Vm }

C. Establish Single Factor Fuzzy Assessment Matrix According to the relationship between factor set and assessment set, establish the fuzzy mapping U − F (V ) of U corresponding V, suppose the evaluation vector of the single factor fuzzy evaluation

i as:

Ri = ( ri1, ri 2, , rij , , rnm ) Ri can be regarded as the fuzzy subset of evaluation set V,

rij shows the grade of

membership of the i factor evaluation on the j level, therefore, the single factor comprehensive evaluation relation matrix can be established:

⎡ r11 r12 ⎢r r Ri = ⎢ 21 22 ⎢ ⎢ ⎣ rn1 rn 2

r1m ⎤ r2 m ⎥⎥ = ( rij )nm ⎥ ⎥ rnm ⎦

These steps are in correspondence with the fuzzy synthetic assessment. D. Determine the Weight by ANP In the system, assume the factors in the controlling layer of ANP model including p1 , p2 , ⋅⋅⋅, pm ; the network layer of the controlling layer has the element set of

C1 , C2 , ⋅⋅⋅, Cn , of which Ci has elements ei1 , ei 2 , ⋅⋅⋅, ei ni , therefore, the index

weight steps for weight calculation can be summarized as: 1. Determine the weight matrix of the element set, also known as the main factor later. Take 0~9 as the scale, take the control layer element ps ( s = 1, 2, ⋅⋅⋅, m) as criterion; and one element of

Ci (i = 1, 2, ⋅⋅⋅, n) as sub-criterion, conduct relative

376

X. Zhang and Y. Qin

influence degree comparison among other factors, constituting n comparison matrixes; calculate the corresponding characteristic vector of each matrix’s maximum characteristic value, and then carry out consistency test. 2. Determine the super-matrix of the sub-factor layer. Take the control layer element ps ( s = 1, 2, ⋅⋅⋅, m) as the criterion, and the element ei k ( k = 1, 2, ⋅⋅⋅, ni ) of

Ci (i = 1, 2, ⋅⋅⋅, n) as the sub-criterion, conduct dominance degree comparison among elements in element group C1 , C2 , ⋅⋅⋅, Cn according to their influence on ei k . It is similar to the weight matrix calculation, construct the weight matrix of the sub-factor n

group to form a

∑n i =1

i

order super-matrix and this super-matrix is composed of

n block matrices. 3. Determine weighted super-matrix. Multiply each matrix element in the weight matrix of the main factor layer with the super-matrix block in the sub-factor layer to constitute weight matrix. Weighted super matrix reflects the main factor’s control on the sub-factor and the sub factor’s feedback to the main factor. 4. Solve the index weight. For the weighted super-matrix, use the corresponding calculation method to determine the relative weight vector, that is, the weight of the n

∑ n element according to their catalogue. i =1

i

E. Comprehensive Evaluation Use model M (•, ⊕) to calculate weight C and get the comprehensive evaluation:

B =C•R ⎧ ⎨bt The corresponding review of Max 1≤t ≤ ⎩ the greatest risk factor/ .

⎫

n

∑ b ⎬⎭ (the maximum degree of membership) is t =1

t

5 The Establishment of a Certain e-Commerce Risk Index System Through the analysis on risk factors influencing a certain e-commerce, conduct investigations and consultations from a number of experts with rich practical experience by Delphi method as well as refer to a lot of existing research data to establish the comprehensive evaluation index system by e-commerce factors; meanwhile, because there is a certain ambiguity in risk measurement, divide the risk degree into five levels. ⎧High risk、relatively high risk、 medium risk、⎫ V =⎨ ⎬ ⎩relatively low risk、 low risk ⎭ = {v1 , v2 , v3 , v4 , v5 }

A. The Establishment of Network Analysis Structure Model Based on the above analysis on e-commerce risk assessment index system, the interaction model of network analysis has collected the scores made by 20 experts on

The Application of Fuzzy Synthesis Evaluation Method

377

the above-mentioned risk sub-factor layer evaluation index factors, and the evaluation results are shown in Table 1: Table 1. Comprehensive Evaluation of risk factors for an e-business Main factor layer

Sub-factor layer Economic policy e11 Market structure e12 Cost budget e13

Cost risk C1

Organization risk C2

System security analysis C5 Technical C6

Low risk 0

0

9

9

2

0

0

5

5

4

6

0

0

8

6

6

Organization structure e22

0

10

5

5

0

0

4

6

4

6

0

5

5

5

5

0

0

10

10

0

0

0

5

5

10

0

5

8

4

3

0

5

7

4

4

10

3

2

5

5

Project management risk e41 risk Project demand risk e42 Environment condition risk e43 Network condition risk e51

risk

Relatively Medium Relatively high risk risk low risk 10 10 0

Human resources status e21 Contract risk e23 Project member efficiency e24 tool Development Development Environment availability e31 risk C3 Development tool quality e32

Project analysis C4

High risk 0

12

5

3

0

0

Operation system risk e52

10

5

4

1

0

Data access risk e53

14

4

2

0

0

Technical difficulty e61

10

4

4

2

0

Technical applicability e62

0

6

5

4

5

Technology life circle e63

16

4

0

0

0

According to Table 1, establish multi-indexes fuzzy evaluation matrix and conduct standardized treatment. B. Determine the Weight and Sorting of Various Risk Factors In the comprehensive evaluation of e-commerce risk factors, the determination of risk factor weight vector is the crucial step of the entire e-commerce risk factor sorting; meanwhile, it is also the core of ANP risk assessment. According to the risk factor influence relation and ANP structure model, the calculation of e-commerce risk factor weight should be carried out according to the following steps: 1. Determine the weight matrix of the main factor layer The influence relation among various evaluation factors can be seen from the e-commerce ANP model. Through constructing judgment matrices, calculate the corresponding eigenvector of each maximum eigenvalue and conduct normalization treatment, thus obtain the weight matrix of main factor layer.

378

X. Zhang and Y. Qin

2. Determine the super matrix of the sub-factor layer (1) In element set C1 (cost risk), take element e11 (economic policy), e12 (market structure), and e13 (cost budget) as criteria, carry out indirect dominance comparison of various factors according to the influence degree to constitute judgment matrix and calculation weight vector. (2) Repeat the above steps and the judgment matrices of elements sets such as C2 (organization risk), C3(development environmental risk), C4(system security risk), C5(system security risk) and C6 (technical risk) can be obtained. (3) According to the same calculation method, the judgment matrix can be obtained and the factor layer super matrix W will be solved; the calculation weight is as follows according to the W structure fuzzy weighted super matrix: ⎡ a11W11 ⎢a W ⎢ 21 21 ⎢a W W = W • A = ⎢ 31 31 ⎢ a41W41 ⎢ a51W51 ⎢ ⎣⎢ a61W61

a12W12 a22W22 a32W32 a42W42 a52W52 a62W62

a13W13 a23W23 a33W33 a43W43 a53W53 a63W63

a14W14 a24W24 a34W34 a44W44 a54W54 a64W64

a15W15 a25W25 a35W35 a45W45 a55W55 a65W65

C. Comprehensive Evaluation Conduct calculation with model M (•, ⊕ ) T

⎡ 0.002 ⎤ ⎡0.00 0.50 0.50 0.00 0.00 ⎤ ⎢ 0.002 ⎥ ⎢0.00 0.45 0.45 0.10 0.00 ⎥ ⎢ ⎥ ⎢ ⎥ ⎢ 0.003⎥ ⎢0.00 0.25 0.25 0.20 0.30 ⎥ ⎢ ⎥ ⎢ ⎥ ⎢ 0.040 ⎥ ⎢0.00 0.00 0.40 0.30 0.30 ⎥ ⎢ 0.093⎥ ⎢0.00 0.50 0.25 0.25 0.00 ⎥ ⎢ ⎥ ⎢ ⎥ ⎢ 0.041⎥ ⎢0.00 0.20 0.30 0.20 0.30 ⎥ ⎢ 0.016 ⎥ ⎢0.00 0.25 0.25 0.25 0.25⎥ ⎥ ⎢ ⎥ ⎢ ⎢ 0.307 ⎥ ⎢0.00 0.00 0.50 0.50 0.00 ⎥ ⎢ 0.307 ⎥ ⎢0.00 0.00 0.25 0.25 0.50 ⎥ ⎥ •⎢ ⎥ B =C•R = ⎢ ⎢ 0.019 ⎥ ⎢0.00 0.25 0.40 0.20 0.15⎥ ⎢ ⎥ ⎢ ⎥ ⎢ 0.022 ⎥ ⎢0.00 0.25 0.35 0.20 0.20 ⎥ ⎢ 0.036 ⎥ ⎢0.50 0.15 0.10 0.25 0.00 ⎥ ⎢ ⎥ ⎢ ⎥ ⎢ 0.021⎥ ⎢0.60 0.25 0.15 0.00 0.00 ⎥ ⎢ 0.047 ⎥ ⎢0.50 0.25 0.20 0.05 0.00 ⎥ ⎥ ⎢ ⎥ ⎢ ⎢ 0.027 ⎥ ⎢0.70 0.20 0.10 0.00 0.00 ⎥ ⎢ 0.003⎥ ⎢0.50 0.20 0.20 0.10 0.00 ⎥ ⎢ ⎥ ⎢ ⎥ ⎢ 0.004 ⎥ ⎢0.00 0.30 0.25 0.20 0.25⎥ ⎢ ⎥ ⎢ ⎥ ⎣ 0.010 ⎦ ⎣0.80 0.20 0.00 0.00 0.00 ⎦ = (0.083, 0.103, 0.324, 0.395, 0.180)

a16W16 ⎤ a26W26 ⎥ ⎥ a36W36 ⎥ ⎥ a46W46 ⎥ a56W56 ⎥ ⎥ a66W66 ⎦⎥

The Application of Fuzzy Synthesis Evaluation Method

379

According to the principle of maximum membership degree, the maximum value is 0.395, showing this project is highly risky.

6 Conclusion Establish risk assessment model through comprehensive application of network analysis and fuzzy evaluation method; through combining qualitative analysis and quantitative calculation, tightly combine the decision makers’ subjective judgment and reasoning to carry out quantitative description of the decision maker’s reasoning process thus apply it in the decision-making issues with multi-criteria, complex structure and are difficult to quantify, providing scientific basis for decision-making. On the basis of the current e-commerce risk assessment method, propose ANP based fuzzy synthetic evaluation method in accordance with network analysis method and fuzzy synthetic judgment decision-making theory; try to seek a reasonable risk assessment method to solve risk management issues full of fuzzy information by applying such method in risk management.

References 1. Yang, Y., Feng, W.: Fuzzy AHP in the evaluation of construction projects. Construction Economics, special issue (2006) (in Chinese) 2. Fikset, J.: Risk Analysis in the 1990s. Risk Analysis 2 (1990) 3. Singh, M.P., Travis, C.C.: Environmental Risk Analysis: An Overview. Risk Analysis 3 (1991) 4. Jaafari, A.: Management of risk, uncertains and opportunities on projects:time for a fundanmental shift. International Joural of Project Management (1999)

Research and Application of Three Dimensional Visualization of Geological Objects Hua Li and Hao Wu Resource and Environmental Engineering Institute, Wuhan University of Technology, Wuhan, the People’s Republic of China [email protected]

Abstract. There are three modeling methods about the geological bodies, including the facial model, the volumetric model and the mixed model. This paper gives the reason why the facial modeling is still the main modeling method at the present stage. Also we presented a sort of three dimensional(3D) modeling approach which is suitable for the stratified geological bodies: first of all, we use DEM method to fit every stratum based on the stratum data of the bores. Then we show all DEM facial models and lastly construct entities through sewing the neighboring boundaries of the all layer. We also design and exploit a visualization system of the geological objects visualization system using the component technology. The system includes the data source management component, data dictionary management component, geological object core component, three dimensional control component. The system has the function to read the original data of the geological survey, display and query information about the stratums and also subdivide the section planes. The establishment of the system can provide reference to create the other similar system. Keywords: three dimension, visualization, component, geological objects, facial model.

1 Introduction Geological objects are composed of different kinds of data, such as borehole data, topography data, rock and soil data, geophysical and hydrological data[1]. With the development of computer technology, the techniques of interactive modeling and visualization about geological objects help overcome the shortcomings of the traditional method, such as tables and plots[2]. The research of 3D visualization has a wide scope, including the spatial modeling, 3D visualization and Three-dimensional topology. The spatial modeling method of the geological objects are the main topic in the 3D GIS domain. Over the past decade, researchers presented more than 20 kinds of spatial modeling, which can be generally classified into the facial model, the volumetric model and the mixed model[3]. Since the facial model has strong modeling capabilities and can realistically represent the outline of the geological body. And it is very suitable M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 380–386, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research and Application of Three Dimensional Visualization of Geological Objects

381

for the human visual habit. While the technique about the volumetric model is not perfect, and the volumetric model has the poor interactivity. So the facial model is still the major modeling method nowadays[4]. The research domain is the geological survey. Through the data analysis about the research domain, we can draw the conclusion that the facial model can satisfy the geological modeling and visualization.

2 Methodology A. Data Model Research As the above narrated, the geological survey is the research domain, so the bore data and the stratum layer based on bores is the most direct data source of the geological body 3D modeling. We can use the data to simulate the 3D stratums, geological structures and the complex geological bodies. Figure 1 shows the three-dimensional database model diagram based on the bores. We can apply the database to store the raw data uniformly based on this model, then provide the data source to simulate, display and analyze the 3D geological body. The data model is mainly composed of four data tables, which are bore data table, stratum data table, segment data table about stratum, the stratum metadata table. Also, the data model diagram indicates the relationship between these tables.

Fig. 1. Three-dimensional database model diagram based on the bore

B. Modeling Study about the Geological Body Through the data analysis about the geological survey, the raw data are the 2.5, 2.75 dimensional data, also called quasi-three-dimensional data. And most of the geological bodies are Stratiform, so we can construct these geological bodies using the facial model. The following is the specific method: firstly we apply the layer data about the

382

H. Li and H. Wu

bores to fit each layer according to the digital elevation model method, and show the above every layer at the same time, then construct entities through sewing the neighboring boundaries of the all layer. The 3D modeling process is shown in figure 2.

Fig. 2. The 3D modeling process diagram

C. Algorithm Study 1) The single stratum modeling algorithm We use triangulated irregular network (TIN)[5] to build the single stratum of the geological body, and set up TINS to cover the entire area using the scattered bore points. It is the key technology to determine which of the three discrete data points form an optimization triangle, and insure that each discrete sampling point is the vertex of a triangle. 0

a

1

b ⊩

3

2

c

d

4

e

Fig. 3. The triangular surface reconstruction method

2) Algorithm about sewing the neighboring boundaries of the stratums Geological survey area involves mostly layered rocks, for each layer rock, it simply consists of front, back, left, right, top and bottom interface. Top and bottom interface are the neighboring stratum, so front, back, left, right interface can form through sewing the neighboring stratums.

Research and Application of Three Dimensional Visualization of Geological Objects

383

The sewing method is that any two neighboring stratums establish some triangleshaped surfaces. The basic idea is to connect the adjacent triangle mesh nodes of the stratums grid model border, and complete the triangular surface reconstruction between two neighboring stratums. The method is shown in figure 3. 3) Subdivision algorithm Based on the 3D geological model, we can clearly understand the geological model inside through subdividing the geological model to form the sections. Sections are subdivided by the following two steps: firstly section plane intersects every stratum and its segments to create lines, then the neighboring section lines can be sewed to generate the triangle meshes of the section plane. D. System Design and Implementation We design and implement a 3D geological objects visualization system(Geo3DModel System) based on the three-dimensional visualization data models and the above algorithm. The system stores data in a SQL Server database, reads the original data of the geological survey, uses the appropriate data model to build three-dimensional geological bodies which can visualize, display and operate. System is based on C/S structure and uses the component-based development techniques[6]. The system consists of four components (one control, three DLL, includes the data source management component, data dictionary management component, geological object core component, three dimensional control component) and a master calling program. The control(moSite3D.ocx) is written in C++ and the others in C#.Net[7]. The system component structure based on UML(Unified Modeling Language) is shown in Fig.4, the upper components depend on the underlying components.

Fig. 4. Three-dimensional visualization components diagram of the geological bodies

In the figure 4, the GeoCoreLib component((geological object core component)) is one of the most important components. The component implements the properties, methods of the core classes and their relationships, these classes include bore, stratum, segment about stratum, the stratum metadata. And the component also provides external interface for external application to access and operation. The class diagram of the GeoCoreLib component is shown in Figure 5.

384

H. Li and H. Wu

Fig. 5. The classes diagram of the GeoCoreLib component

The GeoCoreLib component was fulfilled by the collection classes and the single class based on the above class diagram. All bores compose a collection class(clsBores) and a single bore composes a single class(clsBore). Because of a bore can contain multiple stratum data records, so we can use a collection class(clsBoreLayers) to represent them. While a single stratum can be represented by clsBoreLayer. The segment about the bore also depends on the same principle.

3 Application Based on the above data model, algorithm, design thinking and process, we design and exploit a visualization system of the geological objects. The system can simulate the whole three-dimensional structure of the geological survey area, and display the every stratum information and the custom section planes. You can take a variety of display mode to build a three-dimensional view, and can freely zoom in, zoom out and rotate three-dimensional landscape field. Also you can query and analysis the arbitrary stratum, section plane. At the same time, you can fulfill the stratum color setting and texture setting using the system. The functionality of the system(The system is shown in figure 6) is described below: a) Display: The system displays the three-dimensional figure of the specified field in the geological survey area and can manipulate the three-dimensional figure, including zoom in, zoom out, rotate roaming, etc.

Research and Application of Three Dimensional Visualization of Geological Objects

385

b) Display mode: you can change the three-dimensional display mode according to the customer requirements, including the grids display, the 3D scatter points display, the survey points solid tubes display, the entities display and the section planes display. c) Any section plane subdivide: you can subdivide and display any custom section planes. d) Query: you can select and query information about the bores and the stratums.

Fig. 6. The classes diagram of the GeoCoreLib component

4 Conclusion As we known, there are three modeling methods about the geological bodies, including the facial model, the volumetric model and the mixed model. The facial modeling is still the main modeling means at the present stage, because the facial model has very strong modeling capability and is suitable for the human visual habits. We presented a sort of 3D modeling approach which is suitable for the stratified geological bodies: first of all, we use DEM method to fit every stratum based on the stratum data of the bores. Then we show all DEM facial models and lastly construct entities through sewing the neighboring boundaries of the all layer. We also design and exploit a visualization system of the geological objects visualization system using the component technology. The system includes the data source management component, data dictionary management component, geological object core component, three dimensional control component. The system has the function to read the original data of the geological survey, display and query information about the stratums and also subdivide the section planes. Although the system has the above function, but for the faults, folds and other more complex geological structures, the system’s modeling capacity is not very strong. So how to model these more complex geological structures is our next step research orientation[8].

386

H. Li and H. Wu

Acknowledgment. This research was supported by the Natural Science Foundation of China(Grant no. 40901214) and the Fundamental Research Funds for the Central Universities(Grant no.2010-IV-076).

References 1. Guo, Y., Li, L.: Structural Geology, simple tutorial. China University of Geosciences press, Wuhan (1995) 2. Zhang, L.Q., Tan, Y.M., Kang, Z.Z., et al.: A methodology for 3D modeling and visualization of geological objects. Sci. China Ser. D-Earth Sci. 52(7), 1022–1029 (2009) 3. Wu, L.-X., Shi, W.-Z.: Geographic Information Systems Theory and Algorithm. Science Press, Beijing (2003) 4. Brooks, S., Whalley, J.L.: Multilayer hybrid visualizations to support 3D GIS. Computers, Environment and Urban Systems 32, 278–292 (2008) 5. Yong, X., Sun, M., Ma, A.: On the reconstruction of three-dimensional complex geological objects using Delaunay triangulation. Future Generation Compute Systems 20(7), 1227–1234 (2004) 6. Takatsuka, M.: A component-oriented software authoring system for exploratory visualization. Future Generation Computer Systems 21(7), 1213–1222 (2005) 7. Wang, S.: Master Visual C# 2005—Language base, database and Web exploit. Posts & telecom press, Beijing (2007) 8. Wu, Q., Xu, H.: An approach to computer modeling and visualization of geological faults in 3D. Computers & Geosciences 29(4), 503–509 (2003)

The Control and Measure of Requirements Stability in Software Project Chen Ting Faculty of Mechanical & Electrical Engineering Kunming University of Science & Technology Kunming, P.R. China

Abstract. In the development of software project, requirements stability is an important factor which relates to success or failure of software project. This paper made a detailed analysis of the factors of affecting the requirements stability, proposed the control method of the requirements stability, constructed the control process of requirements change, and has conducted the research on the measure of the requirements stability for achieving the purpose to grasp the degree of the requirements change effectively, minimize the defects and risks caused by it, and ensure the successful completion of software project according to a predetermined cost, schedule, and quality. Keywords: Software engineering, Requirements stability, Control, Measure.

1 Introduction With the fast development of global economy & technology and the speed-up of the process of social informationization, computers are widely used in various industries, all kinds of application software come into being, and the management or production of various industries is becoming more specific, digitized, quickly. Then users' demand for computer software is getting more and more complex, the scale is getting bigger and bigger, the degree of requirements instability is increased along with it. In the development of software project, the quality and stability of requirements play a critical role regarding labor costs and deliverables quality of the project. Unstable requirements will inevitably cause extension delivery of the system, serious decline in quality, user dissatisfaction increasing, cost overruns and other issues. On the one hand the requirements change is inevitable, and it follows the entire software development lifecycle, on the other hand we must take effective measures and means to minimize the requirements change as far as possible, reduce influence caused by it. Therefore, through carrying on the control and the qualification to the requirements stability of software project can grasp the degree of requirements change of software project effectively, minimize the defects and risks caused by it, and ensure the successful completion of software project according to a predetermined cost, schedule, and quality.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 387–394, 2011. © Springer-Verlag Berlin Heidelberg 2011

388

C. Ting

2 The Factors Affecting Requirements Stability Compared with traditional industrial production, software requirements are with the characteristics of fuzzy, implicit, uncertainty, variability and subjectivity, and so on. It makes requirements change become an inevitable problem which is most difficult to grasp in software project. There are many factors affecting requirement stability, summarized in the following four aspects: A. User-Side Factors Users are the proponent of project requirements. Determining users’ final requirement is a very difficult thing. This is because most users lack computer knowledge, or because of insufficient knowledge of information systems, not pay enough attention to the requirements, abstract level of their own business is not enough, and the coordination level with the developer is not enough. At the beginning of the project, users can not determine what the computer can do for themselves, can not do. So users often can not accurately express their requirements. However, it is unrealistic to require users to make all requirements clear one-time and do not allow any changes in requirements since then. With the continuous advance of the development progress for software projects, users gradually deepen understanding of the system, have the new understanding of requirements, and then put forward new requirements which are more meet their needs. B. Development-Side Factors Because of the existence of such problems for developing-side, such as they do not know users’ business processes, it is inadequate to communicate and exchange with users, the communication skills are not high, the knowledge reserve of requirements analysts is not enough, the technology of requirements engineering is not sophisticated, the requirements for research, analysis, definition and assessment is not enough detailed, clear and full, the requirements description exists ambiguity, lead to the questions are implied in the requirements specifications, failed to obtain the potential requirements of users accurately and comprehensively until it was discovered during the development process. Such requirements changes are the most common change reasons in the process of software development. It is also requirement change problems which requirement analysts and software developers are most concerned about. Moreover it will also result in the requirements change such as the project management is not standardized, the development method is not flexible, the contract binding on the user is not enough, the research range is uncertain, etc. C. System Factors With technology updating of hardware system, operating system and system software, there are requirements change in the security and compatibility aspects of the original design. For example, operating system changes from Windows 9X to Windows 2000/XP, IE upgrades from 5.0 to 6.0 or 7.0. D. Work Environment Factors It refers to requirements change related to software running, such as the changes of work systems, or regulations and policy, the continuous expansion of business scope, the continuous changes of business processes, the continuous innovation of management model, or business requirements changes. Such requirements changes often appear in

The Control and Measure of Requirements Stability in Software Project

389

the professional software. For example, the requirements change of financial software resulting from changes in accounting system, the requirements change of tax software resulting from changes in tax policy, etc. System factors and work environment factors are closer to a "force majeure" relative to the other two factors in these four factors. So the requirements analysts, system designers and developers should pay more attention to user-side factors and development-side factors, and reduce the requirements change outside of "force majeure" to a minimum as much as possible [1].

3 Control Methods and Measurement Since the requirements instability is an objective reality, then the correct treatment of requirements change, the courage to accept it, be proactive response to the changing requirements using new technologies, so-called "embrace change". Requirements change is not necessarily a bad thing, it could also be a good thing, because we can create and win the opportunity in the process of requirements change. A. Control Method •

•

•

In order to the developers can understand users’ requirements better, it is necessary to make a training of the developers on the related knowledge in the initial stages of doing requirements analysis. At the same time make a timely introduction of both sides recognized experts, and the experts feel the pulse for some key issues can also avoid some unnecessary requirements change. It must be emphasized the active participation of users in the development process of the system. Through collaboration and communication, development-side should get a common language with users, reach a consensus, and help users who are not familiar with computer to establish the common concept of software development. When users propose requirements change, the developers should carefully listen to the users' requirements, make a collation and analysis. Even if the users propose some "excessive" requirements, must carefully analyze the reasons and propose viable alternatives. Note to users that these requirements change will bring the adverse consequences to the development of the entire project. It allows users to realize that computers can not solve all the exist problems currently because of the constraints of technical, human and other resource. And the development of software product requires a certain period, too much requirements and too frequent changes will increase the development costs and duration extension to some extent. When developers sign the project contract with users, can increase some of the relevant terms about requirements change, clear the responsibility and obligation that both parties should bear, and reduce the friction between the two sides and random requirements change to some extent. Such as the establishment of a deadline for requirements change, the circumstances in which users can change the requirements, and what requirements change can be accepted by the development-side, etc.

390

C. Ting

•

•

Requirements must be logged into the document and take good care of them, it is very important. The final result of requirements analysis is the specific document prepared by both sides when developers and users reach a consensus on the products to be developed. With this document, even if the changes for the role of the developer will not affect the preparatory work of requirements analysis. Each requirement change can be identified with a new version [2]. The version control of requirements document is an essential aspect of requirements management. It is likely to result in a variety of waste without good requirements document management. The version control must do the following: it needs to be unified to determine each version of requirements document, ensure that each member can get the current version of the requirements; the changes are written the documents clearly and timely notify the staff involved in project development; it should only allow the specified people to update requirements document in order to reduce confusion, conflict and misunderstanding. Simply put, the version control of requirements document is to ensure the relevant personnel have the latest version of requirements document and record history version of requirements. In addition, throughout the development process, it must carry on the requirement track, the aim is to establish and maintain the consistency and integrity from the beginning of users’ requirements to test, and ensure that all implementation is based on users’ requirements, while ensuring that all of the output is compliance with users’ requirements [3]. According to the experience of project management, carrying on the requirements change assessment is not only necessary but also essential. Generally, the project manager carries on first trial in order to improve working efficiency. As the project manager is more familiar with the project, his first trial can filter out unreasonable requirements change and some requirements change that are micro and easy to implement. The former will not be considered, the latter can enter the implementation process of requirements change directly. After first trial is passed, the review should be organized. Large projects or important requirements change should establish change control board of the project or similar organizations with related functions to be responsible for determining which changes to accept. CCB is composed together by multi-staff the project involved. It should include decision-makers of user-side and development-side. It needs to combine a variety of assessment methods in the assessment stage, fully listen to the views of all sides, allow different people to verify the requirements from different perspectives. The contents to be verified include requirements feasibility, integrity, consistency and accuracy, etc. As the authors of the requirements, users are one of the most authoritative spokesmen. In fact, in the assessment process of requirements, users often can provide many valuable advices. At the same time, this is the final opportunity that users confirm the requirements. It can effectively reduce the occurrence of requirements change. Ultimately, reach agreement among users, requirements analysts and R & D staff and form the final treatment views. It should determine requirements baseline after formal assessment and confirmation. The further requirements change based on the baseline will be carried on according to

The Control and Measure of Requirements Stability in Software Project

•

391

change process of the project definition. Setting the requirements baseline can minimize trouble caused by requirements change. Most users do not like the control of requirements change. In fact, the standardized change control process is not a man-made obstacles, but a funnel and filter mechanism. It can ensure that the project includes the most appropriate requirements and reduces the number of random changes effectively, enables changes in a controlled implementation process, thus ensures requirements stability. The control process of requirements change must be drawn up before the first requirements change of the system occurs. The control process of requirements change, shown in Figure 1.

Fig. 1. The control process of requirements change

•

•

When the requirements change, in order to better adapt to requirements change, the requirements analysts can use technical countermeasures, such as rapid prototyping, agile software development and software reuse technology, etc. The requirements analysts can also use requirements management tool. The commonly used requirements management tool has CA Corporation's CA-Super Project & Project Software and Rational Corporation's Analyst Studio, etc [4]. From the perspective of analysis and design of software systems, through using rational analysis & design method, such as object-oriented technology, and good architecture can effectively reduce the risks and maintenance costs caused by requirements change [5].

392

C. Ting

•

•

After the reexamination of requirements change passes, the project manager should implement requirements change as soon as possible, make reasonable, complete and clear division of labor, determine implementers and testers of requirements change. It should generally be considered that the original requirements implementers make a realization of requirements change directly. After the implementation of requirements change, the project team should organize to test requirements change. Regarding the test of requirements change, it should make the complete testing for related functions in order to avoid other problems caused by requirements change.

The above-mentioned control method seems simple, but it is difficult to implement the method truly. It needs to coordinate with the actual work of the project team based on theoretical knowledge, make concrete analysis of concrete and constantly explore and summarize in practice. B. The Measurement According to the project characteristics and requirements of business management, the requirements change often needs to be controlled below a certain threshold. For example, a company has the following requirements in the project until the end of the project: The total number of aggregate requirements ≤ number of initial requirements × 130%, namely, number of appended requirements is not more than 30%; The total number of aggregate requirements changes ≤ number of initial requirements × 60%, namely, aggregate requirements changes are not more than 60%. To meet these requirements, first, we need to make an entry and centralized management for the requirements. This is also a prerequisite for the measurement of requirements stability. Therefore, in the analysis of project requirements, the developer statistic number of initial requirements, number of appended requirements, number of removed requirements and number of modified requirements at regular intervals, such as one month. Then requirements stability and rate of change in requirements are determined by calculation. Table 1 is requirements statistics data first six months in 2009 that the company implements a software project: Table 1. Requirements statistics data Month

Number of Number of Number of Number of Number of initial appended removed modified unchanged requirements requirements requirements requirements requirements

The total The total Rate of number of number of Requirements change in current requirements stability requirements requirements change

1

25

1

1

0

24

25

2

96.00%

8.00%

2

25

3

0

1

24

28

4

85.71%

16.00%

3

28

2

1

0

27

29

3

93.10%

10.71%

4

29

1

0

0

29

30

1

96.67%

3.45%

5

30

1

1

1

28

30

3

93.33%

10.00%

6

30

0

0

1

29

30

1

96.67%

3.33%

Of which: Number of unchanged requirements = number of initial requirements - number of removed requirements - number of modified requirements

The Control and Measure of Requirements Stability in Software Project

393

120. 00% 100. 00% 80. 00% changes

Requirements stability/Requirement rate of

The total number of current requirements = number of initial requirements + number of appended requirements - number of removed requirements The total number of requirements change = number of appended requirements + number of removed requirements + number of modified requirements Requirements stability + number of unchanged requirements / the total number of current requirements Rate of change in requirements = the total number of requirements change / number of initial requirements The total number of aggregate requirements = 30 ≤ number of initial requirements × 130% = 25 × 130% = 32.5 The total number of aggregate requirements change = 14 ≤ number of initial requirements × 60% = 25 × 60% = 15 Therefore, the requirement change met this project demands. Requirements stability & rate of change in requirements are shown in Figure 2.

Requirem en t s st abilit y

60. 00%

Requirem en t rat e o f ch an ges

40. 00% 20. 00% 0. 00% 1

2

3

4

5

6

Month

Fig. 2. Requirements stability & rate of change in requirements

Currently, there is no uniform standard about the calculation of requirements measure in the industry. For some special cases, the corresponding rules of data collection can be given combined with the specific characteristics of the project. For example: A requirement is broken down into two; two requirements gather are a requirement. It is not purpose to collect measurement data simply. It is the fundamental purpose to grasp the degree of requirements change, prevent and control requirements change, reduce the risks caused by requirements change through carrying on the qualification to the requirements stability and analyzing data.

4 Conclusions Currently, there are many problems to be studied about the control of requirements stability. It is impossible to stabilize requirements completely, only try to avoid and reduce the impact of requirements change, and actively respond from thinking, management and technology aspects. Thinking aspect refers to solve problems mainly

394

C. Ting

from the subjective understanding; Management aspect refers to specify the control process of requirements change, enhance the training and exchange, etc. Technology aspect refers to control requirements change through the introduction of advanced technology. The ways to improve the stability of the requirements is not fixed. Although the different project teams use the different methods, the ultimate goal is to improve the requirements stability. The practice proved that requirements stability control the better, the success rate of software projects is higher.

References 1. Wang, Q.: The Management of Requirement Changes in Software Project. Computer Knowledge and Technology(Academic Exchange) 6, 1342–1343 (2007) 2. Meng, y.: Elementary Explanation of Requirements Analysis in the Development Process of Software Project. Science &Technology Information 11, 43–44 (2009) 3. Jiang, x., Wang, c.: Research on Management of Software Project Requirement. Computer and Modernization 2, 19–21 (2006) 4. Jiang, h.: Requirements Analysis and Requirements Change of Software Development. Fujian Computer 8, 65–66 (2009) 5. Zhang, x.: Research on Requirements Change Management of Software Project. China Science and Technology Information 01A, 107–108 (2006)

A Novel Initial Radius Selection with Simplify Sphere Decoding Algorithm in MIMO System Song Yang, Li Jianping, and Cai Chaoshi School of Information Engineering Communication University of China Beijing, China [email protected]

Abstract. Sphere decoding (SD) is an efficient algorithm which has been proposed in Multiple-input Multiple-output(MIMO) digital communications. Sphere decoding has been shown to achieve near-ML performance with low complexity which can avoid searching for the element. However, SD also has high complexity in some situations. The complexity of the algorithm is controlled by radius .Thus, it is important to choose a fit initial radius for SD which trade-off the performance and complexity. Chen-Lee sphere decoding algorithm can increase the size of the search region. In this paper, we propose a novel scheme to reduce the initial radius in Alamouti code decoding though combined with Chen-Lee sphere decoding algorithm and the average energy of qQAM constellation. The simulation results show when BER is below 10-4, the proposed scheme can achieve about 0~1 coding gains over Rayleigh fading channels. Keywords: MIMO, SD, STBC, ML, Alamouti code, initial radius.

1 Introduction Multiple-input Multiple-output(MIMO) wireless transmission systems have been intensively studied during the last decade. With MIMO system[1-2], the original one is transmitted on individual antennas. Space-time block code(STBC), is one of the key encoding techniques for MIMO system. Alamouti code [3], which increases the capacity of wireless systems with a relatively simple receiver structure and achieves the full diversity promised by the transmitter and receiver antennas, is an important space-time block code(STBC) of the STC family. Alamouti code has two transmit antennas and one receiver antenna, which can provide temporal diversity. STBC based on the ML detection can achieve the best bit error rate performance among all kinds of detection methods in MIMO system. However, the ML detection is its huge computational complexity. Sphere decoding(SD)[4], was introduced to perform ML detection, which achieves reduced complexity by searching over the lattice points. Sphere decoder based on Viterbo-Boutros scheme [5-6], and other algorithms for closest point search [7-9].The choice of method for solving the closest point problem depends on the structure of the lattice. Therefore, the method requires estimation of an M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 395–402, 2011. © Springer-Verlag Berlin Heidelberg 2011

396

Y. Song, J. Li, and C. Cai

initial search radius. The radius is controlled by the complexity of the algorithm and plays a critical role in identifying the correct point in the lattice. However, the initial radius selection is still a problem in the decoding. If r too small, it leads to low probability of finding the ML solution and if too large, it results in a sphere containing more lattice point, named candidates . In[10-15] some of methods have been intruded to choose r and trade-off between the performance and complexity. The initial radius is mainly selected by the experience in this case, while any generally effective selection method for this spherical radius hasn’t been proposed yet. In this paper, a novel and effective method is proposed for initial radius selection with simple sphere decoding algorithm. As to qQAM, we propose a novel scheme to reduce the initial radius in Alamouti code decoding, though the average energy of qQAM constellation is combined with an improved algorithm based on Chan-Lee sphere decoder. This paper is organized as follows. In section 2 reviews multiple antenna system models with Alamouti code and Chen-Lee sphere decoder. Our proposed code scheme for choosing initial radius is presented in section 3. Simulation results are given in section 4, and finally conclusion is made in section 5.

2 System Model Consider a MIMO system with m transmit antennas and n receive antennas which can be modeled by the linear relationship: y=Hx+n

(1) T

Let H be the n×m channel gain matrix. n=[n0,n1,.....,nN-1] is the zero-mean additive white Gaussian noise(AWGN) complex vector which has i.i.d entries T ni~CN（ 0， N0/2） , x=[x1,x2,.....xN-1]T is the transmitted vector, y=[y0,y1,.....,yN-1] is the T received vector and (.) denotes transposition. The element hij of H is the complex path gain from transmit antenna j to receive antenna i. The receiver is assumed to have ideal channel estimates so it can separate and decode the symbols transmitted from each antenna. The ability to separate the symbols is due to the fact that in a scattering environment, the signals received at each receive antenna from each transmit antenna appear to be uncorrelated A. Alamouti Code The Alamouti Scheme[2], which includes two transmit antennas and one receive antenna, is one of the most elegant space-time codes for the transmit diversity system. And it can be extended to two receive antennas. The channel at time t can be modeled by a complex multiplicative distortion h0(t) for transmit antenna 0 and h1(t) for transmit antenna 1. Assuming that fading is constant across two consecutive symbols, these two complex multiplicative distortions can be written as follows:

h0 (t ) = h0 (t + T ) = h0 = α 0 e jθ0

(2)

h1 (t ) = h1 (t + T ) = h1 = α1e jθ1

(3)

A Novel Initial Radius Selection with Simplify Sphere Decoding Algorithm

397

where T is the symbol duration. The received signals can then be expressed as follows:

r0 = r (t ) = h0 c0 + h1c1 + n0

(4)

r1 = r (t + T ) = −h0c1∗ + h1c0* + n1

(5)

where r0 and r1 are the received signals at time t and t+T and n0 and n1 are complex random variables representing receiver noise and interference. The combiner shown in Fig. 4 builds the following two combined signals that are sent to the maximum likelihood detector:

c0 = h0*r0 + h1r1*

(6)

c1 = h1*r0 − h0 r1*

(7)

Substituting (2) ~ (5) into (6) and (7) we get:

c0 = (a02 + a12 )c0 + h0*n0 + h1n1*

(8)

c1 = (a02 + a12 )c1 − h0 n1* + h1*n0

(9)

After the signal combining, the combined signals are sent to the maximum likelihood detector which, for each of the signals c0 and c1, uses the decision rule expressed as follows: Choose ci if :

(a02 + a12 − 1) ci + d 2 (c0 , ci ) ≤ (a02 + a12 − 1) ck + d 2 (c0 , ck ), 2

2

∀i ≠ k

(10)

The Alamouti code with two transmit antennas and one receive antenna is used.

Fig. 1. The Alamouti coding system with 2 tx antennas and 1 rx antenna

398

Y. Song, J. Li, and C. Cai

B. Chan-Lee SD Our simplified algorithm can be summarized as follows: Step 1-Input r, C, H and S. Step 2-Compute Gram matrix G:=HTH, and find QR decomposition.{qij}:=QChol(G) Step 3-Compute ｐ :=H-1r Step 4-Initialize d2:=C, Tn=C, Sn=ｐ n ,i=n Step 5-Evaluate the followings: U

i

= Q − Up(

Ti

Li = Q − L o w (−

+ S i , S );

q ii Ti

q ii

+ S i , S );

N i := l e n ( L i , U i , S ) ; y i := f i n d ( L i , U i , S ) ; Z i := s o r t ( y i , U i , S ) Step 6-Output si=zi(1) Step 7-Next i

3 Proposed Scheme with Sd A. Initial Radius of Sphere Decoding The algorithm of Fincke and Pohst [4] does really address how to choose r and propose an efficient way to tell which lattice points are inside the sphere. When sphere radius is r, we have:

r 2 ≥ y −H x

2

(11)

In order to transform the problem into an easier form, it is useful to consider the Orthogonal-triangular(QR) factorization of the matrix H:

⎡R ⎤ H = Q⎢ ⎥ ⎣0 ( n − m )×m ⎦

(12)

Q=[Q1 Q2] is an n×n orthogonal matrix and R is an m×m upper triangular matrix. Now the (11) can be written as follows: ⎡R⎤ 2 r 2 ≥ y − [ Q1 Q 2 ] ⎢ ⎥ x ⎣0 ⎦

⎡Q T ⎤ ⎡R⎤ = ⎢ 1T ⎥ y − ⎢ ⎥ x ⎣0 ⎦ ⎣⎢ Q 2 ⎦⎥ = Q 1T y − R x

2

2

+ Q 2T y

2

(13)

A Novel Initial Radius Selection with Simplify Sphere Decoding Algorithm

Defining

2

rm2 = r 2 − y + H xˆ

2

so

rm2 ≥ rm2 , m ( xm − xˆ m ) 2 + rm2−1 , m−1 ×

（ xm−1 − xˆ m−1 +

399

rm −1,m rm −1,m −1

(14)

( xm − xˆ m )） 2 + ...,

And then:

⎢ ⎡ rm−1 ⎥ r m−1 ⎤ ⎥ ⎥ ≤ xm−1 ≤ ⎢xˆm−1 m + ⎢ xˆm−1 m − rm−1,m−1 ⎦⎥ rm−1,m−1 ⎥ ⎣⎢ ⎢

(15)

One can continue in a similar fashion for Sm-2 and so on, until all points inside the sphere are found. This essentially leads us to the sphere decoding algorithm. B. The Proposed Initial Radius Selection Method In this paper, we combine with Chan-Lee sphere decoding algorithm, and choose a fit initial radius to use the average energy of qQAM constellation. The conventional method chooses the initial radius r, that is: n

αn

∫

0

λ2

−1

⎛n⎞ Γ⎜ ⎟ ⎝2⎠

e − λ dλ = 1 − ξ

(16)

Where α is commonly based on experience. Γ ( ⋅ ) is he gamma function and the 1 − ξ is set as a value close to 1. Can we could increase the probability 1 − ξ by adjusting the radius r. We define average energy of qQAM constellation is E. and the Alamouti code transmit antenna m and definition coefficient ∂ , then we can get

E = ((q − 1)* 4 ) / 6

r = ∂*

1 m* E

(17) (18)

This new radius scheme defines the initial radius of SD to form average energy of qQAM which is combined with Chen-Lee sphere decoding algorithm.

4 Simulation Results In the improved scheme, we choose initial radius according to the average energy of QAM constellation in SD, combine with Chan-Lee sphere decode algorithm in Alamouti code with 2 transmit antennas and 2 receive antennas. Here we consider 16QAM and

400

Y. Song, J. Li, and C. Cai

Fig. 2. Chan-Lee sphere decoding algorithm, the reader is referred to [6]

Fig. 3. The performance comparison between the proposed and conventional SD with 16QAM

A Novel Initial Radius Selection with Simplify Sphere Decoding Algorithm

401

Fig. 4. The performance comparison between the proposed and conventional SD with 64QAM

4QAM modulation, Gary mapping .the proposed scheme r=1.6 and conventional r=3.2. We focus on the bit error rate(BER) performance over Rayleigh fading channels. Fig.3 shows the BER curves of the improved initial radius scheme and the conventional scheme of SD over fading channels. The improved scheme is kept about 1-2dB code gains when BER is below 10-3 with 16QAM modulation. The next shows that over Rayleigh fading channels when BER is below 10-5, it can achieve 0~1dB coding gains at the Fig.4. Simulation results show that our average energy of qQAM constellation to choose initial can get a better coding gain and ensures that at least one lattice point is inside a sphere.

5 Conclusion In this paper, a new initial radius selection scheme of the SD uses the average energy of qQAM constellation to combine with Chan-Lee sphere decoding algorithm which can get coding gains compared with the conventional one in Alamouti code. The proposed MIMO system defines the average energy of qQAM constellation algorithm formula with r. Simulation results demonstrate that when BER is below 10-4, it can get about 1~2 dB coding gains over Rayleigh fading channels with 16QAM. And with 64QAM can get about 0~1 dB coding gains. Acknowledgment. This paper is supported by the key project of Chinese Ministry of Education(No. 106042) and the project sponsored by the Scientific Research Foundation for the Returned Overeas Chinese Scholars, State Education Ministry(2007[24]).

402

Y. Song, J. Li, and C. Cai

References 1. Foschini, G.J., Golden, G.D., Valenzuela, R.A., Woiniansky, P.W.: Simplified processing for high data spectral efficiency wireless communication employing multi-element arrays. IEEE Journal on Selected Areas in Comm. 17(8), 1841–1852 (1999) 2. Golden, G.D., Foschini, G.J., Valenzuela, R.A., Woiniansky, P.W.: Detection algorithm and initial laboratory results using V-BLAST space-time communication architecture. Electron. Lett. 35, 14–16 (1999) 3. Alamouti, S.M.: A simple transmit diversity technique for wireless communications. IEEE J. Select. Areas Commun. 16(8), 1451–1458 (1998) 4. Fincke, U., Pohst, M.: Improved methods for calculating vectors of short length in a lattice, including a complexity analysis. Mathematics of Computation 44, 463–471 (1985) 5. Viterbo, E., Boutros, J.: A universal lattice code decoder for fadingchannel. IEEE Trans. on Inform. Theory 45(5), 1639–1642 (1999) 6. Chan, A.M., Lee, I.: A new reduced-complexity sphere decoder formultiple antenna system. In: IEEE Conference on Communications, ICC 2002, pp. 460–464 (2002) 7. Damen, M.O., Gamal, H.E., Caire, G.: On maximum-likelihood detection and the search for the closest lattice point. IEEE Trans. on Inform. Theory 49(10) (October 2003) 8. Damen, M.O., Gamal, H.E., Caire, G.: Low complexity ML Detection based on the search for the closest point. In: Damen, M.O., Gamal, H.E., Caire, G. (eds.) Intl Symp. on Inform. Theory, Japan, June 29-July 4, p. 135 (2003) 9. Agrell, E., Eriksson, T., Vardy, E., Zeger, K.: Closest point search in lattices. IEEE Trans. on Inform. Theory 48(8), 2201–2214 (2002) 10. Wang, Y., Roy, K.: Reduced-complexity sphere decoding via detection ordering for linear multi-input multi-output channels. In: SIPS IEEE 2004, pp. 30–35 (2004) 11. Liu, Q., Yang, L.: A novel method for initial radius selection of sphere decoding. In: IEEE VTC 2004-Fall, vol. 2, pp. 1280–1283. IEEE, Los Alamitos (2004) 12. Cheng, B., Liu, W., Yang, Z., Li, Y.: A new method for initial radius selection of sphere decoding. In: Proc. IEEE ISCC 2007, Aveiro, Portugal, pp. 19–24 (July 2007) 13. Shim, B., Kang, I.: On radius control of tree-pruned sphere decoding. In: Proc. IEEE ICASSP 2009, pp. 2469–2472 (2009) 14. Xia, X., Wang, H.: Reduced Initial Searching Radius for Sphere Decoder. IEEE Trans. Inform. Theory, PIMRC, 1–4 (2007) 15. Hosseini, F.E., Moghaddam, S.S.: Initial Radius Selection of Sphere Decoder for Practical Applications of MIMO Channels. IEEE Trans. Inform. Theory, COMPENG, 61–63 (2010)

The Research of Customer Relationship Management between China and Foreign Xinbao Guo Management school Henan University of Science and Technology Luoyang, P.R. China [email protected]

Abstract. The U.S. is the earliest initiator of Customer Relationship Management (CRM). In 1990s, it was introduced into China. The differences of economic background, technical resources, academic traditions, resources and methods result in different approaches to the CRM both at home and abroad. In this paper,a comprehensive discussion about the study on CRM background, theoretical foundation , the integration of CRM and the corporate culture in home and broard was conducted, and the research problem in our country was pointed out . At last, this study will provide some helps and suggestions to the research of CRM in CHINA. Keywords: Customer Relationship Management, Database Direct Marketing, Corporate Culture.

1 Introduction With the development of human society, the marketing concept had experienced the change from product-oriented to customer-oriented. Foreign research and application of customer relationship management (CRM) have got a great success. As the cultural background, economic background, technical resources and other factors, Chinese and foreign scholars studies have some differences in certain aspects of CRM. A small number of scholars compared theoretical study of Chinese and foreign CRM,such as Anshi reviewed and compared the domestic and foreign scholars study of the meaning of CRM; Liu Zhouping compared the research of Chinese and foreign scholars about customer satisfaction and customer loyalty; Yao Nanlin compared the study of consumer privacy of Chinese and foreign scholars. It is not difficult to see, these scholars are from a particular area to carry out comparison the CRM of Chinese and foreign. This paper attempts to compare the customer relationship management from following aspects such as background, theoretical basis, the integration of CRM and corporate culture, so that it will be useful to theoretical study of CRM in our country.

2 The Background of Customer Relationship Management In the west, it is the need of enterprise management and update core competitiveness of enterprises promote the generation of CRM, and it was drived by many aspects such as M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 403–408, 2011. © Springer-Verlag Berlin Heidelberg 2011

404

X. Guo

the updation of management concepts and the support of electronic information technology. In China, with the development of economic and as the increasingly fierce competition in the market, more and more companies is looking for business development strategy. And this need to enhance the value of customers to a new level. Various functional departments of enterprises such as sales, marketing, customer service, technical support for all areas need to be able to achieve automation solutions, so that it can create a customer-facing platform. A. Economic Background It is the competition between producers and consumers that lead to the the change of enterprise management philosophy and consumers value choice, and this is the economic background of CRM generated. In China, it was divided into three stages. The first stage, a seller stage: product demand. Enterprises in a absolutly dominance of the market, do not care about the feelings of consumers, business management at this stage is the production control; consumers value choice is the product's prices and availability, customer satisfaction out of the question. The second stage, one-sided pursuit profit maximization stage: with the tremendous growth of products, consumers pay more attention to product brand and appearance of the image; while increased inventories and precipitation of funds threatens the enterprises interests, businesses began to pursue the sales maximization, using a variety of marketing methods and sales channels. Customer satisfaction is difficult to get a real in aspects such as brand integrity, product quality and so on, especially in after-sales services aspect. The third stage, customer satisfaction has been given sufficient attention. At this point, the improvement of living standards, technological advances and product greatly enriched made consumer value orientation is more personalized, more diversified. The brand of product, the degree of personalization, as well as its price and quality will affect customer choice. Compared with the previous, customer satisfaction has really begun to decide the fate of a product and a company's destiny. Therefore, the company began targeting their core management on achieving maximum customer satisfaction, Since then the philosophy of customer-focused management was formally established. B. Management Ideas Update After 20 years , the concept of business marketing has gone through a major shifting from the production concept, product concepts, promotional concepts, marketing concepts and then to the concept of integrated marketing. The latest marketing attempt including relationship marketing, database direct marketing and so on. Marketing theory evolues from the 4P (Product, Price,Place, Promotion) to 4C (Consumer wants and needs, Cost, Convenience, Communication) and then to 4R (Relevancy, Response, Relation, Return), accurately reflects the customer-centric trends. A large number of empirical studies have shown that close to the customer and customer-focused is one of the main features of good corporate. C. Technical Background With the improvement of office automation and staff computer skills and the level of enterprise information, business management are conducive to realize customer relationship management. With the global launch e-commerce, it is changing the way business operate: Enterprise launch marketing and sell products to customers, provide

The Research of Customer Relationship Management between China and Foreign

405

after-sales service, collect customer information through the Internet. Customer information is the basis of customer relationship management. The development of data warehousing , business intelligence, knowledge discovery techniques make the quality of collection, collation, processing and the use of customer information significantly improved. This will drive the Internet, telephone development, and then promot the development of call center. The combination of Internet and telephone allows enterprises to face the customers in a unified platform. A complete sales process is as follows: customers get the name of that company from advertising, browse the company's home page, then check the local distributors, and discuss sales discounts, delivery and service details with staff, place an order, inspect and test the product in the determining receipt , the final is payment. In this sales process, customers and business place a direct or indirect contact .Channels are varied: the telephone, interviews, e-mail, fax or mass media, etc. In the past, when any department dealing with the customers, any negative impact can make orders turn to competitors. As the customers know the company is a whole, the treatment that customers received in any part of the contact represent the company's style. As company has many departments, each department has different goals. It is difficult for inter-departmental to transfer information, resulting communication barriers. The whole process may be very long, and this potential customer may give up the association with the business in any link, and then turn to competitors. For internal staff, these problems are difficult to found.

3 A Review of the Oretical Foundation of CRM First, customer relationship management is based on the development of relationship marketing, then combine database marketing technology and methods, ultimately form customer relationship management. Thus, the theory of relationship marketing is theoretical foundation of CRM and the technology of database marketing is technical basis. Domestic and foreign scholars have done a lot of research on the relationship marketing and database marketing. As the cultural is different, Chinese and foreign research is not exactly the same. In the below, this paper will elaboratly describe the similarities and differences between domestic and foreign research about relationship marketing. A. CRM Theoretical Foundation - Relationship Marketing Customer relationship management is based on the development of relationship marketing, then combine technology and methods of database marketing, ultimately form customer relationship management. Thus, the theory of relationship marketing is theoretical foundation of CRM. Since 1982Bailey propose relationship marketing to 90's, many researchers have studied about it. Bailey think that "relationship marketing emphasis on the contact between buyers and sellers, through the maintenance of relationship among marketing, quality and customer service to win and retain customers." MeKerma summed up "the purpose of relationship marketing is to develop the close interaction among suppliers, customers or other members of value chain". Czepiel think that "long-term customer relationship is developed through a series of contacts at different stages". These stages include: the accumulation of satisfaction contact, active participation based on mutual

406

X. Guo

understanding and trust, then produce dependence on partners and psychological integrity. For companies, the value that each customer can create is different, Thus, the company should adopt different strategies to treat different types of customers. The role of relationship marketing is to identify high value customers and develop longterm relationship with them, at the same time, give up the customers who is lack of loyalty and do not have the value of cultivating future. As cultural background is different, the study of relationship marketing focus has some differences between Chinese and Western scholars. Guo Zhiming has deeply studied the relationship marketing. He defines the characteristics of relationship marketing in China: In order to get the benefits of personal or business, close to the actual or potential interest groups. He also proposed the difference of relationship marketing between west and east: In the West, people pay more attention to the team participation, at the same time they try to limit the communication in the commercial level as much as possible; while in the background of eastern cultures, when people evaluate, measure, judge the strengths and the weaknesses of a business and products, they often make emotional exchanges and cultural integration of the two sides as the core. For example, in the east, business communication are often on the table, and it often involved some personal topics such as family, friends, experience and so on. These are avoided by the Western culture. He also stressed that "the performance is more important than the relationship for ever" and he developed relevant strategies for Chinese enterprises to conduct relationship marketing. Sun Qingyong, Zhang Yong and the other scholars propose the speciality of relationship content in Chinese culture --relationship privatization. they believe that because there are differences in culture between western and eastern, lead to understanding relationship and relationshiprelated behavior have differences. A high degree of customer relationship privatization is a sriking feature of the domestic CRM practice. It illustrates the relationship privatization has an impact on the CRM practice, and he also put forward some strategies to develop CRM in the case of relationship privatization. B. CRM Technical Foundation - Database Marketing Domestic and foreign scholars have the basically same definition of database marketing. Database marketing is based on accurate customer information, competitor information and internal information. This is an interactive marketing communication. Database Marketing mainly consists of three subsystems: the direct response marketing, computer-assisted sales and customer information services. 1) Direct response marketing -- Assisted with the database to communicate with existing customers or potential customers allow customers to respond quickly, such as direct mail, telemarketing and direct response advertising. 2) Computer- assisted sales -- Sales team direct access to the company's database through the computer, obtain information about customers or potential customers, competito's r information and company's information. 3) Customer Information Services -- To provide customers with information support as much as possible, such as billing inquiries, quality complaints, technical issues, products and services information, so that they can deep the understanding of this enterprise, better use of the company's products. From the above we can see that the study of relationship marketing focus has some differences between Chinese and Western scholars. Western scholars study focuses on

The Research of Customer Relationship Management between China and Foreign

407

how companies can maintain a close relationship with customers. Through constant contact with coustomer to win customer satisfaction and customer loyalty. However, our research is focused on the effective integration of Chinese-style "relationship" and marketing strategy. As the "relationship" have an important position in Chinese culture, Chinese scholars tend to study the relationship marketing under Chinese culture, they also stressed the relationship marketing through cultural integration and emotional exchange. On the contrary, because of cultural differences, " relationship " in Western culture is not at such an important position, therefore,there are very little relevant research.

4 Integration of CRM System and Corporate Culture The study of integration of CRM system and corporate culture is a key research area of CRM. CRM system will be integrated with the corporate culture is to ensure the CRM system successful implementation. Domestic and foreign scholars have done a lot of research about this area. Through the study, foreign scholars Delisi found the issues in the implementation process are all cultural problems. Only by building the "information culture", information System can play a role to solve these problems. Adler proposed the model of cultural influence. He thinks that people's behavior are influenced by culture and cultural through values influence their attitudes, and then indirectly affect human behaviors. Martinsons through the analysis of the characteristics of Western culture and information systems, found that Western culture is conducive to the use of information systems, while characteristics of Chinese cultural have a restricted impac on the implementation of enterprises information systems. He also suggested that to create a "customer-centric culture” is a prerequisite for the successful implementation of CRM in Western companies. In addition, in the study, scholars also found that information technology itself has culture. Some scholars have seen culture as one of important factors in technical implementation. Bowers think that information technology is not neutral in the culture. In fact the promotion of computer is to impose Western culture to other social cultural. In different cultural environment appliy the same technology will produce different results. From the above foreign scholars study, we can found that there have much more studies about relationship between information systems and corporate culture and integration of them. But in CRM systems, especially in the integration of CRM concept and corporate cultur,e there exists a great void. Here are the research results some Chinese scholars obtained in this area. Xie Lianan think that the building of enterprise culture is a key strategy to successfully implement CRM. He believes that in the initial stage of the implementation of CRM, change the traditional management philosophy and practice is the key link to the implementation of CRM. At the same time, we must do the training, make the customers at the center of business organizations, take steps to implement CRM etc. Weng Liang proposed one of the basic strategy for implementing CRM is training for CRM concepts of all employees,at the same time training for their values. Zhang Qinmin believes that when enterprises implement CRM, they must rebuild their corporate culture and implement the concept that customer is the

408

X. Guo

enterprise strategic asset. Zhu Cuiping and the other scholars believe that the excellent corporate culture is the guarantee for successful implementation of CRM:(1) "Customer centric" is the concentrated expression of core corporate culture;(2) Established culture system to meet customers demand for personalized;(3) Create a corporate culture focus on the customer benefits and customer satisfaction. Zhong Qiuyan proposed corporate culture characteristics are those support the CRM and real play a role:(1) Customer-centric, focusing on maintaining existing customers; (2) Recognizing that customer is the permanent assets; (3) Management's primary objective is customer satisfaction; (4) Focus on the ability to use customers resources; (5) Recognizing customer's consumer demand for personalized. Throughout the scholars's Research in this field, we can draw up that: First, the foreign research has its cultural limitations. Foreign scholars research in information systems and corporate culture is rich, but the research about integration of CRM system and the corporate culture is lack, and studies abroad mostly are around the western companies. Therefore, the study does not fully applicable to our businesses. In contrast, domestic scholars have done a thorough study in the integration of CRM system and the corporate culture, thy have made great achievements, and the research also fully applicable to our businesses. However, many scholars of China are only brief summary, this can not establish some more convincing technology model to analyze and evaluate the relationship and performance between CRM system and corporate culture.Therefore, this aspect still needs further study.

5 Conclusion In the CRM area, the foreign has been nearly twenty years history, during this twemty years foreign scholars have done a lot of studies about CRM and achieved many results. Compared with foreign studies, our studies both have a lot of advantage and many shortcomings. Overall, our CRM research can against the situation in China and the status of Chinese enterprises to carry out, it also can make many valuable suggestions to successfully implementing CRM for our companies, which are foreign studies can not.

References 1. Churchill, G.A.J., Surprenant, G.: An investigation into the determ inant of customer satisfaction. Keting Research 11(9) (2007) 2. Wikstrom, S.: Value Creation by Company Consumer Interaction Journal Management. Journal Management 12, 359–374 (1996) 3. Stephanie, C.: An Extension on the Traditional Theory of Customer Discrimination. Customer Versus Customers 62(2), 319–343 (2003) 4. Gremler, D.D., Brown, S.W.: Service loyalty: its nature, inportance, and omp; implications. In: Edvardsson, B., et al. (eds.) Advancing Service Quality: A Global Perspective, International Service Quality Association, pp. 171–180 (2006) 5. Chiou, J.-S.: The antecedents of consumers loyalty toward Internet Service Providers. Information &Management 41, 685–695 (2004) 6. Bhatnagar, A., Ghose, S.: Segmenting. Consumers based on the benefits and risks of Internetshopping. Journal of Business Research 57, 1352–1360 (2004)

The Process Reengineering of Accounting Information System Xinbao Guo Management school Henan University of Science and Technology Luoyang, P.R. China [email protected]

Abstract. The needs of accounting information in different units will be different, the same will be the accounting procedure and interior data processing. Through the comparision between the traditional data processing and information-based process, this paper designs accounting treatment process based on information technology, which includes the flow of data transfer between sub-systems, the input data test, the output data sharing, and so on. Keywords: Accounting, Accounting system, Reengineering.

1 Introduction The independence of the accounting subsystem is characterized by the accounting functions of process control and reflection of results. Accounting is a process of recording, clarifying,summarizing and interpreting of those business activities that can be expresed in monetary terms. In the process, it produces large amounts of information flow. Due to the differences among various units in the size, production process, level of business complexity, and the requirement for accounting information, the function of accounting information system will be different,and the same is the accounting treatment process. I will do some research on these issues.

2 The Traditional Data Processing and Its Drawbacks In a traditional accounting system, the basic process should follow: source voucher→voucher records→bookkeeping→statement though there are different accounting processing procedures. That is because that compilation of statements should rely on sequential classification of bookkeeping instead of random businesses. Taking accounting process of voucher records as an example as follows.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 409–412, 2011. © Springer-Verlag Berlin Heidelberg 2011

410

X. Guo

Fig. 1. Accounting process of voucher records

The above process has the following shortcomings: First,the process is extraordinary complex. Under manual system, although there are different accounting processing, the basic process is still in accordance with the process :original documents→posting documents →book →report. That is to say, the preparation of the report must rely on the general chronological books instead of the scattered businesses that happens because of the heavy workload . In the information technology environment, all these restrictions are swept aside ,so the report can be prepared by aggregating the amount of the documents directly no longer the general chronological books, and the accounting procedue accordingly changes into evidences → statements. Second, over-duplicated checking. Reconciliation is the core of manual accounting system. Under manual system, the different accounting books are recorded and taken in charge by different persons, with the view of verifying the correctness of accounting easily. When there is no data dislocation, omission, registering Into the wrong accounts, and duplicate registration account, the results should be correct. When the general ledger is not consistent with its subsidiary ledger ,there must be billing error occurs in one or both parties. So, regularly reconcile between different accounts is necessary and an effective way in detecting errors under the manual accounting system. Under the information technology environment, reconciliation between the accounts is no longer needed due to the same data source. Third, the massive data redundancy. Accounting documents are the data source of accounting processing subsystem, so, in a sense, the information that the documents contain nearly covers all kinds information contained in all kinds of subsidiary ledger,general ledger and statements.That is, from the information content point, what the latter can not provide more information than the forme. Under manual system, the account date on the certificates is copied repeatedly. This massive data duplication on the same date not only causes a waste of storage, but also easily leads to data inconsistencies between ducument and different books. Finally, lagging behind the information requirments. Accounting statements are the “end products” of accounting processing subsystem, which provide the impotant information for users,such as investors, creditors, managers, government agencies, workers ,trade unions ,and customers, to inquire the financial situations of an enterprise’,including its operating conditions at a certain day and operating results during a certain period. These information is necessary for the information users to

The Process Reengineering of Accounting Information System

411

make all kinds economic disicions. However, due to the massive wokeload and the slow pace of manual handling which combined with many reconciliation and account adustment events, manual accounting system has to take a long time to compile all financial statements, which inevitably leads to lag behind the information requirments .It will severely impaire the usefulness of accounting information.

3 Accounting Information Process Reengineering According to business process after business reengineering, information process of accounting information system can be obtained as fig.2. The system is consisting of five parts. The first part is various independent accounting subsystems, including human resource system marketing information system fixed assets, production information system accounting treatment, initialization; the second part is accounting process part, the main part is finishing initialization、 voucher inputting, checking, accounting, closing accounts, bank’s checking account, cross-year accounting and account current bookkeeping management, project management, department accounting, leader query etc.; the third part is automatic transfer accounting which solving control and data transfer between subsystems and accounting system; the fourth part is internal evaluation and monitoring, through value accounting to realize “control of process and conclusion of concept” and use value indexes to process data, predict future, assist Decision-making, it mainly include purchasing-sales-transporting and inventory management, contract management, labor statistics management etc.; the fifth part is financial report which provides financial report for stakeholders, including balance sheet, income statement, cash flow statement and receipt and payment statement of primary business、 statement of profit distribution, payable value added tax statement and financial analysis report etc. All the above parts are closely related, and the relationships between theme are not only data transfer, but control between systems, including calling control, sequential control etc. Above processes, (1)Deleting repeated data of bookkeeping in source system, mainly including subsidiary accounts, general account, journal, and various statements are directly made by balance sheet, voucher sheet； (2)Realizing automation of accounting data collection, mainly including various data collection from internal enterprise, automation transfer and producing mechanism vouchers and transferring into accounting process to process, certainly, including data transfer among internal subsystems, such as material, fixed assets etc. transferring data to cost subsystem, (3)self-making transfer voucher to record directly without checking by following design principle of “upstream checking data is unnecessary to be rechecked in downstream”. Therefore, the direction of data is not temporary voucher but voucher; (4)Increasing predicting future, assisting decision, and realizing sharing data resources, mainly including internal management, contract management, statistics management, break-even and target profit analysis, purchase-sale-transport-inventory management etc.; (5)Data transfer, and adjustment between subsystems should be realized by automatic control instead of manual control. For instance, accounting process of employees on salary in each period should be processed once only, and must be processed before settling accounts; therefore there will be a cycling control between “data transfer” and “closing accounts” so as to realize automatic control.

412

X. Guo

Fig. 2. Computer information Process of accounting

References 1. Shiju, z., et al.: Computer Accounting. Petroleum Industry Press, Beijing (2001) 2. Wang, J.: On the Accounting Data-interface Methods of the Multi-function Card System. In: Chinese Control and Decision Conference, pp. 4009–4012 (2008) 3. Zhang, S.: Accounting information process reengineering based on ERP. In: Control and Decision Conference (CCDC), pp. 3818–3821 (2010)

The Model of Optimal Price and Leadtime in the Decentralized Setting Quan Jie School of Mathematics & Computer Science Jianghan University Wuhan, Hubei, China, 430056 [email protected]

Abstract. This paper investigates a firm with two independent functions, marketing and production, which serves customer demand that is sensitive to both price and leadtime. Price and leadtime decisions are made by marketing and production, respectively. We develop a new model that integrates pricing and delivery leadtime decisions constrained by capacity expansion cost, where substitution effect on competition is considered. In our model, we capture the optimal price and leadtime decisions in the decentralized setting. A numerical example is given to illustrate some helpful results. Keywords: price, leadtime, decentralized setting, capacity expansion cost, Substitution.

1 Introduction Price and leadtime are considered as two of the most important competitive priorities for success in today’s environment. So and Song (1998) study the impact of using delivery time guarantees as a competitive strategy in service industries where demands are sensitive to both price and delivery time. A mathematical framework is proposed to understand the interrelations among pricing, leadtime guarantee and capacity expansion decision [1]. So (2000) further illustrate how the different firm and market characteristics would affect the price and delivery time competition in the market [2]. However, they do not consider the effect of substitutability on the firm’s optimal decisions, where the products are differentiated in terms of prices and leadtimes in a competitive environment. Tsay and Agrawal (2000) study a distribution system in which a manufacturer supplies a common product to two independent retailers; they propose a demand model that reflects the substitutability of the products [3]. Draw inspiration from the demand model, Boyaci and Ray (2003) research a profitmaximizing firm selling two substitutable products in a price and leadtime sensitive market, but, they do not explicitly model competition in their study[4]. Pekgün et al. (2008) study a firm which serves customers that are sensitive to quoted price and leadtime, with pricing and leadtime decisions being made by the marketing and production departments, respectively [5]. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 413–420, 2011. © Springer-Verlag Berlin Heidelberg 2011

414

Q. Jie

Our purpose of this paper is to develop a new model that integrates pricing and delivery leadtime decisions constrained by capacity expansion cost, where substitution effect on competition is considered. Our analysis highlights the optimal price and leadtime in the decentralized setting. Through a numerical study, we illustrate how firms would choose their pricing and leadtime strategy to compete in a market.

2 Modol Formulation A. Description and Assumptions This paper investigates a firm whose product demand is sensitive to time and price and whose product competes with the alternative products in the market. The product is different from the regular one in that price is high and delivery leadtime is short. Subscript P and M denote the decentralized setting with production as the leader and marketing as the leader, respectively. Through the analysis of existence of the optimal solutions under model P and M, this paper studies the pricing and delivery time setting strategies for the firm under different competition market. For our analysis, we make some specific modeling assumption. We assume that the production facility forms an M/M/1 queueing system. The customers arrive to take delivery of the product according to a Poisson process. The mean rate for the product depends on the price and guaranteed leadtime of the product. The service time for the product is exponentially distributed and the customers are served on a first-come firstserved basis. The firm has a predetermined internal leadtime reliability target, which is the probability between zero and one and close to one. Similar to literature [1] and [4], we assume that capacity expansion cost is increasing and linear. Parameters

a = maximum attainable demand (market potential) corresponding to zero price and zero leadtime;

p = the firm’s product price; l = the firm’s guaranteed leadtime;

p0 = the regular product price in the market; l0 = the regular product leadtime in the market; bp = price sensitivity of demand;

bl = leadtime sensitivity of demand;

θp

= sensitivity of switchovers toward price difference;

θl

= sensitivity of switchovers toward leadtime difference;

The Model of Optimal Price and Leadtime in the Decentralized Setting

415

λ = mean demand for the product (units/time); μ = capacity for product facility (per time); m =unit operating cost (excluding capacity expansion cost); A = capacity expansion cost per unit time;

π

= profit per unit time for the firm;

s = internal leadtime reliability target, close to one B. The General Model Based on the above notation, the mean demand for the product is given by:

λ = a − bp ⋅ p − bl ⋅ l − θ p ⋅ ( p − p0 ) − θl ⋅ (l − l0 )

(1)

λ = a − (bp + θ p ) ⋅ p − (bl + θl ) ⋅ l + θ p ⋅ p0 + θl ⋅ l0

(2)

When decreased in price or leadtime per unit, the mean demand will increase bp + θ p or bl + θl units. The switching of the customers is governed by the difference between the prices and leadtimes (at a rate

θ p or θl

, respectively).

Our objective is to maximize the expected profit per unit time subject to the reliability requirement that the probability of meeting the delivery leadtime guarantee must be at least s . Then, the firm’s problem in its general form can be formulated as:

max π ( p, l ) = ( p − m) ⋅ λ − A ⋅ μ st

1 − e − ( μ − λ )⋅l ≥ s

(3) (4)

p ≥ m+ A≥0

(5)

μ ≥λ ≥0

(6)

l≥0

(7)

It is well known (see literature [1] and [4]) that at optimality, delivery leadtime reliability constraints must be binding, which implies that the capacity requirements of the product will be:

μ ( p, l ) = −

ln(1 − s ) + λ ( p, l ) l

(8)

416

Q. Jie

As a result, the firm’s problem reduces to maximizing Equation (3) with μ ‘s given as above. Note that Equation (8) enables us to explicitly model the impact of prices and leadtime (i.e., demand) on capacity requirements and costs.

3 Optimal Decisions Analysis In the decentralized setting, the pricing decision is made by the marketing department, while the leadtime decision is made by the production department. When production department as the leader, first the leadtime is determined by the production. Then, the marketing choose a price accordingly. We call such a model for P model. Correspondingly, when marketing as the leader, the price is determined. Then, the production chooses a leadtime accordingly. We call such a model for M model. A. Optimal P Model Under P model, leadtime is given, while price is decision variable. Replacing Equation (1) in Equation (3) and differentiating have:

π

twice wrt p , we

∂π = [a − bp ⋅ p − bl ⋅ l − θ p ( p − p0 ) − θl (l − l0 )] − ( p − m − A) ⋅ (b p + θ p ) ∂p

(9)

∂ 2π = −2(bp + θ p ) < 0 ∂2 p So, π is concave in p . Hence, we can determine the optimal price Equation (9) =0:

p* = −

a + θ p ⋅ p0 + θ l ⋅ l0 m + A bl + θ l ⋅l + + 2(b p + θ p ) 2(b p + θ p ) 2

by solving

(10)

Replacing Equation (10) in Equation (1), we have:

λ* = −

a + θ p ⋅ p0 + θl ⋅ l0 m + A bl + θl ⋅l + − ⋅ (bp + θ p ) 2 2 2

(11)

Replacing Equation (11) in Equation (8), then, Replacing Equation (8) and (10) in Equation (3), we obtain the optimal profit while production as the leader: π* =

a + θ p ⋅ p0 + θl ⋅ l0 m + A b +θ 1 ln(1 − s) ⋅[− l l ⋅ l + − ⋅ (bp + θ p )]2 + A bp + θ p l 2 2 2

(12)

The Model of Optimal Price and Leadtime in the Decentralized Setting

417

B. Optimal M Model Under M model, price is given, while leadtime is decision variable. Replacing Equation (1) in Equation (3) and differentiating π twice wrt l , we have:

∂π = −( p − m − A) ⋅ (bl + θ l ) − A ln(1 − s )l −2 ∂l

(13)

∂ 2π = 2 A ln(1 − s )l −3 < 0 2 ∂l So, π is concave in l . Hence, we can determine the optimal leadtime Equation (13) =0:

l* = −

A ln(1 − s ) ( p − m − A)(bl + θl )

by solving

(14)

Replacing Equation (14) in Equation (1), we have: λ * = −(bp + θ p ) ⋅ p − (bl + θl ) −

A ln(1 − s) + a + θ p ⋅ p0 + θl ⋅ l0 ( p − m − A)(bl + θl )

(15)

Replacing Equation (15) in Equation (8), then, Replacing Equation (8) and (14) in Equation (3), we obtain the optimal profit while marketing as the leader:

π * = ( p − m − A) ⋅[a +θ p ⋅ p0 +θl ⋅ l0 − (bp +θ p ) ⋅ p]

(16)

C. Numerical Example We present a numerical example to illustrate the behaviors of the optimal price and leadtime decisions, as predict by our model, when the firm compete in the different setting. We consider such example:

a = 400, m = 50, bp = 1, bl = 10, θ p = 2,

θl = 20, l0 = 3,

p0 = 250, s = 99% , A = 60 . We first studied how the leadtime would affect the price, mean demand and profit. The results are given in Figure 1. Figures 1 (a) and (b) show that the leadtime is inversely proportional to the price and to the mean demand. In Figure 1 (c), when the leadtime increases, the benefits first increased and then decreased. When the deviation of optimal leadtime, profits will reduce, but in the early period of the optimal leadtime profits drop more serious than in the late period.

418

Q. Jie

216 214

Price

212 210 208 206 204 202 200 198 0

0.5

1

1.5

2

2.5

3

2.5

3

3.5

Leadtime

Mean demand

(a) 320 315 310 305 300 295 290 285 280 275 270 265

0

0.5

1

1.5

2

3.5

Leadtime

(b) 35000 30000

Profit

25000 20000 15000 10000 5000 0 0

0.5

1

1.5

2

2.5

3

3.5

Leadtime

(c) Fig. 1. Optimal decisions under P model

Observation 1. Under P model, there is an optimal leadtime. To guarantee a too short leadtime will cause serious damage to the firm. We next studied how the leadtime would affect the price, mean demand and net profit. The results are given in Figure 2.

The Model of Optimal Price and Leadtime in the Decentralized Setting

419

1.2

Leadtime

1 0.8 0.6 0.4 0.2 0 100

150

200

250

300

350

250

300

350

250

300

350

Price

(a) 600

Mean demand

500 400 300 200 100 0 100

150

200

Price

(b) 35000 30000

Profit

25000 20000 15000 10000 5000 0 100

150

200

Price

(c) Fig. 2. Optimal decisions under M model

Figure 2 (a) shows that the price is inversely proportional to the mean demand. In Figure 2 (c), when the price increases, the benefits first increased and then decreased. While the deviation of optimal price, profits will reduce at similar rate. Observation 2. Under M model, there is an optimal price. When price is much higher than the optimal price, the mean demand is very small. So, if the firm wants to keep market share, marketing department should avoid a too high price.

420

Q. Jie

4 Conclusions and Future Work Price and leadtime are two important factors for success for firms in today’s competitive markets. Using a new model, we studied a firm with two independent functions, marketing and production, which serves customer demand that is sensitive to both price and leadtime. Price and leadtime decisions are made by marketing and production, respectively. This paper developed a new model that integrates pricing and delivery time decisions constrained by capacity expansion cost, where substitution effect on competition is considered. In our model, we capture the optimal price and leadtime decisions in the decentralized setting. Through a numerical study, we illustrate how firms would choose their pricing and leadtime strategy to compete in a market. Our results help to identify the key market factors and have important implications on how firms should choose to compete under different market environments. Our model and results are based on linear cost structure. So, it would be interesting to see whether the results can be extended to more general cost structure. This question should be answered in future study.

References 1. So, K.C., Song, J.S.: Price, delivery time guarantees and capacity selection. European Journal of Operational Research 111, 28–49 (1998) 2. So, K.C.: Price and time competition for service delivery. Manufacturing and Service Operations Management 2(4), 392–409 (2000) 3. Tsay, A.A., Agrawal, N.: Channel dynamics under price and service competition. Manufacturing and Service Operations Management 2(4), 372–391 (2000) 4. Boyaci, T., Ray, S.: Product differentiation and capacity cost interaction in time and price sensitive markets. Manufacturing & Service Operations Management 5(1), 18–36 (2003) 5. Pekgün, P., Griffin, P.M., Keskinocak, P.: Coordination of marketing and production for price and leadtime decisions. IIE Transactions 40, 12–30 (2008)

Urban Residential Land Automatic Recognition from Remote Sensing Image Based on Combined Features Yunjun Zhan Department of Resources and Environment Engineering, Wuhan University of Technology, Wuhan 430070, P.R. China [email protected]

Abstract. Residential land is the main factors in the process of urbanization and for urban expansion, it is important for study the spatial structure of city, urban planning management and the development and monitoring of land use estate to auto-recognize residential land from remote sensing image. In This article, we regarded residential district as target object, analyzed spectral features, shape features and texture features. Then, we described these features by mathematics, and construct fuzzy discrimination rule. At last we integrated fuzzy rules base by combination of multiple features. As experiment the Wuchang local areas are recognized using QuickBird data. Keywords: Urban Remote Sensing, Residential Land, Feature Extraction, Automatic Recognition.

1 Introduction Urban residential land is the basic space for urban resident’s life, and is the main part of urban land use. With the rapid development of urbanization, particularly in recent years, the boom in real estate development, there is a serious contradiction in urban land use structure. Quickly mastering temporal and spatial distribution of residential land, especially commercial housing land has important significance for urban planning and urban management decision. Remote sensing has strong timeliness for getting urban spatial information. Currently, study on automatic acquisition of urban remote sensing object information is mainly habitation remote sensing and urban architecture remote sensing. Jianqing Zhang[1], Lorette[2], Jieli Chen[3], Wei Hou[4], Pan Li[5], Zhang He[6] extract residential information and dynamic monitoring of residential areas using remote sensing technology respectively. Residential land includes housing land, public service facilities land, road land and green space, in which public service facilities land includes primary school, middle school, kindergarten and others that postal station, savings office, police station in residential area. For studying housing land condition, semantic granularity that is too high is unable to investigate quantity and spatial structure of urban housing land, especially commercial housing. Haiyue Li [7], HouLei[8] have studied automatic recognition of building and recognition of main M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 421–427, 2011. © Springer-Verlag Berlin Heidelberg 2011

422

Y. Zhan

contour of building from remote sensing image respectively and proposed concrete methods and algorithm .The results has referential significance for residential district as integral object, but the single building as object, the identification result can not meet the monitoring objective of housing land. This article , using the high resolution remote sensing image, analyzes image features of modern residential district, extracts the spectral features, shape feature and texture feature, which are combined into fuzzy discriminate rules of residential district and then the information of residential district can be automatically extracted.

2 Study on Automatic Extraction Model of Remote Sensing Information Based on Combination of Multiple Features A. Remote Sensing Image Features of Ground Objects Remote sensing process is an information transfer process. Ground information is multidimensional and infinite and it is simplified as two-Infinite and limited information throng remote sensing imaging. Consequently, the information included by remote sensing image space is comprehensive, time phase and mapping with geographical combination of multiple features. The information that provided by remote sensing image is mainly throng gray scale and color step scale spectral information, spatial information, temporal information ,comprehensive information and so on. Consequently, it is core and base of remote sensing application analysis to understand the characterization and rules of the object feature from remote sensing. Remote sensing image features of ground object mainly include spectral features, morphological features, spatial structure features, shadow characters, texture feature and activity features. Different objects have different identification features on image. Throng observing ground object and analyzing remote sensing image features， combination many characteristic can build semantic features and discriminatory features that indentify earth object . B. Image Features of Residential District Land Use Residential land is the main portion in the urban land, including residential building, public service facilities of district, road land and green space. Housing include pitched roof style apartment, pitched roof small house, flat roof style apartment and so on. Area of modern residential district relatively large, and its building has regular arrangement and good greening, some of them install open pit court. Because of different slope directions of roof, pitched roof style apartment have different hue on image, and there is certain spacing among buildings and it has regular arrangement. Pitched roof small house mainly lie in old city of urban, besides having different hue, the distance of building is density and has irregular arrangement and channel is narrow. Roof of flat roof style apartment has uniform hue on image. Generally, housing characteristic such as water tank and unit balcony can be seen. Because the age of flat roof style apartment is ….it is multi-layer or high rise and has regular arrangement and road around is regular and wide generally.

Urban Residential Land Automatic Recognition from Remote Sensing Image

423

C. Mathematical Expression of Combined Mult- features (1) Description of Spectral Features Spectral Features are the set of all the image object descried and related features of pixel gray value, which reflect spectral information of object. It mainly includes mean value, brightness and standard deviation of image objects. Formula of mean value is as follows:

μL =

1 n ⋅ ∑ v1 n i =1

(1)

μL mean value of single object Ui is pixel gray value n is total number of pixel in the object. Formula of standard deviation is as follows: nL 1 δ L= ⋅ ∑ (u i − μ L ) 2 n − 1 i =1

(2)

(2) Description of shape feature Shape feature are the set of all the shape feature of image object descried themselves, which reflect the shape information of object. It mainly includes area, length to width ratio and shape index of image object. Formula of area is as follows: n

A = ∑ ai i =1

(3)

A mean area of image object， ai mean true area of each pixel， n mean the number of pixel. The calculation of length to width ratio is according to rectangular of outsourcing. Formula is as follows:

γ=

l w

(4)

L mean the length of rectangular of outsourcing， w mean the width of rectangular of outsourcing. Shape index The shape are more smooth, the value are smaller. Formula is as follows:

si = Bl mean Boundary Length of object.

bl 4× A

(5)

424

Y. Zhan

(3) Description of texture feature Description of texture feature based on grey level co-occurrence matrix. Grey level co-occurrence matrix method is a method that statistic all the pixel in the region of image object and describes the Spatial Distribution of gray. Characteristic Parameters that is common and formula is as follows: Homogeneity n −1

pi , j

∑ 1 + (i − j )

H=

i, j = 0

2

(6)

Probability after normalizing: It describes the uniformity of image, which is also the degree that concentrated on diagonal line of maximum element in grey level co-occurrence matrix. The more central, the homogeneity is larger, which suggests uniformity of image is higher. Dissimilarity:

D=

n −1

∑p

i, j =0

i, j

i− j

(7)

It is similar to contrast ratio, but it increases linearly. If local contrast ratio is higher, the similarity degree is higher too. Mean:

μi , j =

1 n −1 ∑ pi, j n 2 i, j =0

(8)

The mean which is described by the grey level co-occurrence matrix, is the probability that pixel combined with certain pixel that adjacent. Standard deviation

S=

n −1

∑( p

i, j =0

i, j

− μi , j )

(9)

The standard deviation The standard deviation that is described by grey level co-occurrence matrix is measurement of pixel and mean bias. It is similar to contrast ratio and non-similarity. Entropy

E=

n −1

∑p

i, j

(− ln pi , j )

(10)

i, j =0

It is an index that measure whether the texture feature is order. When the texture is inconsistent on image, element value of gray difference vector is small and the entropy is high. Entropy is uncorrelated to angular second moment height.

Urban Residential Land Automatic Recognition from Remote Sensing Image

425

Angular second moment

ASM =

n −1

∑p

i, j =0

2

i, j

(11)

It describes the uniformity and consistency of gray distribution, which is also called energy. When the image is uniform area or it has consistent texture, angular second moment is high.

3 The Example of Automatic Extraction of Residential Land Information Based on Combination of Multiple Features A. General Situation of Study Area and Interpretation of Data The study area that this article chooses lies in south lake of Hongshan area in Wuhan city Hubei province. It is in the south suburb of Wuhan. There is much commercial housing land and the residential land there has certain of typicality and universality. The data used includes QuickBird satellite-remote-sensing image data in 22nd. January. 2009. Spatial resolution is 0.6m. B. The Building of Recognition Fuzzy Rules Recognition rules of object are that build fuzzy rules using the method of application fuzzy discriminate, and then several fuzzy rules combine, forming a fuzzy rule base. Fuzzy rule use the form of “if-then”. If meeting the terms, it will perform an operation. In order to create an advanced fuzzy rule, fuzzy set can be combined. A logical operation can return to fuzzy value combined by fuzzy set, which depends on the operator of logical operation. The basic logical operation includes “logic and”, “logic or”, “logic not”. There are several methods to realize this operation. In the most case, the most simple practice is to realize fuzzy “logic and” through calculating minimum to fuzzy set, realize fuzzy “logic or” through calculating maximum to fuzzy set, realize fuzzy “logic not” through calculating negative number to fuzzy set. The expression formula and logic operation can be combined arbitrarily, which the description to categories is flexible and clear. An operation can combine expression formula and it also can combine the operation including expression formula. The result of logical combination of fuzzy set is independent of its order, A and B=B and A. In addition, the creating of priority structure is easy to the creating of general logic, A or ( B and C ) = ( A or B and A or C). For example, A, B, C represent one of or a few of spectral features, shape feature and texture feature respectively, and the combination form can be (A and B ) or ( A and C ) and A and ( B or C ). The discriminate eigenvalue can be obtained through statistical calculation to samples of designated object. C. Analysis of Extraction Result Input the remote sensing image data of experimental area and extract the information of residential district using the discrimination rule that have been built. Figs 4 is the

426

Y. Zhan

identification result according to certain a residential district of combination of multiple features rules recognition. The experiment show that residential district, as a whole object, can be recognized easily using the recognition method of combination of multiple features, but the deficiency of the result is obvious too. Just as figs 1, it regards the road connected the district as the district, while it does not regard the central garden in the district as the district.

Fig. 1. One of the recognition results

4 Conclusion In this study, it is the beneficial and feasible exploration to recognize the residential district using the method of combination of multiple features such as spectral features, shape feature and texture feature, and it is the trend in the study of the intelligentized remote sensing image. The result also shows that, in order to improve recognition precision, it is necessary to improve the shortcomings of mathematical description. In addition, other mathematical methods, such as region-growing method, expansion operation method, should be used to improve the recognition results and eliminate the edge serrated of recognition result, which is the next research task. Acknowledgment. The work was supported by the Fundamental Research Funds for the Central Universities (No.2010-Ia-057), the Wihan University of Technology Scientific Research Found for Doctor (471-38650564), the Youth Chenguang Project of Science and Technology of Wuhan City of China (No.200950431203), the Natural Science Found of Hubei Province (No.2009CDA015), the National High Technology Research and Development Program of China (863 program, No.2009AA12Z201).

Urban Residential Land Automatic Recognition from Remote Sensing Image

427

References 1. Jianqing, Z., Qiong, S., Change, P.L.: Detection of Residential Area by Remote Sensing Image Based on LBP /C Texture. Geomatics and Information Science of Wuhan University 33(1), 7–11 (2008) 2. Lorette, A., Descombes, X., Zerubia, J.: Texture Analysis Through a Markovian Modeling and Fuzzy Classification: Application to Urban Area Extraction from Satellite Images. International Journal of Computer Vision 36(3), 221–236 (2000) 3. Jieli, C., Yongxue, L., Manchun, L., Chenglei, S., Dong, Z., Wenting, C.: Extracting remote sensing information of residential areas based on the analysis of normalized difference Index. Science of Surveying and Mapping 35(2), 204–206 (2010) 4. Wei, H., Xuejun, L., Chunxiao, Z., Jing, W.: Object-oriented Information Extraction from H igh Resolution Ima–A Case Study for Recognition of Residential Area in Lixian County Sichuan Province. Journal of Geo-Information Science 12(1), 119–125 (2010) 5. Mingsheng, L., Liming, J., Hui, L., Limin, Y.: Estimating Urban Impervious Surface Percent Using Boosting as a Refinement of CART Analysis. Geomatics and Information Science of Wuhan University 32(12), 1103–1106 (2007) 6. He, Z.: Automatic Abstraction Methods of Residential Area Information of Remote Sensing Image Based on Texture Features. Journal of Jianghan Petroleum University of Staff and Workers 20(4), 93–96 (2007) 7. Haiyue, L., Hongqi, W., Jianwei, L., Yin, L., Fusen, W.: Technique for automatic building recognition and mapping in remote sensing images. Electronic Measurement Technology 30(2) (2007) 8. Lei, H., Dong, Y., Xiaojian, Y.: An Automatic Building DetectionM ethod from Remote Sensing Images. Computer Simulation 23(4), 184–187, 224 (2006) 9. Dong, Z., Yun-cai, L.: Recognition of Building’s Principal Contour in High-Resolution Aerial Image. Journal of Shanghai Jiaotong University 37(11), 1723–1727 (2003)

Decision Support System for Emergency Response of Geological Hazards in Three Gorges Reservoir Area Haifeng Huang and Shimei Wang College of Civil Engineering and Architecture China Three Gorges University Yichang, China [email protected]

Abstract. China Three Gorges reservoir area (TGRA) has always been severe geological hazards, and it gets worse when reservoir water level rises greatly with the construction of dam, emergency response of geo-hazards is becoming a frequent and important work. To guarantee the order and high efficacy, it is necessary to establish decision support system to assist the decision makers to work out perfect emergency response plan. According to years of experience in TGRA, on the basis of summarizing emergency response framework that included emergency survey, risk assessment and emergency decision-making, a decision support system for emergency response of geo-hazards in TGRA, which consisted of database, model base, knowledge base, case base and inference machine was established, and three decision-making processes included emergency preplan decision-making, emergency plan decision-making and emergency measures decision-making were designed. The application effect indicated the DSS system had good practicability because it could not only meet the multi-level and multi-task requirement of geo-hazards emergency response decision-making, but also tally with the practical scenarios. Keywords: decision support system, emergency response, geological hazards, Three Gorges reservoir area.

1 Introduction It was the frequently occurrence area for geological hazard problems such as collapses, landslide and so on in Three Gorges reservoir area (TGRA) in history, with the construction of Three Gorges Project, the reservoir water level had been raised greatly, which induced and revived more geo-hazards. In order to minimized geo-hazards damage and effectively protected the lives and property of local people, the prevention and treatment work of geo-hazards in TGRA has been implemented since January 2002, and the emergency response of geo-hazards was an important part of the work. Usually, the emergency response of geo-hazards is a complex work that calls for a tight schedule, a close coordination of multi-department and multi-human to complete multi-task efficiently and methodically, so the quick and effective decision-making is an important prerequisite for success in this work. Decision Support System (DSS) for emergency response of geo-hazards can deduce pointed decision conclusions from M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 428–436, 2011. © Springer-Verlag Berlin Heidelberg 2011

Decision Support System for Emergency Response of Geological Hazards

429

emergency survey information and effective method base, knowledge base and case base, to help managers and engineers in dealing with the emergency. This paper presented a decision support system for emergency response of geohazards in Three Gorges reservoir area (DSS-ERGH/TGRA). On the basis of analyzing geo-hazards emergency response framework in TGRA, in accordance with the technical requirements of DSS, we put forward and elaborated the system architecture, and then expounded three levels of decision processes in DSS-ERGH/TGRA. Finally, the system application effect was introduced and discussed.

2 Geo-hazards Emergency Response Framework In order to avoid or reduce casualties and property losses, when geological disaster is happening or about to happen, the emergency response of geo-hazards shall start at once. According to years of experience in TGRA, the geo-hazards emergency response framework consisted of three parts, which were emergency survey, risk assessment and emergency decision-making, as shown in Fig. 1. (1) Emergency survey. It was an important precondition and basis of geo-hazards emergency response that organized technical personnel to make a survey and write emergency survey report in the first time after the disaster or danger [1], because the firsthand information from emergency survey was an important foundation, sometimes to be the exclusive source of information to carry out all decision-making activities. Usually, from geo-hazards emergency survey reports, the decision-makers could know about at least the information included basic and deformation characteristics of hazard,

Fig. 1. Geo-hazards emergency response framework in TGRA

430

H. Huang and S. Wang

statistics of losses and affected targets, preliminary analysis of formation mechanism, impact factors and development tendency of geo-hazards. (2) Risk assessment. Making decisions only based on emergency survey information was not enough, and it’s necessary to make comprehensive risk assessment by combining the basic information and establishing qualitative or quantitative assessment models. According to the contents of geo-hazards emergency response, in order to make professional identify and judgment of geo-hazard damage grade, stability, development tendency, trigger factors, warning criterion, etc., geohazards risk assessment should at least comprise loss estimation, vulnerability assessment, stability evaluation and so on. (3) Emergency decision-making. Based on the geo-hazard emergency survey information and risk assessment results, the pointed emergency decision-making conclusions could be reached by reasoning in accordance with all relevant national laws and regulations, technological standards, expert knowledge and practical experience, relevant cases and so on. Usually, according to the contents, levels and affected targets of emergency response, the geo-hazards emergency decision-making in TGRA could be divided into 3 parts, which were emergency preplan decision-making, emergency plan decision-making and emergency measures decision-making. Emergency preplan decision-making was identifying four-stage emergency response preplan of geo-hazards based on disaster levels; emergency plan decision-making was making the most appropriate choice among geo-hazards prevention and reduction plans, which are relocation project, monitoring and early warning project, and control project [2]; emergency measures decision-making was making decisions to choose the most appropriate methods and measures which corresponding to emergency plan decision-making conclusions. The above 3 parts of decision-making covered all emergency decisions task of geo-hazards in TGRA respectively from the macro, middle and micro levels, so it could meet the demands of geo-hazards emergency rescue and decision-making very well.

3 Design of DSS-ERGH/TGRA A. System Architecture Decision support system is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, professional knowledge, or business models to identify and solve semistructured or non-structured problems and make decisions[3]. Generally, DSS consists of four sub-systems[4, 5], which are human–computer interaction system (HCIS), database management system (DBMS), model base management system (MBMS) and knowledge base management system (KBMS). Because the spatial agglomeration of geo-hazards, it’s possible to refer to lots of similar cases in the same area when making decisions of emergency response, therefore, a case base management system (CBMS) was introduced into the system besides above four sub-systems. In addition, inference machine (IM) was designed as an independent functional component in DSSERGH/TGRA. So, the system architecture was shown in Fig. 2.

Decision Support System for Emergency Response of Geological Hazards

431

HCIS DBMS

MBDS KBMS

CBMS CBR

KB

RBR

DB

IM

CB

MB

Fig. 2. The system architecture of DSS-ERGH/TGRA

(1) HCIS, also called human-computer interface system, which mainly responsible for the management of user interface and supporting the interaction between user and DSS. In DSS-ERGH/TGRA, HCIS provided the interface of comprehensive information services (e.g. query, retrieval, and statistics), information management (e.g. input, read, modification, and save), reasoning and decision-making, and calling the DBMS, MBMS, KBMS and CBMS. (2) Database (DB) was the base of DSS and in which large amounts of data were stored. Taking into account the demand that some spatial data such as the geographic distribution of geo-hazards and so on was used in DSS-ERGH/TGRA, all data were divided into geographic information system (GIS) spatial data and non-spatial attribute data. GIS spatial data consisted of geographical background data of TGRA (remote sensing imagery, topographic map, etc.), and geo-hazards distribution data (location, boundary); non-spatial data consisted of geo-hazards attribute data (text/ table/picture/video/etc.) and geo-hazards emergency survey data. In addition, there were some important functions of DBMS include data management and maintenance, data query and retrieval, connection with other sub-systems, and so on. (3) Model base (MB) stored risk assessment models and methods of geo-hazards, mainly included loss estimation, vulnerability assessment, stability evaluation and some other auxiliary qualitative and quantitative evaluation models and methods. And by MBMS, user could maintain all models and methods, such as add, delete and modify. At the same time, MBMS provided model called interface so that user could make use of any model and method conveniently in decision-making process. (4) Knowledge base (KB) was the core of system, and various knowledge included facts, rules, and constraints which mainly came from expertise was saved. According to the geo-hazards emergency decision-making contents in decision framework (Fig. 1), the knowledge base also included 3 parts, which were emergency preplan decisionmaking knowledge, emergency plan decision-making knowledge and emergency measures decision-making knowledge. In the process of decision-making, KBMS could explain the input data and information by using knowledge, and simulated the method and process of decision maker’s thinking. So in the support of knowledge base and KBMS, DSS-ERGH/TGRA could fully exert the experience, judgment and deduction of experts and decision makers, and obtained satisfactory and creditable solutions to problems of geo-hazards emergency response in TGRA. (5) As mentioned earlier, each geo-hazard was not isolated, but usually appeared in the form of spatial agglomeration, for example, the landslides induced by rainfall or by the fluctuation of the reservoir water level was in the majority in TGRA. That was to say, when the decision makers faced an emergency response decision of geo-hazards,

432

H. Huang and S. Wang

they might meet with the similar previous case frequently, so established case base (CB) and CBMS in DSS-ERGH/TGRA was absolute essential. In case base, all kinds of geo-hazard emergency response cases were stored, and each case included complete information of emergency survey, results of risk assessment, conclusions of emergency response decision-making and evaluation of applied effect. CBMS was responsible for case retrieval at first, and then adjusting or modifying the source case so as to get the results that conformed to the target case. Besides, CBMS could maintain case base such as add, delete and modify cases. (6) Usually, inference machine (IM) was not an independent subsystem, but the core part of KBMS. In DSS-ERGH/TGRA, there must be Case-Based Reasoning (CBR) mechanism to support the application of case base [6], and it was the same with Rule-Based Reasoning (RBR) mechanism to support knowledge base [7]. So IM in DSS-ERGH/TGRA was designed as an independent function module, which realized CBR and RBR and supported the interaction between IM and CBMS or KBMS effectively. Here was another point that above sub-systems was paratactic and could call each other, for example, the parameters of MB could extract from DB, and the calculated results of MB could be saved to DB, also could be joined to knowledge reasoning or case reasoning. B. Decision Process In order to achieve 3 levels of emergency decision-making, three corresponding decision processes must be designed in DSS-ERGH/TGRA, shown as Fig. 3: • Information acquisition of geo-hazards emergency survey. It’s the first step, also was the basic data source of decisions that establishing geo-hazard emergency survey data table in database according to the emergency survey report. • Process of emergency preplan decision-making. According to relevant laws and regulations, geo-hazard emergency preplan was corresponding to the disaster response levels, and which were classified by geo-hazards damage grade. So emergency preplan decision-making was a relatively simple process: first, decision makers could identify geo-hazards damage grade by adopting damage grade evaluation model based on losses data in emergency survey data table, then matched the damage grade with the premise in emergency preplan decision-making knowledge base, at last, used forward inference control strategies in RBR to get the emergency preplan decision-making conclusions. • Process of emergency plan decision-making. The geo-hazard emergency plan decision was based on emergency survey data table and a series of risk assessment conclusions including stability, vulnerability, and development tendency, et al. so an integrated and dynamic geo-hazard emergency response information table was built as the source of decision inference by classifying and filtering emergency survey data and risk assessment conclusions, then user could make emergency plan decisions based on CBR and RBR as follows: in CBR, searched and matched the emergency plan decision cases based on the data in geo-hazard emergency response information table at first, then extracted and output the most similar source case as emergency plan A; at the same time, in RBR, matched the data in geo-hazard emergency response

Decision Support System for Emergency Response of Geological Hazards

433

Start Geo-hazard emergency survey data table Risk assessment

KB of emergency preplan decision forward inference

storage

Damage grade evaluation match

Emergency dynamic information table case search match

Emergency preplan decision Save/Output End

Database

Model base

Knowledge base

Case base

Decision conclusions

Inference machine

CB of emergency plan (measures) decision case match

KB of emergency plan (measures) decision forward inference

Emergency plan (measures) decision A

Emergency Plan (measures) decision B

(optimize) Emergency Plan (measures) decision Save/Output End

Fig. 3. The decision process in DSS-ERGH/TGRA

•

information table with the premise in emergency plan decision-making knowledge base, used forward inference control strategies to get the emergency plan B; then compared and optimized emergency plan A and B to get the final decision-making conclusions. When the conclusions were saved, the process of emergency plan decision-making was over. Of course, in order to continue the emergency measures decision-making, the emergency plan decision-making conclusions could be saved to the dynamic geo-hazard emergency response information table. Process of emergency measures decision-making. It’s similar to the process of emergency plan decision-making, the only difference was the case base and knowledge base belonged to emergency measures.

4 Using the System According to the geo-hazards emergency response framework in TGRA, and the design of system architecture and decision process, DSS-ERGH/TGRA was built based on classic Browser/Server structure: the human-computer interaction interface was designed in web browser, and the decision inference function was developed on server side. Besides, WebGIS technologies was introduced into system: in browser side, map service function was integrated into human-computer interaction interface; in server side, centralized management of spatial and non-spatial data was realized in DBMS by mean of GIS spatial data engine technology [8].

434

H. Huang and S. Wang

Fig. 4. The interface of acquiring emergency survey information

As the core function of DSS-ERGH/TGRA, the decision-making of geo-hazards emergency response began in the acquisition of emergency survey information (Fig. 4), users could search and modify the information that had been saved in database, also could input and save new information, and the map page would display or accept the input of geo-hazard point at the same time. After DSS-ERGH/TGRA got the emergency survey information, the system would infer and make decisions according to Fig. 3. To guarantee the automation of inference, the decision process minimized user intervention as much as possible, but in order to ensure the credibility of decision conclusions, users had to interact and confirm with system in these situations: decided to use the default or custom value of parameters and weights of models before risk assessment; decided the inference path among multi knowledge or cases that had same priority level when encountered the conflict in inference process; decided the break and continue running of inference and decision process. Fig. 5 showed the final integrated interface of geo-hazards emergency response decision conclusions, which included emergency preplan decision-making, emergency plan decision-making and emergency measures decision-making.

Fig. 5. The interface of displaying decision-making conclusions

Decision Support System for Emergency Response of Geological Hazards

435

5 Discussion and Conclusions DSS-ERGH/TGRA was built on the framework and process of geo-hazards emergency response in TGRA, therefore, it conformed to the human mind and actual operation habits, which had more practicability. Especially the decision-making conclusions about emergency response of the common landslides induced by rainfall or by the fluctuation of the reservoir water level in TGRA had a good reliability, and which was closely related to lots of similar cases and knowledge stored in CB and KB. So, it’s important to keep perfecting CB and KB in order to improve the practicability of DSSERGH/TGRA, of course the improvement of IM and MB is necessary. On the other hand, we found that the geo-hazards emergency response decisionmaking involved enormous crucial qualitative analysis or assessment, such as formation mechanism, development tendency and so on, in which the traditional DSS was weak. Intelligent Decision Support System (IDSS) combined DSS with Expert System (ES), can solve the qualitative analysis problems easily [9], perhaps a better choice. At the same time, just like mentioned above, spatial data display and analysis was needed, so Spatial Decision Support System (SDSS) which has more tight integration between GIS and SDSS may be more suitable for geo-hazards emergency response decision-making [10]. In general, as an important technological means in support of the geo-hazards prevention and reduction of Three Gorges reservoir area, the DSS-ERGH/TGRA is necessary and effective. And on a long view, the intelligent spatial decision support system (ISDSS) that integrates DSS with ES and GIS may be the most suitable technical framework for assistant decision-making of geo-hazards emergency response. Acknowledgment. This project was funded by a China national science & technology support program (No. 2008BAC47B03-3).

References 1. Liu, C.Z.: Basic problem on emergency disposition of abrupt heavy geological disaster. Journal of Natural Disasters 15, 24–30 (2006) 2. Wang, S.Q.: Monitoring and prediction of landslide in the Three Gorges. Geological Publishing House, Beijing (2008) 3. Gorry, G.A., Morton, M.S.S.: A framework for management information systems. Sloan Management Review 12, 55–70 (1971) 4. Sprague Jr., R.H., Carlson, E.D.: Building effective decision support systems. Prentice Hall, Englewood Cliffs (1982) 5. Turban, E., Aronson, J.: Decision support systems and intelligent systems. Prentice Hall PTR, Upper Saddle River (1997) 6. Aamodt, A., Plaza, E.: Case-based reasoning: foundational issues, methodological variations, and system approaches. AI Communications 7(1), 39–59 (1994) 7. Marling, C.R., Petot, G.J., Sterling, L.S.: Integrating case-based and rule-based reasoning to meet multiple design constraints. Computational Intelligence 15(3), 308–332 (1999)

436

H. Huang and S. Wang

8. Charvat, K., Kafka, S., Holy, S., Horak, P., Cepicky, J., Kocáb, M., Cajthaml, T., Valdova, I., Konecny, M., Kubicek, P., Stanek, K.: Spatial data management. In: Computers in Agriculture and Natural Resources - Proceedings of the 4th World Congress, pp. 705–710 (July 2006) 9. Kuma, C.D., Sarma, V.V.S.: Towards building an intelligent decision support system for project management. Academy Proceedings in Engineering Sciences 21, 327–343 (1996) 10. Chang, N.B., Wei, Y.L., Tseng, C.C., Kao, C.-Y.J.: Design of a GIS-based decision support system for chemical emergency preparedness and response in an urban environment. Computers, Environment and Urban Systems 21, 67–94 (1997)

To Promote the Development of Retail E-Commerce in Depth with Regional E-Commerce Bo Zhang, Haijun Zhang, and Bingwu Liu School of information Beijing WuZi University Beijing, China [email protected]

Abstract. Compared with the traditional consumer-oriented E-Commerce, regional E-Commerce has many advantages such as customer base, types of goods, logistics and distribution, transaction security, reputation and etc. The developed areas in China, especially the central cities are all equipped with the conditions for developing regional E-Commerce. These conditions are the number of Internet users, distribution system, means of payment, and so on. These developed areas should pioneer the regional E-Commerce. Keywords: regional E-Commerce, conception, advantages, support conditions.

1 Introduction Consumer-oriented online retailing has two forms; one is B2C, or business to consumer E-Commerce, which representative is Dangdang and Joyo. The other is C2C, or consumer to consumer E-Commerce, which representative is Taobao (In order to have a convenient description, this article describes the E-Commerce models like Dangdang and Taobao as traditional consumer-oriented E-Commerce models, or traditional XTOC, X on behalf of B or C). These E-Commerce web sites have opened up a new world for the online retail market in China with a sharp rise turnover doubled each year (Figure 1). In 2009, online retail transaction volume has reached 263 billion Yuan, up 105.2% over 2008， online shopping transaction size accounting for the proportion of total social consumer goods retail sales climbed to 1.98%, while the scale of online shopping is expected to exceed 100 million users, and its penetration rate among Internet users has further increase, up to 28.2% [1]. The rapid development of online shopping not only stimulates domestic demand, contributes to the promotion of consumption, but also brings convenience and benefit for people's life. As online shopping has not restrictions in time and territory, so the traditional consumer-oriented E-Commerce (including B2C and C2C) has a common characteristic, that is they serve all netizens. In the early E-Commerce development stages, this model played a key role in nurturing consumer-oriented E-Commerce market, fostering consumer-oriented terminal distribution market, attracting netizens to understand online shopping and experiencing online shopping. However, this business model with no physical stores’ support serving for so many consumers by large-scale M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 437–445, 2011. © Springer-Verlag Berlin Heidelberg 2011

438

B. Zhang, H. Zhang, and B. Liu

distribution has some problems, such as high distribution costs, unscheduled distribution, seller’s bad faith, and etc. Therefore, this E-Commerce model is only a form of online retail E-Commerce. In order to make E-Commerce to develop in depth the consumer-oriented E-Commerce should go in the direction of regionalization, and substantiation. 



  

   

 





VDOHVYROXPH





Fig. 1. 2004 to 2009, online retail transactions (unit: 100 million Yuan)

2 The Disadvantages of Traditional XTOC E-Commerce A. Users Dispersed The users of traditional XTOC E-Commerce spread over the whole China and even around the world, like a large market without borders, without fixed customer groups. B. The Low Rate of Repeat Purchase Commodities of the traditional XTOC web sites are more fashionable, novelty goods. Users often buy these goods only once. Their purchase will not be repeated. Although the traditional XTOC web sites have greatly increased the variety of goods, they do not change the basic characteristics of the goods. C. Only a Small Number of Firms Survive As the network has no distance, this makes the traditional XTOC E-Commerce has a typical characteristic which is "winner takes all". Chinese E-Commerce has already developed for 10 years, but the web sites can be remembered by users are only a few. Unless the business model has a change, or the subsequent enterprise is difficult to survive. D. High Distribution Costs and Low Distribution Efficiency Due to its fashionable, novelty merchandise, traditional XTOC E-Commerce’s every single sale is relatively low and the distribution scope is very broad, which will inevitably lead to high distribution costs and inefficiency. When the distribution amount does not meet the economy scale, the logistics costs is difficult to be reduced, and it is difficult to attract logistics companies to join in [2]. Therefore, the current distribution of XTOC E-Commerce depends on express companies.

To Promote the Development of Retail E-Commerce

439

E. Restricted Goods Since there is no physical store, the products of traditional XTOC enterprise can not be experienced by customers, so, their commodities are largely restricted, which are often some products with no demand of users’ personal experience and touch, which are often some products with high degree of standardization and high-technology, such as computer-related products, books, audio and video products, creative unique products, collectable products, software, services, and etc. The products consumers need every day and the daily necessities are often not suitable for seller online. F. The Reputation Has No Guarantee China Consumer Association's latest survey shows that the growth rate of the complaints against the Internet services ranked first among all the complaints. Integrity has become the biggest bottleneck of online shopping. In the vast Internet, unless the website makes some fame, how can the credibility of the site make people believe? Even if the site has good reputation, how to ensure the credibility of the merchant signed in the site? I am afraid that some credit rating alone can not solve the consumer's fear.

3 Conception of Regional XTOC E-Commerce Regional XTOC E-Commerce means the trading parties are both in a small regional area, such as a city. The vendors and customers use E-Commerce tools to finish shopping, payment and complete the transaction. Regional XTOC E-Commerce and traditional XTOC E-Commerce have some fundamental differences in E-Commerce models, which follow as: A. They Have Different Service Providers The service providers of traditional XTOC E-Commerce usually are virtual enterprises, while in regional XTOC E-Commerce, traditional physical store-based retailers become major service providers, and allowing the multiple XTOC models coexist. B. Their Clients Differ in Territorial Scope Traditional XTOC E-Commerce serves all Internet population, and regional ECommerce provides services for local Internet users which are in local region or in the same city. C. They Provide Different Products The goods provided by traditional XTOC E-Commerce are restricted by delivery, integrity, and security, so, many products such as food, valuables, are not suitable for sale, while, the goods of regional E-Commerce have no restriction. D. They Have Different in Distribution In traditional XTOC E-Commerce condition, distribution has large range and distance, and is not timely; regional E-Commerce distribution occurs in the same city, which is small distance, even if there is, a need, it can provide instant delivery. Regional E-Commerce is to build a network platform which gathers all the sellers in the city and provides a virtual business life for citizens. This platform can provide

440

B. Zhang, H. Zhang, and B. Liu

efficient logistics and distribution services by safe and reliable means of payment, so that the people can take a stroll on all the city's shops staying at home, enjoy the efficient and convenient service brought by electronic commerce.

4 The Superiority of Regional XTOC E-Commerce Regional E-Commerce is mainly undertaken by traditional commercial enterprises, which is the traditional enterprise extending their business online. Compared with traditional XTOC E-Commerce, regional E-Commerce has the following advantages. A. Customer Flow's Stability and User's Trust In the long run of business, each physical store or physical enterprise has established a relatively stable customer groups and trusted relationship between buyers and sellers. To buy the goods on line of his familiar store, user will not have doubts. B. Goods Are Very Rich and Customers Repeat Purchase Traditional business enterprises provide more goods than pure XTOC web sites can provide. They can provide products daily used which are in great demand and will have repeat of purchase. C. Can Distribute Large Amount of Goods and Provide Timely Delivery We all have this experience, spending hundreds Yuan or several hundreds Yuan in once purchase in a supermarket is a common thing, and almost every week we will do this repeat purchase. In regional E-Commerce condition, sellers and buyers coexist in the same city; delivery distance is short which will reduce distribution costs. Buyers can get the desired goods just in time. D. Payment is Secure and a Variety of Payment Method Can Be Used Due to payment security, traditional E-Commerce can only use third party payment or cash on delivery or postal remittance and other payment methods. While, regional ECommerce’ s dependence on third-party payment will be reduced and more flexible payment can be adopted because the sellers in regional E-Commerce are most local physical stores or enterprises, the buyer’s worry about payment security will be greatly reduced. In addition to third-party payment, buyers can directly online pay by bank cards or credit cards, buyers can also apply for purchase card from sellers and pay(prepayment), they can also use cash on delivery(post- payment ). E. Conducive Competition and Inter-Enterprise Integration Developing regional E-Commerce, all sellers’ goods will be displayed online, consumers can shop around. In the past, the same product’s price in different shopping malls is very different, and this situation will greatly be solved. Users can buy most cost-effective goods from all sellers in the city. The market share of the sellers with high operating costs and poor service will be compressed, until they are eliminated from the market. And high-quality companies will be further expanded by integrating other enterprise.

To Promote the Development of Retail E-Commerce

441

5 Support Conditions of Regional E-Commerce A. Online Shopping Population To develop regional X2C E-Commerce, the first prerequisite is sufficient concentration of the online population. Today, China has the world's largest number of Internet users. According to CNNIC statistics, as of December 2009, China's Internet population reached 384 million, ranking first in the world, coverage reached 28.9%, 28.1% of them do online shopping, the total number reached 108 million people, 24.5% of them use online banking, 24.5% of them use online payment, online payment users reached 96.04 million [3]. Since China's unbalanced regional economic development, these online populations concentrated in the economically developed areas and central cities, as shown in table 1 [3]. From the local perspective, in China's economically developed areas, especially in central cities the network population coverage is beyond Europe (52%) and other regions, just below the North America (74.2%); Internet population and Internet shopping population are very concentrated. Table 1. Top 6 Internet population coverage cities in China Province Beijing

Internet population 11.03 million

coverage 65.1%

coverage ranks 1

Shanghai

11.71 million

62%

2

Guangdong

48.60 million

50.9%

3

Tianjin

5.64 million

48%

4

Zhejiang

24.52 million

47.9

5

Fujian

16.29 million

45.2

6

Source: China Internet Network Information Center

B. Logistics Distribution System In recent years, the logistics industry has a rapid development in china; it is shown that logistics is the third source of profit. Beijing, Shanghai, Guangzhou and other central cities have thousands of logistics and distribution companies. Beijing Olympic Games and Shanghai World Exposition have greatly improved the logistics distribution network of the host city, and have provided valuable experience in the construction of china’s logistics distribution system. At the same time, after several years of development, E-Commerce cultivated a large number of express delivery companies whose main business is to serve consumers and provide logistics in the same city; it is not a dream to deliver the goods to customer within hours or even an hour. All these have provided a strong support for regional E-Commerce. C. Internet Bank Payment System As mentioned earlier, the regional E-Commerce can use a variety of payment methods; the popularity of bank card and Internet Bank usage will directly affect the scale of the regional E-Commerce. In the first, let we look at the use of bank cards, according to media reports, in Beijing, bank card penetration rate in 2008 had exceeded 80%, "2010, in Shanghai, the coverage of special merchants using Union Pay Card will

442

B. Zhang, H. Zhang, and B. Liu

exceed 80%; in Nanjing, Hangzhou, Ningbo, bank card penetration rate will exceed 60%” [4]. In Beijing, Shanghai and other central cities, the bank card coverage is beyond 70% which is the average level of developed countries. Secondly, let we see the Internet Bank usage, at present, all major commercial banks offer online banking business, in 2009, the utilization rate of online payment was 24.5% (the national’s average), having a growth rate of 80.9%; online payment is the fastest growing applications in all network applications, 75% of consumers online shopping use online payment [3]. Internet Bank users concentrated in central cities, according to 2007 survey of 10 economically developed cities; 37.8% of people use Internet Bank [3], after three years, this ratio will undoubtedly increase exponentially. In the end, from the seller’s perspective, in 2008, in Beijing, Shanghai and other central cities, more than 90% of the major commercial organization use credit card, debit card, and other bank card to complete the transaction, which is near 100%. The development of Internet Bank, bank cards provides regional XTOC E-Commerce with payment guarantee. D. Transaction Security Consumer in consumer-oriented E-Commerce has two main worry, one is payment security, and the other is the seller’s reputation and the merchandise quality assurance [5]. Currently, online payment security issue has a better solution, an increasing number of Internet Bank users hold a positive attitude towards this. As for seller integrity, in regional XTOC E-Commerce, the main sellers are physical shops and traditional enterprises, these sellers are around the consumers, after years of operation, they have established a good reputation and this greatly eased the worry of consumers. In summary, in economically developed areas, especially in central cities, to develop regional consumer-oriented E-Commerce is possible.

6 Several Proposals for Developing Regional E-Commerce A. Initiate Regional E-Commerce in Economically Developed Central Cities Because of the imbalance in regional economic development, business infrastructure, distribution system and payment system, regional E-Commerce can not be done overnight, it should be a gradual process; it can be initiated in the central cities of developed area, and then extended to second-tier cities and third-tier cities. B. Building Regional E-Commerce Platform Led by the Government Regional E-Commerce platform has two modes. One is setting up web sites by the commercial enterprises themselves; in this way, commercial enterprises will invest large money and undertake huge costs because logistics distribution issues, payment problems, safe certification issues had to be solved by themselves, and it is difficult to form a brand. Another is setting up a service platform led by the local government, constructing a regional online retail market, and providing the market with the necessary logistics, payment and security infrastructure; the market should be defined as integrated retail market; the platform mainly serve for local online sellers which have physical store (including department stores, supermarkets, restaurants, travel offices, and other business organizations or service groups), it also provides a trading

To Promote the Development of Retail E-Commerce

443

platform for virtual business enterprises and individuals which have no physical store; in this way, it can reduce the seller’s investment, and avoid repeat investment, and it is conducive to the promotion of the web site and conducive to forming a brand. C. Overall Planning Urban Logistics Distribution System Due to a small distribution range, regional XTOC E-Commerce can use a variety of delivery methods, such as self-distribution, express company delivery, consumers going to specified distribution sites and picking up their own goods, and so on. But from the perspective of the healthy development of online retail, the city should build a unified distribution system, distribution standards, and standardizing company's distribution services. To do this, it should be led by industry associations; industry associations establish a long-term stable partnership with some logistic companies and express companies which have a certain size and reputation, use Internet and modern communication technology to realize information of shopping and delivery instant transmission and provide fast and efficient distribution services for customers. D. Actively Promote the Use of Online Banking Online payment is one of the important conditions to Regional E-Commerce, without online payment, E-Commerce’s advantage of rapid and convenient, advantages beyond the time and space limit will disappear. Local governments should make full use of their influence, and work with banks to actively promote the use of credit card and bank card, and guide the citizen to use online banking in payment, taxes, trade and other sectors, thus laying a solid foundation for regional E-Commerce. The good news is, Central Bank decided to set up online banking exchange platform, in June 2010, it will be completed and will be used on-line. The presence that Internet Bank connected each other but can not exchange each other will cease to exist [6], which will promote the use of bank card and Internet Bank.

7 The Significance of Regional E-Commerce Constructing regional E-Commerce platform has important significance, only a few reasons summarized below. A. Bring Innovation to E-Commerce Model Developing regional BTOC E-Commerce is an innovation to E-Commerce model [7], it will change the traditional concept that E-Commerce should win customers all over the world, it gives a better solution to the distribution and shopping security bottlenecks that traditional BTOC E-Commerce encountered, it can expand content and areas that BTOC E-Commerce serves. B. Enhance the City Status Economic strength, industrial structure, level of infrastructure, education and technology, urban environment, international level, technological innovation, the financial industry, the proportion of GDP created by tertiary industry, and so on are dominant measures of a city position in international as well in domestic. The

444

B. Zhang, H. Zhang, and B. Liu

development of regional BTOC E-Commerce needs the support provided by Network infrastructure, logistics and distribution infrastructure, scientific and cultural levels, the level of financial sector; The regional BTOC E-Commerce having successful development will highlight the city's comprehensive strength, and will promote the city’s status. C. Bring Convenience and Benefits to the Public With regional BTOC E-Commerce platform, people can stay at home shopping in the city and enjoy various services; the public life becomes much easier, and the costs of public travel will be reduced, traffic congestion will be reduced too, the logistics industry will be promoted. At the same time, in the regional E-Commerce platform, commodity prices becoming more transparent to consumers which effectively limits the merchant's windfall profits and will be conducive to competition among sellers and bring tangible benefits to the public. D. Promote Consumption Regional E-Commerce platform provides a place for merchants to promote products and services, in this platform, merchants can fully demonstrate their superior products and services, expand their sales area, pull the consumption.

8 Conclusion E-Commerce model innovation is a driving force for E-Commerce to develop in depth. Traditional enterprises pursue development online and virtual enterprises make development offline become the main tone of E-Commerce development. Traditional retail and online retail moving toward integration is an inevitable trend of ECommerce’s development. As the giant of online retail, Taobao also innovates in business model. Just the news was “January 16, 2010, the first 150 authorized Taobao shops opened for business in Hangzhou offline at the same time; nationwide, Taobao plan to authorize more than 30,000 stores to open business in universities and communities this year, offline authorized stores will use a unified brand "Yes! Tao"” [8]. Conditions for traditional enterprises to develop Internet marketing are also becoming more mature, it can be predicted that traditional enterprises making sales online will be also not far off. Acknowledgment. This paper is based on work supported by Funding Project for Academic Human Resources Development in Institutions of Higher Learning under the Jurisdiction of Beijing Municipality under Grant No. PHR200906210, Funding Project for Base Construction of Scientific Research of Beijing Municipal Commission of Education under Grant No. WYJD200902, Beijing Philosophy and Social Science Planning Project under Grant No. 09BaJG258, and Funding Project for Science and Technology Program of Beijing Municipal Commission of Education under Grant No. KM200910037002.

To Promote the Development of Retail E-Commerce

445

References 1. IResearch Consulting. 2009-2010 Report of China’s Internet shopping industry (April 2, 2010), http://report.iresearch.cn/Reports/Charge/1364.html 2. Chen, S., Ning, J.: Constraints on E-commerce in Less Developed Countries: The Case of China. Electronic Commerce Research 2, 31–42 (2002) 3. CNNIC. 25th Statistical Survey Report on Internet Development in China, p. 15, 31, 39 (January 15, 2010) 4. Huang, W.: Merchants using bank card in Shanghai over 80% penetration. Oriental Morning Post, 14 edn. (December 24, 2008) 5. Guo, Y., Salvendy, G.: Factor Structure of Content Preparation for E-Business Web Sites: A Survey Result of Industrial Employees in P.R. China, pp. 784–795. Springer, Heidelberg (2007) 6. Cheng, J., Cheng, Y.: Current Status of Online Banking in China. Managers, 138 (March 2009) 7. Jennex, M.E., Amoroso, D.L.: E-Business and Technology Issues for Developing Economies: A Ukraine Case Study. Electronic Journal on Information Systems in Developing Countries 10(5), 1–14 (2002) 8. Heart Rock. Is Taobao building physical stores contrary to the trend Mody?, http://column.iresearch.cn/u/panshizhixin/archives/2010/ 275408.shtml (January 18, 2010)

Research on Management Accounting for SMEs Innovation in China Min Pan Department of Accounting College of Economic and Management Wuhan University Wuhan, China

Abstract. This paper introduces the findings from an extensive postal survey conducted in Wuhan Optics Valley, which looks at the innovation process of small and medium enterprises (SMEs), both incorporated and unincorporated. The implications of management accounting practices on innovation decisions in these businesses, are considered. The results indicate that management accounting is very sophisticated and has an effect on innovation management in most SEMs. Especially for accounting planning practices are in a position to utilise fully all available innovation risk reduction mechanisms. Keywords: Management Accounting, SMEs, Innovation.

1 Introduction Small and medium-sized enterprises (SMEs) are of particular interest in the study of innovation. It has been argued that they are disproportionately responsible for significant innovations, and one estimate suggests they contribute more than twice as many innovations per employee as large organisations (Vossen,1998). Innovation processes need to build the internal and external R&D investment decisions mechanism,encourage investment in human resources, pay more attention to the management accounting report(Hatch, 2006). Although the literature on SMEs and innovation is large and diverse, and despite the existence of recognised centres of study with good linkages to policy makers, our knowledge of the place and operation of management accounting in small businesses innovation still contains significant gaps. In this paper, we hope to shed some light on the question of how managers in SMEs use management accounting to control innovation processes. We enter the subjective realities of individual managers, for these form the inner contexts in which management decisions are made, and accounting plan are evaluated. The paper is structured in three parts. First, we review the key literature which has sought to explain innovation in SMEs; secondly, we give more detail about our research study and its methods; and thirdly, we present our results and we conclude with a discussion of the link between our findings and the existing literature. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 446–450, 2011. © Springer-Verlag Berlin Heidelberg 2011

Research on Management Accounting for SMEs Innovation in China

447

2 Literature Review It has been said that SMEs do not necessarily innovate in formally recognised ways. It is likely that they seldom use management accounting to control innovation process as much as product innovation (Ho man et al.,1998). The literature (for example,Brush and Chaganti, 1996; Delmestri, 1997; Frybourg, 1997; Kerr and McDougall, 1999;Heunks etal., 2008) suggested that management accounting was being made in two main avenues: first, reflect the information of learning and development in SMEs, and secondly, control their key linkages in which small firms gain access to resources both internal and external. Small and medium-sized businesses face particular challenges with regard to innovation. The range of skills represented in-house tend to be limited, as is their bench depth, so that the loss of certain organisation members can entail a serious loss of tacit knowledge, sometimes suffcient to endanger organisational survival. Retention, therefore, is always a serious concern for small and medium-sized businesses, particularly in relation to skilled labour. Yet skilled labour is what has been seen as especially key to small firm innovation, the related individual intellectual capacity information can be obtained from management accounting report (SBRT et al., 2008). In new technology-based firms, innovation is dependent on individual or collective business intelligence (Hatch,2006). Vossen(1998) and Openshaw (2003) suggested that innovative SMEs seek resources through a complex array of interconnections with their environment. Management accounting is are helpful to explore of this linkage between SME and environment. The importance of customers as informational resources regarding new product development, customer information has been noted (Malecki and Nicole,2001). The most versatile information source, however, is said to be the network of other firms suppliers, neighbours, or trade association partners. Management accounting can be used to make an explicit and planned strategy of cooperation (Storey and Chaganti, 2009). The above literature is informed by the grand narrative of the relations between management accounting and SMEs Innovation. What has been less established by this growing stream of research is how the managers evaluate the importance of management accounting. In conducting empirical study, our purpose was to gain insight into how the practitioners perceived the nature of management accounting in SME innovation.

3 Method and Sample We located the SMEs for our study by asking innovation counsellors at a Wuhan Optics Valley Business Link to identify the 36 most innovative SMEs in their area. Some of these turned out to be part of a very much larger organisation and so our final sample consisted of the 25 SMEs which we report in this paper. For another, they were all medium-sized firms, which comprise less than 22 per cent of Wuhan Optics Valley businesses. Also, given that less than 69 per cent of SMEs survive longer than five years. The oldest dated from 1992 with a re-incarnation in 2004, and the youngest (by a considerable margin) from 2009. They were all manufacturers, whose businesses ranged from optical metal products through valves and ultrasonics to high-tech

448

M. Pan

communications devices. The smallest employed 35 staff and the largest 212; although the latter fell above the Wuhan Optics Valley upper limit of 200 employees for a medium-sized enterprise, we nevertheless included it, as it certainly could not be described as a large enterprise (LE) and still was proud to consider itself an SME. Our method of enquiry was to use in-depth semi-structured interviews with individual managers in a variety of roles in each organisation. Within each organisation, we interviewed the CEO or CFO, and then we selected a purposive sample of managers to interview, on the basis of their involvement as key players in the innovation-implementation pathway. Our respondents totalled 57. Our content analysis focused particularly on ascertaining the value of management accounting, in so far as these could be derived from the narratives managers gave of their experience of innovation within their company. It allowed us to capture not only the technical detail of real-life innovation, but also its accounting level. We asked our respondents to tell the process of innovations as they had experienced them in their organisation. We wanted to understand how they use the tools of management accounting in innovation. The only aim which we investigated was wether the innovation process could be reflected and controled by management accounting.

4 Results and Discussion It can be concluded that managers spend time in accounting exercises in order to minimise their innovation risk. In an attempt to throw some light on the effectiveness of management accounting practices in these firms, respondents were asked to indicate at what stage of the financial year they have the first indication about their estimated innovation risk. The responses are summarised in Table 1. It is very interesting to note that only about one third (34.4 per cent) of the respondents know their innovation risk before the year end. A further 49.3 percent estimate their innovation risk after the year end, whilst 10.8 per cent only know their innovation risk when management accounting report is completed. Obviously estimating the innovation risk before the year end offers the opportunity to utilise available accounting control mechanisms effciently to help reduce the innovation risk. So why do all firms not try to estimate their innovation risk before the year end? Apparently, time and money are an issue. Perhaps the relationship of SMEs management with their accountants (the main port of outside finacial planning advice) and advisers is more tuned to the accounting cycle. Table 1. Estimation of innovation risk Question: When do you first know your estimated innovation risk? Timing of estimation

Before year end After year end When accounts are available When the products design are available When products prototype is completed Other

percentage

24.4 10.0 38.9 10.4 10.8 5.5

Research on Management Accounting for SMEs Innovation in China

449

In Table 2, it can be seen that these costs are regressive since the proportion of companies who do not estimate their innovation risk before the year end falls as the businesses grow in size. Although it would be expected that more profitable companies devote more time and effort to management accounting planning, results here suggest that this is not the case. Both profitable and unprofitable firms are equally likely (or unlikely) to estimate their innovation risk before the year end. It could be argued that although management accounting planning can be expected to be important in profitable firms where more profits are subject to innovation, planning is also important in less profitable firms, where innovation will be crucial in the struggle to improve cashflow. Table 2. Estimation by size of company Number of employees (%)

Timing of estimation 0-50

Before year end After year end When accounts are available When the products design are available When products prototype is completed Other

100-150

19.9 33.3 9.1 14.9 41.7 36.2 11.0 7.8 12.4 7.1 5.9 0.7

>150

40.7 9.9 31.9 4.4 4.4 8.8

chi-squared = 44.201, p = 0.000

Table 2 shows that management accounting planning practices become more sophisticated as the firm grows larger. However, since the majority of businesses are relatively small in size, accounting planning practices are generally unsophisticated. As a result small firms may fail to utilise available mechanisms effectively and eficiently to reduce their innovation risk which they do not know until after the year end, when it is too late to use most of these risk engineering. The primary accounting planning mechanism that such companies can use after the end of the financial year, in order to reduce their innovation risk, is investment in skilled labour/experts' pension schemes. Pensions are given favourable treatment in the legislation compared to other types of staffs, and as such they are an important aspect of innovation process. Pension scheme contributions not only reduce serious loss of tacit knowledge, but also accumulate intellectual capacity within the firm. However, contributions to pension schemes require money to be taken out of the business and so provide a disincentive to business growth, investment and employment. In fact, when respondents were asked to indicate which planning mechanisms they use to reduce their innovation risk, skilled labour/experts' pension schemes were rated as the most commonly used mechanism(73.9 per cent), followed by the purchase of fixed assets before year end (69.9 per cent). Other less important mechanisms are paying important members to use up their allowance (44.5 per cent) and increasing owner/directors' salaries to exhaust their allowances (42.7 per cent). The responses are summarised in Table 3.

450

M. Pan Table 3. Management accounting to reduce I NNOVATION

RISK

Question: Do you use the following management accounting mechanisms to reduce your innovation risk? Yes (%)

1. skilled labour/experts' pension schemes 2. Buying of fixed assets 3. Pay other important members 4. Increase owners'/directors' salaries 5. Reduce management cost 6. Reduce operating expense 7. Reduce financial cost

73.9 69.9 44.5 42.7 36.4 23.2 21.1

No (%)

26.1 30.1 55.5 57.3 63.7 76.8 78.8

Reiterating the above, it is clear that SMEs are normally late in estimating their innovation risk, thus they cannot make effcient use of some available management accounting mechanisms to reduce their innovation risk, and (possibly) as a result they rely on planning mechanisms mechanisms that involve the extraction of money out of the business, such as pension fund contributions and salaries. On a macro-economic level, this may be efficient as such practices perfect investment in innovation with the potential to grow and to generate wealth and employment.

References 1. Acs, Z.J., Audretsch, D.B.: Innovation in Large and Small Firms: An Empirical Analysis. American Economic Review 78, 678–690 (1988) 2. Czarniawska, B.: Narrating the Organisation:Dramas of Institutional Identity. University of Chicago Press, Chicago (1997) 3. Hatch, M.J.: The Role of the Researcher: An Analysis of Narrative Position in Organisation Theory. Journal of Management Inquiry 5(4), 359–375 (2006) 4. Heunks, F.J.: Innovation, Creativity and Success. Small Business Economics 10, 263–272 (2008) 5. Nicole, A.: Local Partnerships for Economic Development: Business Links and the Restructuring of SME Support. Economic Development Quarterly 12(3), 266–279 (2001) 6. Openshaw, S.: Multivariate Analysis of CensusData: The Classification of Areas. In: Rhind, D. (ed.) Census User’s Handbook, Methuen, London, pp. 243–263 (2003) 7. SBRT, NatWest SBRT Quarterly Survey of Small Business in Britain 14(1) (2008), Small Business Resesarch Trust, London 8. Storey, J.: The Meanings of Innovation. Financial Times Mastering Management (26), 30–33 (2009) 9. Vossen, R.W.: Relative Strengths and Weaknesses of Small Firms in Innovation. International Small Business Journal 16(3), 88–94 (1998)

Web Services Technology and Its Application in Geophysical Data Processing Jianbo Lian1, Minghua Zhang2, and Chengxi Wang2 1 Information College, Zhongkai University of Agricultural and Engineering, Guangzhou, China 2 Data Process Unit, Development and Research Center of China Geological Survey, Beijing, China [email protected]

Abstract. Web services are the Application modules published on the web that internet users can easily find and use. Its characteristic is good encapsulation, loosen coupling, height integration and openness. This article describes technology and architecture of the development of a web service by using c # and Visual studio.Net platform for gravity and magnetic data processing in geophysical application. Good result and expect efficiency are obtained. Keywords: Web services, Geophysical data processing.

1 Introduction Web services is a kind of software technology with the development of distributed computing building a universal platform don't concerned with the difference in language and technology of various heterogeneous platform, it describes some operation interface, allows applications to use, is the XML standard messages through the network access these operating mechanism of the logic unit. Web services solve the defects of traditional middleware technology (platform dependencies, firewall and interoperability between components in different problem), and seamlessly integrate different hardware and software platforms [1].

2 Web Services 2.1 The Characteristics of Web Services (1) Good Encapsulation: Web services are objects deployed in the Web, these objects have a good encapsulation, users can only see the interface function and parameter name provided by Web services, and operation process and algorithm are encapsulated in Web services. (2) Loosely Coupling: For web service users, as long as the Web service interface functions do not change, Web services for any changes to the realization of internal Web services, and for users are transparent. And distributed application M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 451–456, 2011. © Springer-Verlag Berlin Heidelberg 2011

452

J. Lian, M. Zhang, and C. Wang

logic need to use the distributed object model in sharp contrast, for example: distributed component object model (DCOM), common object request broker architecture (CORBA) program, the system can expand to the Internet, should they require service system to provide clients with services must be tight coupling between itself, which requires is a similar structure. (3) Highly Integrated: Web services using simple and easy to understand Web protocol, as components and collaborative description interface, completely blocked the difference of various software platform, CORBA, DCOM can through the EJB or a standard protocol interoperation SOAP, can highly integrated. Web services can be regarded as a group of programmable components, users can use them through the Web service application programming interface (API). They are integrated into the web applications such as Windows program, Web program and Web services [2]. Web service technology has been accepted by many manufacturers, it has become widely accepted open standards. Different manufacturers use these standard technologies, combining with their professional needs and development platform, to realize the unified Web service. These basal standard technologies include: (1) XML(Extensible Markup Language ) is a set of rules for encoding documents in machine-readable form. It is defined in the XML 1.0 Specification [3] produced by the W3C, and several other related specifications, all gratis open standards.[4] XML's design goals emphasize simplicity, generality, and usability over the Internet.[5] It is a textual data format with strong support via Unicode for the languages of the world. Although the design of XML focuses on documents, it is widely used for the representation of arbitrary data structures, for example in web services. Many application programming interfaces (APIs) have been developed that software developers use to process XML data, and several schema systems exist to aid in the definition of XML-based languages. (2) SOAP (Simple Object Access Protocol): It is a simple, universal, XML-based standard, the text transport protocol, which consists of three parts: the package structure, coding rules and the RPC mechanism. SOAP supports HTTP protocol and can pass through the firewall, using secure sockets layer encryption mechanism and the remote client services, exchange data, so that the client with TCP / IP network environment can access Web services around the world [6]. (3) WSDL (Web Services Description Language): It is a description of XML documents, and it provides access to Web services, Web services users need to know all the contents, such as location, parameter information and support protocols with language independence may be implementation of various languages to describe Web services interfaces for users to select and use. (4) UDDI (Universal Description, Discovery and Integration): It is an open standard and a structured way to help developers distribute their services created. UDDI manages Web services by classification and storage, and allow people or the systems anywhere in the world easily check the services and use them.

Web Services Technology and Its Application in Geophysical Data Processing

453

2.2 Web Services Architecture Web service architecture is service-oriented architecture, a complete Web services architecture consists of three entities: service providers, service requester and service registry. Between the three involved bind, find, and publish operation [7], shown in Figure 1.

Fig. 1. Web services architecture

Service providers (Service Provider) is the creator and owner of the service, it creates Web services and generates WSDL documents, the created WSDL file and other information described by XML is registered in the registration center of Web Service, and issued to the Internet for public through the release operation. Service requester (Service Requestor) can find services at the Web service registry and understand its functions. Service requestor has to find and call another service, or start with the interactive services, Web service provider send the SOAP message access to Web services functionality. Service registry (Service Registry, UDDI server) is a searchable registry of service descriptions, where service providers can publish their services, their classification, and search services. Development in a static binding or dynamic binding during the implementation, the service requester finds services and obtains binding operation of information services, it does not store Web services, only provides links of Web services, service delivery functions and descriptions.

3 Geophysical Data Processing Web Services Most of the geological exploration data are geophysical data. Information extraction should undertake metallogenic need for geophysical data processing. Magnetic measurement method is the traditional geophysical exploration method. Gravity and magnetic measurements continuously improve the accuracy of the measurement results contained in the information is being continually expanded, in order to highlight the exception of the useful information must be processed and converted exception. Conventional gravity and magnetic data processing methods include upward continuation, downward continuation, regularization filter, the first order direction derivative, second derivative calculation of the vertical, gravity and magnetic separation of potential fields [8]. The following magnetic field separation of heavy computing services, for example gravity and magnetic data processing brief Web services development process.

454

J. Lian, M. Zhang, and C. Wang

3.1 Web Services of Calculation of Gravity and Magnetic Potential Field Separation Web services development platform, such as Microsoft studio.net, Delphi, C++ Builder J2EE, etc. Asp.net platform, because the Web service simplified create, testing and deployment, easy to use and development, therefore, the paper selects the.net platform to develop magnetic data processing, develop language chooses c#. Separation of magnetic field calculation Web service function interface is as follows: public byte[] ApartField(byte[] DataS,int i_ExRows,int i_ExColumns,float m_fFactor) Input parameters: byte [] DataS: an array of binary data files. int i_ExRows: expanding rows, the data type is integer. int i_ExColumns: expanding columns, the data type is integer. m_fFactor: Regular Factor, the data type is float. Return values: It is an binary array. Web service will be pass the results to the Web service consumer with array. WSDL of input data in the XML Schema described as follows: - <s:element name="ApartField"> - <s:complexType> - <s:sequence> <s:element minOccurs="0" maxOccurs="1" name="DataS" type="s:base64Binary"/> <s:element minOccurs="1" maxOccurs="1" name="i_ExRows" type="s:int" /> <s:element minOccurs="1" maxOccurs="1" name="i_ExColumns" type="s:int" /> <s:element minOccurs="1" maxOccurs="1" name="m_fFactor" type="s:float" /> The return value in the WSDL XML Schema is described as follows: <s:element name="ApartFieldResponse"> - <s:complexType> - <s:sequence> <s:element minOccurs="0" maxOccurs="1" name="ApartFieldResult" type="s:base64Binary" /> 3.2 The Application of Gravity and Magnetic Data Processing Web Service For the convenience of the user processing gravity and magnetic data, this paper developed a network of gravity and magnetic data processing application, reference has been developed for registration of gravity and magnetic data-processing Web service to complete the core calculation.

Web Services Technology and Its Application in Geophysical Data Processing

455

Using Visual Studio. NET to create applications, only to facilitate the use of. NET platform provides Internet search services and quoted on the Web service, which is found in the services by using the DISCO. Web reference name can be defined according to user's requirements, in the process of creating service agency, and application in the process of using the Web service, service agency after receiving the application, will send to the Web service request, and Web service accepts requests after treatment, the corresponding results in XML format will return to the service agent, application through the service agency for the need of complete Web services calling. Below is an example of gravity and magnetic anomaly separation calculation service: Gravity.ApartField test=new Gravity.ApartField( ); byte[] DataD; DataD=test. ApartField (DataS,i_ExRows,i_ExColumns,f_Factor); Users at the service page need to input/handle his data file and relevant parameters at local computer, the server-side will call the corresponding anomaly separation computing Web service. output document will be displayed after calculation to the user. The User can click on the "contour display" button also to observe the contour of calculated result, and change the parameter and re-computing till satisfied. Calculation service interface of anomaly separation is shown in figure 2.

Fig. 2. Calculation page of magnetic field separation

4 Conclusion Web services is an effective solution of distributed computing. This article work developed a geophysical data processing Web service for Internet user trying to meet the needs of daily data processing by geophysicists worldwide. Standards followed by are the Web services through Internet by UDDI. Users can find this service and integrated into their own geophysical data processing system for data processing. Research and application of this work using web services is a new field of geophysical data processing in the application of modern information technology for geo-exploration.

456

J. Lian, M. Zhang, and C. Wang

References 1. Cai, X.R.: Web services architecture and open interoperability technology. Tsinghua University Press, Beijing (2002) 2. Tabora, R., Xu, J., Ying Yu, M.: Microsoft. NET XML Web Services. Mechanical Industry Press (2002) 3. XML 1.0 Specification. W3.org, http://www.w3.org/TR/REC-xml (retrieved 201008-22) 4. W3C DOCUMENT LICENSE, http://www.w3.org/Consortium/Legal/2002/ copyright-documents-20021231 5. XML 1.0 Origin and Goals, http://www.w3.org/TR/REC-xml/ #sec-origin-goals (retrieved July 2009) 6. Li, W.: C + + Builder SOAP / Web Service development. Huazhong University Press (2002) 7. Yan, X., Li, W., Chen, F.: Web services volume structure and application. Journal of Wuhan University of Technology 24 (June 2002) 8. Dong, H.: magnetic prospecting tutorial. Geological Publishing House, Beijing (1993)

The Analysis of Strengths and Weaknesses of Online-Shopping Li Milong International School Beijing University of Posts and Telecommunications Beijing, P.R. China [email protected]

Abstract. The development of E-commerce, accompanied by the wide usage of Internet technology in economic activities, has launched a global business revolution and economic revolution. As a part of E-commerce activity, onlineshopping has tremendous business opportunity and market potential. However, the problems of online-shopping at present have severely limited its development. This essay analyzed the strengths and weaknesses of online shopping from the aspects of consumers, merchants, and the whole market economy. Moreover, in order to promote the development, the essay also came up with solution for the existing issues of online-shopping from the four angles, which are legal policies, techniques, honesty and education. Keywords: online-shopping, strengths and weaknesses, solution.

1 Introduction Online-shopping, is the process whereby consumers directly buy goods or services from a seller in real-time, without an intermediary service, over the Internet. According to the “25th China Internet Development Statistics Report”, released by the China Internet Network Information Center (CNNIC), Up to Dec 2009, the scale of Chinese Internet users has reached 384 million. Compared with 2008, it rose by 86 million, and the annual growth rate is 28.9%. Among them, the scale of onlineshopping customers has reached 108 million; the annual growth rate is 45.9%. And the usage of online-shopping is rising continually, which reaches 28.1% now. Based on this statistic report, as a new way of shopping, online-shopping is showing the tendency of growth rapid. Online-shopping, with a huge potential, how can it develop healthily, become the tendency of shopping in the future, the need is to analyze the strengths and weaknesses of it firstly.

2 Strengths of Online-Shopping Compared with traditional shopping way, online-shopping is a product of our modern life. Amount of strengths as followed: M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 457–464, 2011. © Springer-Verlag Berlin Heidelberg 2011

458

M. Li

A. For Consumers: a) Unrestricted services. Online-shopping can be accomplish without the restrictions of the time and the place. Due to the application of the advanced internet technology, consumers can select and purchase goods at anytime in anywhere. One instance is iHush (www.ihush.com), it afford 24 hours services a day, which can ensure consumers achieve the process ‘choose-purchase-payment’ whenever and wherever possible. This idea solves the serious problems of traditional shopping in restrictions of the shop hours and the location of business efficiently and effectively. b) Comprehensive information. Current online-shopping platform, for example, Taobao, Dangdang, etc, have built their own search engine, which can help consumers finding the entire merchants that in the sale. Furthermore, this service helps consumers shop around to get a good buy quickly and easily. The survey data of the usage of search engine by the “2009 China online-shopping market research report” shows that the proportion of searching goods and commodities by using general search engines and local search engines are 27.1% and 20.6%, further highlighting the importance of searching in goods selection in online-shopping. Therefore, as the unique characteristics of online-shopping, comprehensive information has become one of the key advantages of it. c) Labor and time saving. Compared to traditional shopping, online-shopping should not be in the action during all of the shopping procedure, such as selecting, purchasing, and picking goods up. Consumers can save the cost and time which spend on the going to and form the shops, finding items, etc. Past five years, the survey comes from “Hots of China Internet Survey Report” shows that 35.7% of consumers believe that online-shopping can “save your energy and time”, while 53.9% of consumers believe that online-shopping is of “convenience due to home-delivery service”. d) Less cost. Thanks to the low requirement on the operating cost and few links of commodity channels, online store can save a lot of additional costs; while, the usage of Internet technology which built on the top of the online trading platform addresses the differences in the commodity prices led by the regional differences and business marketing strategies. Thus, based on this condition, the commodity prices sold online is cheaper than sold by traditional way. Moreover, for C2C shopping sites, such as PAT, provide a route for consumer make auction with businesses, which, likely, make consumer buying cheaper goods. B. For Merchants: a) Low operating costs and flexible operating form. Different from traditional shopping, the operating costs of online-shopping are relatively low. Merchants can save a lot of used in the purchasing of facilities or renovation, instead, just small amount of money will be taken for web design and maintenance. At the same time, the operation form is relatively flexible. As online store is a virtual network platform, the number of goods sold can be greatly increased due to no restrictions on business area. Merchant can allocate goods by using the time slot between the orders placed with the goods distributed. That is to say, deployment did after received the consumers’ orders. This way will help reduce the merchant’s inventory, thereby reducing the backlog of capital.

The Analysis of Strengths and Weaknesses of Online-Shopping

459

b) Strong potential for market development and considerable economic returns. CNNIC pointed out that the scale of Chinese Internet users is considerable, while the corresponding policy environment is relaxed currently. While the increasingly growing purchasing power of market players and the gradual recovery in consumer confidence make the penetration of online-shopping which is relatively low before (at 2009 is 26%) have a tendency of growth clearly. Therefore, the number of potential consumers is considerable in China. For the merchants, great deal of opportunities in online trading is presented themselves. With the constant improvement of this market, related business strategies will be adjusted timely, which, indeed, will help improving the economic returns of merchants. C. For the Market Economy: a) Improve the efficiency of resource allocation. One of the outstanding performances of network economy is the flexibility when compared with other economic form. Against the background of global financial crisis, the major industry and market in China have got some impose. However, according to “China onlineshopping market monitoring statistics report of the second quarter of 2009” issued by iResearch Consulting shows that the transaction size in online-shopping market has reached 56.36 billion Yuan during the second quarter of 2009. This indicates that the network economy represented by network retail companies and small or medium B2B e-commerce enterprises has became the warm flow in economic winter. Deeply, as a industry, online trading is not exist in isolation, the following chart shows the relationship among the online trading and other industries.

Fig. 1. The map of Internet shopping business eco-system

Online-shopping is developing. This process will also bring out tremendous market opportunities for related industries such as advertising and other service providers. It is good for breaking the situation of industry’s malaise, restructuring the structure and upgrading the services of each level of industries. Thanks to the development of online-shopping, the efficiency of resource allocation will be improved fundamentally, and the resource will be better used.

460

M. Li

3 Weaknesses of Online-Shopping Currently, the distemperedness of online-shopping and the bottleneck of internet technology formed a number of weaknesses of online-shopping, which restricted the development of online-shopping. Analyzing these weaknesses will help find solutions of problems, thus promoting a virtuous cycle of development of online-shopping. A. For Consumers: a) Risks of online-shopping. According to the survey given by CNNIC, in 2009, Chinese consumers are not satisfied with online shopping for the following factors: Table 1. Statistics of factors of consumers dissatisfied with online-shopping Factors

Proportion

Goods does not match the pictures

52.3%

Merchandise is fake

25.0%

Shoddy or damaged goods

22.7%

Too long time of delivery

21.2%

Bad attitude of courier

15.7%

Goods damaged during shipping

11.3%

Shipping costs are too high

10.8%

The dissatisfaction of consumers is caused by the weaknesses of online-shopping. This survey indicates that one of the serious drawbacks of online-shopping is the risks in it, such as the risk of goods quality , risk of merchants’ reputation, etc. the following are the lists of each potential risks. • Risk of goods quality. Due to the complexity and virtual of Internet and Internet technology, consumers cannot shop like traditional way when shopping online. The “buyer experience” advocated by traditional shopping which namely means that test goods by seeing, touching and other related activities before purchasing is not suit for online-shopping. In this modern way, consumers cannot have any contact with the real foods before receive it, which, indeed, creates the risk of goods quality. • Risk of merchants’ reputation. During the whole process of online-shopping, consumers cannot see the entity store of the online store personally. Therefore, another risk existed about merchants’ reputation, for example, whether this store existed or whether it can provide good after-sales services, etc. • Risk of information leakage. Consumers will be asked to provide personal information such as email address, mobile number, etc. when shopping online. If the platform of online-shopping cannot provide adequate privacy assurance, it will cause information leakage, which may bring damage for consumers. Relevant information of consumer or credit card numbers may be stolen, even more, the phenomenon of false orders may happened, which may cause great economic losses for consumers.

The Analysis of Strengths and Weaknesses of Online-Shopping

461

• Risk of logistics. Most of the online store cannot establish a national logistics system because of the limited operating power. They rely on courier companies or postal companies to deliver goods. Therefore, consumer have to wait a long time before receive goods, and the integrity of goods cannot be guaranteed in the distribution process. These discussed above are the main risks of online-shopping, based on this, a model of distribution of Risk severity- Satisfaction can be built, as followed:

Fig. 2. The distribution of Risk severity- Satisfaction

b) Issues of after-sales services. The process of shopping online is completed via the virtual medium. Traditional shopping process is that “selection - purchase payment - receipt – after-sales services”. The difference, however, is that the process of online-shopping has already ended after receiving goods because that the shopping platform built on the Internet and merchants set up shop in a virtual environment. When consumers ask for the after-sales services, or when consumer thinks that goods should be sent back for the quality problems, it is difficult for them to find a way to implement this activity, even if the after-sales service can be given, the efficient of it cannot satisfied with consumers as well. A typical case occurred in April 16, 2009, the flagship store of UNIQLO in Taobao, which is used to achieve online retail business system. According to follow-up investigation, the most things consumers dissatisfied is the after-sales services in the whole process of this system. On the BBS designed by UNIQLO online shop, the “rate of returned goods” is one of the problems consumers often complaint. Factors like transportation, verify and refund confirmation may impact the return rate. B. For Merchants: a) Difficult to enlarge the scale of online store. The characteristics of comprehensive information of online-shopping may make the accumulation of consumers becomes extremely difficult. Consumers can find many vendors who sell same commodity. Increased choice for consumers means that merchants should face a fierce competition which called “Red Sea”. Moreover, the quality of merchants online is uneven. Some merchant may use untrue or exaggerated way for sale in order to seek the interests of economic benefits, which, make the fierce competition

462

M. Li

increasingly lack of standardization and fairness. The “Chinese online-shopping market research report” in 2008 gives the survey about the single transaction of consumers as followed: Table 2. The data of single transaction of consumers Shopping amount

Proportion

Less than 100 RMB

24.7%

100-300 RMB

26.7%

300-500 RMB

27.5%

500-1000 RMB

9.3%

1000-2000 RMB

7.3%

More than 2000 RMB

4.6%

This survey indicates that the goods consumers have the willing to buy is whose price less than 500 Yuan. That is to say, the economic benefits of online-shopping that merchants can get are not enough. Therefore, for merchants who want to treat the online trading as long-term businesses and want a large-scale store online, it is of difficulty to accomplish this, only thing can be achieved is stay at a stage of relatively little profits at present. C. For the Market Economy: a) Regional differences may limit economic development. The development of online-shopping relies on the Internet technology. Thus, with the regional differences of development of modern society, the development of online-shopping has emerged in regional differences. It shows concretely as follows: the development of city is faster than that of rural, and the development of east is faster than that of west. According to the “Chinese online-shopping market research report” in 2009, 92.6% of Chinese online-shopping consumers are urban consumers, while only 7.4% of them are rural consumers. And according to the “Chinese online-shopping survey” in 2008, in 2007, the number of online-shopping consumers in Beijing, Shanghai, Guangzhou and Shenzhen which are major cities is over 10.5 million, the penetration rate of the online-shopping occupy 41.7% of total consumers. However, the number of onlineshopping consumers in Wuhan, Chengdu, Shenyang and Xi’an is only 2.53 million, the penetration rate is just 29.3%. This features of online-shopping which development regionally will make more serious of the differences between city and rural or east and west in their economic development, and may restrict the overall pace of Chinese economic development, obstruct the macro-control of market economy in China.

4 Effective Solutions Market structure includes consumption subject, purchasing power and desire to purchase. At present, the online-shopping market is far from satisfactory. Even through the penetration rate of online-shopping is growing; the total proportion of consumers who have the willing of shopping online is still in a low level. The

The Analysis of Strengths and Weaknesses of Online-Shopping

463

weaknesses has restricted the consumption subject, purchasing power and desire to purchase, so amount of Internet users have a posture with online shopping as “wait and see”. This will impact the merchant and economic environment as well. Thus, it is of importance to proposed corresponding measures to improve the situation of onlineshopping currently. The following aspects should be considered: A. Laws, Regulations and Policies: Two aspects should be taken into account in order to perfect laws and regulations. One is aimed at consumers. The consumer protection system of online-shopping should be established as soon as possible. It is reported that Chinese SAIC will amend the “Consumer Protection Law” and other relevant laws and regulations so that give more clear regulations about the problems of online-shopping violations. At the same time, relevant departments should carry out uniform supervision for online stores and dispose the violations timely and correctly in order to protect the interests of consumers essentially. The other is aimed at merchants. Local governments should put the appropriate policies to support the development of local online retail market, provide the standardization of market which can give a environment of fair competition and freedom development for merchants. At present, Policies such as the “Regulations of promoting the development of E-commerce in Shanghai” promulgated in June 2009 and the “Notice for general college graduates to engage on E-commerce (online shop) for their own businesses” issued by Zhejiang’s Provincial Education Department are all aimed at afford opportunities for development of online retail market, but their efforts were to be enhanced. B. Technique: The improvement of technique is against the solutions of the problem of onlineshopping itself and other related technology. First is aimed at the information security. Network enterprise and Internet sectors should update the measures of information protection continually, focus on the security of website, use firewalls, encrypt technology or even electronic signature to protect the personal information and passwords of credit card from being stolen. Second is aimed at the delivery. Enterprise or logistics companies should pay attention to the built of logistics network in order to enhance the efficiency of logistics system and reduce the occurrence of bad situation such as goods damaged during the process of distribution, etc. final is aimed at the website design. Merchants should study the features of consumers such as consumers’ psychology, consumers’ decision etc deeply to redesign the website of online store, reduce the complexity of their page, add the detail description of their goods etc. Government is building a good technological environment for onlineshopping recently. Some measures, for example, optimize the third-party payment continuously, or promote the development of SMEs online. C. Honesty: Relevant departments should strengthen the level of supervision on the onlineshopping and advocate self-discipline. One is aimed at the monitoring of quality of goods in online-shopping. The merchant who did commercial fraud such as sell adulterated goods should be given seriously punish. Meanwhile, the merchant who have a good reputation should be rewarded and publicized. Second is aimed at the monitoring of the after-sales services. Government should punish the merchant who

464

M. Li

reject to afford after-sales services or provide “overlord clause” for consumers. Last but not the least, a fair environment for competition and a standardization of marketing strategy should be promoted so that the online-shopping market can develop soundly. D. Education: Government and relevant departments should strengthen the education of consumers, and create a good shopping environment for consumption constantly. First is to strengthen the awareness of consumers’ self-protection. This awareness includes the awareness of risk of possible information leakage, information theft and so on. Second is to educate consumers protect their legitimate rights and interests by using legal weapon and promote consumers handle the unlawful infringement during the process of online-shopping legally. Finally, government should promote a correct way to shop online. Standardize consumers’ behaviors and make them know that do not hanker after cheap when shopping online and request the purchase invoices when shopping ended in order to prevent the legal interests of consumers from being violated.

5 Conclusion In the future, the market will be domain by 80s retro and 90s retro. The features of this consumer group are skilled in Internet technology and willing to experience new things. It happens that this kind of demands and desires can be satisfied by onlineshopping. As the future development trend, the potential market and power are limitless. Faced with the strengths and weaknesses correctly, and improved the situation of online-shopping through the endeavor by consumers, merchants and the macro-control of market will promote a virtuous cycle of the development of onlineshopping. The boom of online-shopping is just around the corner.

References 1. 2. 3. 4.

Chen, L.: Shopping Online. China Social Press (2010), ISBN: 9787508728438 The 25th Chinese Internet Development Statistics Report, CNNIC (2009) The Chinese Online-shopping Market Research Report in 2009, CNNIC (2009) Ni, Q., Li, J.: Study of Demand Characteristics of Consumers in Online-shopping and Related Influencing Factors. Social Sciences Review (6) (2007) 5. Li, B., Li, Q.: Analysis on Consumers’ Perceived Risk in Internet Shopping: Its Components and Sources. Economic Management (2) (2006)

Confusion of Franchisor of Chain Business and Development Strategy Li Yuhong1, Lu Hong2, and Han Weixi³ 1

College of Applied Science and Technology, Beijing Union University, P.R. China, 102200 2 Beijing Information Technology College, P.R.China, 100070 3 College of Applied Science and Technology, Beijing Union University, P.R. China,102200 [email protected]

Abstract. The future chain business is bound to develop along the line of franchise chain which is bound to along the line of franchise business mode. However, presently a number of franchisors have never formed the franchise chain with standardized service, professionalized operation and informationalized management. With the rapid development and expansion of China’s business services, the franchise that relies on trademark or product now no longer suffices for the ongoing development of franchisees, so the road of connotation development has become the main stream for the chain business. The advanced stage of franchise chain development is the unified business model via high technology and advanced management philosophy, achieving unified accounting and management. Franchisors shall arrive at the purpose of quadruple-win of franchisors, franchisees, customers and society by the establishment and under the management of standardized service, professionalized operation, informationalized management and scientific decision-making. Keywords: Franchise chain business, franchisor, franchisee.

After the embryonic state of fully regular chain, the chain business has entered the initial stage of franchise business, that is, the franchisors achieve the purpose of chain business through franchisees by franchising trademarks and products to them. In developed countries, both the number of franchisees and the turnover of the franchise chain in this way have decreased obviously. For instance, the turnover in the United States shares less than 3% of the total turnover of chain business. With the rapid development and expansion of China’s business services, the franchise that relies on trademark or product now no longer suffices for the ongoing development of franchisees, so the road of connotation development has become the main stream for the chain business. The advanced stage of franchise chain development is the unified business model via high technology and advanced management philosophy, achieving unified accounting and management.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 465–470, 2011. © Springer-Verlag Berlin Heidelberg 2011

466

Y. Li, H. Lu, and W. Han

1 Overview of Local Franchisee Chain’s franchise business has formed scale since the 1990s and almost all types of operation of chain business in the world have emerged in China. A number of chain groups of developed countries have entered China’s market, and became an important component of China’s franchise industry, greatly promoting and influencing the foundation of the organizational and management model of franchise business. Many of China’s local franchisees have the experience of working in foreign chain enterprises; imitating and learning from the successful model of foreign chain business, they have combined the law, technology and management of franchise business with China’s local environment, becoming the new force of the franchise chain business in China.

2 Confusion of Local Franchisors Presently, China’s chain industry is developing in an active stage. During 2005 to 2008, the number and sales of chain stores have grown with the rate of 20%, and in 2009 the financial crisis caused a decline in profits, leading a rather small increase largely in Beijing, Shanghai and other major cities and a higher increase in second-tier cities. In the light of franchise chain, both the number and turnover of franchisees are still in the high growth state. However, the date from China’s Chain Store & Franchise Association and other authoritative institutions show that on one hand, the franchisees increased rapidly with a number of nearly one thousand in peak months; on the other hand, the retreat or “disappearance” of them was quickly with a loss rate of above 40%, which can be described as “violently joining and hastily retreating”. It can be said simply franchising trademark or product now no longer suffices for the ongoing development of franchisees. The drawbacks lie in the followings: 1. Poor Sustainability of the Commercial Value Delivered to the Franchisees In the initial stage of the franchising relationship between the franchisors and franchisees, the former obtain the first franchise fee, and the latter get the trademark or products, rather than the operational way of them, of the former in exchange, and as a result, the franchisees generally get very little support in the operation from the franchisors. This kind of franchised intellectual property is very limited, so the franchisees fail to get increased turnover and profit from the purchase of franchise. To extend their business, many franchisees establish separate companies and operate other products and items or default on subsequent franchise fees, making the franchising relationship exist in name only and the franchising agreement a dead letter. 2. Weak Promoting Capacity of the Value of Franchisors Themselves The franchisors can only own a long-term stabile franchise in the fierce business competition by continuing to improve the intellectual property of their own, increasing the knowledge of their brands, products, business models and the connotation of management technology. They can only attract franchisees when they manage and exploit the intrinsic value attached to the brand and product. However, it is far from the attainment of this object set in the original agreement between the two sides due to the lack of long-term stable symbiotic and mutually reinforcing relationship with the

Confusion of Franchisor of Chain Business and Development Strategy

467

franchisees as a result of franchisors’ weak capacities of maintaining their franchise and appreciation. The runaway state of the business in the first, middle and late stages after franchising has caused low knowledge and technology content of franchising, so that the franchisees can be independent of the franchisors or even regard them as a burden to strain at the leash to escape their control. 3. Lagged Franchise Philosophy and Method Franchise is a business model by which the chain enterprises expand market, increase market share, gather resources, reduce costs and form economies of scale. The purpose of franchise chain business is to form interest community through franchise and achieve the situation of quadruple benefit of franchisors, franchisees, customers and society by economies of scale. In the future, the chain business is bound to develop along the line of franchise chain which is bound to along the line of franchise business mode. However, presently a number of franchisors have never made efforts in creating the franchise chain system with standardized service, professionalized operation and informationalized management, but rather focused on trademarks and products promotion and charging franchise fee, because they believe that they can attract franchisees so long as the trademark and brand promotion is sufficient. This philosophy and practice, which are adopted by the United States one hundred years ago, still remain in the initial stages of franchise business and has distinctly fallen behind international franchise business philosophy, and the approach of simply franchising trademarks and products has reached a dead end in China.

3 Local Franchisee’s Countermeasure It is the key to the franchise business to build franchise chain business system, the aim of which is the quadruple-win of franchisors, franchisees, customers and society, and the source to achieve this goal lies in the franchisors. By creating and franchising standardized service, professionalized operation, informationalized management and scientific decision-making subsystem, franchisors enhance franchisee’s ability to quickly respond to market, accelerate the flow, reduce operating costs and make greater profits space, enabling them to offer more profit to customers and allowing customers to get satisfying goods or services at less costs. Meanwhile, franchisors shall integrate franchisee resources and the joint purchase and marketing will also reduces the social transportation costs and ease traffic pressure, which was one of the initial causes for Japanese government’s actively promoting the chain business. 1. Standardize Service by Providing Training System By organizing vocational institutions, vocational colleges, industry associations, etc, the franchisors can develop and gradually implement the training system, including training and selecting instructors, training, instruction manuals, training stuff development and management of training process and feedback. The training is designed to help franchisees standardize their operation and services, and therefore, the training should include: Establish the service ideology and code of conduct on service of the employees of franchisees;

468

Y. Li, H. Lu, and W. Han

Train the ideology of unified service etiquette and enhancing customer satisfaction; train customer service skills; Understand the implication of company’s unified image, logo, brand, store layout, primary colors, etc; Service standardization is mainly to improve employees’ ideology of customer satisfaction, establish operating procedures and codes of conduct, and form combined internal force and consensus and set clear and consistent external corporate style and image. 2. Professionalize the Business by Designing Operating Procedures and Developing Codes of Conduct The value of franchise is to provide franchisees with mature procedures which are proven effective by practice and shall be perfected through constant improvements. （ 1） Franchisee manager manual, including Manager responsibilities, customer relationship management, project management, staff management, store management, sales management, financial management, marketing information management, administrative affair management, etc. （ 2） Franchisee operational management manual, including: Pre-, in- and after-business operating procedures, service procedures, after-sale service procedures, complaint handling procedures, emergency handling procedures, store sanitary standard, staff sanitary standard, staff instruction, operating hours, etc （ 3） Chain store commodity management manual, including: Procurement planning, order management, replenishment management, commodity receiving procedures, standard of goods placement, inventory management, stock-taking procedures, marketing statistics, etc

Only achieve the level of modern services when measure up to the standards of service maturity. “Service maturity” reflects the level of service and service management of a service enterprise which can be divided into five levels: Level 1, the “initial level”: chaotic service and management Level 2, “repeatable level”: repeatable service process and relatively orderly service, but no available service standards Level 3, “Standardized level”: The service procedures have been standardized, in which each action and each service has its standard, having available management document Level 4, “Manageable level”: This level has formed quantified management objectives in all procedures and links, so all the service actions can be measured and evaluated. It has achieved a quantitative management. Level 5, “Optimizable level”: This level has achieved continuous service improvement, and the service procedures are continuously optimized, service quality continuously improved, having the ability to prevent service defects. The service level and management level can be continuously improved by way of gradual progressions. Each progression is required to complete the “critical procedures” of this level and previous level. These “critical procedures” form a “critical procedures area”.

Confusion of Franchisor of Chain Business and Development Strategy

469

3. Informationize Management by Establishing a Distribution Assurance Platform The distribution system includes three core business processing functions: integrated business management, warehousing operation management, distribution operation management, and two very important management functions: logistics cost management and logistics performance management. In addition to the above, it provides leadership decision-making with the functions of efficient inquiry and decision support, and basic information support maintenance and system management for the normal operation of the system.

◇

Available for a variety of business documents, such as distribution bills, transportation bills, warehousing management bills, transferring bills, lading bills, online orders; Reports of recorded, actual and expected inventory are available at any time Available for bar code and two-dimensional bar codes in inventory management Available for manual and automatic designation of storage spaces in stock in & out Inquiry for current and forecasted storage capacity, circulation and processing capacity and handling capacity are available at any time Dynamic tracking of distribution task helps enterprises and enterprise customers grasp the distribution status Arrangement of distribution tasks by various strategies such as owners, routes, goods, schedules, etc （ 1） Business document management, including The functions of online document; input, audit, decomposition, issue, feedback, reception and track of business document （ 2） Subsystem of storage operation Stock-in management The functions of forecasting the arrival of cargo, stock inspection and acceptance, stock difference processing, assignment of storage placement, making and refilling shelving bills; Inventory management The functions of consolidation of storage areas, shelf life management, inventory early warning, internal inventory replenishment, etc; Stock-out management The functions of making and refilling pick list, distribution record, stock-out inspection, stock-out record; Stock-taking management Setting stock-taking cycle, making and refilling stock-taking list, handling overage & shortage, etc; Distribution processing and packaging management Defining processing technology and packaging, making and refilling packaging list, making and refilling processing list, etc; （ 3） Subsystem of distribution business management

◇ ◇ ◇ ◇ ◇ ◇

· · · · ·

470

Y. Li, H. Lu, and W. Han

·

Dynamic vehicle management The functions of setting and inquiry of available vehicle, dynamic report and inquiry of vehicle; Dispatching plan management Arranging vehicle for certain cargo distribution in defined path and order according to vehicles state, distribution cargo and requirements; Log book management Recording the processes and costs of the distribution; Distribution accident management The functions of providing distribution accident and direct losses records, record and inquiry of compensation processing and record and inquiry of responsibility handling; Cargo transfer management Cargo transfer record, arrangement of rejected or undelivered cargo; Cargo transit management Managing the operating procedures which need transit in temporary storages before transport and distribution, including the functions of temporary stockpiling management, temporary discharge record, cargo sorting and loading, etc.

· · · · ·

4. Achieve Scientific Decision-Making by Information Data Analysis System The computer information data analysis provided by franchisors is of great significance for the decision-making of franchisees. The automatically recorded name, number, quantity and other data of the cargo of franchisors can be provided for franchisees after information aggregation, calculation and analysis statistics. This date can provide franchisees with sales information of different types of goods, such as salability state, margin, etc, forecasting the information as passenger flow, purchase volume, sales of single product, commodity wastage, etc in a certain time period to help franchisees make accurate business decisions.

References 1. Liu, w.: China Franchise Directory. Publishor of China Finance Economic (2002) 2. The Future of Franchising: Looking Twenty-Five Years ahead to the year 2010, a study for the International Franchise Association by The Naisbitt Group, p. 1. International Franchise Association, Washington, DC (1986) 3. Schmitt, B.H., Pan, Y.: In Asia, the Supermarket Means Sales. The Newyork Times 3(11), 2 (1995)

On Early Warning Evaluation Index System of Enterprise Purchasing Risk Based on the Balanced Scorecard Yongsheng Liu and Chunlei Ma School of Logistics Beijing Wuzi University Beijing, P.R. China [email protected]

Abstract. This research aims to seek a better early warning evaluation index system of enterprise purchasing risk. Based on the basic principle of the Balanced Scorecard (BSC), a feasibility of applying the BSC in early warning evaluation of enterprise purchasing risk is analyzed first. Secondly, risks in enterprise procurement and their respective influencing factors are proposed from the perspectives of finance of purchasing, purchasing performance, internal operation of purchasing and purchasing future development. Also, an early warning evaluation index system of enterprise purchasing risk is constructed. And finally, the Fuzzy Analytical Hierarchy Process (FAHP) is introduced in the early warning evaluation index system of enterprise purchasing risk, which thus helps to strengthen the enterprise purchasing risk management. Keywords: balanced scorecard, enterprise purchasing, early warning evaluation of risk, index system, fuzzy analytical hierarchy process.

1 Introduction With an accelerated process of economic globalization and an increasing importance of purchasing in enterprises, the scope of enterprise purchasing has been extended from mere domestic market to a global market. Also, the risks for purchasing are correspondingly increased. This requires enterprises to find out an effective way to prevent purchasing risks from the aspect of internal management. Therefore, it is necessary to establish and perfect an early warning mechanism of enterprise purchasing risk. To achieve this, however, it is essential to construct the early warning evaluation index system of enterprise purchasing risk. As yet, in terms of enterprise purchasing risk, much of the literature focuses on identification, cause analysis, risk prevention and control[1-3] or specific risk measurement[4-5]. Little is researched on a comprehensive evaluation of enterprise purchasing risk, and there is still no research in the respect of the early warning evaluation of enterprise purchasing risk. As such, the paper seeks to apply the Balanced Scorecard (BSC) in early warning evaluation of enterprise purchasing risk, M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 471–477, 2011. © Springer-Verlag Berlin Heidelberg 2011

472

Y. Liu and C. Ma

and then the early warning evaluation index system of enterprise purchasing risk is established. It is noted that the Fuzzy Analytical Hierarchy Process (FAHP) is applied to early warning evaluation of enterprise purchasing risk.

2 Feasibility Analysis of the Balanced Scorecard in Early Warning Evaluation of Enterprise Purchasing Risk[6] Firstly, based on the balance idea, the Balanced Scorecard (BSC) emphasizes that the level of organization performance does not directly depend on its financial standing, and more attention should be given to the capabilities of sustainable development and value creation. As for early warning evaluation of enterprise purchasing risk, the concept of balance and overall planning should also be emphasized when building up the early warning evaluation index system. Specifically, it is of great concern to strike a balance between cost and benefit, short-term goal and long-term goal , development and stability, among past risk condition, current risk condition and possible risk condition in the future and so on. Secondly, the BSC, which puts the development at its centre, converts strategic goals of organization into performance evaluation indexes, and associates the behaviors of organization and its members with such goals. It is therefore beneficial to achieve strategic goals of organization and enhance organization performance. Taking purchasing as its central task, the purchasing department is required to translate its objectives into specific purchasing activities. Moreover, enterprise purchasing refers to continuous and developing activities, and it is unfavorable for sustainable development of enterprise purchasing if enterprises only focus on the current risk evaluation. Therefore, paying more attention to development factor is essential for the early warning evaluation of enterprise purchasing risk. Thirdly, the BSC presents qualitative and quantitative analysis method. Quantitative analysis should be a major method in the early warning evaluation of enterprise purchasing risk, and at the same time the combination of two methods is used when needed. Thus, the BSC provides a practical and reliable technical tool for the early warning evaluation of enterprise purchasing risk in a scientific and an accurate way.

3 Early Warning Evaluation Index System of Enterprise Purchasing Risk Based on the Balanced Scorecard Early warning evaluation index system of enterprise purchasing risk refers to a series of index sets that reflect enterprise purchasing risk condition, and a basic idea for setting up the early warning evaluation index system of enterprise purchasing risk is offered by means of starting with analyzing and predicting basic risk factors of enterprise purchasing[7]. Depending on enterprise controlled resources in procurement, obtaining the very products that enterprise needs at the cheapest possible price is a critical element in enterprise operation and is also an important source of profits. Through purchasing, the normal production process can be ensured. Particularly by improving the quality of raw materials and controlling and reducing the costs related to purchasing, product quality and economic benefit can be improved. However, due to the complexity of the environment and operation process regarding purchasing, enterprises will certainly face many kinds of risks in activities including purchasing planning, supplier selection,

On Early Warning Evaluation Index System of Enterprise Purchasing Risk

473

purchasing decision, order processing, transportation, receiving and until the use of these materials. Meanwhile, the risks are caused by a number of factors, such as natural factors, economic policy, technological progress, price fluctuation, behaviors of the supplier and so on. To conduct an effective early warning evaluation of enterprise purchasing risk in a comprehensive and specific way, classifying these risk factors is needed to make their relationships clear. So the degree the influence of risk factors on the evaluation objectives can be distinguished. To analyze what factors lead to these purchasing risks, both external environment and internal operation should be taken into consideration. But these risk factors, whether from external environment or from internal operation, are complicated and correlated. Thus, it is impossible and also not necessarily to design early warning evaluation index system for each enterprise purchasing risk. The objective should be set before integrating related factors and indexes. Clearly, the BSC lays a foundation for integrating related factors of enterprise purchasing and the early warning evaluation index system. Firstly, according to the basic idea of the BSC, both financial factors of procurement and the potential factors for future development should be considered. Secondly, it is essential to consider risk conditions of procurement from the perspectives of performance and internal operation, and have close linkage between long-run strategic risk factors and short-run operational risk factors. Borrowing from research results of purchasing performance evaluation[6,8,9], risk factor analysis of the enterprise purchasing is proposed from four perspectives, that is, financial Risk of purchasing, internal operation risk, purchasing performance risk and future development risk. These four perspectives are corresponding to finance, performance, internal operation, future development. It is obvious that this risk analysis combines financial indexes with non-financial indexes and lays a foundation for establishing the early warning evaluation index system of enterprise purchasing risk. A. Financial Risk of Purchasing Financial risk of purchasing refers to a state of deviation from expected financial expected goals resulting from the unforeseen circumstances in purchasing by purchasing agencies. If financial risk indexes of purchasing are worsen in a low level, it indicates low performance of Purchasing input, while worsen in a high level, it means enterprise financial burden will be increased. The factors influencing purchasing financial Risk include purchasing cost risk, purchasing rate risk, purchasing capitalsaving risk and cost-saving risk of bulk commodity purchase. B. Internal Operation Risk Internal operation risk involves the possibilities and losses caused by operation failure or failing to achieve the expected goal due to limitation of cognitive ability and adaptability in procurement. The factors that affect internal operation risk of procurement include turnover risk, risk of an honest of purchasing staff, information management risk, open and transparency risk of purchasing, operating efficiency risk, standardized operation risk, risks of operating system construction, etc. C. Purchasing Performance Risk The right quality, the right price, the right quantity, the right time and the right place have been constant pursuit objectives of enterprise purchasing. Purchasing performance risk refers to the possibility and the degree purchasing activities and their results do not achieve the goals. The factors that affect performance risk of procurement include price

474

Y. Liu and C. Ma

risk, commodity coincidence rate associated with quantity, specification and quality, the risk of the purchasing department response to demand, environment risk, etc. D. Future Development Risk Future development risk refers to the possibility and its extent that enterprise can not adapt to new economic situation and new requirements. The factors that affect enterprise future development include risk of the expenditure on business improvement of purchasing staff, self-improving risk of purchasing staff, business exchange risk of purchasing agencies, risk of out-of-date purchasing model, risk of development strategy, etc. To maintain the significant momentum, enterprise should improve the quality of purchasing personnel, purchasing institutional self-adaptability and innovation when facing the fierce market competition. Based on the above risk factors, the early warning evaluation index system of enterprise purchasing risk is designed in accordance with mentality and principle of designing of early warning evaluation index system of risk. It centers on the objectives of early warning evaluation of enterprise purchasing risk and includes various factors that affect the operation of enterprise purchasing. The index system is showed in table 1. It should also be clearly noticed that early warning evaluation index system of enterprise purchasing risk designed here is of generality. These early warning evaluation indexes are required to be adjusted according to purchasing tasks of different enterprises. Furthermore, the calculations of early warning evaluation indexes of risk are also needed to be changed in the light of actual situations of different enterprise purchasing. Table 1. The early warning evaluation index system of enterprise purchasing risk

Early warning evaluation of enterprise purchasing risk

Target Layer

Rule Layer

Index Layer

Early warning evaluation indexes of purchasing financial risk

Purchasing cost

Early warning evaluation indexes of purchasing internal operation risk

Early warning evaluation indexes of purchasing performance risk Early warning evaluation indexes of future development risk

Purchasing rate Capital-saving rate Cost-saving rate of bulk commodity purchase Turnover rate Honest index The level of information management Open and transparency Standardized Operation Operating efficiency Operating system construction Price rationality Commodity coincidence rate service efficiency Environmental protection effect The ratio of business improvement to its cost Time for vocational study Business exchange rate A model innovation index The clearness of development strategy

On Early Warning Evaluation Index System of Enterprise Purchasing Risk

475

4 Early Warning Comprehensive Evaluation of Enterprise Purchasing Risk Each early warning evaluation index can only reflect one aspect of risk condition of enterprise purchasing. The entire risk condition of enterprise purchasing can be effectively reflected only when there is a comprehensive evaluation of the early warning evaluation index system. On this basis, the Fuzzy Analytical Hierarchy Process (FAHP) [10] is applied in the domain of the early warning comprehensive evaluation of purchasing risk. The Analytic Hierarchy Process (AHP) provides a framework for acquiring the weight of each risk factor by integrating expert evaluation, constructing the judgment matrix, and avoiding the errors in the logical reasoning in terms of complicated risks. Through simulating the property of making the judgment by human, fuzzy mathematics can be used for effectively dealing with imprecise and ambiguous information. The FAHP, however, is a model that combines the AHP and the Fuzzy Evaluation Method and makes them complement each other, thereby ensuring the early warning evaluation index system of enterprise purchasing risk more effective. A. The Construction of Factor set, Evaluation Set and Set of Decision Values Factor set refers to a set whose elements are various factors associated with the evaluation object. As illustrated in table 1,the factors under the objective of the early warning evaluation of enterprise purchasing risk can be classified into two grades: the first-grade factor set is X={X1, X2, X3, X4}={early warning evaluation index of purchasing financial risk, early warning evaluation index of internal operation risk, early warning evaluation of purchasing performance risk, early warning evaluation of future development risk};the second-grade factor is subordinate to the first-grade factor, and its factor set respectively is X1={X11, X12, X13, X14}, X2={X21, X22, X23, X24, X25, X26, X27}, X3={X31, X32, X33, X34}, X4={X41, X42, X43, X44, X45}. Evaluation set involves a set that is composed of any possible evaluation results about the evaluation object made by the evaluator. Evaluation set includes four levels: V={v1, v2, v3, v4}, representing {safe, basically safe, risk, major risk}. Set of decision values is a set that corresponds to the evaluation level and the set is B={b1, b2, b3, b4}, where bi stands for the decision value associated with the evaluation level of the (ith). B. Determination of the Weight of Each Index by the AHP The importance of factors in factor set is compared one another two at a time by expert. As to the second-grade factor set, the judgment matrix Cs(s=1， 2， 3， 4) can be respectively constructed with 1-9 methods of scale, and the largest eigenvalue λ s,max and the corresponding eigenvectors are solved by the matrix. Thus the weight of each factor is obtained as follows: Ws=(ws1， ws2， ⋯， wsm) Then consistency checking of these weights is carried out according to C.I.=( λ s,max m)/(m-1)≤0.1, that is, logical consistency checking of these weights is given. Likewise, the weight vector of factor set that is composed of the first-grade factors can be obtained as follows:

476

Y. Liu and C. Ma

W=(w1, w2, w3, w4) C. The First-Grade Comprehensive Judgement on Sub-factor Set Single-factor judgment matrix, that is, fuzzy relational matrices from U to V, is first constructed. It is generally obtained by using the method of random sampling. For U1:

⎛ r11 ⎜ r R1 = ⎜ 21 ⎜ r23 ⎜⎜ ⎝ r41

r12 r22 r32 r42

... r1m ⎞ ⎟ ... r2 m ⎟ ... r3 m ⎟ ⎟ ... r4 m ⎟⎠

where rij stands for the degree the index (ith) is defined as the level j. Similarly, R2, R3, R4 can be obtained by using the above matrix. Then the model of Fuzzy transformation from Ui to V is as follows: Bi=Ai·Ri=(bi1, bi2, …bin), i=1, 2, 3, 4 where n stands for the index of the (nth) in Ui . D. Second-Grade Comprehensive Judgement Single-factor judgment matrix R is established with R1, R2, R3 and R4, whose elements are made up of U1, U2, U3 and U4. Then it is followed by Fuzzy transformation from U to V: B=A·R=(b1, b2, b3, b4). By unitary processing, the model is as follows:

B' = (b1 ' , b2 ' , b3 ' , b4 ' ) . In this case, according to maximum membership principle, the level of enterprise purchasing risk can be judged to realize comprehensive judgement. If B≤[0.9, 1.0],it means safe and is defined as no warning area. At this level, the warning light is green. If B≤[0.7, 0.9） ,it means basically safe and is defined as a low-level warning area, where the warning light is blue; If B≤[0.5, 0.7） ,it represents risk and is defined as a medium-level warning area. Correspondingly, the warning light is yellow. If B≤[0, 0.5） ， it stands for major risk and is defined as a high-level warning area, thus the warning light is red. The purpose of using lights of different colors is to warn managers involved in Enterprise Purchasing Risk to adjust strategies in good time to reduce the losses and the occurrence of the risks. It will also enhance the ability of risk resistance in enterprise purchasing. Meanwhile, a comprehensive, systematic and preventive management is required. The countermeasures regarding early warning management should be formulated and implemented according to the warning sign when a forecast or a warning has been given. In doing so, the risks and the losses can be reduced or avoided, thereby ensuring enterprise purchasing go on smoothly.

On Early Warning Evaluation Index System of Enterprise Purchasing Risk

477

5 Conclusions The goal of the paper is to provide a reference for enterprises to perform the early warning evaluation of purchasing risk and theoretically for further study on the early warning evaluation of purchasing risk. The early warning evaluation index system of enterprise purchasing risk is a basic part of enterprise purchasing risk management. It is noted that early warning and control of risk in advance can be realized by designing a scientific early warning index system of risks. The theory on early warning of risk is applied to the risk management. Also, the design idea of early warning evaluation index system of enterprise purchasing risk is proposed. On this basis, according to the basic principles of the BSC, the early warning evaluation index system of enterprise purchasing risk is constructed. And in the end, the FAHP is applied to a comprehensive early warning evaluation of enterprise purchasing risk. Acknowledgment. The research is supported by the Funding Project for Academic Human Resources Development in Institutions of Higher Learning under the Jurisdiction of Beijing Municipality (PHR (IHLB)) under Grant PHR200907134.

References 1. Zsidisin, G.A.: Managerial Perceptions of Supply Risk. Journal of Supply Chain Management 39, 14–25 (2003) 2. Liu, B., Wan, W.W.: Risk Countermeasures and Strategies for Power Construction Company Purchase. Electric Power Construction 28, 61–62 (2007), doi:CNKI:SUN:DLJS.0.200702-022 3. Deng, Y.G.: Research on the Risk of Enterprise Material Purchase. China Logistics & Purchasing, 72–73 (2008), doi:CNKI:SUN:ZWZJ.0.2008-12-025 4. Jiang, W.D.: A New Way for Purchasing Risk Management. Technoeconomics & Management Research, 74–75 (2007), doi: CNKI:SUN:JXJG.0.2007-02-032 5. Wan, X., Yan, L.: Procurement Risk Management Model Based on VaR. Logistics Technology 26, 54–57 (2007), doi:CNKI:SUN:WLJS.0.2007-01-015 6. Zhang, X.Y., Liu, W.Y., Xue, R.: Equipment Procurement Performance Measurement Structure Design Based on BSC. Journal of Academy of Armored Force Engineering 20, 25–27 (2006), doi:CNKI:SUN:ZJBX.0.2006-06-006 7. Liu, Y.S., Tang, B., Yang, L.: Research on Early-Warning Index System of Logistics Enterprise Risk. Railway Transport and Economy, 74–76 (2010), doi:CNKI:SUN:TDYS.0.2010-02-024 8. Shang, C.B.: A Study on Performance Evaluation of the Military Material Purchase. China Logistics & Purchasing, 62–63 (2004), doi:CNKI:SUN:ZWZJ.0.2004-09-028 9. Zhang, M., Liu, W.Y.: Research on Construction of Equipment Procurement Performance Evaluation Index System. Military Economic Research, 36–37 (2007), doi:CNKI:SUN:JSYP.0.2007-09-011 10. Zhang, J.J.: The Fuzzy Analytical Hierarchy Process. Fuzzy Systems and Mathematics 14, 80–88 (2000)

Investment Value Analysis for Listed Companies of China Communications Industry Hua Han and Fei Tang Science College Wuhan University of Technology Wuhan, Hubei, PR China [email protected]

Abstract. In this paper, it studies 42 communication industry listed corporation companies in China. By constructing the evaluation index system, selecting the 13 financial indicators, using principal component analysis to extract six principal components so as to calculate the integrated value, thus the 42 companies were sorted. On that basis, through cluster analysis, the stocks which have similar performance are classified. Result shows that in the first quarter of 2010, about 50 percent of China's communications industry companies behave well and implicate enormous investment value, these companies are distinct on different aspects. It also gives the corresponding policy recommendations from the angle of both managers and investors. Keywords: communication industry, cluster analysis, investment value, principal component analysis.

1 Introduction With social development, communication technology and people's daily life are increasingly linked. Communications industry has become the national economy progress and basic industry. On the background of the global financial crisis, China telecommunications industry remained stable growth while global communications industry is generally depressed. The industry has gradually become one of the fastest growing and the most effective in China. With the coming of 3G mobile media era, the telecommunications industry has added new vitality. With a greatly increased scale of investment, communications section will continue to strengthen. Communications sector will definitely become the new focus in the future stock market. In view of the situation, how to objectively measure the communications industry investment value of listed companies to control market risk is the common problem facing by investment institutions and investors. With the deepening of the study for investment analysis, investors are increasingly concerning about the listed companies’ inherent investment value as well as communications industry. Through a forward-looking grasp to the regular pattern and trend of the stock’s intrinsic value, it can provide a scientific basis for investors to have a rational investment decision. M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 478–483, 2011. © Springer-Verlag Berlin Heidelberg 2011

Investment Value Analysis for Listed Companies of China Communications Industry

479

This article analysis the stocks’ investment value of 42 China's communications industry listed companies to examine the impact factor and establish an integrated investment value system. According to the 2010 first quarter financial indices, it establishes the investment value evaluation model which based on the principal component analysis and cluster analysis: Firstly, using the method of principal component analysis combines together with various indicators to form the main component, determine the correlation between principal components and investment value, calculate the principal component values, integrated values and rankings so as to find stocks with investment prospects. Furthermore, based on the extracting principal components, similar stocks are classified by cluster analysis in order to make comparative analysis of different category company.

2 Model Constructed A. Selection of Indicators For the analysis of the investment value of listed companies, many scholars construct the investment value index system. Financial dates obtained from the consolidation of listed companies can reflect the value of their investment to some extent. However there are many factors which affect the investment value of the listed company, such as profitability, solvency, asset management, capacity development and capital structure and so on. On one hand, including all indicators is impossible when we establish the investment value evaluation model. It not only lacks of maneuverability but also leads to distortion of evaluation results easily. If some selection has little effect on investment value or includes a greater amount of repeated information, the correlation among each factor is strong. On the other hand, it easily leads to miss some important indicators if we choose subjectively. Therefore, the proper choice of evaluation indicators is the key to evaluate the investment value of listed company correctly. For the communications industry, the research objects are selected from the same field, so the profession characteristic difference is not obvious. It can be ignored. According to the general theory of company's value, firm value is primarily decided by profitability, growth, liquidity, asset management and other various factors. Taking into account data availability and comparability between indexes, the paper selected the following 13 indicators to constitute the evaluation index system of listed company’s investment value: Main Business Profit Margins, Earnings Per Share, Net Asset Per Share, ROE, Current Ratio, Quick Ratio, Asset Liability Ratio, Fixed Asset Turnover, Total Assets Turnover, Total Assets Growth Rate, Net Profit Growth Ratio, Main Business Revenue Growth, Net Assets Per Share Growth Rate. B

．Selection of Evaluation Methods

Index system of the investment value of listed companies is constituted by a number of indicators. These indicators reflect listed company's operating conditions from different angles. It easily leads to wrong evaluation results if depending on only one indicator to assess the value of the company's investment evaluation. So it should be

480

H. Han and F. Tang

avoided. Judging the investment value of listed company by evaluation index system belongs to the problem of evaluating the integrated evaluation index system in the nature. Comprehensive evaluation methods are used commonly include principal component analysis, hierarchical analysis, expert consulting and so on. In this paper, it adopts the method of principal component analysis. The nature of this method is to seek less unrelated indicators instead of the original ones by seeking simplify indicators which unrelated to each other, so as to reduce dimension. The principal components can reflect not only the original information but also the similar indicators’ common sense and features after the combination of the principal component which chooses from the similar indicators. The integrated effect is greater than the actual interpretation of each one. In this way, it not only rules out the subjective factors when choosing and determining indicators but also reduces the influence of repeated information. It reduces variables which the quantitative analysis involved in and obtains more information. It is easier to grasp main contradictions. So the result of comprehensive evaluation is objective and reasonable. Cluster analysis is a method of studying “Birds of a feather flock together". Its basic idea is to provide a value about the certain samples or the degree of similarity according to a given measure of similarity or indicators. Thus we can classify the objects into several categories. For communication industry listed companies, the similar performance of companies can be classified through cluster analysis, then it provide a measure to make a contrast among different types and structure a reasonable and effective portfolios.

3 Analysis A. Sample Selection and Data Sources In this paper, it studies 42 listed companies of China’s communications industry, using the 42 companies’ basic financial data and key financial indicator on research. Raw date comes from Tong Huashun software. SPSS13.0 statistical analysis software is used for data processing. Under the cumulative variance in the required contribution rate, extracting the principal components to calculate each principal components’ value and the comprehensive ranking of investment value analysis. Furthermore, principal component values and integrated values are used as the experimental data to make further cluster analysis. B. Principal Component Analysis Process After input the dates into SPSS, in the cumulated variance contribution of 89.208% circumstances it can extract six main composition. Through the reasonable explanation about six main components combining with the individual scores and composite scores, it can evaluate the overall level of investment value for the 42 companies, the main component of each corresponding Eigen value characteristic vector is shown in Table 1, and the integrated values and sorting results are shown in Table 2.

Investment Value Analysis for Listed Companies of China Communications Industry

481

Table 1. Component matrix Component Name Main Business Profit Margin Earnings per share Net assets per share ROE Current Ratio Quick Ratio Gearing ratio Fixed asset turnover Total assets turnover Growth rate of total assets Net profit growth rate Main business revenue growth Net assets per share growth rate

1

2

3

4

5

6

0.441 0.680 0.290 0.697 0.238 0.204 -0.300 0.702 0.633 0.214 0.726 0.231 0.703

0.272 0.490 0.606 0.353 0.479 0.476 -0.422 -0.595 -0.690 0.439 -0.070 -0.608 -0.370

0.089 -0.297 -0.176 -0.277 0.831 0.841 0.015 0.105 0.102 -0.416 -0.047 0.287 -0.055

0.506 0.287 -0.420 0.445 0.019 0.039 0.734 0.036 0.098 -0.271 -.0378 -0.413 -0.084

0.432 -0.113 0.210 -0.240 -0.002 0.016 0.209 -0.065 -0.077 0.473 -0.437 0.336 0.404

-0.341 -0.049 -0.334 0.017 0.134 0.131 0.050 0.093 0.084 0.479 -0.046 -0.259 0.139

Table 2. Companies ranked Stock Code 002148 600658 002281 600522 002115 002194 002089 002093 600487 002231 600289 002151 600485 600498

Integrated value 3.1734 1.0773 0.9982 0.6512 0.6204 0.4995 0.4604 0.4516 0.4390 0.3674 0.3532 0.3352 0.2614 0.2276

Rank

Stock Code

1 2 3 4 5 6 7 8 9 10 11 12 13 14

000063 600345 000829 600105 002017 600050 000547 600640 000016 002188 600776 000733 000070 600260

Integrated value 0.2012 0.1935 0.1883 0.1841 0.0895 0.0645 -0.0587 -0.1376 -0.1400 -0.1623 -0.1963 -0.1992 -0.2607 -0.2625

Rank

Stock Code

15 16 17 18 19 20 21 22 23 24 25 26 27 28

000100 000062 000851 600130 000555 000890 600680 600775 600198 000586 000034 600677 002052 000766

Integrated value -0.3294 -0.3459 -0.4370 -0.4716 -0.5080 -0.5103 -0.5152 -0.5629 -0.6179 -0.6226 -0.7015 -0.7438 -0.7783 -2.2751

Rank 29 30 31 32 33 34 35 36 37 38 39 40 41 42

As TABLE 1 show, through principal component analysis it can reduce the 13 indicators to 6 main components. According to the contribution rate of the principal component and the Eigen value load quality of every principal component, the ability that each component represents can be easily got. It’s convenient for investors to construct investment portfolios. From the point view of integrated value in TABLE 2, there are 20 enterprises whose investment value are positive, accounts for 47.2 percent of the industry. The other 22 enterprises’ integrated values are negative, accounting for 52.8 percent of the statistical listed companies. It can be said that the percentage which the companies possessing investment value and investment potency is not small. Communications industry is still a potential investment stock in the future. The ranking can provide certain reference for investors.

482

H. Han and F. Tang

C. Cluster Analysis Process The evaluation in TABLE 2 largely meet investors’ need for the investment value analysis of listed companies, but the investors’ idea tend to vary and the focus of attention is always different. To analysis various factors more detailed, the paper will further make cluster analysis about the above companies depending on the already received six major components, in order to get more useful conclusions. Hierarchical Cluster which is belonged to the system of cluster analysis is used in the paper. The measurement adopts absolute value of distance scale, and clustering algorithms method is Wards’ Method, the classified conclusion is as follows in TABLE 3: Table 3. Company classification

Class

Stock Code

Number

000016ˈ000586ˈ000070ˈ000100ˈ000733ˈ000851ˈ002017ˈ000890ˈ

18

List 1

002194ˈ002188ˈ002231ˈ600260ˈ600198ˈ600640ˈ600677ˈ600680ˈ 600775ˈ600776

2

000063ˈ000062ˈ000547ˈ000829ˈ002052ˈ002089ˈ002093ˈ002151ˈ

16

600105ˈ600130ˈ600289ˈ600345ˈ600487ˈ600485ˈ600522ˈ600498

3

002115ˈ002281ˈ600050

3

4

000034ˈ000555ˈ000766

3

5

002148ˈ600658

2

The classification results suggest that the fifth class companies represent best, the integrated value are of the top two rows. The ranking of every principal component is on the top. Their comprehensive values are on the first two rows; the main business profit margins and net profit growth rate are higher. The companies have lower debt ratio, their outstanding competitive advantages and other indicators are better than the overall level of listed companies in communications industry. They belong to the leading in the same industry and are the first choice for investors to have a long-term investment. By contrast, the first class companies lag behind the overall ranking. The principal component values and integrated values are mostly below zero and lower than the overall industry average (expected value is zero). Net profit growth and main business revenue growth is negative. The companies are losing money whose shares are low income, low-growing. Although there is some main business profit, in general, prudent investors should not be too much involved in such stocks. The other three categories companies belong to the middle and upper ranks, investors can make reasonable and effective portfolio according to characteristics of class.

Investment Value Analysis for Listed Companies of China Communications Industry

483

4 Conclusion Through the above analysis, it can be found that in the first quarter of 2010, about 50 percent of China's communications industry companies behave well and implicate enormous investment value, and these companies are distinct on different aspects. Investors can choose the most advantages company into their investment choice scope. So, it provides a rational investment advice for investors to some extent. On the opposite, as for the management of the company, through the comparison with other companies in communications industry, they shall cause enough attention to the disadvantage factors, dedicate to improve corresponding skills so as to promote companies’ comprehensive value.

References 1. Han, Z., Xie, M.: Listed companies’ investment value evaluation model and empirical analysis. Journal of the central university of finance and economics (11), 71–75 (2004) 2. Johnson, D.A., Wachern, D.W.: Multivariate statistical analysis. Tsinghua University press, Beijing (2008) 3. Li, J., Guo, Y.: The principal component analysis method of evaluation indexes for more. Journal of engineering management (1), 39–43 (2002) 4. Wall, A.: Ratio Analysis of Financial Statements. The Accounting Review 3(4), 415–417 (1998) 5. Kiviluoto, K.: Predicting bankruptcies with Self-organizing map. Neurocomputing 1, 191–201 (1998) 6. Zhang, Y.: 3G mobile communication of China’s development present situation analysis. Hua Zhang 15, 153–159 (2009)

E-Commerce Extension Multi-factor Assessment Sunxu and Wan Haixia Jilin Technology college of Electronic Information Jilin, China [email protected]

Abstract. With the development and application of computer technology, internet and innovation of related technology, China’s enterprises invested considerable human and material resources to construct e-commerce systems, but the construction and application effects are not perfect because of many factors. In view of this, many researchers began to pay attention to comprehensive evaluation of enterprise e-business. In order to provide method reference to China’s enterprises, the author put forward a comprehensive evaluation method of e-business in this paper combining extension theory on the basis of previous studies. Keywords: E-commerce, enterprise, extension theory, determination model.

1 Problem Statement All Along with the amazing development of computer technology and the rising and popularization of Internet, with the innovation of correlation technique, human civilization gets into information era. In the meantime, the more and more enterprises start constructing and using information technology to construct their e-busines system. E-commerce evaluation understand the value of development e-commerce business.A scientific assessment method can promote the whole level and quality of e-commerce and improve the business regulation of e-commerce,while it promotes the healthy development of e-commerce and increases the corporate competitiveness [1]. In present years,e-commerce performance evaluation theory became one of a frontier problem and it was generally concerned by the enterprise and the academia circles.

2 Evaluation Index System and Method A. Establishment Evaluation Index System Evaluation index is objective vector and external styles of evaluation content,and the concrete expression of evaluation method. While it makes comment thinking and evaluation thinking ways carryin out through setup measures. The design of evaluation index needs to construct system analysis and to follow a couple of basic principles. Firstly, enterprise has to follow the combination scientifis and mainly principles.In terms of grasping the correctness of e-commerce assessment, the completeness of evaluation index design and the logical tightness of quantitative treatment method, it M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 484–491, 2011. © Springer-Verlag Berlin Heidelberg 2011

E-Commerce Extension Multi-factor Assessment

485

has to reflece scientific priciples and construct performance evaluation index system to outburst the main index priciples.Scondly, enterprise has to follow the combination of quantitative and qualitative priciples. Quantitative index is more specific and intuitive. When evaluate it we can calculate actual numerical value. Evaluation results can make the directness and clear impression through quantification present. Therefore, the choice of evaluation index need to follow the combination of quantitative and qualitative priciples. Thirdly, enterprise has to follow combination of comparability and operability priciples. Evaluation index needs to have the rounded comparability, including compared wih othe e-commerce and compared with profession average level, mainly Enterprise has to select diffent enterprise indexes which can get them generally to ensure the comparability of index. Finally, enterprise has to follow comparability and systemic priciples of index. The quantitative index of e-commerce evaluation index system use relative index to evaluate. According to importance of carrying out evaluation objective of index, and the logical relation and the logical relations degree in diffent indexes, enterprises setup and select index to stick out the key point of evaluation index, to keep the relative unity and to carry out the optimization of system[2]. According to above priciples and combining to the related e-commerce evaluation index system[3], this essay construct the enterpise e-commerce evaluation index system. According to Figure 1:

Fig. 1. Evaluation index system of enterprise e-business plan

B. Evaluation Method In the present age, enterprise e-commerce evaluation methods include of the method of fuzzy cluster analysis and fuzzy comprehensive evaluation method, mainly. Althouth these methods is widely used, there is no other compared method to confirm the reliability of evaluation. Therefore, this essay construct the enterprise e-commerce evaluation methods basised of extension theory.

486

Sunxu and H. Wan

a) Define cassical domain and joint domain When N j represents evaluating enterprise e-commerce and

ci represents enterprise

ci ’s value range is v ji =< a ji , b ji > ( i = 1, 2, " , n; j = 1, 2, " , m : n represents numbers of article feature； m represents grade

e-commerce feature, while the

number), the evaluating equipment classical domain can represents that:

R

j

⎡N ⎢ ⎢ ⎢ = ( N j , c, v) = ⎢ ⎢ ⎢ ⎢ ⎢⎣

j

c1 c2 # ci # cn

< a j1 , b j1 > ⎤ < a j 2 , b j 2 > ⎥⎥ ⎥ # ⎥ < a ji , b j i > ⎥ ⎥ # ⎥ < a jn , b j n > ⎥⎦

(1)

The whole of evaluating enterprise e-commerce plus the whole of enterprise ecommerce index which consist of matter-element is joint domain matter-element. While v pi =< a pi , bpi > is the ci feature ratio about joint domain matter-element. It expands the value range. Joint domain matter-element can represent that:

Rp

⎡N ⎢ ⎢ ⎢ = (N p , c, v) = ⎢ ⎢ ⎢ ⎢ ⎣⎢

< a p1 , b p1 > ⎤ < a p 2 , b p 2 > ⎥⎥ ⎥ # ⎥ < a pi , b pi > ⎥ ⎥ # ⎥ < a p n , b p n > ⎦⎥

c1

j

c2 # ci # cn

(2)

N p represents the whole of enterprise e-commerce. Obviously, it has that < a ji , b ji >⊂< a pi , bpi > (i = 1, 2, " , n ) .

b) Define evaluating matter-element N represents enterprise e-commerce and R represents enterprise e-commerce evaluation system index. Therefore,we can see that:

R

=

⎡ N ⎢ ⎢ ⎢ ⎢ ⎢ ⎢ ⎢ ⎢⎣

c

1

v

1

c

2

v

2

# c i # c n

# v i # v n

⎤ ⎥ ⎥ ⎥ ⎥ ⎥ ⎥ ⎥ ⎥⎦

(3)

R repersents enterprise e-commerce evaluating matter-elementa. N represents enterprise e-commerce. vi represents ci ’s value about N or ci ’s concrete value about evaluating enterprise e-commerce feature index. c) Calculation of weight coefficient Weight coefficient can use system analysis method, elementary association function methods and analytic hierarchy process to define, from up to down. This eaaay use analytic hierarchy process to define every feature weight.

E-Commerce Extension Multi-factor Assessment

487

We use AHP to process analysis. Firstly, we put the inclusion factors in every group and make every group as every level. Let the highest level, several middle levels and the lowest level in a row. The whole of levels must be in a row. We can assume that the whole of factors, A1 , A2 , " , Am , is finished. Therefore, the weight is

a1, a 2 ,", am , respectiively. The result of local level B1 , B2 , " , Bn is i b1i , b2i ,..., bni . We can assume that Bi and Ai have on relation, and b j = 0 ,

therefore the result of total taxis of hierarchy can represent by table 1. Obviously, n

m

∑∑ a b i

i j

=1

(4)

j =1 i =1

Total taxis of hierarchy is also a normalization normal form of vector. To evaluate the uniformity of Total taxis of hierarchy result, we have to calculate the detection observables as same as single sequencing. As same as the uniformity of single hierarchical arrangement, this step carries out from up to down. CI represents uniformity total taxis of hierarchy index. RI represents mean consistency index of total taxis of hierarchy. CR represents random index of total taxis of hierarchy index. Table 1. Hierarchy of the table

Level A

A1

A2 …… Am

a1

a2 …… am

Global weight level B

of

m

B1

b11 b12 …… b1m

B2

b 21

b 22

…

…

……

Bn

bn1

bn2 ……

∑ab i

i =1

i 1

m

∑ab

…… b 2m

i =1

…

m

∑

bnm

i =1

m

∑ a CI i =1

Ai

and

judgment

i 2

…

They can respectively present that: CI = about

i

matrix

in

i

level

i

a i b mi

( CI i is the consensus index

B),

and

CIi =

λ max − n n −1

.

488

Sunxu and H. Wan m

RI = ∑ ai RI i ( RI i is mean consistency index about about Ai and judgment matrix i =1

in level B).Therefore, m

CI CR = = RI

∑

a i CI

i

∑

a i RI

i

i =1 m

(5)

i =1

λmax

is the energy of judgment matrix. n is the order of judgment

matrix. RI is mean consistency index. Usually, it can selected from table 2. Table 2. Different values of the order of the standard comparison matrix RI judgment matrix numbers

1

2

3

4

5

6

7

8

9

10

RI

0

0

0.58

0.9

1.12

1.24

1.32

1.41

1.45

1.49

Only when CR < 0.1 , we can say that the result of global weight has great uniformity. Otherwise we have to rebalance the value selection of matrix factors[5]. d)Calculation of correlation function and correlation degree When the correlation function represents value selection of matter-element on real axis, matter-element fits the requested degree. As a result of extension set of correlation function can represent by algebraic expression, we can resolve questions through quantification. According to extension theory, we can define the evaluating working state of quipment of about every standard of correlation function: the number of i index belongs the number of j standard about correlation function: ⎧ ρ ( xi , x ji ) ⎪ ⎪⎪ ρ ( xi , x pi ) − ρ ( xi , x ji ) K j ( xi ) = ⎨ ⎪ ρ ( xi , x ji ) ⎪− x ji ⎪⎩

xi ∈ x ji ; xi ∉ x ji

a ji + b ji

⎫ 1 − (b ji − a ji ) ⎪ 2 ⎪ ⎬ a pi + b pi 1 ρ ( xi , x pi ) = xi − − (bpi − a pi ) ⎪⎪ 2 2 ⎭

ρ ( xi , x ji ) = xi −

(6)

2

(7)

e) Comprehensive correlative degree and comprehensive evaluation in matter. Toward multi-index evaluation, to compare simply, we have to design general evaluating value to evaluate matter N about level j’s comprehensive correlative degree k j ( N x ) .

E-Commerce Extension Multi-factor Assessment

489

n

∑α

k j(Nx) =

i =1

ij

k j ( xi )

(8)

k j ( N x ) is evaluating mater about level j’s comprehensive correlative degree. k j ( x i ) is evaluating mater about every level of correlative degree (i = 1, 2," , n) .

α ij

is

every evaluation index of weight coefficient. As: k j 0 = m ax [ k j ( N x )] ( j = 1 , 2 , " , m )

Evaluation matter

(9)

N x belongs level k j 0 .We also can define eigenvalues’level

through calculating variable grade eigenvalues. As below calculation formula: k k

j

=

j

− m in k

j

j

m a x k j − m in k j

m

j* =

(10) j

j

∑

j× k

j

j =1

(11)

m

∑

k

j

j =1

Evaluation matter N belongs level

j* [4].

3 Empirical Analysis In this essay, active data indexes involved come from one of every associated department of a ralated electric power Co. Ltd. The selection of indicators standard value can acccord to these priciple: indicators standard value of enterprise index mainly use of index value of model enterprise. About unlocatde index of model enterprise evaluation system and designde index of enterprise indicators standard value, we can consult our historical data, industry standard and profession scoring method to study out. Inside every index weight should be calculated by AHP. We can refer active data index, standard value and value from table 3. According to table 3, the evaluating classical domain R j of defined enterprise ecommerce is : ⎡N1 ⎢ ⎢ ⎢ R1 =(N1,c,v) =⎢ ⎢ ⎢ ⎢ ⎢⎣

c1 <0.90,0.10>⎤ ⎡N1 ⎥ ⎢ c2 <0.80,0.75>⎥ ⎢ ⎥ ⎢ # # ⎥ R = (N1, c,v) = ⎢ ci ⎥ 1 ⎢ ⎥ ⎢ # # ⎥ ⎢ c15 <0.80,0.75>⎥⎦ ⎢⎣

c1 < 0.85,0.70 >⎤ c2 < 0.75,0.60 >⎥⎥ ⎥ # # ⎥ ci < a1i ,b1i > ⎥ ⎥ # # ⎥ c15 < 0.75,0.65 >⎥⎦

490

Sunxu and H. Wan Table 3. Evaluation of a Power Company E-commerce and data

Establishme nt hardware facilityk1 Resource input k2 Network security k3

Trade sizek4 Socialbenft k5 Economic benefit k6

0.20 0.15

c31

0.15 0.25

classical domain

0.06 0.05 0.04 0.10 0.05 0.05 0.05

c32 c33 c41 c42 c51 c52 c61 c62

0.10

⎡N1 ⎢ ⎢ ⎢ R1 =(N1,c,v) =⎢ ⎢ ⎢ ⎢ ⎣⎢

Rp

c11 c12 c13 c21 c22 c23

0.15

0.03 0.07 0.04 0.06 0.70 0.80 0.15 0.10

Very good

Good

Normal

Bad

measured data

Two Three grade grade index weight index weight evaluation evaluation

<0.90,0.85> <0.8,0.75> <0.60,0.55> <0.50,0.45> <0.40,0.35> <0.60,0.55>

<0.85,0.70> <0.75,0.60> <0.55,0.50> <0.45,0.40> <0.35,0.30> <0.55,0.45>

<0.70,0.65> <0.60,0.55> <0.50,0.45> <0.40,0.35> <0.30,0.25> <0.45,0.35>

<0.65,0.10> <0.55,0.35> <0.45,0.30> <0.35,0.25> <0.25,0.15> <0.35,0.25>

0.88 0.58 0.56 0.48 0.26 0.48

<0.01,0.03>

<0.03,0.05>

<0.05,0.10>

<0.10,0.20>

0.02

<0.40,0.35> <0.80,0.75> <100,90> <800,700> <0.90,0.85> <0.60,0.55> <0.90,0.80> <0.80,0.75>

<0.35,0.30> <0.75,0.70> <90,80> <700,600> <0.85,0.75> <0.55,0.45> <0.80,0.75> <0.75,0.65>

<0.30,0.25> <0.70,0.65> <80,60> <600,400> <0.75,0.65> <0.45,0.35> <0.75,0.65> <0.65,0.55>

<0.25,0.15> <0.65,0.55> <60,40> <400,100> <0.65,0.45> <0.35,0.15> <0.65,0.45> <0.55,0.35>

0.28 0.78 95 750 0.80 0.56 0.85 0.78

c1 <0.70,0.65>⎤ ⎡N1 ⎢ c2 <0.60,0.55>⎥⎥ ⎢ ⎥ ⎢ # # ⎥ R = (N1, c,v) = ⎢ ci ⎥ 1 ⎢ ⎥ ⎢ # # ⎥ ⎢ c15 <0.65,0.55>⎦⎥ ⎣⎢

c1 < 0.65,0.10 >⎤ c2 < 0.55,0.35 >⎥⎥ ⎥ # # ⎥ ci < a1i ,b1i > ⎥ ⎥ # # ⎥ c15 < 0.55,0.35 >⎦⎥

Rj :

⎡N ⎢ ⎢ ⎢ = (N p , c, v) = ⎢ ⎢ ⎢ ⎢ ⎣⎢

j

c1 c2 # ci # c1 5

< 0 .9 0 , 0 .1 0 > ⎤ < 0 .8 0 , 0 .3 5 > ⎥ ⎥ ⎥ # ⎥ < a pi , b pi > ⎥ ⎥ # ⎥ < 0 .8 0 , 0 .3 5 > ⎦⎥

According to calculation (6,7), we can calculate every factors included level 2 index investigation value abou their correlation function of classical domain. We can get these evaluation matrices: k1 =[ −0.1106 0.0128 0.0208 0.0708] k2 = [ −0.015 0 0.015 0.04] k3 = [ −0.0128 0.0007 0.0142 0.0332] k 4 = [ 3.2

9.6

25.4

41.2 ]

k5 =[ −0.0027 0.0123 0.0273 0.0573] k6 = [0.0105 0.028 0.053 0.103]

According to (8), we can calcuiate comprehensive correlative degree of this evaluatin n

a : Kj (a) = ∑αi Kij (a) =[0.3007 0.9709 2.5656 3.7977] .If we let these 4 evaluation i=1

level(“very good”, “good”, “normal” and “bad”) as 1, 2, 3, 4, respectively, we can get

E-Commerce Extension Multi-factor Assessment

the result that,

491

K2 (a) = max K j (a) = 3.7977 . Therefore, we can evaluate that j∈{1,2,",5}

evaluating enterprise e-commerce is “very good”, Preliminary. To get basis for decision making more precise, according to (10) (11), we can calculate that

j* =3.6732. According to this result, this enterprise e-commerce multi-factor level is “very good” , but it not arrives at “very good” totally. It is in the middle of “very good” and “good”, in favor of “very good” [6].

4 Conclusion Extensive comprehensive evaluation approach is combined with qualitative analysis and quantitative calculation. According to these above analysis, we can get these result as below: (1) It can be made out that extension theory construct evaluation measure model enterprise e-commerce multi-factor level. (2) The expandable evaluation model not only evaluate enterprise e-commerce multi-factor level through association degree score, but also it can evaluate superiority and inferiority of enterprise e-commerce multi-factor level. The expandable evaluation model has obvious superiority compared with other methods. The key to enhance correctness of evaluation result is consructing evaluation index system, correctly and resonably. And we have to distribute every weight of index, correctly. Besides, grade interval of classical matterelement can make a tremendous influence to evaluation result.

References 1. Mou, D.: E-Commerce Performance Analysis. Enterprise Economy 6, 26 (2003) 2. Yao, Y.: Study on E-business Performance Evaluation Systems Based on the AHP. Science & Technology Progress And Policy 10, 129–133 (2009) 3. Liu, M., Chen, Z.: Research on Indicator System for Measuring E-commerce. Statistics & Information Forum 7, 20–27 (2008) 4. Cai, W.: Matter Element Model and Its Application. Science Press, Beijing (1994) 5. Zhao, H.: AHP. Science Press, Beijing (1986) 6. Liang, H., et al.: Extenics theory in evaluation of water quality in the application. Pollution control Technology and Equipment 7, 25–29 (2004)

SWOT Analysis of E-Commerce Development in Yunnan Province Sun Liangtao and Chen Gang Business College Honghe University Mengzi, China

Abstract. This paper applies the SWOT analysis method to analyze the strengths, weaknesses, opportunities and threats for the development of the ecommerce in Yunnan Province, makes a concrete foundation for the following exploiting local advantages according to the local conditions to develop ebusiness development strategy, thus provides referred advices for getting rid of the development dilemma and opening the way for e-commerce development in Yunnan. Keywords: Yunnan, E-commerce, SWOT analysis.

1 Introduction SWOT analysis is a method commonly used in strategic analysis method, is an analysis on the advantages, disadvantages, opportunities and threats. The basic principle of SWOT is that through a systematic analysis of the internal conditions and external environments of the studied objects like organizations, individuals, industries or regions, the internal strengths and weakness of the studied objects can be learned, the external opportunities and threats of the studied objects can be analyzed, and on this basis, the optimal action strategy can be selected to mobilize resources and strengths at a maximum level, exploit opportunities and avoid risks, realize the possibilities for sustainable development. Through a helpful SWOT analysis, the weaknesses can be transformed, the strengths can be developed, the opportunities can be grasped, and the development of electronic commerce in Yunnan Province can be accelerated in consequence.

2 The Strengths Analysis of the E-Commerce Development in Yunnan Province A. A Broad Market Prospect •

Agricultural Development Speed Is Fast and Agricultural Products Has Great Market Potential. Yunnan climate resources are very rich with unique location, a variety of agricultural products such as tea, sugar cane, oil plants, vegetables, flowers, pomegranates, tangerine and other agricultural products play

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 492–499, 2011. © Springer-Verlag Berlin Heidelberg 2011

SWOT Analysis of E-Commerce Development in Yunnan Province

•

•

•

493

important roles in the country. Although the agricultural products are rich in Yunnan province, but the market is comparatively dispersed with slow circulation and higher transaction costs. E-commerce can be applied to agricultural markets to link scattered markets together through the Internet to enhance the market competitiveness of agricultural products in Yunnan province, to create a brand of Yunnan province's agricultural products. It is also very helpful to improve the agricultural value chain and enhance the competitiveness of agriculture. Tourism will release a new vitality. Yunnan’s special geographical and climatic environment, numerous nations, long history and splendid culture created a unique tourism resource in Yunnan. Within its border, there is a magnificent landscape of mountains, forests, peaks; caves, rivers, lakes, spectacular waterfalls, Yunnan Stone Forest, Dali, Xishuangbanna, the Three Parallel Rivers, Dianchi Lake in Kunming, Lijiang, Yulong Snow Mountain, etc are all scenic areas of national priority. More than 100 nature reserves at or above the county level with the total area of 1.926 million hectares has been established in Yunnan province, 22 national and provincial forest parks with a total area of 85,500 hectares are also established here. Tourism industry needs the cooperation of many other sectors such as the traffic sector, the business sector, and e-commerce can link scenic spots, travel agencies, hotels, inns and other related industries together, attract more tourists with the help of web sites. Viewed from this point, tourism e-commerce is a new opportunity for developing e-commerce in Yunnan. Mineral Resources: Mineral Reserves Are Numerous in Both Quantity and Categories in Yunnan, Known as China's "Non-ferrous Metals Kingdom." 142 categories of minerals have been found, there are 92 categories with proven reserves, 1274 mineral deposits are identified. The maintained reserves of 54 categories of minerals rank the top 10 in China. The largest mineral advantage in Yunnan is non-ferrous mineral, the reserve of aluminum, zinc, tin ranks first in the country, the maintained reserves of copper, nickel metal rank third. Among precious metals and rare element minerals, the reserves of indium, thallium, cadmium metal rank first in the country, silver, germanium, platinum group metals rank second; among chemical raw materials minerals, the reserves of 8 kinds of minerals including phosphorus, salt, Glauber's salt, arsenic, sylvite, pyrite, calcium carbide with limestone, serpentine mineral for fertilizer use, ranking on the top 10 list. Yunnan has formed a group of mineral resources mining, dressing, and smelting industries with a certain scale mainly consisting of non-ferrous metals industries, it is the country's important production base of tin, copper, phosphate fertilizer. The field of geology and mineral resources is an important industry in Yunnan, the development of its ecommerce with integrated production, supply, and sales and the e-commerce integrating demand, and supply forms a large electronic market, so as to achieve the goals of raising greater efficiency, increasing sales, reducing inventory and lowering cost. The Development Space for the Logistics Industry Is Huge. Yunnan is located in the southwestern border of China, connecting with Sichuan and Tibet in the north, connecting with Guizhou, Guangxi in the east, is adjacent to Myanmar,

494

L. Sun and G. Chen

Laos, Vietnam in the Southwest, connecting Pacific Ocean, Indian Ocean, Southeast Asia, South Asia, is an important channel open to South-East Asia. Now, "Kunming-Bangkok Highway" (from Kunming to Bangkok, Thailand) has opened, "Trans-Asian Railway" (Kunming, China through Vietnam, Cambodia, Malaysia, Singapore) has been under construction, the development of the logistics industry has a unique geographical advantage. Yunnan is in the center of the "China - ASEAN Free Trade Area,", with the opening the "China - ASEAN Free Trade Area”, the geographic advantage of Yunnan will be given full play, Yunnan Province has the potential and opportunities of becoming an important node of the international regional trade logistics chain, possesses the objective conditions of developing into a logistics center where the great Southwest facing the Southeast Asia. Yunnan possesses the basis for the development of modern logistics industry, and with the quickened economic and social development and the increase of the overall strength in the whole province, the development of the logistics industry has also made the corresponding achievements. Transport enterprises can integrate the existing vehicles, routes and stop sites, and changes into the logistics businesses as far as possible. Therefore, logistics and e-commerce has a promising development in Yunnan. B. Government Gives Strong Support and Encouragement to the Development of the e-Commerce Yunnan provincial commission of the CCP and the provincial government formulated 2 documents titled "The Implementation Opinions of Accelerating the Development of e-business in Yunnan Province "and "The “Eleventh Five-Year "development goals of E-Commerce in Yunnan Province". It is the requirement to realize "the Eleventh Five" economic and social development objectives to accelerate the advancement of ecommerce development in Yunnan province, during the "Eleventh Five-Year Plan" period, the main objective of e-business development in Yunnan province are: by 2010, over 70% enterprises in the province realize the primary internal information transformation; provincial key enterprises fully realize the internal information transformation and B to B e-commerce transactions; e-commerce applications will basically be realized in provincial tobacco, tourism, medicine, metallurgy, information, electricity, flowers, transportation, petrochemicals, commerce and other key industries and large agricultural trades; to strive to have more than 40% of large enterprises that apply e-commerce to procure raw materials or parts and sell products. SMEs with good conditions realize the e-business applications; the government procurement will have a full realization of e-commerce transactions between business and government. This laid a solid foundation for the development of e-commerce in Yunnan and creates a favorable environment for development.

3 The Analysis of Disadvantages of e-Business Development in Yunnan Province A. Network Infrastructure Lags Behind Network infrastructure is one of the biggest bottlenecks restricting the rapid development of e-commerce. The realization of real-time online transactions requires a

SWOT Analysis of E-Commerce Development in Yunnan Province

495

very fast network response speed and higher bandwidth, which must be provided by the hardware support for high-speed networks. , Although Yunnan has made certain achievements in the network infrastructure after the development in recent years, however, due to insufficient investment and lack of technology and human resources, etc, there is still a big gap between the construction of the network infrastructure and the requirements of the development of e-commerce. Meanwhile, areas with developed Internet in Yunnan are confined to a handful of main cities; some areas are yet to solve the internet access problem, some areas with internet access need to raise the speed of surfing on the internet. Many factors such as lagged telecommunications infrastructure, the serious shortage of internet access among the whole population, unreasonable prices seriously hinder the development of e-commerce in Yunnan. B. The Internet Development Lags, Network Coverage Rate Is below the National Average The Building and wider application of Internet is the base of the e-commerce. The development of electronic commerce needs rapid, safe, stable network system, and a large number of Internet users. According to the 25th China Internet Development Statistics Report issued in January 2010 by the China Internet Network Information Center, ended December 31, 2009, the number of Internet users has reached 384 million people, the coverage rate reached 28.9%, an annual growth rate 28.9%, of which the number of internet users in Yunnan Province is 8.44 million, the internet coverage rate is 18.6%, ranking No.27 among all provinces in the country, the network coverage rate is below the national average. C. Insufficient Internet Applications, the Low Percentage of Online Transactions As of December 2009, the national rate of net applications ranked online music (83.5%), network news (80.1%), and search engines (73.3%) as the top three. By the end of June 2009, the proportion of Chinese Internet users doing online shopping is 28.1%, the number of online shopper reached 87.88 million, online shopping penetration rate among Internet users is not high, only 26%. Online shopping penetration rate in Beijing, Guangzhou and Shanghai is 51.3%, 52.6% and 35.2% respectively Internet users in Beijing, Shanghai and Guangzhou, represents only 8.4% of the country, but online shoppers account for 15.6% of all online shoppers in the country. Among them, the number of online shoppers in Shanghai reached 6.13 million, ranking first in the three cities. The proportion of online shopping in Yunnan has not yet reached the national average, compared with the figures in economically developed regions; the Yunnan e-commerce market still needs more breeding. D. Weak Awareness of e-Commerce Yunnan Province is located in the border areas with mostly minorities and relatively backward economy, people's thinking is also relatively closed, and lack a clear understanding and understanding on the importance and necessity of the development of e-business. On the one hand, governments in some prefectures and cities do not recognize the important role the government can play on the development of ecommerce, did not take positive and effective policies to promote e-commerce development; on the other hand, enterprises are the main body of e-commerce, but some enterprises have only a weak sense to develop e-commerce, focusing only on short-term interests, leading to backward management, lacking stamina for enterprise

496

L. Sun and G. Chen

development; furthermore the general public lacks sufficient enthusiasm for the participation in electronic commerce, it is difficult to for the general public to change the traditional shopping habits of "See with eyes, touch with hands, listen with ears, tastes with tongue", which restrict the rapid development of consumption patterns of online shopping. E. Information Technology and E-Commerce Personnel Shortage E-commerce is the organic combination of information modernization and business, so the development of e-commerce needs multi-level and complex talents who understand not only technology and management skills, but also business and law talent. To achieve the integration and upgrading of e-commerce and traditional industries, talents are the key. Due to a number of disadvantages like natural, social and economic factors, Yunnan lack enough attractiveness for talents, which will inevitably lead to deprivation and loss of talents. This is very bad to the development of electronic commerce. F. Logistics Distribution System Is Not Perfect An easy, fast and efficient E-commerce depends partially on a fast logistics system. As logistics companies in Yunnan do not have a strong economic strength, resulting in high logistics costs, limited coverage area. The professional and technical levels of the logistics system in Yunnan are relatively low and are unable to adapt to rapid ecommerce information flow and cash flow needs. Currently a number of third-party logistics companies have formed in Yunnan province, but these companies have not achieved the scale of economy and lack efficiency on the distribution of goods, which limits the further development of electronic commerce in Yunnan province.

4 The Analysis of Opportunities for E-Commerce Development in Yunnan Province A. The Influences of the Financial Crisis The financial crisis triggered a global economic recession, many companies are in the layoff or a pay cut, quite a number of businesses went bankrupt. E-commerce can save costs for businesses, improves efficiency, expands market, open a new development path for enterprises. The development of electronic commerce can be accelerated greatly by e-commerce by integrating electronic commerce with related businesses such as IT, communications, logistics and other industries; meanwhile the state can adopt various measures to expand domestic demand, accelerating the flow of material merchants and personnel, provide the perfect opportunities for the rapid development of e-commerce. B. "Late Development Advantages" and the Great Environment for Development Because of the existence of late development advantage, less developed regions can learn from the successful experience of developed areas, conduct technical imitation and innovation, the system reference and remolding, the optimization and upgrading of structure, make up own deficiencies with others’ advantages. Yunnan can use information technology and electronic commerce to influence and change methods of

SWOT Analysis of E-Commerce Development in Yunnan Province

497

the allocation of resources, make the development of the region no longer depend entirely on local resources and conditions; transform traditional industries, change systems change concepts through direct use of new technology, new thinking, new management approach in order to shorten the gap, to realize the goals of the leapfrog socio-economic development in Yunnan. As e-commerce possesses the characteristics of low transaction costs, high efficiency, and huge market, many companies actively develop e-commerce market. In addition, the state is also increasing funding for the construction of related infrastructure investment. This has accumulated some experiences and also laid some material foundation for the development of ecommerce in Yunnan province, also provided the guarantees of many aspects such as human resources and technology. C. Great Potential Benefits E-commerce can push forward the economic development of a region or country from multi-levels and around all directions. E-commerce can lower the operational costs, improve efficiency for enterprises and to provide enterprises with a broad market space, enhance the overall competitiveness of enterprises; to break through time and space constraints of traditional transactions, providing personalized products and services and provide great convenience for people’s work and lives. Yunnan must tap the huge potential e-commerce benefits to achieve the rise and economic leap-forward development. D. Resource Allocation Level Is Improved Yunnan is a great resource province with rich tourism resources and human resources, and has established the multi- category industrial system consisting of tobacco, tourism, medicine, flowers, metallurgy, construction materials, etc. The development of e-commerce can take full advantages of various advantages of Yunnan province, rising continuously the application level of e-commerce technology in the relevant industry , and take the path of low-cost, high-quality, cost-effective development to enhance the overall resources allocation level, which will be conducive to rapid and healthy economic development in Yunnan province. E. China - ASEAN Free Trade Area Was Officially Launched On January 1, 2010, China - ASEAN Free Trade Area was officially launched, and Yunnan is located in the China - Southeast Asia two regional economy convergence zone, is the forefront of regional economic cooperation, is a important windows and bridges, through which, China and neighboring countries strengthen neighborly friendship and the economic and trade exchanges. The launch of China-ASEAN Free Trade Area brings great opportunities to Yunnan's foreign trade and e-commerce.

5 The Threat of e-Business Development in Yunnan Province A. There Is a Risk for E-Commerce Security System Network security is the key issue of e-commerce development, any organization conducting business on the Internet must take active measures to ensure adequate safety system to prevent the illegal invasion and loss of information leaks. Viruses, fraud, hackers and other factors continue to threaten the security of online transactions,

498

L. Sun and G. Chen

China's encryption technology, and digital signature technology is relatively backward, and these factors become safety hazards for the development of electronic commerce in Yunnan Province. Due to technical factors, Yunnan lags behind in the construction of the e-commerce security system, coupled with the lack of a sound credit system; there are some inevitable risks on the electronic trading. B. E-commerce Related Laws and Policies Is Still Not Perfect Besides security system and support system, business-related laws, regulations and policy support are also needed for the e-commerce. E-commerce transactions are completed through the computer and network, involving a number of legal issues, how to use legal means to ensure the security of online transactions, binding laws and regulations are needed to deal with the main e-commerce legal issues such as evidence problems, clearing certification and contract certification, the validity of making electronic contracts and the time and place of the contract validity, , legal regulations on the transaction behaviors of buyers, sellers and intermediaries, transaction risk and liability issues, etc. But e-commerce transactions is a relatively new transaction approach, at present, e-commerce legislation and the corresponding standard is not perfect, it is difficult to effectively guarantee the legitimate interests of parties in the network transactions. C. Inter-departmental and Inter-regional Coordination E-commerce is a huge and complex social engineering involved not only the two sides of the transaction, but also the industrial and commercial administration, taxation, banking, insurance, customs, and many other sectors and different regions, different countries. It also involves cooperation among a number of links and multiple industries on information resources, electronic payment, security certification, trade flows, taxation at different levels. This requires unified laws and policies to regulate, restrict and coordinate related issues and sectors. At present, a unified, coordinated, and orderly e-commerce system in China has not yet been built, which, restricts to some extent the development of e-commerce in Yunnan.

Summary Through SWOT analysis, we have recognized the strength, weaknesses, opportunities and threats of e-commerce development in Yunnan Province, laid a concrete foundation for making the following specific e-business development strategies by exploiting local advantages according to local conditions; enable Yunnan to get rid of e-commerce development dilemma, and go ahead on a development path with an overall planning, focused key points, continuous improvement, less investment, fast achievements. Acknowledgment. Many thanks to the support of Honghe College Scientific Research Foundation for Masters and Doctors on this project titled: "A Study of the Influences of E-commerce on the Economic Development in Yunnan", Project Number: XSS08023.

SWOT Analysis of E-Commerce Development in Yunnan Province

499

References 1. Li, Q.: E-Commerce Introduction. Higher Education Press, Beijing (2006) 2. Wang, J., E-commerce, A.: Business Perspective. Higher Education Press, Beijing (2007) 3. Du, Y.: Take Full Advantages of the Functions of Information Modernization in the Changes of Economic Development Methods in Yunnan. Economic Problems Exploration, 190 (July 2008) 4. Jiang, F.: An Analysis of the Current Situation of E-Commerce in Yunnan. The Academic Journal of Liaoning Engineering & Technical University, 153–155 (March 2004) 5. China Internet Information Center. China’s Online Shopping Market Research Reports (November 2009) 6. China Internet Information Center. China Internet Development Statistics Report (January 2010)

Application of Analytic Network Process in Agricultural Products Logistics Performance Evaluation Xiaolin Zhang1,2 and Chunhui Wang1 1.

Department of Economy and Management, Tianjin Agricultural University, Tianjin, China 2 Business School, Tianjin University of Finance & Economics, Tianjin, China [email protected]

Abstract. Besides the technology advancement and political support, an important factor in the development of agriculture is the circulation of agricultural materials and products, which is agricultural products logistics. This paper analyzed the meaning of agricultural products logistics and characteristics of its development. This paper established an agricultural products logistics performance evaluation indices system based on analytic network process (ANP) performance evaluation methodology. Then it discussed the theoretical foundations and application process of ANP and analyzed dependence and feedback among indices. Super Decisions software was used to obtain the result of ANP model for the indices system. The case study in this paper proves that the ANP method can solve problems with dependent indices effectively. Keywords: agricultural products logistics, performance evaluation, analytic network process (ANP).

1 Introduction Agriculture is the basis of national economy and it has been attached much importance by the government with the rapid development of our national economy. In the new century, China has entered a new stage of agricultural development, which is at a high speed. As the foundation of national economy, the development of agriculture is emphasized more and more. An important factor in the development of agriculture is the circulation of agricultural materials and products, namely, agriculture logistics, besides the technology advancement and political support. Agricultural Products Logistics has formed a potentially huge market demand for logistics because of large quantities and varieties. It has become an important part of agricultural industry. Nevertheless, the level of Chinese agricultural products logistics is still in a primitive stage for several reasons, such as high costs and low efficiency. The delayed construction of modern logistics system of agricultural products has seriously affected the process of agricultural industrialization in China. Agricultural Products Logistics is one important part of economic behavior, which is to create value and surplus value with the purpose of the act. Modern agricultural products logistics is to use modern science and technology to service in modern M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 500–506, 2011. © Springer-Verlag Berlin Heidelberg 2011

Application of ANP in Agricultural Products Logistics Performance Evaluation

501

society. It is a profit-oriented economic behavior. Modern agricultural products logistics is a global agricultural market. The production and consumption has become a worldwide behavior. Through high-tech, high intelligence and modern marketing, agricultural products have entered into the international circulation of the track. Agricultural products logistics is throughout the entire process. With the agricultural production process and the increasing integration of the circulation process, the labor in agriculture and trade have integrated. Now agricultural production is the production of circulation, and the consumer is the circulation of agricultural products consumption. In modern times, how to meet the current consumer’s demand for agricultural products, how to develop the potential demand for agricultural products, and how to create new demand, are running the development of durable agricultural products logistics. A successful agricultural products logistics management, which is an important tool to improve the organizational competitive power and to drive the development of social economy, will obviously provide sustainable competitive advantage. There are many researches on the literature on evaluation methods. It is necessary to make an evaluation for the reality of some of the management decision-making. Through the evaluation, we can identify strengths and weaknesses in order to improve the system. Evaluation is an important decision-making tool. The significance of the study about evaluation is to provide the basis for decision making of complex economic system according to results of the evaluation. Today, agricultural products logistics has been given more and more attention, including evaluation on agricultural products logistics performance. Zhao Yingxia [1] constructed for the evaluation of agricultural products logistics from three angles, which are the external environment of agricultural products, internal processes and overall effectiveness; Du Xiaofang [2] from Huazhong University of Science and Technology established a fresh agricultural product such as JIT delivery logistics effectiveness evaluation model, whose evaluation results showed that access to fresh farm produce more benefits than the traditional distribution system; ZHAO Zhen and Wang Wenbin [3] made the logistics of the evaluation index system of agricultural products, and established a multi-index comprehensive evaluation of nonlinear decision-making model based on network analysis (ANP ); Gong Dickson [4] impacted from four areas of logistics and distribution of fresh factors, and established three levels of the 25 indicators the evaluation index system, using multi-level fuzzy comprehensive evaluation model to evaluate.

2 Constructing Evaluation Indicator System of Agricultural Products Logistics It is significant to establish a logistics system performance evaluation of agricultural products to judge and evaluate the performance of logistics activities, which means to improve the existing system of agricultural products logistics services by providing a reference. To ensure the effectiveness of the system, some principles should be followed in establishing the system: systematic principle, scientific principles, and operational principles, qualitative and quantitative principles.

502

X. Zhang and C. Wang

According to the paper [5], an ANP model for agricultural products logistics performance evaluation indices system is shown in Table 1. The influential factors are derived through widespread investigation and consultation with several experts. Table 1. Agricultural Products Logistics evaluation indices system criteria logistics infrastructure

human resource

logistics information management and customer service levels

Sub-criteria transportation distribution network storage preservation proportion of highly educated employees proportion of employees obtained logistician certification employee training information level logistics standardization investment in hardware investment in software feedback quality management management fees

3 Analytic Network Process Method The AHP is a relatively popular tool for multi-criteria decision-making and has successfully been applied to many practical decision-making problems. The basic assumption of the AHP is that the decision-making problem can be decomposed in a linear top-to-bottom form as a hierarchy, where the upper levels are functionally independent from all lower levels, and the elements in each level are also independent. But many decision-making problems cannot be structured hierarchically, or there would be strong interactions and dependencies between inter-level and intra-level elements. There are many ways to determine the index weight. AHP and ANP are all used to solve unstructured and semi-structured decision problems. As the application of AHP method is on the premise that index system is a separate hierarchical structure, while the index of agricultural products within the logistics system is not independent, the logistics of the evaluation of agricultural products should adopt the ANP method [3]. ANP has the advantage that the process can be considered in the analysis of various indicators of the interaction between the inevitable and conditionality. Saaty proposes a “supermatrix” approach and extends the AHP to problems with dependencies and feedback. The resulting ANP generalizes the AHP and provides a framework for dealing with decision-making problems within which assumptions about dependencies between criteria and alternatives are unnecessary. The ANP has been applied to a large variety of evaluations: marketing, medical, political, social, forecasting, prediction and many others. For example, V. Ravi, Ravi Shankar and M. K. Tiwari [6] use ANP model, for end-of-life computers in reverse logistics; Wu Weiwen and Li Yuting [7], for knowledge management strategies selection; Eddie W. L. Cheng and Heng Li [8], for strategic collaborating. In

Application of ANP in Agricultural Products Logistics Performance Evaluation

503

agricultural products logistics performance evaluation problem, decision-makers might intuitively feel that some factors are more important that others in affecting their final preference among alternatives. If there is some feedback and interdependency among the factors, an unimportant factor may turn out to be far more important than even the most intuitively important one. Therefore, ANP is preferred over other approaches to handle agricultural products logistics performance evaluation problems. The establishment of a logistics system performance evaluation of agricultural products to judge the performance of logistics activities, evaluation, thereby improving the existing system of agricultural products logistics services provide a reference of great significance. Evaluation system o ensure the effectiveness of the system should be followed in establishing the following principles: the principle of systematic, scientific principles, operational principles, qualitative and quantitative principles, financial indicators combined with the principle of non-financial indicators. An ANP model on agricultural products logistics performance evaluation system will be constructed in Super Decision (SD) software here, which is a simple easy-touse package for constructing decision models with dependence and feedback and computing results using the supermatrix of the ANP. A typical network structure is as below[9].

Fig. 1. A typical network structure

A. Supermatrix First, the first step of ANP is to compare the criteria in whole system to build up the supermatrix. The relative importance value can be determined using a scale of 1-9 to stand for equal importance to extreme importance. We postulate network structure is composed of hierarchy C k (h = 1,2, "" , m) . For each hierarchy, Ck assume there exist elements ek1 , ek 2 ,"" , ekm , so the influence of C k (h = 1,2, "" , m) can be denoted as below:

504

X. Zhang and C. Wang

Which is the general form of the supermatrix. Wij shows the influence of each element of the i hierarchy on j the hierarchy, which is called a block of a supermatrix, whose form is as follows

⎡Wi1 j1 ⎢ ⎢Wi2 j1 Wij = ⎢ ⎢ # ⎢W ⎣⎢ in1 j1

Wi1 j2 " Wi1 jn ⎤ j ⎥ " Wi2 j2 Wi2 jn ⎥ j ⎥ # " # ⎥ Win j2 " Win jn ⎥⎥ 2 i j ⎦

B. Weighted Supermatrix The priorities of elements in one hierarchy according to a certain criterion can be denoted with a supermatrix, which means every column of every hierarchy in the supermatrix is column stochastic. However, the influence that other hierarchy according to this criterion is not concerned. As a result, each column of the supermatrix is not column stochastic. It is essential to consider the influence between every two hierarchy. The method is: regarding each hierarchy as an element, and pairwise comparing according a certain hierarchy, then computing corresponding priorities. Assume aij is the influence weight of the i hierarchy on the j hierarchy, let W ij = aijWij

(1)

W is a weighted supermatrix. In a weighted supermatrix, addition of elements in each column is 1. Matrix has this trait is called column stochastic. This step is much similar to the concept of Markov chain for ensuring the sum of these probabilities of all states equals to 1.

C. Limited Supermatrix What we want to obtain is the priorities along each possible path in a supermatrix, on the other word the final influence an element on the highest goal. This kind of result ∞

can be acquired by solving W , W

∞

= lim W k →∞

k

(2)

The weighted supermatrix is raised to limiting powers like in (2) to get the global priority vector or called weights[10]. For compute the weight of factors, index system in Table I is used to establish the model. Agricultural Products Logistics Performance model has been constructed in Figure 2 based on analyzing theories and consulting experts.

Application of ANP in Agricultural Products Logistics Performance Evaluation

505

Fig. 2. Super Decision model for the Evaluation index system

With the help of Super Decision software, it become more easy to calculate the supermatrix, weighted supermatrix and limited supermatrix. The elements have been sorted by priority, which help decision-makers focus on certain factors. We can see the priorities of alternatives in Figure 3.

Fig. 3. Priorities of alternatives in evaluation system of Agricultural Products Logistics

The priorities were shown in Figure 3 , it can help decision makers to make decision more easily. It is clearly which factors have a greater influence in the Agricultural Products Logistics. The green number were normalized by cluster, the last column means the priorities of every index, people can make decision according to the priorities directly.

506

X. Zhang and C. Wang

4 Conclusion Agricultural products logistics system is a very complicated system. For such a system, how to evaluate the performance? How to optimize the system? These problems are of practical significance. From the development process of agricultural products logistics, the logistics of agricultural products are at the initial stage of development. It is significant to research on agricultural products logistics performance evaluation. In this study, agricultural products logistics performance evaluation was considered as a multi-criteria decision problem and a model was proposed by using ANP. The ANP approach proposed in this study offers a more effective method for problems with dependence and feedback, with which decision-makers can evaluate more exactly and more rationally. But the model developed in this paper has a limitation as well: the evaluation result is based on the opinion of experts in agricultural products logistics field, whose preference to some criterion might have influenced the result. Although Delphi method is used in pairwise comparison phase, some subjective factors are still inevitable. Further research should be carried out on the usage of triangular numbers, which can revise human vague and imprecise judgments.

References 1. Zhao, Y.: China’s agricultural products logistics evaluation index system. Business Research, 211 – 213 (2007) 2. Du, X., Zhang, J., Zhang, S.: Agricultural Products Logistics Assessment Model for JIT delivery efficiency, 103- 106. Huazhong University (Social Science) (2004) 3. Zhao, Z., Wang, W.: Agricultural Products Logistics Performance Evaluation of ANP method. Agricultural system science and comprehensive study, 237–240 (2005) 4. Gong, D.: Perishable goods logistics performance of the fuzzy comprehensive evaluation. China Transportation, 104–106 (2007) 5. Yang, J., Qi, Y., Tang, C.: The Construction of the Performance Evaluation Index System of Sichuan Agricultural Products Marketing Logistics. Journal of Sichuan Agricultural University 26(3), 301–304 6. Ravi, Ravi Shankar, Tiwari, M.K.: Analyzing alternatives in reverse logistics for end-oflife computers: ANP and balanced scorecard approach. Computer & Industrial Engineering 48(1), 327–356 7. Wu, W., Li, Y.: Selecting knowledge management strategies by using the analytic network process. Expert Systems with Applications 32(1), 841–847 8. Cheng, E.W.L., Li, H.: Application of ANP in process models: An example of strategic partnering. Building and Environment 42(7), 278–287 9. Xu, S.: Practical Decision-making Method——Theory of Analytic Hierarchy Process. Tianjin University Publisher, Tianjin (1998) 10. Wang, C.-h., Wei, J.-y.: Research on the Dry Port Location of Tianjin Port Based on Analytic Network Process. In: 2008 Internationl Seminar on Business and Information Management, vol. I, p. 77 (2009)

SMEs Contest between Asymmetric Rivals in Financial Market from an Evolutionary Viewpoint Zheng Zhou and Fanzhao Zhou Center for Economic Research Harbin Commercial University Harbin, China [email protected]

Abstract. This paper mainly discusses the contest between two types of businesses in the financial markets, one is intense innovation geared but of smaller size and the other being just the opposite. From an evolutionary viewpoint, a model is established from references to the hawk-and-dove game theory in an attempt to illustrate the process of competition so that we can find how a new institution is to be formalized. And it can also demonstrate which roles both parties act in the game. It sheds light on the appropriate way which will facilitate the formalization and promotion of a newer and better institution. Keywords: Logistic Innovation, Following Cost, Fitness, SSE.

1 Introduction1 Since logistic theory was introduced into China in 1990s, past financial enterprises in planned economy system had transformed into new ones in succession. But it was just a simple change of a name. And it brought financials the first valley on the developing road in China. We found in financial market that actually innovation happened every now and then, but there were a little which could have key effect on the companies. Especially there are many small and medium enterprises (SMEs). To a turn, these key innovations change the status of financial company and improving the operational benefit. Thus, to study the development of financial innovation has become a important theme. Innovation was brought forward by Joseph Alois Schumpeter in 1911, and soon became a best-known core conception. As the explanation of Schumpeter, innovation is not only a new technical discovery, but also a economic conception. It means “enterpriser carries out new combination of production factors”, introducing a new productive function, so that the company can produce more than ever. In his eyes, the reason why the economic system can go from a kind of equilibrium to another kind of equilibrium is the continuous innovation activity. Modern financial is a process including management, control and execution, dominated by information, using present financial technology, target on satisfying 1

This thesis is supported by the funds project under the Ministry of Education of the PRC for young people, named "Analysis of Evolutionary Game and Research on Related Factors about Innovation of Financial System"(09YJC790062).

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 507–512, 2011. © Springer-Verlag Berlin Heidelberg 2011

508

Z. Zhou and F. Zhou

customer’s need, to improve the efficiency and benefit of flowage and deposit of raw materials, products in process, finished products and correlative information from supply to consume. Compared with the traditional financial system, modern financial system improves qualitatively whether on the advance of technology or on the social and economic benefit. Entering into the 21th century, there appears a new trend of development of financial technology, including four sides: 1, accelerating the research and practice of integrated financial system technology; 2, financial establishment and facilities growing to be reconfigurable, reusable and extensible; 3, virtual financial system coming into appliance; 4, financial system growing to be environmental (Du Xiaojun, 2001). These leads to three new targets: response ability, agility or elasticity, Condense. The realization of these three targets depends on financial company’s possession and use of information. That is to say, a modern financial company should also be a intellectualized company. From three views of the form and approach of financial innovation, innovation can be divided into two types: 1, product innovation and procedure innovation; 2, technology-push innovation and market-traction innovation; 3, radical innovation and gradually innovation (Hans Christian Pfohl, 2004). Different innovation types depend on different innovative elements. And companies with different structures face different innovations. Because companies with different scale have different drive to take innovative strategy, we analyze mostly whether a innovation developed by a company with little scale can be recognized by the market.

2 Evolutionary Game of Asymmetric Financial Rivals Consider two financial company groups, one is small, as be player A, the other is big, as be player B. assumed that big companies have market leadership, and small companies have market vigor and elasticity comparatively. In order to occupy market, small companies have to take innovative competition strategy on his own-take supplying innovative product or service as a example, continuously developing new product. Because the financial market is competitive, we might as well suppose that one’s market influence is in the direct ratio to its market capacity. Assumed that big companies’ market influence is μ, and small companies’ market influence is λ. Because big companies have bigger market than small ones, we can obtain that μ>λ, and μ+λ=1. Because the market of innovative product is uncertain, small companies may supply common product instead of innovative product. Thus A companies have two options: strategy 1 is to supply innovative product, strategy 0 is to supply common product instead of innovative product. Because of considering the factors such as market preference and cost, B companies also have two options. Strategy 1 is to follow the innovation, supposed the following cost is i. If so, A companies will gain the following cost entirely. Strategy 0 is to supply common product instead of to follow the innovation. This following cost is mainly made up of patent transfer fee or management technology transfer fee, including staff training expense and equipment updating expense, etc. When A companies and B companies choose option 1 at the same time, the innovation is realized and recognized by the whole market. B companies’ fitness defines as b11, but they have to pay the following cost i. Thus their fitness turns to be

SMEs Contest between Asymmetric Rivals in Financial Market

509

b11-i. And A companies’ fitness is a11+i correspondingly. Because B companies have bigger market, we find b11>a11. And because they adopt the same innovation, we can suppose a11/a00=b11/b00=θ. Θ describes the changing rate of fitness brought by innovation, θ>1. When A and B choose 0 at the same time, they can both gain some fitness by common product. Because inferior innovation will be washed out in competitive market by all appearance, we just take innovations superior to common product in this paper. Because of the brand effect, big companies’ fitness is bigger than small ones, 0
B strategy 0

A strategy 1

a11 + i, b11 − i

λ a11 , (1 − λ ) b00

A strategy 0

λ a00 + i, (1 − λ ) b11 − i

a00 , b00

3 Discussion of Model A. The First Situation When λa11>a00, viz. λθ>1, which means, for A, the rate of fitness increasing brought by innovation creates so much benefit that it can make up the deficiency of low market occupation. Then the position of Nash Equilibrium lies on the comparison of b11-i and (1-λ)b00. If b11-i<(1-λ)b00, i>b11-(1-λ)b00=(θ+λ-1)b00, which means the following cost is quite high, the Nash Equilibrium Solution is {1,0}. The market segmentation occurs. The whole market is divided into two segments. Lesser one supply better, or rather advanced products. At the same time, biggish one supply common products. The final outcome mostly might be that A will become special R&D consultant companies and B will become special manufacture companies. The financial industry will go on further specialization. If b11-i>(1-λ)b00, i<(θ+λ-1)b00, which means the following cost is not high, the Nash Equilibrium Solution is {1,1}. Primary common product market will face upgrade, be changed into innovation product market. B. The Second Situation When λa11max, Nash Equilibrium Solution is {0,0}, which means overmuch following

510

Z. Zhou and F. Zhou

cost will make B abandon the innovation, and A lack of support of the financial market, so as to abandon the innovation finally. When min
Fig. 1. Expected benefit in games

When the game reach a stable status on E1 or E0, any company will take stable activity. To A, equilibrium E1 is better by all appearance, A have drive to pursue E1. As to B, because b11-i-b00=b00(θ-1)-ib00(θ-1-λ-θ+1)=-λb00, which is better among E1 and E0 depends on the amount of following cost. In any case, because there exists specific strategy of non-optimal reaction, they may update their activity, namely, take another strategy. Supposed in the beginning of every period, there are companies of a certain proportion of every group who update their activity, and the updating base on the expected benefit of two strategies. Because former periods’ group composition is common knowledge to current period, if the status in last period had not changed, the expected benefit will be the real benefit which can be gained. Supposing companies’ updating strategy is monotone function of expected benefit, namely, to the monotone change (Δα,Δβ) on companies distribution, Δα has the same expression with (a1-a0), and Δβ is the same. When –λb00
α = *

(1 + λθ − θ ) b (θ + 1) λ b

00

00

+i

,β = *

1 − θλ

θ + 1 − λ − θλ

(1)

SMEs Contest between Asymmetric Rivals in Financial Market

511

If α<α*, the optimal reaction of B companies is to choose strategy 0, if α≥α*, the optimal reaction will be strategy 1; if β<β*, the optimal reaction of A companies is to choose strategy 0, if β≥β*, the optimal reaction will be strategy 1. Thereby expected benefit of these two groups will balance each other. And then we have result of group dynamic as Fig. 2.

Fig. 2. Dynamic status space

As to the area of α<α* and β<β*(left inferior area in fig. 3), obviously Δα and Δβ are all less than 0, therefore groups will move to E0; as to the area of α>α* and β>β*, obviously Δα and Δβ are all more than 0, therefore groups will move to E1. That is to say, E0 and E1 are in the state of attraction in dynamic system, forming two basins of attraction. When groups were on the track, dynamic system will move to{α*,β*}, which is a unstable Nash Equilibrium (a saddle point). The point under the track will move to E0, the point above the track will move to E1 as well. That is to say, dynamic system will move to either E0 or E1 finally. If there is no biggish shock, dynamic system will always keep this stable status. And the final stable status depends on the original status, that is to say, initial status is path dependent. This status show that which environment society gives to innovative financial companies is very important. If society gives innovative financial companies excellent environment and preferable encouragement at the very beginning, the dynamic system will settle on E1, excellent innovation will be adopted continuously, and innovation will promote the unceasing development of financial industry. When 0
512

Z. Zhou and F. Zhou

4 Conclusion We can easily find by the analysis above that i, following cost is an important parameter. Its value influence directly whether excellent innovation can be accepted by market. If i was too small, the innovative companies will lose drive of innovation. If i was too big, the innovation shouldn’t be followed by other companies, innovation won’t be accepted by market. In addition, the course of innovation marketization is related to companies’ occupancy ratio and the increasing of fitness brought by innovation. We must take all these factors into account, adjusting institution according to the change of market, in order to suit the development of financial industry. Our country’s economy has come to a important step, transforming the pattern of economic growth from rough type to intensive type. Promoting the innovation energetically is overwhelming trend. Although we have made significant progress in patent and copyright institution construction, there is still a gap comparing with developed country. Therefore, we should give the excellent innovation corresponding institutional and even economic support on its inchoation, in order to sustain the stable status in E1, making E1 to be SSE. In this way, we can promote the development of financial industry, make whole society keep vigorous, lead our country’s economy on the road of healthy development in intensive type, benefit type and innovative type.

References 1. Pfohl, H.C.: Innovative Element In 21th Century. In: Financial Frontier Practice Innovation prospect. China Machine Press, Beijing (2004); translated by Zhang, J., Li, Y., Chen, H. 2. Gintis, H.: Solving the Puzzle of Prosociality. J. Rationality and Society 15(2), 155–187 (2003) 3. Bowles, S., Gintis, H.: The Evolution of Strong Reciprocity: Cooperation in Heterogeneous Population. J. Theoretical Population Biology 65(1), 17–28 (2004) 4. Du, X.: A New Method to Gain Competitive Edge in Modern Manufacturing Industry. J. Science & Technology Progress and Policy 18(5), 25–26 (2001)

Study on Fuzzy Evaluation of Train Operation Dispatching System for China Passenger Dedicated Lines Based on AHP Sunqi, Zhangyanpeng, Liyulong, Liminzhi School of Electronic and Information Engineering Lanzhou Jiaotong University Lanzhou, China

Abstract. It is vital for a whole passenger dedicated line to construct the train operation dispatching system. So it is more important to evaluate the quality rationally, on which an impersonal evaluation has been done by AHP modeling and fuzzy evaluation theory. After some procedures such as establishing an AHP model of evaluation system, constructing the fuzzy evaluation matrix, determining the weight of evaluation index, choosing the operator M (i, ∑) of product and sum and so on to take into account various factors, the software of railway dispatching system can be evaluated impersonally and rationally. The decision maker in railway enterprise can make use of the method to choose the suitable software of railway dispatching system for railway development in accordance with practical situations. Keywords: China Passenger Dedicated Lines, Train Operation Dispatching System, Fuzzy Evaluation, AHP.

1 Introduction Train operation dispatching system for passenger dedicated line (TODS for short) is an intelligent integration system with transportation schedule as the leading role, which can manage real-time graphs on the basis of train operation commanding to associate various operation systems or processes with autonomous and decentralized characteristics and controllable and random attributes related to operation for passenger dedicated line by message trigger mechanism of concurrent inference. Therefore, it is vital for a whole passenger dedicated line to construct the train operation dispatching system. Thus, it is more important to evaluate the quality rationally for assistant operation dispatching[1]. In the paper, the architecture of TODS has been evaluated impersonally by AHP modeling and fuzzy evaluation theory.

2 AHP Modeling of Evaluation of Tods Architecture The hierarchical model of evaluation of TODS architecture based on AHP has been established in figure 1, which has three parts, including target, rule and index. The M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 513–518, 2011. © Springer-Verlag Berlin Heidelberg 2011

514

Sunqi et al.

target refers to the evaluation of TODS architecture (Z)[2,3]. The rule consists of system construction evaluation, system performance evaluation and system application evaluation (Bi, i=1, 2, 3). The index includes the various index weighing rules (Ci, i=1, 2…16).

Fig. 1. The Hierarchical Model of Evaluation of TODS Architecture

3 Constructing of Judgment Matrix and Determination of Weight of Evaluation Index The evaluated is marked for Z to determine the weight of evaluation index of software for more impersonal evaluation. After some investigation of several passenger dedicated lines already running and consultation with specialists, the judgment matrix has constructed with rational standards and calculated by the software YAAHP where:

⎡1 1 1/ 5⎤ Z = ⎢1 1 1/ 5⎥ ⎢ ⎥ ⎢⎣5 5 1 ⎥⎦

(1)

Study on Fuzzy Evaluation of Train Operation Dispatching System

515

According to equation (1), the eigenvector W of matrix Z and random concordance RI are: WBi =(0.1429 0.1429 0.7143 )T, i=1,2,3; RIZ=0.0000.

⎡ 1 ⎢1/ 3 ⎢ ⎢1/ 9 B1 = ⎢ ⎢1/ 9 ⎢1/ 7 ⎢ ⎣1/ 9

3 1 1/ 7 1/ 7 1/ 5 1/ 7

9⎤ 7 7 5 7 ⎥⎥ 1 1 1/ 3 1 ⎥ ⎥ 1 1 1/ 3 1 ⎥ 3 3 1 3⎥ ⎥ 1 1 1/ 3 1 ⎦ 9 9

7

(2)

According to equation (2), the eigenvector W of matrixB1 and random concordance RI are: WCi=(0.4946 0.2860 0.0414 0.0414 0.0951 0.0414)T, i=1,2,3,4,5,6; RIB1=0.0297.

5 7 8 ⎡ 1 ⎢1/ 5 1 3 5 ⎢ ⎢1/ 7 1/ 3 1 3 B2 = ⎢ ⎢1 / 8 1/ 5 1 / 3 1 ⎢1/ 9 1/ 7 1 / 5 1/ 3 ⎢ 5 7 7 ⎣ 1

9 1 ⎤ 7 1/ 5 ⎥ ⎥ 5 1 / 7⎥ ⎥ 3 1 / 7⎥ 1 1/ 9 ⎥ ⎥ 9 1 ⎦

(3)

According to equation (3), the eigenvector W of matrixB2 and random concordance RI are: WCi=(0.3740 0.1288 0.0693 0.0396 0.0224 0.3658)T, i=7,8,9,10,11,12; RIB2=0.0773.

1 1/ 5 3 ⎤ ⎡ 1 ⎢ 1 1 1/ 5 3 ⎥⎥ B3 = ⎢ ⎢ 5 5 1 7⎥ ⎢ ⎥ ⎣1/ 3 1/ 3 1/ 7 1 ⎦

(4)

According to equation (4), the eigenvector W of matrixB3 and random concordance RI are: WCi=(0.1530 0.1530 0.6323 0.0617)T, i=13,14,15,16; RIZ=0.0274.

516

Sunqi et al.

The above results show the values of RI are all less than 0.1, so coherence verification has been received. Then, the judgment matrices have been processed and the weight of various evaluation indexes has showed in table I meeting the condition of coherence. Table 1. Weight of various evaluation indexes indexes C1 C2 C3 C4 C5 C6 C7 C8 C9 C10 C11 C12 C13 C14 C15 C16

Weight 0.0707 0.0409 0.0059 0.0059 0.0136 0.0059 0.0534 0.0184 0.0099 0.0057 0.0032 0.0523 0.1093 0.1093 0.4516 0.0441

4 Theory of Fuzzy Set Ordination A.

Establishment of Evaluation Sets

From the attributes of evaluation indexes showed in figure 1, most of them are qualitative and difficult to ex-press as exact amount. In practical evaluation, the qualitative evaluation has been done by judgment committee and then quantified. The judgment committee includes so-ftware specialists, system management and maintenance crew, system users and user’s leaders[4]. For more exact evaluation, the evaluation set has been set up, where: V={v1(excellent),v2(good),v3(normal),v4(worse),v5(wor-st)}; Meanwhile, in order to quantify information of evaluation rank, the quantified vector of evaluation set can be expressed as: V=(1,0.8,0.6,0.4,0.2). B. Establishment of Fuzzy Evaluation Matrix in the Index Layer In accordance with established evaluation index system and evaluation sets, software can be evaluated by judgment committee. By statistic results of evaluation, the fuzzy evaluation matrix of rule Ci of TODS software Ak can be obtained, as follows:

Study on Fuzzy Evaluation of Train Operation Dispatching System

R AkC i

⎡ rki11 ⎢r = ⎢ ki 21 ⎢M ⎢ ⎣ rkim 1

rki12 rki 22

rki13 rki 23

M rkim 2

M rkim 3

rki14 ⎤ rki 24 ⎥⎥ M ⎥ ⎥ rkim 4 ⎦

517

(5)

Where:

rkixj =

•

f Ak Cix j 5

∑f j =1

•

f Ak Cix j is the sum of ballot approving of the evaluation rank vj, and rkixj is the membership degree to the evaluation rank vj. k=1,2,…,n； x N； i=1,2,3； j=1,2,…,5.

• • • • C.

Ak Cix j

∈

Integrated Fuzzy Evaluation Vector and Evaluation Value in the Rule Layer

When making use of the method of fuzzy mathematics to evaluate, different operators can be chosen according to the relationship between practice situation of object, evaluation index and evaluation set. If the problem is determined by dominant factors, the operator of “choosing bigger or smaller” M (∨, ∧) can be used. If the problem stands out due to dominant factors, the operator of “choosing bigger in product” M (i, ∨ ) can be adopted. If the problem includes entire consideration, the operator of “product and sum” can be elected. For the use of chosen information operator by judges, integrated fuzzy evaluation vector of evaluation rule Ci of TODS software Ak is

BAk Ci = WCi i RAk Ci

(6)

N Ak Ci = BAk Ci iV T

(7)

then, the evaluation value is

Where: • • •

WC is the weight vector of various indexes to Ci in the rule layer; k=1,2,3,…,n; i=1,2,3.

D. Integrated Evaluation Value in the Target Layer The integrated evaluation value of TODS software Ak is:

N Ak = WG i ⎡⎣ N Ak C1 , N Ak C2 , N Ak C3 ⎤⎦

T

(8)

518

Sunqi et al.

Where: • •

WG is the weight vector of various rules to target G in the rule layer; NAk reflects the level of integrated quality of TODS software Ak.

The bigger the value of NAk, the more requirements of user the system can meet. For users, the better advantages and performances of TODS software are very satisfactory.

5 Conclusion The evaluation of TODS software is always extremely complex. In the paper, the evaluation of TODS software has been done by fuzzy mathematics and the operator M (i, ∑ ) , which has taken into account various factors to avoid the shortcomings of subjective reasons. The judgment committee only needs to evaluate qualitatively, and the other calculations can be done by computers, which can make sure the accuracy of data and impersonal and rational evaluation. The decision maker in railway enterprise can make use of the method to choose the suitable software of railway dispatching system for railway development in accordance with practical situations.

References 1. Yu, S., Hao, Y.: System Architecture of Railway Passenger Dedicated Line Operation and Dispatching System. China Railway Science 28(1), 106–112 (2007) 2. Tao, Q., Wang, W.: Fuzzy Comprehensive Evaluation on DSS. Mathematics in Practice and Theory 35(5), 71–76 (2005) 3. Chen, X.G.: The ambifguous synthetical evaluating mathematic model of machine. Coal Mine Machinery 52(8), 23–28 (2004) 4. Liu, Y., Li, K., Qin, L.N.: Corporate’s Credit Rating and Relevant Fuzzy Comprehensive Evaluation. Journal of Northeastern University(Natural Science) 26(5), 76–81 (2005)

Disruption Management Optimal Decisions of Supply Chain under Uncertain Environment Based on Dynamic Network Xiaonan Cai1 and Jing Lu2 1

Department of Transportation, School of Mines, China University of Mining and Technology, Xuzhou 221116, China 2 Department of Industrial Engineering, School of Mines, China University of Mining and Technology, Xuzhou 221116, China [email protected]

Abstract. This paper aims to help supply chain companies make quick response and correct decisions in order to avoid disruption risks, losses and restore the normal operations soon. The strategy repertoire of supply chain’s disruption management is established from four main aspects: supply management, demand management, production management and information management; then the mathematical programming model is built to determine evaluation index based on different combined strategies. On that basis, time nodes can be increased in real-time , after which decision-making dynamic network can be built to enable the entire network search. Thus the disruption management strategies that can maximize the supply chain’s expected profit can be found. Based on this case, the results show that this method can find the best strategies’ combinations effectively. Most importantly, it guarantees the correctness and timeliness of decision-making. Keywords: supply chain’s disruption management, strategy evaluation, dynamic network, optimal decisions.

1 Introduction As the uncertainty of market development and frequency of external disasters, the global supply chain networks are becoming more vulnerable and making more severe impacts. The 911 event in the U.S. in 2001, the SARS in China in 2003, and even floods and droughts in southern China this year, have made the global supply chain networks suffer damages of different extents. Many supply chains’ normal businesses had been forced to interrupt, and some companies even go bankruptcy [1]. Therefore, how to take emergency control of supply chains and make quick response in unpredictable information environment is very important for supply chain corporations to avoid of risks and losses. The so-called supply chain’s disruption management [2] is: when some emergencies occur, such as natural disasters, emergent public health events and major incidents, goods must be gathered from the supplying place and transported to the receiving place in some unconventional way. With the aid of modern information technology, this M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 519–525, 2011. © Springer-Verlag Berlin Heidelberg 2011

520

X. Cai and J. Lu

process aims to provide the emergency materials and pursues the greatest time benefit and the least loss of disaster. It consists of a series of procedures, for example, gathering of goods, transportation, storage, loading and unloading, handling, carrying, packaging, distribution and information processing, etc. Currently, supply chain’s disruption management is becoming a research hot spot in academic and business area. Qi et al. [3] researched the supply chain’s disruption management in the case of demand fluctuations caused by sudden events; Xu et al. [4] studied the supply chain coordination problem when production costs were disrupted under a two-echelon integrated supply chain environment; Yang [5] studied supply chain’s disruption management when both demand and production costs were disrupted at the same time; but their studies are all based on some certain situations. However, in practice, those sudden events are often complicated and uncertain. Firstly the paper establishes a strategy repertoire of disruption management and builds the mathematical programming model to calculate the expected profit of the supply chain of the corresponding strategy. Then it increases or decreases times nodes in real-time, and establishes the network of supply chain strategies. Finally, how to find the optimal or sub-optimal strategies is studied, and the aim enables companies to minimize the loss and response rapidly.

2 Model A. Establish Disruption Strategy Repertoire The direct purpose of establishing the disruption strategy repertoire is to help the corporations make the right decision to enable the supply chain to restore normal operations quickly. Thus they can minimize losses in case of sudden events. The part will specifically analyze disruption strategies that can help to deal with sudden events effectively. And the analysis will be unfolded from four main aspects of supply chain: supply management, demand management, production management and information management. Through studies of specific cases and related textural references, combined with experts’ review scoring method, the part summarizes frequently-used and effective measures to constitute the disruption strategy repertoire (Figure 1). B. Establish the Mathematical Model Although the disruption strategy repertoire can help to mitigate supply chain risks and impacts, using it often needs more resources and more operational costs, for example, multi-vendor, strategic disruption stocks, flexible information system etc. A supply chain enterprise decides which strategy or strategies’ combination to use mainly according to the losses cut down and extra costs increased by the strategy, which aims to maximize the supply chain’s expected profit. Model assumptions: (1) For supply chain enterprises, the probability of daily operational risks is relatively stable; (2) Considering the daily operational risks only, the profit enterprise has a stable expectation for annual profit, which is set as R.

Disruption Management Optimal Decisions of Supply Chain

521

Fig. 1. Supply chain's disruption strategies

Firstly, without regard to sudden events and disruption strategies, the annual profit expectation of a supply chain is:

G ( p ( K ), K ) = R

(1)

Where,

p ( K ) represents the decision-maker’s preference weight to adopt a certain strategy, which equals to zero; K represents the input cost required, when a certain strategy is adopted; which equals to zero;

G ( p( K ), K ) represents the annual profit expectation of a specific supply chain

enterprise. Taking account of sudden events and a certain disruption strategy, the annual profit expectation of the supply chain is:

G ( p ( K ), K ) = R − K − p ( K )i L ( K )

(2)

Where,

L ( K ) represents the possible loss when the strategy is adopted.

In practice, the enterprise wants to minimize the loss, with an input of K;

min K + p ( K )i L ( K )

(3)

That is to say,

max G ( p ( K ), K ) = R − K − p ( K )i L ( K )

(4)

In conclusion, after using the disruption strategy, the mathematical model of expected profits is as following:

522

X. Cai and J. Lu

max G ( p ( K ), K ) = R − K − p ( K )i L ( K )

(5)

⎪⎧∑ p ( K ) = 1 s.t. ⎨ ⎪⎩0 ≤ K < L ( K ) C. Establish a Dynamic Network of Supply Chain A dynamic network of supply chain consists of several decision time points. Each time point occurs randomly and at which several strategies can be used, specifically as shown in Figure 2. The feature of a dynamic network of supply chain’s disruption strategy: 1)

S11, S12, S 22,..., Snm represent different states of disruption strategies;

S 0, St represent emergency management’s start and final states respectively; in theory, the number of strategies in the disruption strategy repertoire is n , and thus there are 2 n − 1 possible combinations in each decision point; 2) t1, t 2,..., tn represent the time required to make decisions, when sudden events occur; they can be increased in real time according to the actual situation; 3) G 011, G 012,...Gnmt are evaluations of different disruption strategies based on the mathematical programming model(5); in other words, it is expected profit of the supply chain from the original state to the corresponding point; meanwhile, the final weight of the network, Gnit, is set as zero; 4) Decision-making points of the dynamic network are changing and uncertain, and would increase with occurrence of sudden events. D. Algorithm for Solving the Optimal Strategy This part needs to search for the optimal strategy combination from the entire dynamic network of supply chain in the enumeration method. Because it makes sure that the optimal path is part of the globally optimal path at any time. That is to say, whenever, the optimal strategy is a subset of the globally optimal strategy, without any conflict. Specific algorithm: Step 1. Create initial values. For all nodes, d ijkm

= Gijkm ,

rijkm = km , p = 1 , and then go to Step 2; Step 2. With nested loop, calculate the sum of the weights of all paths in turn, and record the passed path nodes as rijkm , and then go to Step 3;

p = n + 1 , then end the calculation and record the sum of the weights of each path as d nkm ; else p = p + 1 , and

Step 3. Determine whether it is the termination. If then go to Step 2;

Disruption Management Optimal Decisions of Supply Chain

523

Fig. 2. Supply chain's disruption strategies for dynamic network map

Compare all the sums of weights in turn to gain the ing path of the optimal strategy

max ( d nkm ) and the correspond-

rijkm , which is the optimal strategy combination.

3 Case Study Assumption: the annual operating profit of a supply chain company is 10 million RMB considering the company’s own characteristics; its supply chain's disruption strategy repertoire includes multi-supplier strategy, strategic disruption stocks strategy and alternative strategy; the manager's preference changes at different decision points as 0.4,0.35,0.25. So the first decision point’s parameters are shown in Table 1. Different strategies are independent and irrelevant. According to the formula (5), expected values of different strategies are shown in Table 2. Table 1. Strategy Empirical Parameters (currency: RMB) Strategies parameters preference weights Input costs risk losses

Multi-supplier strategy A 0.4 0.5%±0.01%( profits) <50,000

Strategic disruption stocks B 0.35 200,000±30,000 <20,000

Alternative Strategies C 0.25 500,000±50,000 <20,000

524

X. Cai and J. Lu Table 2. Expectations of Different Strategies’ of the Supply Chain (currency: RMB) No. 1 2 3 4 5 6 7

Strategies combination A B C A+B A+C B+C A+B+C

t1 Profit expectations 9,930,000 9,910,000 9,855,000 9,910,000 9,855,000 9,805,000 9,785,000

t2 Profit expectations 9,912,500 9,930,000 9,780,000 9,942,500 9,782,500 9,750,000 9,732,500

t3 Profit expectations 9,937,500 9,957,500 9,805,000 9,907,500 9,812,500 9,745,000 9,732,500

Notes: when two or more of the portfolio strategies are adopted, input costs are the main factors since risk losses are negligible. Decision-makers’ preferences for different strategies are different at different time. So the expectations of different strategies are not fixed but fluctuating.

Establish the decision-making network as following (Figure 3):

Fig. 3. The Disruption Decision Network of the Supply Chain

Program in C language to calculate the profit expectations of all decision-making paths, and find

max ( d nkm ) as well as the optimal combination of decision-making:

S0---S11---S24---S32---St, in other words, multi-supplier strategy---multi-supplier strategy and strategic disruption stocks---strategic disruption stocks, which is the optimal strategy combination on this occasion.

4 Conclusions The main factors that affect the efficiency and flexibility of a supply chain’s disruption management are the disruption strategy repertoire, and correct and timely

Disruption Management Optimal Decisions of Supply Chain

525

decision-making. Disruption strategic system and mathematical optimization model provide effective support for decision-making; meanwhile, decision-making dynamic network ensures fast response. Actually, the supply chain does not return to its original state but a relatively normal state after adopting certain disruption strategy. However, there are still some shortcomings in the supply chain’s disruption management study which is based on dynamic network in uncertain environment. There are so many alternative strategies in practice. For example, if there are n kinds of strategies, there will be 2 n − 1 possible options at each decision point. On this basis, if the number of decision points is also counted, the algorithm complexity can be very high. Therefore searching for high-efficiency network algorithm is the key issue for the future. Acknowledgment. The authors would like to thank the guidance under the Professors Mingling Lu, Congan Ma and Xin Li at China University of Mining & Technology. Meanwhile, the paper received much assistance and support from the mentors Ph.D. graduates Dan Ma, Fan Pan and Yingxiu Liu at China University of Mining & Technology.

References 1. Zhu, C.: Study on supply chain disruption managemnet based on disruption. Xiamen University Master degree, Xiamen (2008) (in Chinese) 2. Ma, H., Ji, J., He, B.: Study on supply chain management for disruption. Modern Management Science 10, 57–64 (2009) 3. Qi, X.T., Bard, J., Yu, G.: Supply chain coordination with demand disruptions. Omega 32(4), 301–312 (2004) 4. Xu, M., Qi, X., Yu, G., Zhang, H.: Coordinating dyadic supply chains when production costs are disrupted. IIE Transactions 38(9), 765–775 (2006) 5. Yang, Z.: Study on supply chain’s disruption management when both demand and production costs were disrupted at the same time. University of Electronic Science and Technology Master degree, Chengdu (2008) (in Chinese) 6. Ingene, C.A., Parry, M.E.: Channel coordination when retailers compete. Marketing Science 14(4), 360–377 (1995b) 7. Wu, J., Li, J., Wang, S.: Several key problems in supply chain risk management. Journal of Management Sciences in China 9(6), 1–5 (2006) 8. Sheffi, Y.: Supply chain management under the threat of international terrorism. International Joumal of Logistics Management 12(2), 1–11 (2001) 9. Xu, M.: Disruption management in supply chain. Wuhan University Doctor degree, Wuhan (2005) (in Chinese) 10. Kraljic, P.: Purchasing must become supply management. Harvard Business Reviews 61(5), 109–117 (1983) 11. Lonsdale, C.: Effective managing vertical Supply relationships:A risk management model outsourcing. Supply Chain Management: An Intemational Journal 4(4), 176–183 (1999) 12. Hallikas, J., Karvonene, I., Pulkkinen, U.: Risks management Proeesses in supplier networks. International Journal of Production Economics 90(1), 47–58 (2004)

Visual Angles and Reference Systems of Management Theory Sun Bo School of Economics and Management Jiaying College Meizhou, P.R. China [email protected]

Abstract. Profit is usually listed the first visual angle of management. What the so-called ‘management desire’ refers to should be a kind of thirst for power. At the same time, a harmonious idea penetrates in each part of management. Management pursues effect that 1+1> 2, as implies a kind of interactive angle of view. Economy is unavoidably necessary as a reference system when decomposing management from profit perspective. Entering the commercial domain, power appears by forms of corporate politics and market politics. The so-called ‘construction of harmonious society’ more selects society as the referring standard. The self-concept is a management phenomenon contradictory with interaction. To deal with it requires taking the entire or the larger system as reference, namely systematic view. Therefore, point of this article is: management can be researched from four different visual angles of profit, authority, harmony & interaction; the relative reference systems are economy, politics, society and system. Keywords: Management, Visual Angle, Reference System, Analyzing Tool.

1 Introduction We may first attempt to decompose management by literal analysis. A. Chinese Wording Management in Chinese, means both to control and to react as it suggests - the former mainly emphasizes to exert influence over human, matter, thing, wealth, information and so on; The latter is to handle or deal with mainly objective events and belongings. ‘Control’ should be initiative, ‘react’ is more passive. Control without reaction resembles bureaucracy which is high above but not agile and nimble; reaction without control will lose directive grasp since it cares only minute affairs just like a fire fighter. B.

English Wording

Management in English could be understood in another way. A man engages in management is called a ‘manager’. Here a ‘man’ once has certain ‘longevity (ager)’, namely accumulated experience, he possibly becomes a manager. This also promulgates one of management’s inherent laws - strong practicality: an armchair M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 526–532, 2011. © Springer-Verlag Berlin Heidelberg 2011

Visual Angles and Reference Systems of Management Theory

527

strategist is not a true manager. The famous management scientist Drucker renowned as ‘the master in masters’ representing the empiricism school specially emphasizes summarization of successful and failed experience, positively verifies the guiding principle of management: from practices and for it too.

2 Viewpoint of This Paper Analyzing ‘management’ only from wording is far not enough. To such a voluminous discipline as ‘management’, there varied theoretical viewpoints. Even opinions of ‘masters’ are different or even mutually contradicted. Drucker stresses that ‘management is one kind of practice’; Simon pays great attention to policy-making’s scientific formulation; Adizes studies management from angle of enterprise life cycle, Barnard cuts into from organizational function......Besides the books, how many mysteries on earth are there with management science? The author obtains some points as following. In order to be understood more easily, a table (Tab. 1) is presented here – actually it’s not so complex. Table 1. Visual Angle, Reference System & Analyzing Tools of Management Visual Angle Profit Authority Harmony Interaction

：

(Source SUN Bo

，2007)

Reference System Economy Politics Society System

3 Visual Angles Although management or management science is colorful and varied at different points of view, this paper attempts to give some personal viewpoints. A. Profit Profit here is ranked the first visual angle of management, as is deemed to win support of majority irrespective of some experts’ objection. After all, the economic basis determines the superstructure. One of two drunkards in rags in Street Park complains to the other: ‘my consultant reminds me to pay attention to authorization.’- Such scene is doomed to be scorned or even worthy of no such – just because the economic interest is always the initial factor influencing power of management. In peace society, it’s undisputable to pursue monetary benefit – to develop economy, and to raise people’s material life level, are precisely the first important matter of nation governance. Technical research & development to enhance labor productivity is nothing but to create more economic output. The ‘undertaking’ seems to remind us not to forget to ‘take’ economic profit. B. Authority There shouldn’t be big opposition to list authority as the second visual angle of management. Mankind has never separated with authority ever since the end of the

528

S. Bo

primitive society. This condition gets closer and closer with management as propagation of group living and team cooperation. We say that a manager must have the desire to manage; such desire could then be understood as one kind of ‘thirst for power’. Simply it might be a psychological condition to ‘gives orders’; intricately it might also be a system restricting each side, thus the objective affairs could be run more steadily. C. Harmony Perhaps people disagree with harmony’s third rank of management’s visual angle – even the author also believes that there will be more disputes on it and the coming fourth point ‘interaction’. Supposing a person sets up an enterprise or takes over a regime, certainly he will consider how to develop economy, as is possibly originated from his authority lust. But everyone subconsciously hopes to live in peace with each other no matter he, the supervisee, or the good-intentioned onlookers - this is of course only a narrow aspect; If viewed from a more macroscopic angle, it should be the lubricant & harmonious disposition of staff, wealth, material, relations and so on. Supply chain management or even placing of stock materials should accord some principle to favor previous and following procedures, thus to lubricate the overall workflow, as is penetrated with a kind of harmonious intention. As for interpersonal or man-machine aspect, idea of harmony is more needed. The formulation of enterprise strategic goals has to take long-term and short-term harmony into account; Internal harmony is not enough, external harmony should also be pursued ......It can be said that concept of harmony penetrates in every shade of management. D. Interaction Viewing management from interactive visual angle seems to be new, but actually it’s got an ancient background. Why must management pursue effect of 1+1> 2? Once an organization is formed, even if it’s only made up by two people, so long as there is division of manager and supervisee, problem of how to motivate supervisee’s intrinsic power exists. The pompous & routined so-called ‘quick & great work’ and ‘joint effort’ are helpless to goal approach. Whistling jigs to a milestone is obviously not interactive; repeating the book saying will still not produce expected behavior. Only to truly clarify the mechanism, give what is desired, scratch the itching place, could joint force form, then enterprise could advance fast.

4 Reference Systems Because the visual angles are different, the reference systems are naturally different, too. Here the visual angles above mentioned will be accorded strictly to continue the discussion. A. Economy Profit is the object economists love. If management is viewed from profit angle, the reference system of economy is certainly unavoidable. Decision of supply & demand, price mechanism, output choice, market determination and so on, are all compulsory courses when enterprises tracing profit.

Visual Angles and Reference Systems of Management Theory

529

Enterprise operating in market must have the self-knowledge. The ‘self-knowledge’ means to reasonably judge ones market and location in the market; understand the product not only its function & specification, but also elasticity, cost as well as investment of production elements. Enterprise should also know the other side while knowing oneself, thus it could maintain advantage in repeated gambling with competitors. Enterprise should know some about macroeconomics to deal with customers, suppliers and competitors. How does the national economy develop? What’s the investment in expenditure? How about the tendency according to adjustment in financial & monetary policies? Enterprise must gain the related information in studying the above situations, and then it will be more positive in market competition. The further importance is that managers should initiatively foster habit of using economic theory to instruct management practice in enterprise practice. ‘decisionmaking by patting the forehead’ has already been outdated. what it receives is more possibly the dangerous situation participated by investor, staff and other stakeholders. When the situation is worse, ‘patting the thigh’ – ‘how could it be?’ When it further worsens, by ‘patting buttocks’ one will just escape. Such ‘management by three pattings’ is no doubt the toxicant of organization development. B. Politics Authority is usually considered a toy in politicians’ palms. Although it teases, it actually makes some sense. It’s not only national democratic affairs needing politics in fact. 1) Corporate Politics There is also politics inside company. We often see triads & cliques in enterprises. They’re result of corporate politics’ internal action. A man is unavoidably tendentiousness - just like the so-called ‘radish & cabbage are respective loves’. A person possibly has already gotten in an interior sphere of influence carelessly. Of course we may explain it by enterprise culture and unofficial organization. But there still be something these cannot explain. To raise up explicitly - is actually quite normal. Since there’s difference in authority division, born of politics is also natural. In order to restrict authority, is has to be decentralized – the federated decentralization and the simulated decentralization comes into being. Principle of decentralization divides the whole-in-one board of directors into executive department (board of directors) and non-executive department, namely surveillance department (board of supervisors). The national principle of checks and balances gets reflection in company whose form and spirit both resembles. In China, the Party and government organizations even unconventionally created an innovative blaming mechanism ‘the Discipline inspection committee’. To comb production relations must rely on politics at any time. It will possibly face problems of philosophy or management philosophy, but ‘economic basis determines superstructure’ is still the unbreakable truth. ‘The like attracts the like’ is still the automatic indicator of interest grouping. Authority is always the focus of politics. If a manager wants to govern, he has to satisfy non-managers’ request of ‘participation’ to some extent to realize ‘democracy’ – how incredible it is! So we esteem leaders when seeing them because only such political experts can handle so complicated conflicts.

530

S. Bo

2) Market Politics If we say the conflicts in company are still implicit, we should acknowledge that managers’ behavior of politician style when transacting with company’s exterior is more evident. They attack the counterparts using excellent market strategies; they know how to take advantage of situation or make the situation to attract attention; they even could utilize government’s visible hand to adjust market’s invisible hand. To grasps the market and operate business by politician's technique, as is market politics. In the author's eyes, market politics is a required course of manager’s success. Politics is like the weather somewhat. If the manager does not know the weather, how could he run the enterprise? Caring about today’s weather could live today happily. But if a manager doesn’t pay attention to weather of tomorrow or even the day after tomorrow, possibly he will lose the enterprise's future. C. Society Management's ultimate aim should be to improve organizational & personal quality of life. But can this aim get done in one action? 1) Harmonious Society Now in the mainland of China the most popular glossary is nothing but ‘harmonious society’. It manifests the Central Party Committee’s farsightedness that velocity shouldn’t be the price of development, as also gives us a negative answer to the above question. On aspect of management’s visual angles, it is to pursue reasonable matching of management object and the aim. Research on management from harmonious visual angle more selects society as the reference standard. In present society especially Chinese society, there’re too many so-called ‘duals’: dual of city and countryside, dual of worker and peasant, dual of rich and poor, dual of labor and capital......Although the objective contradiction and interest conflict are not so radical as that of capitalism society, anyway they’re the urgent problems governors have to face and solve. The society taken as reference system, harmony of principal parts, objects and in between might be obtained. To seek common ground while maintaining difference, as endows the common benefit more space to develop - this is absolutely the compatible plan worth consideration in management process. Management is objectively kind of function, depending on its duty. That is, management is a discipline. But management receives influence of social culture, and belongs to its value, tradition and custom. Management has to become a tool that could drive cultural difference serve for mankind's common goal. The Europe’s passion on management is to a great extent because of the expectation on management to change cultural and social traditions. Management’s such kind of initiative will bring mankind a more harmonious society which will be realized in acceleration. 2) Social Responsibility The manager should be a craftsman whose first duty is to enable his organization to accomplish its expected mission and goal - no matter it is the commodity, service, education or diagnosis. But this is not enough - every organization lives because of the society, and exists in specific community. Therefore, it definitely rubs, collides and conflicts with the outside. And it has to be responsible for its behavior. In modern nation’s multi-organizational society, every leading group, namely managers of varied institutions should undertake social responsibility of their own, should consider the

Visual Angles and Reference Systems of Management Theory

531

value concept, the faith and the pledge of their society, and should be coordinators while fulfilling the functional and limited mission. Such responsibilities have caused a new significant challenge - and proposed a series of hard questions on aspects of management and political theory & practice. As is the fact we cannot avoid. The social responsibilities cannot be avoided. This is not only because of the public & social need, moreover, but also because there’re no other leading groups except managers in the modern society. If the managers of our principal organs, especially business enterprises did not undertake the responsibilities for the common benefit, there would be no other people do it. In Drucker’s book , he discloses that company should undertake not only its responsibilities to shareholder & staff, but also its responsibility to the society. This caused anger of Sloan, the president of GE. But years later, it actually conquered the public. In the multi-dimensional society composed of varied organizations, the government can no longer be ‘the dominator’ or ‘the guarder of common interest’, although political theory still deems that it could. The leading group of this society, viz. managers of essential organizations, irrespective of their willingness - in fact also irrespective of their competence – have to consider seriously what responsibilities they can and should undertake, where and why to undertake. The most extreme case of requiring enterprise to undertake social responsibility is possibly a declaration in the 60s proposed by John·Lindsay, the New York Mayor. He summoned that every big company in New York ‘claim’ a black slum area and guarantee the living necessities accompanied with education and occupation for everyone in this area. He further made up that he hoped these big companies could guarantee each black family have a man as wife’s husband and children's father. This kind of seemingly unreasonable request actually brings stability and harmony for the society, community, family and what we called ‘weak groups’. D. System The egoism is a usual problem in management, and it could be individual egoism, departmental egoism, and regional egoism, etc. It’s also one of managers’ headachy problems. The reason of it should be insufficiency of interaction between managers and supervisees. Perhaps the supervisees only view from ones own angle that is surely narrow. If his visual field is broadened, viz. the entire or a bigger system is taken as the reference, he is deemed to make different choice. A county magistrate in Beijing area used to say: ‘I’m not showing to object the Central Party Committee's decisions. But I’m only a tiny county magistrate who is only able to manage such a scope. So I have to limit the scale of migrants to minimize their threats to natives on employment. If I were the Central Committee’s General Secretary, I will also request each region to cancel the limitations on migrants - but actually I’m not!’ It can be said that this county magistrate's words represent quite a few people’s voice. One must exert force to drive the opposite party if he expects certain behavior to be done. ‘Lei Feng has gone abroad’, as tells that only depending on spirit cannot assure high efficiency of organization operation. And it’s certainly a similarly parochial viewpoint that drive could be supplied only by money. This requests us to put individual in a huger set (we may call it ‘system’) when considering problems including sequence, part & whole, interest conduction......

532

S. Bo

We often say ‘** work is a systems engineering’, as is nothing but to remind us to view the overall situation and grasp the macroscopic trend. But in microscopic view, meticulous connection should be the caution – ‘in order to take, one must first give.’ If the interest conduction mechanism goes wrong, the most resounding slogan will also become prittle-pratlle. The discipline of system dynamics could solve this problem well – it’s still emphasis of systematic view.

5 Conclusions Drucker says, ‘the management is fulfillment of function just like the organs behave on institution’s deputy.’ We know that the hand is human’s most nimble organ - it can make every changing shape, complete varied complex operational tasks. This brings us difficulty in inspecting management and its hand - management analyzing tools. Strictly speaking, everyone’s visual angle is not the same, not to mention the reference systems. Perhaps this is one of the reasons why discipline of management blossoms. The author himself acknowledges he knows little. This paper could be the introductory remarks so that valuable ideas are coming. It’s hoped it is not part for the whole. Acknowledgment. The author appreciates WANG Ying-ge from Jiaying College for her help in this paper.

References 1. Drucker: Management: Duty, responsibility & practice. Mechanical industry publishing house, Beijing (2006) (in Chinese) 2. Drucker: Effective managers. Workers’ publishing house, Beijing (1989) (in Chinese) 3. Drucker: Concept of Company. Mechanical industry publishing house, Beijing (2006) (in Chinese) 4. Simon: Administrative actions. Beijing Economical Institute Publishing house, Beijing (1988) (in Chinese) 5. Barnard: Managers’ functions. China Social Sciences Publishing house, Beijing (1997) (in Chinese) 6. Zhao, R., Adizes: Enterprise’s life cycle. China Social Sciences Publishing house, Beijing (1997) (in Chinese) 7. Jiang, R.: Frog in lukewarm water: From market politician to strategic manager. Modern Business Industry 10, 24–25 (2003) (in Chinese)

Process Improvement Model and It’s Application for Manufacturing Industry Based on the BPM-ERP Integrated Framework Liu Hongjun and Li Nan School of Information Management, Chengdu University of Technology Chengdu, P.R. China [email protected]

Abstract. In order to improve the success rate of ERP in project implementation today, enterprises often implement business process management (BPM) before or during the ERP implementation. Against the background of the ERP implementation, a BPM-ERP integrated framework of manufacturing enterprises is put forward, as well as the Process Improvement Model based on the integrated framework in this article. Business processes are improved by modeling, diagnostics, optimization, evaluation and continuous optimization, and these methods also make functions of ERP system evolve towards processes. Business processes of the production management for a manufacturing enterprise was taken as an example. With the synchronous development of BPM and ERP, the example proves the obvious effectiveness of the processes optimization in construction of enterprise information integration platform. After that, the scientific basis and operational method are offered for enterprises successfully implementing ERP. Keywords: BPM, BPM-ERP integrated framework, Process Improvement Mode, manufacturing industry.

1 Introduction “Rationalization follows information” is an important criterion followed in the implementation of ERP. As a survey [1] conducted by a U.S. research institution in 2006 for U.S. and European companies showed that 80% enterprises, which had implemented ERP, would first optimize the production and management processes, if they were given a chance to promote ERP again. The so-called “rationalization” [2] refers to the enterprise business process analysis, standardization, optimization, reorganization and evaluation—business process management (BPM). BPM is developed from BPR, which contents advanced management methods and a variety of technology, which contents modeling technology, process analysis technology, process optimization technology and process evaluation technology [3]. When enterprises are ready to apply ERP to integrate its internal resources, it is necessary for them to use BPM to diagnose and optimize processes according to their strategic position and business objectives. Then use ERP to change the manual M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 533–542, 2011. © Springer-Verlag Berlin Heidelberg 2011

534

H. Liu and N. Li

process into IT process, so that enterprises can improve work efficiency and management. So if manufacturing enterprises, especially discrete manufacturing enterprises want to implement ERP successfully, it is necessary for them to introduce BPM, and research a set of methodology on the integration of business process improvement and ERP implementation to support enterprise business model innovation, and enhance market competitiveness, which have important theoretical and practical significances.

2 Process Improvement Mode under the BPM-ERP Integrated Framework In most situations, the impletion of BPM in enterprises, is constructed towards to ERP project, or followed the ERP implementation simultaneously. So this article proposes a BPM-ERP integrated framework, which is shown in figure1. BPM Providing

Process modeling

The project integration between ERP and BPM

Demands analysis

Process optimization

Process analysis

Process evaluation

Providing Method and tech. Process review

Process design Survey establishing Making and Texting and organization plans study ERP program data design preparation

BPM Process Reengineering ERP soft selection

In Evaluation System and switch improvement

ERP System platform

BPM is the base of ERP implementation ERP provides tech. and framework for BPM

ERP

Demands analysis

System selection

System implementation (plan, secondary development, model texting, system conformation, system switch)

System operation

Fig. 1. BPM-ERP integrated framework

Based on the process improvement cycle mode, a Process Improvement Model under the BPM-ERP integrated framework is established, which is shown in figure 2. It can be seen from figure 1 that in the first three stages between the impletion of BPR and ERP simultaneously, BPM and ERP are closely related in the time dimension and content dimension. The business process design and ERP project design are built SURFHVVSURFHVV PRGHOLQJDQDO\VLV based on project research and demand analysis, and the consistency of the two design goals ensures that enterprises can realize the information. The redesigned process whether matches the realization of mainstream ERP software system should be attended, which will be helpful to select the right ERP system, realize system  customization, and use and maintain the system running. Besides, training must also be attended, which contents business3URFHVVSURFHVV processes training in improved business processes. H DOXDWLRQ  R WLPL]DWLRQ

Process Improvement Model and It’s Application for Manufacturing Industry

modle tech.

535

analysis

SURFHVVSURFHVV PRGHOLQJDQDO\VLV

tech.

Continued cycle

BPM evaluation

tech.

Improvement  3URFHVVSURFHVV HYDOXDWLRQ  RSWLPL]DWLRQ

optimization

tech.

Fig. 2. Process Improvement Model

In fact, with the changing market demands, enterprises need to constantly adjust business processes, related organizations the functions of information systems. BPM is implemented through the process modeling, process analysis, process design and process optimization and process evaluation, which four parts form a closed loop to track the process comprehensively and optimize the process continuously (figure 2). Process modeling [4] is the start of each cycle, and the cycle is running continuously. But this cycle is not carried out at the same level. Once one cycle is finished, the improvement goals and improvement level will be increased with corresponding results. The implementation of ERP in enterprises is business process-oriented, and ERP itself should also be process-oriented. The implementation of ERP software always puts the rational business processes fixed, and transforms the manual process into IT process, so that enterprises can improve work efficiency and management. It is necessary for enterprises to improve and optimize business processes constantly, which will be achieved through the function of ERP system, so that ERP can evolve from processes. In turn, ERP accelerates business processes operations, and improves corporate management efficiency. This reflects that the process cycle improvement is very important for the implementation of ERP.

3 Case Study This article takes an engineering machinery manufacturing enterprise (CG Company) for an example. Although this company has achieved a degree of information, the information level in each department is uneven. With the fierce market competition, executives in CG Company hope to build an integrated enterprise information management platform through a comprehensive planning. Due to space limitations, this article takes production planning business processes for an example, and extracts

536

H. Liu and N. Li

the functional requirements of ERP from CG company’s business goals and strategies, and makes production planning business processes combined with ERP software implementation through BPM modeling, diagnostics, optimization and evaluation in order to prove the rationality of Process Improvement Mode this article proposed. A.

Process Description and Modeling

According to IDEF0 modeling method, production management business flow chart in CG Company is described as figure 3 shown. The process is defined that production planning is formulated, which includes machine paint plans, orthogonal storage shelves plans, bridge box plans, structural pieces needed plans. And plan operation and production condition are controlled. The customer service objects include every branch factories, materials department, purchasing department, institute, warranty department, the cost of office and association works outside. Process Input: Host monthly storage plan, ordering plans, sub-factory tooling plans, technical notice and spare parts production application documents. Process Output: Production department month plans, special spare-parts plans, special tooling plans and production scheduling notice. B.

Process Analysis and Diagnosis

Production planning business process is one of key production management processes in CG Company. At present, the performance of this process in implementation is poor, and the process needs to be improved and optimized. Through research and analysis, it is discovered that there are several problems in CG Company’s production planning business process.

   ĉ

   Ċ

Making storage and parts demands plans

Storage plans Parts demands

plans

Decomposing monthly plan to

Feedback lists

Tooling demands

branches Plans

ċ

Making production plans

Monthly plan Feedback lists

Delivering monthly plan to branches

Audit

Send-receive reports

Assessing branches

Fig. 3. Production management business flow chart of CG company ： branches ： Production ) ( ： Sales

Ⅰ

Ⅱ

Ⅲ

Process Improvement Model and It’s Application for Manufacturing Industry

537

Through research and analysis, it is discovered that there are several problems in CG Company’s production planning business process. 1) There are some problems on plan and management. In the process of formulating production plans, precise data on procurement, inventory and sales can’t be received timely. 2) There are some problems on production and control. For the production schedule instability, produce parts are shortage or backlog, which results that production schedules is not balanced. 3) There are some problems on data query and control timely. Due to manual data management methods and some isolated island-style management information systems, it is difficult for production department to inquire and control information. According to the six aspects of 5M1E, the fishbone diagram can be drawn as figure 4 shown. It can be seen that as the required production data can’t be transmitted timely, production plans in production management are difficult to be controlled in CG Company. So it’s necessary for CG Company to improve the accuracy and rationality of production planning. So we should diagnose the process, and indicate that how to improve the process according to customer demands, resources consumption in process running, process bottlenecks, internal control and risk control of the process, process stability and so on. It can be found that the bottlenecks in this process include the conflicts to seize resources between conventional production and new products trial or old products improvement. And the factors affecting process operation stability include arbitrary marketing plans, inadequate technical information, large special orders, ineffective supervision and control on the contract manufacturing parts and so on. It can be concluded that this process needs to be improved. (1) To make production planning preparations. (2) To adopt advanced techniques so that data sharing can be realized, and to regulate the compilation of job numbers. (3) To strengthen process control. (4) To establish a special rapid reaction mechanism for special orders, responding to special marketing plans changes. MAN

MACHINE

The lack of responsibility

The lack of i ncentives

Inadequate technical information

Making plan arbitrary

Unshared information ENVIRONMENT

MATERIAL

METHOD

Lacking scientific method to plan

Lacking cooperation part control Weak tooling and spare parts programs

The lack of feedback means

The problem on Making production process Stock information inaccurate Production process can not be valued

MANEGE

Fig. 4. The fishbone diagram on the Production Planning Business Analysis

538

H. Liu and N. Li

C. Process Optimization and Its Matching with ERP E (Eliminate)-S (Simplify)-I (Integrate)-A (Automation) is a basic method to optimize and improve the existing business processes. The core idea is to reduce non-value added activities, reduce waiting time and duplicate work, Coordinate workload, and improve efficiency. For CG company lacks platforms and channels by which CG can get kinds of feedback information timely, it is difficult for CG company’s production management processes to monitor the implementation of every branch factory in production process. So CG Company must take measures to optimize its production business processes. •

•

• •

At present, CG Company draws the production plans up in the light of the demands planning in marketing; however the production capacity of branch factory is ignored. So, it is suggested that control points should be increased in this process——production capacity should be verified repeatedly and balanced before receiving the plans. To establish a public information platform. Technical data, marketing plans, procurement plans and progress, inventory information, production status and other relevant information in research department should be shared. And production planning department can make use of relevant information in the platform to develop and adjust plans, and require elevant executive departments to give feedback to the information platform. To make use of OA system to improve process efficiency. To establish special orders approval process, in order not to affect the implementation of normal production plans.

The above improvements and adjustments are proposed based on the businesses process in CG Company and the corresponding ERP Software features. In CG Company, marketing department decides to produce. Marketing department requires that the custom cycle of products be shortened, however, due to the existing information isolated island, production conditions can not be mastered timely. Besides, CG Company couldn’t collect quality data and process data fully because of the lack of manufacturing management supports. Finally, production department often face plan changes. And research department requires manufacturing site to give feedback, however, manufacturing sector also requires that research department communicate with manufacturing site to inform production change notice. In order to eliminate these “gaps”, it’s necessary for enterprises to integrate manufacturing execution system (MES) into the construction of ERP. For CG Company, by using MES and APS, production department and branches can achieve reasonable dispatch and coordination between upper plan and bottom control. The optimized plan-implement-control business process is shown in figure 5. D. Effects Evaluation Based on previous research results [5], [6] and researches on lots of manufacturing enterprises, the evaluation indicator system for process optimization results in manufacturing enterprises is proposed, which is described as figure 6 shown. In this case, according to this indicator system, we collect relevant parameters and data on optimized production business process from production department’s staffs at

Process Improvement Model and It’s Application for Manufacturing Industry

539

Business

ERP

Company Plans

Dynamic

Static

Dynamic

Data

Data

Data

PC

PC

Static Data

Produce

Branches Execution

Process

Operation

PC Control

PCS

Fig. 5. Process optimization chart on production plan-implement-control in CG Company

Business processing cost A1 Process Cost A

Activity costs A2 Resource cost A3 Business processing time index B1

Process efficiency

Business processing delay rate B2 Process cycle B3

Evaluation indicator system for process optimization ff

Process utilization

Human resource utilization rate C1 Equipment and resource utilization rate C2 Business process Independence D1

Process flexibility

External exposure degree of activities D2 Process maintainability D3

Fig. 6. Evaluation indicator system for process optimization results

540

H. Liu and N. Li

all levels in CG Company by questionnaire survey analysis, so that optimization results’ fuzzy comprehensive evaluation based on the combined weight can be made. In this article, subjective weight is got by analytic hierarchy process, objective weight is got by entropy, and the combined weight is got by the geometric compounds of subjective weight and objective weight. According to analytic hierarchy process， the weight vectors of primary index can be got. ′ ωA =（ 0.436,0.219,0.345,0.168) ′ （ ωB = 0.578,0.144,0.278） ′ ωC =（ 0.646,0.354） ′ ωD =（ 0.512,0.234,0.254） According to entropy, the weight vector of primary index can be calculated. ω = (0.236,0.266,0.139, 0.359), and the corresponding secondary indicators can be got. " ωA =（ 0.414,0.195,0.391） " ωB =（ 0.604， 0.132,0.264） " ωC =（ 0.680,0.320） " ωD =（ 0.448,0.170,0.382） According to the formula (ωk = (ωk′+ ωk")/2)), the combined weight vector can be got. (In this article, the combined weight coefficient is considered as 0.5) ω = (0.202,0.295,0.235,0.268) There are four combined weight vectors in index layer. ωA = (0.425,0.207,0.368) ωB = (0.591,0.138,0.271) ωC = (0.663,0.337) ωD = (0.480,0.202,0.318) The fuzzy matrix of elements on process optimization results is Ri , and the weight coefficient is ωi .

⎡0.21 0.34 0.15 0.21 0.09⎤ Ra = ⎢⎢0.16 0.32 0.17 0.17 0.18⎥⎥ ⎢⎣0.18 0.21 0.26 0.28 0.07⎥⎦ ⎡0.17 0.24 0.36 0.18 0.05⎤ Rb = ⎢⎢0.23 0.26 0.21 0.18 0.12⎥⎥ ⎣⎢0.24 0.27 0.24 0.16 0.09⎦⎥ ⎡0.32 Rc = ⎢ ⎣0.12 ⎡0.19 R d = ⎢⎢0.17 ⎣⎢0.19

0.28 0.14 0.13 0.13⎤ 0.19 0.28 0.24 0.17⎥⎦ 0.36 0.16 0.24 0.05⎤ 0.32 0.21 0.18 0.12⎥⎥ 0.28 0.32 0.15 0.06⎥⎦

Process Improvement Model and It’s Application for Manufacturing Industry

541

Evaluation vectors of four primary indicators can be got by using the formula ( Si = ωi × Ri )

SA =(0.189,0.288,0.195,0.227,0.101) SB =(0.197,0.251,0.307,0.174,0.071) SC =(0.253,0.250,0.187,0.167,1.143) SD =(0.186.0.327,0.220,0.200,0.067) The above evaluation result of each indicator (SA ,SB ,SC ,SD) constitute a higher level fuzzy matrix R (R=(SA ,SB ,SC ,SD)), the combination weight vector of rule hierarchy indicator isω, and the final evaluation results can be got: S = ω×R = (0.206,0.279,0.232,0.190,0.093).

According to the maximum membership degree principle, we can get a conclusion that the evaluation result of production business process in CG Company is good, and the optimized process is in line with the corporate strategic objectives, and achieves the aim to optimize processes. There are four respects that reflect the effects. (1) Realizing standard integration operating between management level in company and Shop floor management, so that product cycle is shortened; and labor productivity is increased. (2) Realizing the centralized management of internal information and data so that the time of inner data circulation is shortened. (3) With the use of supply chain management system, the cost is shortened, the rapid response to customer needs is enhanced, and customer service is improved. (4) Production plans based on real-time data can reflect production conditions correctly and timely.

4 Conclusion With the fierce market competition, manufacturing enterprises have the characteristics of complex business, variable processes, huge information date, long production cycles, and the changing product process, so it is necessary for them to improve their competitiveness by through information technologies. And the implementation of ERP in enterprises has become a trend. In this article, a BPM-ERP integrated framework and a Process Improvement Model are proposed under this integrated framework, which have important theoretical and practical significances to implement BPR and ERP simultaneously and improve the success rate of ERP in project implementation.

References 1. CECA National Informatization Evaluation Center 2005 Top 500 Chinese Enterprises Development Report (2006), http://news.tom.com 2. Zheng, l., Zhang, y., Ren, h.: On the Applicable Model and Technique Formation of BPM. J. Soft Science 19, 57–60 (2005) (in Chinese) 3. Feng, x.: Researeh on ERP Implementation Based on BPM. DalianMaritimeUniversity, Dalian (2008) (in Chinese)

542

H. Liu and N. Li

4. Li, j.: The four elements on effective implementation of process management. J. Market Modernization 481, 136 (2006) (in Chinese) 5. Li, y., Ding, r., Tan, z.: Economic Benefit Model of Enterprise Financial Process Reengineering and its Evaluation. J. Commercial Research 369, 82–85 (2008) (in Chinese) 6. Liu, b., Cai, s., Zheng, s.: Evaluation index system for business processes. J. Huazhong Univ. of Sci. &Tech(Nature Science Edition) 33, 112–114 (2008) (in Chinese)

A Study of Business Process Reengineering Based on Petri Net Kang Zhiyuan No.2 North of Cui Lake Road School of Information Science and Engineering, Yunnan University 650091 Kunming, China

Abstract. As the basis of BPR, the modeling techniques have attracted much attention from a lot of researchers since BPR was first put forward in 1990’s. Various methods and techniques, such RADs methods, IDEF methods, UML methods and so on, has developed through theoretical research and practical projects in the implement of BPR. In order to explore effective ways to improve the performance and ensure the success of BPR, the paper gives a method based on Petri net which could divide the whole business process into different modules and then find out parts that conflicts probably happen and parts which processes can parallel. Keywords: Business Process Reengineering (BPR), Petri net.

1 Introduction Business Process Reengineering was proposed by Michael Hammer and James Champy (1993), which has become one of the most popular management tools for private organizations, as well as public sectors, in dealing with the rapid technological and business change in today’s competitive and turbulent corporate environment[1][2]. It refers to “the fundamental rethinking and radical redesign of business process to complete dramatic improvement in critical, contemporary measures of performance, such as cost, quality, service and speed”[3]. Literature on BPR mainly introduces how BPR has helped firms reduce costs, improve quality and achieve breakthrough performance in all kinds of evaluation parameters, such as customer service, efficiency of operation, quality of production and so on. For instance, Bell Atlantic reduced the time to install new telecommunication circuits from 15 to 3 days, and cut labor costs form USMYM 88 to 6 million[4]. Ford reduced its accounts payable staff by 75%[5]. Apart from case studies of BPR application, there comes a lot of researches which focus on BPR methods and techniques. IDEF covers a wide range of uses, from functional modeling to data, simulation, object-oriented analysis/design and knowledge acquisition, which is taken into BPR by Xiao Yanling, Xu Fuyuan and Hu Wenbo[4]. The most-widely recognized and used of the IDEF family are IDEF0, a M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 543–549, 2011. © Springer-Verlag Berlin Heidelberg 2011

544

Z. Kang

functional modeling language building on SADT, and IDEF1X, which addresses information models and database design issues. Unified Modeling Language (UML) is a standardized general-purpose modeling language in the field of software engineering. The standard is managed, and was created by, the Object Management Group. It offers a standard way to visualize a system's architectural blueprints, including elements such as business processes and organization activities. Although UML is a widely recognized and used modeling standard, it is frequently criticized because it is difficult to learn, especially when engineers are lacking of the prerequisite skills. Role Activity Diagrams (RADs) are a useful way of describing processes which are valuable in documenting processes, but they are just adapt to view main processes due to the fact that it does not support the further analysis of business processes.

2 Petri Net Petri net is a set graphical modeling， mathematical analysis and simulation as a tool. Petri net which is through a description of the system, further analysis can change the liveness, reachability between the state and accessibility, boundness of the location， reversibility of the initial state， the Persistence between changes， synchronous distance between the ineident and the fairness of such acts。 Definition 1: 3-tuple N=(P, T; F) is following terms:

∪ ⊆ ∪ ∪

(1) P T=Φ; (2) P∩T=Φ; (3) F P×T T×P; (4) dom(F) cod(F)=P T. P is a set of places; T is a set of transitions; F is a set of directed arcs that consist of directed pair. dom(F)=:{x| ∃ y: (x, y) F} cod(F)=:{x| ∃ y: (y, x) F}

∪

∈ ∈

A Petri Net can be represented as an incidence matrix, and we can easily get properties of Petri net through its incidence matrix: (1) It means that some transitions could be conflict when there are many “–1” in a line; (2) The place could receive the token when one of transitions is fired if there several “+1” in a line. (3) Transitions are synchronal when there are several “-1” in a volume; (4) Transitions are concurrency when there are many “+1” in a volume. Step 1: find out all source transitions, goal transitions, source places and goal places. Step 2: find out all transitions required synchronization which is the volume where many “-1” exist.

A Study of Business Process Reengineering Based on Petri Net

545

Step 3: find out all places which are conflict that is the line where many “-1” exist. Step 4: in the following four sub-steps, if there are many elements which could be chosen, select each one and construct sub-Petri net separately. Remember that source transitions, goal transitions, source places and goal places are not be considered. (a) Select an element from line or volume of the incidence matrix of the whole Petri net which has more than one “-1”. For instance, aij(aij=-1 and aij does not belong to any exist sub-Petri net). (b) Select aik, aik=-aij, choose one ar random if there are more than one choices. (c) Select amk, amk=- aik. If m=I or k=j, go to step 5. Otherwise go on. (d) Select amr, amr=- amk. If m=I or r=j, go to step 5. Otherwise go back to (c). Step 5: A sub-Petri net is formed if there is only one “+1” or “-1” in each line and volume which is constructed by selected elements, and then, we could go to the next step. Otherwise, forgive this path and go back to (a). Step 6: List the sub-Petri net and its elements. Go to the next step if all source points are included. Otherwise, go back to (a). Step 7: Allocate source transitions and goal transitions to sub-Petri net which has shared places. Step 8: Allocate source places and goal places to sub-Petri net which has shared transitions. Step 9: Allocate each element which is not valued “0” and does not allocate to discretional sub-Petri net which has the same transition matrix and represent “-1”.

+1

-1

+1

-1

synchronization selection conflict

concurrent

Fig. 1. Four relations represented from incidence matrix

3 A Case Study In the past chapter, an algorithm has been given, then a case will be given to make a further analysis.

546

Z. Kang

Figure 2 represent a Petri net model of a company’s business processes and table 1 gives the representation of places in figure 2. Table 1. Representation of Pi Pi P1 P3 P5 P7 P9 P11 P13 P15

content Orders Stocks Semi-finished Products Market Account Receivable Deposit Received Account Payable Advanced Payment

Pi P2 P4 P6 P8 P10 P12 P14 P16

content Procurement Material Finished Products Type of Payment(cust) Cash Type of Payment(sup) Cash Financial Apartment

Table 2 is the incidence matrix which represent figure 2 Petri net..

T1

P2

T2

T11

P12

T12

P1

bank

P13

T14

P14

P3

P11 product

T4

T13

P15

T3 P6

P4 P5

T6

P9

P10

T8

T9

P7 P8

T5

T7

Fig. 2. Petri net model of interior business processes

T10

A Study of Business Process Reengineering Based on Petri Net

547

Table 2. The incidence matrix of figure 2

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15 P16

T1

T2

T3

T4

T5

T6

T7

T8

T9

T10

T11

T12

T13

T14

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

-1

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

-1

-1

0

0

0

0

0

0

0

0

0

0

0

1

0

0

0

0

0

-1

0

0

0

0

0

0

0

0

1

0

0

0

0

-1

0

0

0

0

0

0

0

0

0

1

0

0

0

-1

0

0

0

0

0

0

0

0

0

0

-1

-1

-1

0

0

0

0

0

0

0

0

0

0

0

1

0

0

-1

0

0

0

0

0

0

0

0

0

0

0

1

0

-1

0

0

0

0

0

0

0

0

0

0

0

0

1

-1

0

0

0

0

0

0

0

0

0

0

0

0

0

1

We have got the incidence matrix of the whole Petri net. Then, we should decompose it using the algorithm introduced in last part. Table 3. Sub-Petri net 1(S1)

P2 P3

T1

T2

T4

1 0

-1 1

0 -1

Table 5. Sub-Petri net 3(S3)

P8 P9 P16

T7

T8

T14

1 0 0

-1 1 0

0 -1 1

Table 7. Sub-Petri net 5(S5)

P8 P11 P16

T7

T10

T14

1 0 0

-1 1 0

-1 -1 1

Table 4. Sub-Petri net 2(S2)

P3 P4

T2

T3

T4

1 0

-1 1

-1 -1

Table 6. Sub-Petri net 4(S4)

P8 P10 P16

T7

T9

T14

1 0 0

-1 1 0

-1 -1 1

Table 8. Sub-Petri net 6(S6)

P12 P13 P16

T2

T11

T14

1 0 0

-1 1 0

-1 -1 1

548

Z. Kang Table 9. Sub-Petri net 7(S7)

P12 P13 P16

T2

T12

T14

1 0 0

-1 1 0

-1 -1 1

Table 10. Sub-Petri net 8(S8)

P12 P13 P16

T2

T13

T14

1 0 0

-1 1 0

-1 -1 1

There are 8 sub-Petri nets which represent 8 relative independent business processes, and then we should find out relations between these sub-Petri nets. In sub-Petri net 1 and sub-Petri net 2, we could find that P3 is needed if T3 is fired in sub-Petri net 1 and P3 is also needed if we want to make T4 fired in sub-Petri net 2. We could get relations between these sub-Petri nets as follow: Table 11. Conflicts between sub-Petri nets

Pi P3 P8

P12

Ti T3 T4 T8 T9 T10 T11 T12 T3

S1

S2

√

√ √

S3

S4

S5

S6

S7

S8

√ √ √ √ √ √

Table 12. Synchronization between sub-Petri nets

Pi P3 P8

P12

Ti T3 T4 T8 T9 T10 T11 T12 T3

S1

S2

√

√ √

S3

S4

S5

S6

S7

S8

√ √ √ √ √ √

Conflicts and synchronization between sub-Petri nets can be known through table 11 and table 12. That conflicts appear means that resource is in competition, and synchronization means that these two set of business processes are not independent, but interdependent with each other.. So, we could take some measures to reduce conflicts and make cooperation better.

A Study of Business Process Reengineering Based on Petri Net

549

4 Conclusion In this paper, an algorithm was used to analyze problems in business process. Some problems could be find through this way, and then we can focus on these problems. It is a useful tool to make an analysis. However, the paper does not give an effective and formalized way to solve these problems, and there are a lot of work to do to solve these problems, which need further research.

References 1. O’Neill, P., Sohal, A.S.: Business Process Reengineering: A review of recent literature. Technovation 19, 571–581 (1999) 2. Sarker, S., Lee, A.S.: IT-enabled organizational transformation: a case study of BPR failure at TELECO. Journal of Strategic Information Systems 8, 83–103 (1999) 3. Hammer, M., Champy, J.: Reengineering the Corporation: A Manifesto for Business Revolution. HarperCollins, New York (1993) 4. Kettinger, W.J., Teng, J.T.C., Guha, S.: Business Process Change: A Study of Methodologies, Techniques, and Tools. MIS Quarterly 3, 55–80 (1997) 5. Hammer, M.: Reengineering work: don’t automate obliterate. Harvard Business Review, 104–112 (July/August 1990)

Combined Noise Reduction in CT-Image Based on Adaptive Median Filter and Wavelet Packet Houjie Li, Jiyin Zhao*, Shuang Xu, and Yanqiu Cui College of Electromechanical & Information Engineering Dalian Nationalities University Dalian, China [email protected]

Abstract. Computed tomography (CT), as an import medical supplementary means, may be corrupted by various noises and result in clinical diagnosis reliability reduction. In this paper, considering CT-image simultaneously corrupted by Salt & Pepper noise and Gaussian white noise, we present an effective CT-image combined denoising algorithm based on adaptive median filter (AMF) and wavelet packet threshold shrinkage (APTS). The algorithm exploits AMF Salt & Pepper noise efficient suppressing and better structurepreserving property than traditional median filter. Meanwhile, it also utilizes more refined analysis characteristic and higher time-frequency resolution of wavelet packet transform than wavelet to decrease the probability mistaking image information as noise. The experimental results show that the proposed scheme effectively reduces hybrid noise, and furthermore possible preserve clinically relevant image contents. Keywords: combined noise reduction, CT-image, Salt & Pepper noise, Gaussian white noise, adaptive median filter, Wavelet packet transform.

1 Introduction Computed tomography(CT), as one of most import medical supplementary means, has been widely applied in medical diagnosis field. High quality of CT-image is the precondition of reliable diagnosis. Unfortunately, CT-image may be corrupted by various noises, mainly due to the least possible radiation dose associated with CT being demanded with respect to patients' care. As a result, density resolution and spatial resolution of CT-image are reduced, and error diagnosis is probably caused. Therefore, noise reduction is quite import for obtaining image with high visual quality and reliable diagnosis. The goal of CT image denoising is how to increase SNR, meanwhile possible preserve clinically relevant image content, e.g. structure, edge etc.. At present, many different methods for noise suppressing have been researched, for example wavelet analysis technique, mathematical morphology, adaptive smooth filter, stochastic method, partial differential equation and so on. Among of these approaches wavelet *

Corresponding author.

M. Dai et al. (Eds.): ICCIC 2011, Part I, CCIS 231, pp. 550–557, 2011. © Springer-Verlag Berlin Heidelberg 2011

Combined Noise Reduction in CT-Image Based on AMF and Wavelet Packet

551

analysis technique has been widely used in digital image processing due to low entropy property and multi-resolution properties of wavelet. Since wavelet threshold shrinking algorithm was proposed by Donoho and Johnstone in 1992, investigations on image denoising based on wavelet shrinking enter in active stage. Wavelet packet(WP) analysis method on the basis of wavelet can further divide high frequency band which is not divided in wavelet transform, which is a more refined analysis method and improves time-frequency resolution. Several methods based on wavelet or wavelet packet have been proposed [1]-[6]. In most of these methods Gaussian white noise is considered as background noise. However, the assumption is generally difficult to be satisfied in practical application. In fact noise characteristics in CT image usually deviates from Gaussian distribution and presents tailing properties. In this paper, focussing on the case that CT image is simultaneously corrupted by Salt & Pepper noise and Gaussian white noise, which presents no-gaussian distribution property, we present a combined denoising method which inherently combines the denoising property of adaptive median filter(AMF) in spatial domain with that of wavelet packet threshold shrinkag(WPTS) in wavelet domain. The algorithm exploits Salt & Pepper noise efficient suppressing property of AMF and better structurepreserving ability than conventional median filter, furthermore suppressing partial Gaussian noise to reduce the probability of Gibbs effects generated in WPTS. Meanwhile, it also utilizes more refined analysis characteristics and higher timefrequency resolution of wavelet packet than that of wavelet, which effectively improves clarity and visual quality of CT-image.

2 Wavelet Packet Analysis A. Wavelet Packet Analysis In order to furtherly divide wavelet subspace, Coiffman etc. proposed wavelet packet theory in 1991. Wavelet packet theory adopts new subspace Ujm to unify scale subspace Vj and wavelet subspace Wj [4], [7], which can be written as: ⎧⎪U j 0 = V j ⎨ 1 ⎪⎩U j = W j

where j given,

(1)

∈Z. Then orthogonal decomposition of Hilbert space V

j + 1

U 0 j +1 = U 0 j + U 1 j

j∈Z

=Vj +Wj can be (2)

Subspace Ujm is defined as of closure space of function um (t), and Uj2m as closure space of function u2m (t). Let um (t) satisfy the following two-scale equation:

⎧u2 m (t ) = 2 ∑ h( k )um ( 2t − k ) ⎪ k∈Z ⎨ ⎪u2 m +1 (t ) = 2 ∑ g (k )um (2t − k ) k ∈Z ⎩

(3)

552

H. Li et al.

where g(k) = (-1)k h(1- k), g(k) and h(k) are conjugate filter defined in multiresolution analysis. When m= 0, (3) may be written as

⎧u0 (t ) = ∑ h(k )u0 ( 2t − k ) ⎪ k ∈Z ⎨ ⎪u1 (t ) = ∑ g ( k )u0 (2t − k ) k∈Z ⎩

(4)

Then, when the above result is compared with wavelet transform, we show that u0 (t ) and u1 (t ) is scale function and wavelet function, respectively.

｛

｝

Then, structural sequence um (t) m∈Z+ of (3) is called orthogonal wavelet packet via base function u0 (t ) = φ (t ) . Obviously, Wavelet packet transform is the generalized form of wavelet transform. B. Wavelet Packet Decomposition and Reconstruction Suppose the coefficient of f (t ) in subspace Ω nj are

{c

n, j k

: k ∈ Ζ} , where

j

ckn, j = ∫ f (t )2 2 Wn (2 j t − k )dt

(5)

R

Then, wavelet packet decomposition algorithm [7]: The decomposition coefficient, namely ck2 n, j −1 , ck2 n+1, j −1 : k ∈ Ζ , is given

{

{

}

}

n, j via ck : k ∈ Ζ by

− ⎧ 2 n, j −1 n, j c = h ∑ k l − 2 k cl ⎪⎪ l∈Z ⎨ − ⎪ck 2 n+1, j −1 = ∑ g l cl n , j −2k ⎪⎩ l∈Z

Wavelet packet reconstruction algorithm[7]:

{

}

(6)

{

}

2 n , j −1 n, j , ck2 n +1, j −1 : k ∈ Ζ The reconstruction coefficient ck : k ∈ Ζ is given via ck

by

ckn , j = ∑ [hk − 2l cl2 n , j −1 +g k − 2l cl2 n +1, j −1 ]

(7)

l∈Ζ

C. Optimum Wavelet Packet Base Selection There are many orthonormal bases in wavelet packet bank. How to determine optimum wavelet base is the key of wavelet packet analysis. In this article, we adopt the classical minimum entropy criterion to select optimum wavelet base. The idea of the criterion is as follows: (a) determine decomposition level and decompose image via wavelet packet transform completely. (b) computer every node's entropy value in completely decomposition tree. (c) compare entropy value of father node with that of son nods. If entropy value of father node is larger than sum of entropy values of all son nodes,

Combined Noise Reduction in CT-Image Based on AMF and Wavelet Packet

553

entropy of father node is equal to entropy sum of son nodes. Otherwise, the father node doesn't have son nodes. Presently, there are several common entropy criteria such as Shannon entropy, threshold entropy lp norm( 1≤p<2), logarithm energy entropy and so on. Optimum wavelet packet decomposition tree structure under threshold entropy criterion varies with threshold in a certain range, furthermore gradually closes to complete tree with increase of threshold. Therefor, effect of decomposition under threshold entropy criterion is better than that of other criteria, and we adopt threshold entropy criterion.

3 Adaptive Median Filter Algorithm Median filter is a non-linear spatial filter based on least absolute error rule. Classical median filter can effectively suppress pulse noise or salt & pepper noise in images, at the same time preserve structure to some extent. However, due to whole image being processed equally without considering difference of various sub-window content, some edges and textiles may be destroyed. Based on this point, several adaptive median filter algorithms were proposed. In this paper, we employ the adaptive algorithm presented in [9] and [10], which principle is as follows: 1) Carry out median operation in four angles direction of 0°, 45°, 90°, 135°, respectively, and obtain 4 outputs :

y1( i, j), y2 ( i, j), y3 ( i, j) and y4 ( i, j); 2) Implement difference operation between original sub-image and four output sub-image in 1), respectively, and achieve four differences: d1 = |y1 ( i, j) - x ( i, j) | d2 = |y2 ( i, j) - x ( i, j) | d3 = |y3 ( i, j) - x ( i, j) | d4 = |y4 ( i, j) - x ( i, j) | 3) Four weighted coefficients wt( t = 1, 2, 3, 4) can be given by

wt =

1/ dt 1 / d1 + 1 / d 2 + 1 / d 3 + 1 / d 4

(8)

4) Center pixel value of adaptive median filter is computed by 4

y (i , j ) = ∑ wt yt

(9)

t =1

4 Description of the Proposed New Algorithm Considering CT-image simultaneously corrupted by Salt & Pepper noise and Gaussian white noise, we utilize AMF to suppress Salt & Pepper noise and partial Gaussian white noise firstly. Then the noise in the image processed via AMF further is reduced using WPTS algorithm. The algorithm proposed in this paper is as follows in detail. 1) Perform adaptive median filter of image polluted by hybrid noise. Determinate size of filter window, and apply AMF algorithm mentioned above to suppress Salt & Pepper noise and partial Gaussian white noise.

554

H. Li et al.

2) Carry out complete wavelet packet decomposition of output image in 1). Determine decomposition level J and select a wavelet function to decompose image. 3) Achieve optimum wavelet packet base. Based on Threshold entropy criterion, optimum wavelet packet base is computed for the decomposition tree. 4) Quantify wavelet packet coefficiets by threshold. In this article, we employ soft threshold method to quantify wavelet packet sub-band. Soft threshold formula can be written as ⎧⎪sign( w j )(| w j | −λ ) wλ = ⎨ ⎪⎩0

| w j |≥ λ | w j |> λ

(10)

where λ = σ 2 ln N and σ = med (| w j |) , w j is the wavelet packet sub-band coefficient. 0.6745

5) Conduct wavelet packet reconstruction according to Jth level approximate coefficients and thresholding coefficients.

5 Experiment Results We consider a skull CT image(size 512×512, gray levels 256)as test image, as shown in Fig.1. The noisy image(NI)is obtained by adding Salt & Pepper noise and Gaussian white noise with zero mean. In experiments we perform denoising via traditional median filter(TMF), adaptive median filter(AMF), wavelet packet threshold shrinkage (WPTS), combined adaptive median filter with wavelet threshold shrinkage (AMFWTS) and the proposed algorithm(AMF-WPTS), respectively.

Fig. 1. Skull CT-image as test original image

In TMF and AMF experiments, size of filter window is set 5×5. Meanwhile, we select db3 as wavelet function and decomposition level 3 under comprehensively considering computational complexity and wavelet performance. Denoising performance results of the above methods are shown in table 1, where performance is mean square error(MSE) between original image and denoising image, V is Gaussian white noise variance and τ density of Salt & Pepper noise. As seen in tab.1, MSE of the proposed method is smaller than that of other methods, which shows objectively that this algorithm has better noise reduction performance.

Combined Noise Reduction in CT-Image Based on AMF and Wavelet Packet

555

Table 1. Denoising performance results of several methods for diferent V and τ , and MSE as performance Methods

τ V

NI TMF AMF WPTS AMF-WTS AMF-WPTS

0.01 768.6 82.9 63.8 205.1 90.2 60.1

0.01 0.03 1768.4 164.4 210.7 347.7 140.8 115.5

0.05 2665.9 240.8 396.0 460.6 180.6 170.3

0.01 1408.8 87.9 70.6 258.8 92.7 62.3

(a)

(b)

(c)

(d)

(e)

0.04 0.03 2399.6 176.4 225.7 415.4 147.1 118.5

0.05 3292.6 261.4 433.3 539.9 191.8 183.4

(f)

Fig. 2. Images denoised by five different methods (V=0.03, τ =0.04 ). (a) noisy input image. (b) output from TMF. (c) output from AMF.(d) output from WPTS.(e) output from TMF-WTS.(f) output from TMF-WPTS.

556

H. Li et al.

Fig.2 illustrates denoising image and noisy image under V=0.03 and τ = 0.04 . fig.2(c)(AMF denoising) is evidently superior to fig.2(b) (TMF) in structurepreserving, and in both Salt & Pepper noise is suppressed effectively, but not for Gaussian white noise. fig.2(d) generates serious the effects of Gibbs phenomena. Comparing fig.2(f) with fig.2(e), we show that AMF-WPTS and AMF-WTS can both efficiently reduce noise for hybrid noise image, but the former has higher visual quality than the latter, which shows effectiveness of the proposed algorithm.

6 Conclusions In this paper, considering CT-image simultaneously corrupted by Salt & Pepper noise and Gaussian white noise, which shows no-gaussian characteristics, we introduce an effective CT-image denoising algorithm which combines spatial filter technique with noise suppressing technique in wavelet packet domain. AMF can efficiently suppress Salt & Pepper noise and provide better structure-preserving property than traditional median filter. Wavelet packet transform denoising technology to certain extent decreases the probability that image information is mistaked as noise in wavelet threshold denoising, which is owing to more refined analysis characteristics and higher time-frequency resolution of wavelet packet than wavelet. The experimental results show that the proposed scheme effectively reduces hybrid noise, furthermore possible preserve clinically relevant image content, which offers more precise foundation for reliable diagnosis. Acknowledgment. The work was funded by the youth-fund of Dalian Nationalities University (No.2008A201) and the Fundamental Research Funds for the Central Universitiest (No.DC10010103 ).

References 1. Yu, H., Zhao, L., Wang, H.: Image denoising using trivariate shrinkage filter in the wavelet domain and joint bilateral filter in the spatial domain. IEEE Transactions On Image Processing 18(10), 2364–2369 (2009) 2. Wood, C., Johnson, M.: Wavelet packet denoising of magnetic resonance images: importance of rician noise at low SNR. Magnetic Resonance in Medicine (41), 631–635 (1999) 3. Ding, X., Deng, S., Yang, Y.: Image denoising based on wavelet packet. Journal of Electronic Measurement and Instrument 17(2), 35–39 (2003) 4. Zhao, Z., Wan, J., Guan, C.: Image denoising based on wavelet packet and adaptive threshold. Journal of Image and Graphics 12(6) (2007) 5. Wan, M., Shao, J., Huang, C., Jin, Z.: Wavelet packet transformation in mixed image noise enhancement technology. Computer Science 36(9), 271–273 (2009) 6. Zhang, W., Liu, L.: Investigation of a denoising method based on lifting static wavelet packet transformation. Journal of Harbin Engineering University 30(9), 1051–1055 (2009) 7. Li, B., Luo, J.: Wavelet Analyzing and Applications, pp. 66–67. Publishing house of electronics industry (2005)

Combined Noise Reduction in CT-Image Based on AMF and Wavelet Packet

557

8. Wang, W., Fei, P., Yi, X., et al.: Denoising of SAR images based on lifting scheme. Geomatics and Information Science of Wuhan University 32(7), 585–588 (2007) 9. Wang, Z., Zheng, C., Wang, J., et al.: Application of a new self-adaptive median filter in medical ultrasonic images processing. Journal of SiChuan University ( Engineering Science edition) 32(5), 92–95 (2000) 10. Guan, X., Zhao, L., Tang, Y.: Mixed filter for image denoising. Journal of Image and Graphics 10(3), 332–337 (2005)

Author Index

Ai, Shengli VI-480 Aithal, Himajit IV-351 AliHosseinalipour V-36 Anil kumar, A. IV-351 Aslam, Mohammed Zahid

IV-260

Babaei, Shahram V-36 Bailong, Liu III-39, III-47 Bangjun, Lu VI-124 Bangyong, Hu II-60 Bao, Liwei IV-93 Bi, Guoan IV-224 Bin, Dai II-436, II-443 Bin, Li III-151 Bing, Hu V-476 Bingxue, Han IV-265 Bo, Qi VI-282 Bo, Sun I-526, II-475 Bo, Wu V-74 Bo, Yang IV-1 Bo, Zhou V-461 Bu, Yingyong I-335 Cai, Nengbin IV-402 Cai, Ning II-87 Cai, Xiaonan I-519 Cai, Xiaoqing VI-166 Cao, An-Jie IV-376 Cao, Fengwen IV-189 Cao, Jianbo VI-398 Cao, Jianshu VI-536 Cao, Qiang VI-417 Cao, Yukun III-232 Chang, Henry Ker-Chang VI-500 Chang, Ling-Wei V-483 Chang, Yinxia IV-427 Chang, Zhengwei IV-167 ChangJie, Hu VI-461 Chang-ping, Zhao VI-290 Changxi, Ma VI-282 Changyuan, He V-211 Chao, Hu IV-42 Chao, Yan II-530 Chaoshi, Cai I-395, III-321

Chen, Bin V-170, V-175 Chen, Cheng II-157 Chen, Chuan IV-369 Chen, Chun IV-376 Chen, Haijian III-508 Chen, Haiyuan III-9 Chen, Hong-Ren III-407 Chen, Huiying V-201 Chen, Lingling V-125 Chen, Weiping III-508 Chen, Xiaodong V-175 Chen, Xinglin VI-110 Chen, Yan VI-152 Chen, Yanhui VI-84, VI-89 Chen, Yu-Jui V-10 Cheng, Jiaji IV-280 Cheng, Li V-321 Cheng, Shih-Chuan VI-436 Cheng, Yingjie III-74 Chengcheng, Jiang I-288 Chenguang, Zhao IV-136, IV-144, IV-151 Chi, Xiaoni I-143 Chiang, Yea-Lih III-407 Chong, Guo VI-50 Chuan, Tang I-29 Chuang, Li VI-404 Chujian, Wang I-191, I-366 Chun, Huang I-36 Chun, Yang Chang VI-511 Chunhong, Zhang II-326 ChunJin, Tian III-207 Chunling, Zhang V-381 Chunqin, Zhang III-369 Congdong, Li I-288 Congmei, Wan V-321 Cui, Kang IV-59 Cui, Yanqiu I-550 Cui-lin, Zhang V-461 Da, Zheng V-94 Dai, Minli VI-424, VI-430 Dai, Wei-min V-100 Danxia, Bi V-105

560

Author Index

Dasen, Li II-405 Deng, Fang II-294 Deng, Hui V-201 Deng, Jianping IV-189 Deng, Nan IV-402 Deng, Xianhe II-396 Deng, Xiaoyun VI-343 Deng, Xubin VI-26 Deng, Yibing V-316 Deqian, Xue VI-383 Ding, Feng II-350 Dong, Hao VI-1 Dong, Liu III-292 Dong, Xu III-39, III-47 Dong, Yu VI-50 Dong-Ping, Liu II-303 Du, Jiang V-523 Du, Maobao V-365 Du, Wencai III-1 E., Shiju

VI-398

Fan, Hongda VI-1 Fan, Jihua III-515 Fan, Tongliang IV-433 Fan, Zhao IV-441 Fang, He II-172 Fang, Ligang VI-430 Fang, Qiang VI-166 Fang, Sun IV-242 Fang, Yuan II-274 Fanjie, Bu II-382 Fei, Zhou II-281 Feng, Lei V-304 Feng, Lou III-312 Feng, Lv II-101 Feng, Pengxiao IV-172 Feng, Wenlong III-1 Feng, Yuan II-194 Fengling, Wang I-262 Fengxiang, Chen V-234 Fu, Wenzhi IV-172 Fu, Xixu V-43 Fu, Yizhe VI-179 Fuhua, Xuan I-275 Furong, Wang VI-445, V-511 Gaijuan, Tan V-234 Gai-ning, Han VI-39 Gan, Jing III-427

Gang, Chen I-492 Gao, Cheng I-359 Gao, Fei III-427 Gao, Haiyan III-433 Gao, Jin IV-306 Gao, Junli VI-166 Gao, Li VI-357 Gao, Shuli V-226 Gao, Wei VI-188, VI-197 Gao, Xin II-391 Gao, Xiuju V-365 Gao, Zhijie III-17 Gong, Jun V-529 Gong, Xiaoyan II-194 Gong, Xizhang V-43 Gu, Caidong VI-424, VI-430 Guan, Xianjun I-21 Guangyu, Zhai IV-503 Guilin, Lu VI-232 Guo, Changgeng III-442 Guo, Fachang IV-382 Guo, Lejiang II-194 Guo, Lina III-494 Guo, Lu VI-452 Guo, Shuting V-288 Guo, Wei V-428, V-435 Guo, Wenping III-488 Guo, Xinbao I-403, I-409 Guo, Yanli V-226 Guo, Zhiyun III-284 Guo, Zirui I-359 Guohong V-64 Guohong, Li I-248 Guojin, Chen III-299, III-305 Guojing, Xiong II-267 Guo-song, Jiang I-320, I-328 Haicheng, Xu IV-10 Hailong, Sun I-161 Hai-qi, Feng V-374 Haitao, Hong VI-50 Haiwen, Li IV-335 Haixia, Wan I-484 Haixia, Yu VI-522 HamidehJafarian V-36 Han, Baoyuan IV-450 Han, Dong IV-464 Han, Hua I-478 Han, Xinchao III-401 Han, Xu V-100

Author Index Hang, Ling-li V-268 Hantian, Wei VI-445, V-511 Hao, Fei Lin V-304 Hao, Hong VI-551 Hao, Yitong II-143 Hau, Chuan-Shou V-239 He, Jilin V-137 He, Juan III-103 He, Li III-174 He, Lijuan III-337 He, Siqi II-420 He, Weisong VI-94, VI-100 He, Xiangguang VI-188, VI-197 He, Yang II-312 He, Yinghao IV-32 He, Yong V-304 He, Zhuzhu II-458 Heng, Chen III-89 Hengkai, Li I-213 Hong, Liang IV-181 Hong, Lu I-465 Hongbing, Zhang VI-551 Hongjun, Liu I-533 Hong-li, Zhang I-302 Hongmei, Jiang IV-159 Hongmei, Tang III-345, III-355, III-363 Hongwei, Luo III-183 Hou, Shouming III-337 Hou, Xuefeng IV-369 Hu, Caimei IV-81 Hu, Jianfeng IV-456 Hu, Jun V-409 Hu, Wenfa V-281, V-288 Hu, YongHong VI-452 Hu, Zhigang V-246 Hu, Zhiwei IV-392 Hu, Zong IV-54 Hua, Wang Guo VI-157 Huan, Wang V-518 Huang, Changqin V-258 Huang, De-Fa V-239 Huang, Haifeng I-428 Huang, Hanmin I-94 Huang, Hexiao III-508 Huang, Jun V-268 Huang, Qiong II-287 Huang, Tao III-174 Huang, Weitong V-117 Huang, Xiaodi V-468 Huang, Yu-Chun V-239

Huang, Zhiqiu V-409 Huanhuai, Zhou V-334 Huijuan, Ying V-334 Hui-li, Wang VI-370 Huili, Zhang I-161 Huixia, Wang II-150, II-172 Huixin, Jin I-248 Jangamshetti, D.S. IV-351 Jen, Yen-Huai V-483 Ji, Jia VI-398 Jia, Guangshe V-125 Jia, Zhiyang VI-188, VI-197 Jian, Wang V-374 Jian, Zhou III-143 Jiang, Fuhua II-396 Jiang, Jia VI-398 Jiang, Xuping III-482 Jiang, Yuantao II-17, II-95 Jian-Hao, Xu VI-34 Jianhong, Sun IV-1, IV-10 Jian-Min, Yao III-151 Jianping, Li I-395, III-321 Jianping, Tao III-143 Jianqi, Han VI-50 Jian-tong, He VI-290 Jianwen, Cao IV-503 Jianxin, Gao V-518 Jianzheng, Yi IV-342 Jiao, Linan V-189 Jia-xin, Lin VI-224 Jie, Jin II-303 Jie, Quan I-413 Jie, Xu V-82 Jie, Yu VI-467 Jieping, Han I-132 Jin, Haiyi V-328 Jin, Min II-73 Jin, Wang V-82 Jinfa, Shi III-453, III-465 Jinfang, Zhang VI-467 Jing, Liang V-207 Jing, Tu I-184 Jing, Zhao III-292 Jing, Zhou I-66, I-71 Jing-xin, Chen I-343, I-351 Jingzhong, Liu II-318 Jin-hai, Wang VI-319 Jinhui, Lei III-207 Jinwei, Fu IV-10

561

562

Author Index

Jinwu, Yuan III-420 Jiuzhi, Mao I-313 Jou, Shyh-Jye V-10 Jun, Li VI-148 Jun, Song V-137 Jun, Wang V-82 Jun, Zhang VI-45 Jun-qi, Yang VI-297 Junsheng, Li IV-1 Jyothi, N.M. III-328 Kai, Zhang V-133 Ke, Xiaoyu II-73 Kebin, Huang II-150 Kewen, Geng VI-124 Kun, Shi VI-66 Lai, Herbert Hsuan Heng VI-500 Lan, Jingli II-518 Lee, Xuetao II-226 Lei, Xu VI-232 Lei, Yang II-109 Lei, Yu V-193 Li, Chen II-303 Li, Cungui II-499 Li, Deyang III-263 Li, Dou Hui VI-157 Li, Fengri VI-20 Li, Fengying IV-101, IV-110 Li, Guanglei III-433 Li, Guangzheng III-81 Li, Haibin I-115 Li, Haiyan IV-233 Li, Hongli VI-424 Li, Houjie I-550 Li, Hua I-380 Li, Hui III-174 Li, Jia-Hui IV-316 Li, Jianfeng IV-297 Li, Jianling IV-233 Li, Jinglin III-502 Li, Jinxiang VI-430 Li, Kuang-Yao V-239 Li, Li VI-458 Li, Liwei III-241 Li, Luyi III-192, III-394 Li, Mingzhe IV-172 Li, Na II-202 Li, Peng V-56 Li, Qi I-359

Li, RuZhang V-18 Li, Shaokun VI-335 Li, Shenghong IV-441 Li, Shijun IV-233 Li, Wan V-416 Li, Wang V-346 Li, Wenbin IV-392 Li, WenSheng I-101 Li, Xiangdong III-401 Li, Xiumei IV-224 Li, Yang IV-42 Li, Yanlai IV-297 Li, Ying V-443, V-449, V-455 Li, Yu II-128 Li, YuJing V-18 Li, Zhenlong III-488 Lian, Jianbo I-451 Lianbo, Jiang VI-551 Liang, Wen-Qian II-450 Liang, Yuechen III-232 Liang-feng, Shen I-255 Liangtao, Sun I-492 Liao, GaoHua VI-7, V-498, V-504 Liao, Jiaping III-174 Lieya, Gu I-8 Lifen, Xie II-34 Li-jia, Chen VI-297 Lijun, Shao V-105 Li Jun, Sun II-428, II-436, II-443 Liminzhi I-513 Lin, Chien-Yu V-483 Lin, Haibo II-414 Lin, Ho-Hsiu V-483 Lin, Jing VI-179 Lina, Wang IV-59 Ling, Chen I-29, IV-59 Ling, Shen Xiao VI-511 Lingrong, Da II-373 Li-ping, Li V-221 Liping, Pang V-82 Lisheng, Wang V-234 Liu, An-Ta VI-500 Liu, Bao IV-427 Liu, Bingwu I-437 Liu, Bojia V-111 Liu, Bosong IV-32 Liu, Chunli III-255 Liu, Daohua V-491 Liu, Deli II-181 Liu, Gui-Ying II-342

Author Index Liu, Hong VI-74 Liu, Hongming III-116 Liu, Hongzhi VI-335, VI-343, VI-357 Liu, Jia V-504 Liu, Jiayi II-1 Liu, Jingwei IV-491 Liu, Jixin IV-360 Liu, June I-143 Liu, Jun-Min II-493 Liu, Li V-258 Liu, Lianchen III-158 Liu, Lianzhong II-164 Liu, LinTao V-18 Liu, Linyuan V-409 Liu, Shiwang II-181 Liu, Tao III-442 Liu, Wenbai V-316 Liu, Xiaojing V-117 Liu, Xiaojun I-59, II-164 Liu, Xin V-491 Liu, XingLi IV-181 Liu, Yang VI-110 Liu, Yanzhong II-235 Liu, Yongsheng I-471 Liu, Yongxian III-337 Liu, Yuewen II-458 Liu, Zhaotian IV-233 Liu, Zhi-qiang III-112 Liu, Zhixin I-177 Liurong, Hong V-389 Liuxiaoning V-64 Lixia, Wang VI-267 Lixing, Ding V-50 Li’yan II-22 Li-yan, Chen I-76, I-83 Liyu, Chen I-166, I-172 Liyulong I-513 Long, Chen VI-50 Long, Hai IV-25 Long, Lifang II-181 Long, Shun II-450 Long, Xingwu IV-252 Lu, Hong V-428, V-435 Lu, Hongtao IV-392, IV-402 Lu, Jing I-519 Lu, Ling V-258 Lu, Xiaocheng II-294 Lu, Y.M. V-353, V-359 Lu, Zhijian II-47 Luo, Rong I-222

Luo, Yumei II-414 Lv, Qingchu IV-93 Lv, Rongsheng II-211 Lv, Xiafu IV-280 Ma, Chunlei I-471 Ma, Jian V-164 Ma, Lixin V-328 Ma, Qing-Xun II-116, II-122 Ma, Sen IV-369 Ma, Yuan V-189 Ma, Zengjun IV-93 Ma, Zhonghua III-103 Mai, Yonghao VI-417 Mamaghani, Nasrin Dastranj III-22 Maotao, Zhu VI-210, V-211 Maoxing, Shen VI-148 Masud, Md. Anwar Hossain V-468 Meilin, Wang V-181 Meng, Hua V-69 Meng, Yi-Le V-10 Mengmeng, Gong V-82 Mi, Chao VI-492 Miao, J. V-353 Milong, Li I-457 Min, Ye Zhi VI-511 Ming qiang, Zhu I-150, I-206 Mingqiang, Zhu II-81 Mingquan, Zhou VI-528 Na, Wang I-233 Naifei, Ren V-133 Nan, Li I-533 Nan, Shizong IV-476 Nie, GuoXin V-523 Nie, Zhanglong VI-138 Ning, Ai V-334 Ning, Cai I-36 Ning, Yuan V-416 Nirmala, C.R. III-328 Niu, Huizhuo IV-369 Niu, Xiaoke IV-289 Pan, Dongming V-43 Pan, Min I-446 Pan, Rong II-1 Pan, Yingchun V-170 Pan, Zhifang IV-392 Pei, Xudong VI-105

563

564

Author Index

Peng, Fenglin III-482 Peng, Hao IV-335 Peng, Jianhan III-508 Peng, Jian-Liang II-136 Peng, Yan V-309 Pengcheng, Fan VI-528 Pengcheng, Zhao II-405 Piao, Linhua VI-239, VI-246, VI-253, VI-261 Ping, Li VI-273 Pinxin, Fu V-181 Qi, Lixia I-124 Qi, Zhang IV-219 Qian, Minping IV-491 Qiaolian, Cheng V-370 Qin, G.H. V-89 Qin, Zhou I-302 Qingguo, Liu III-130 Qinghai, Chen IV-335 Qingjia, Geng V-105 Qingling, Liu IV-273, V-24 Qingyun, Dai V-181 Qinhai, Ma I-238 Qiong, Long VI-467 Qiu, Biao VI-179 Qiu, YunJie IV-402 Qiuhe, Yang VI-267 Qiyi, Zhang VI-124 Qu, Baozhong III-255 Qun, Zhai III-143 Qun, Zhang III-377, III-386 Ramaswamy, V. III-328 Rao, Shuibing V-137 Ren, Chunyu VI-218 Ren, Hai Jun V-56 Ren, Honge VI-131 Ren, Jianfeng III-494 Ren, Mingming I-115 Ren, Qiang III-276 Ren, Shengbing V-246 Ren, Wei III-81 RenJie VI-376 Rijie, Cong I-132 Rubo, Zhang III-39, III-47 Rui, Chen II-303 Rui, Zhao I-248, I-313 Ruihong, Zhang II-253 Ruirui, Zhang IV-204, IV-212

Runyang, Zhong V-181 Ru’yuan, Li II-22 Saghafi, Fatemeh III-22 Samizadeh, Reza III-22 San-ping, Zhao VI-13, VI-410 Sha, Hu IV-470 Shan, Shimin IV-32 Shang, Jiaxing III-158 Shang, Yuanyuan IV-369, IV-450 Shangchun, Fan V-321 Shao, Qiang I-109 Shaojun, Qin VI-210 Shen, Ming Wei V-304 Shen, Qiqiang III-95 Shen, Yiwen II-47 Shen, Zhang VI-370 Sheng, Ye VI-232 Shi, Danda V-316 Shi, Guoliang IV-48 Shi, Li IV-289 Shi, Ming-wang V-143 Shi, Wang V-105 Shi, Yan II-414 Shi, Yi VI-131 Shidong, Li V-296 Shou-Yong, Zhang II-428, II-436, II-443 Shu, Xiaohao III-95 Shu, Xin V-164 Shuai, Wang V-221 Shuang, Pan III-30 Song, Haitao VI-166 Song, Meina III-284 Song, Yichen IV-73 Song, Yu IV-73 Sreedevi, A IV-351 Su, Donghai V-404 Sun, Qibo III-502 Sun, Zhaoyun V-189 Sun, Zhong-qiang V-100 Sunqi I-513 Sunxu I-484 Suozhu, Wang I-14 Tan, Liguo VI-110 Tang, Dejun V-328 Tang, Fang Fang V-56 Tang, Fei I-478 Tang, Hengyao II-274 Tang, Peng II-1

Author Index Tang, Xin II-17 Tang, Xinhuai V-1 Tang, Yong V-258 Tanming, Liu II-331 Tao, Li IV-204, IV-212 Tao, Zedan II-357 Tian, Fengbo IV-280 Tian, Fengqiu VI-430 Tian, Ling III-241 Tianqing, Xiao IV-10 Ting, Chen I-387 Tong, Guangji II-499, II-510, II-518 Tong, Ruo-feng IV-198 Tu, Chunxia I-46, I-59 Wan, Hong IV-289 Wan, Wei VI-452 Wan, Zhenkai III-9, IV-484 Wang, Bing II-484 Wang, Chen V-328 Wang, Chengxi I-451 Wang, Chonglu I-222 Wang, Chunhui I-500 Wang, Dan IV-433 Wang, Dongxue IV-297 Wang, Fei I-88 Wang, Feng V-201 Wang, Fengling II-128 Wang, Fumin I-198 Wang, Haiping III-224 Wang, Hongli VI-315 Wang, Huasheng II-350 Wang, Hui-Jin II-450 Wang, JiaLian V-252, V-422 Wang, Jian II-211 Wang, Jianhua IV-48 Wang, Jianqing V-111 Wang, Jie V-404 Wang, Jing V-100 Wang, Jinyu I-335 Wang, Li-Chih V-483 Wang, Lijie V-529 Wang, Linlin V-275 Wang, Luzhuang IV-93 Wang, Min VI-424 Wang, Qian III-166, III-284 Wang, Ruoyang VI-398 Wang, Ruo-Yun IV-376 Wang, Shangguang III-502

565

Wang, Shanshan II-458 Wang, Shijun IV-464 Wang, Shi-Lin IV-376, IV-441 Wang, Shimei I-428 Wang, Shuyan II-10 Wang, Tiankuo II-510 Wang, Ting V-449, V-455 Wang, Weiliang VI-544 Wang, Xia I-21 Wang, Xiaohong III-241 Wang, Xiaohui I-269 Wang, Xiaoya II-420 Wang, Xiaoying V-117 Wang, Xing VI-239, VI-246, VI-253, VI-261 Wang, Yan IV-508 Wang, Y.C. V-359 Wang, Yiran III-247 Wang, Yongping III-276 Wang, YouHua V-18 Wang, Yu IV-252 Wang, Yude VI-480 Wang, Yuqiang V-170 Wang, Zhenxing III-166 Wang, Zhizhong IV-289 Wei, Cai II-150, II-172 Wei, Cheng-Wen V-10 Wei, Fengjuan II-235 Wei, Guo IV-252 Wei, Li III-30 Wei, Lin VI-79 Wei, Ling-ling III-212, III-218 Wei, Liu I-351 Wei, Ou V-409 Wei, Xianmin IV-418, IV-422 Wei, Yang II-253 Wei, Yu-Ting III-407 Wei, Zhou VI-305 Weihong, Chen III-89 Weihua, Liu III-183, III-369 Weihua, Xie V-30 Weimin, Wu IV-242 Weiqiong, He IV-219 Weiwei, Fang III-321 Weixi, Han I-465 Wen, Chengyu I-177 Wen, Jun Hao V-56 Wendi, Ma II-364 Wenping, Zhang I-184 Wu, Bin V-246

566

Author Index

Wu, Caiyan VI-424 Wu, Di II-143 WU, Guoshi III-247 Wu, Hao I-380 Wu, Kaijun V-43 Wu, Peng VI-452 Wu, Xiaofang IV-32 Wu, Xiwei II-357 Wu, Xue-li V-69 Wu, Yanqiang IV-470 Wu, Yong II-493 Wu, Zhongbing I-109 Xi, Ba IV-325 Xi, JunMei VI-7 -xia, Gao VI-297 Xia, Li IV-273, V-24 Xiang, Hongmei VI-94, VI-100 Xiang, Jun II-181 Xiang, Qian V-215 Xiang, Song VI-305 Xiang Li, Wang II-428 Xianzhang, Feng III-453, III-465 Xiao, Weng III-130 Xiao-hong, Zhang IV-411 Xiaolin, Chen II-281 Xiao-ling, He I-320, I-328 Xiaona, Zhou I-313 XiaoPing, Hu VI-350 Xiaosai, Li V-340 Xiaosheng, Liu I-213 Xiaowei, Wei VI-391 Xiaoxia, Zhao III-207 Xiaoya, He II-259 Xiaoyan, Xu VI-528 Xiao-ying, Wang I-343 Xiaoyong, Li II-364, II-382 Xie, Dong IV-25 Xie, Hualong III-337 Xie, Li V-1 Xie, Lihui II-218 Xie, Luning III-122 Xie, Qiang-lai III-212, III-218 Xie, Xiaona IV-167 Xie, Xing-Zhe IV-316 Xie, Zhengxiang IV-280 Xie, Zhimin I-21 Xifeng, Xue VI-148 Xijun, Liu V-476

Xilan, Feng III-453, III-465 Xiliang, Dai VI-124 Xilong, Jiang IV-219 Xin, Xiao IV-204, IV-212 Xin, Zhanhong I-222 Xing, GuiLin VI-357 Xing, Wang V-461 Xing, Xu VI-210 Xinhua, An II-40 Xinling, Wen VI-66, VI-474 Xinzhong, Xiong II-52 Xinzhong, Zhang I-373 Xi ping, Zhang I-150, I-206 Xiucheng, Dong V-340 Xu, Dawei IV-450 Xu, Jing III-166 Xu, Kaiquan II-458 Xu, Li VI-305 Xu, Ming III-95 Xu, Shuang I-550 Xu, Wanlu VI-398 xu, Wenke VI-20 Xu, Zhifeng II-17 Xu, Zhou III-64 Xuan, Dong VI-305 Xue, Qingshui IV-101, IV-110 Xuemei, Hou V-193 Xuemei, Li V-50 Xuemei, Tang V-158 Xuhua, Chen IV-342 Xuhua, Shi V-148, V-153 Xuhui, Wang II-22 Xun, Jin IV-252 Xuxiu IV-521 Xu-yang, Liu V-207 YaChao, Huang V-30 Yachun, Dai V-133 Yamin, Qin I-373 Yan, Fu I-14 Yan, Jun I-115 Yan, Peng V-74 Yan, Qingyou II-420 Yan, Shou III-158 Yan, Yunyang IV-120 Yan, Zhang IV-325 Yanbin, Shi VI-517, VI-522 Yang, Chen VI-210 Yang, Fangchun III-502

Author Index Yang, Fei IV-88 Yang, Hao III-122 Yang, Lianhe IV-476 Yang, Li Chen III-292 Yang, Liming V-365 Yang, Qian II-164 Yang, Qin VI-458 Yang, Renfa II-287 Yang, Song I-238, I-395 Yang, Wei III-112 Yang, Xinhua IV-450 Yang, Xue I-101, I-124 Yang, You-dong V-164 Yang, Yue II-87 Yanli, Shi VI-517, VI-522 Yanli, Xu IV-136, IV-144, IV-151, IV-159 Yanping, Liu III-369 Yan-yuan, Zhang VI-79 Yanzhen, Guo I-248 Yao, Lei-Yue III-218 Yaqiong, Wei I-132 Yazhou, Chen V-211 Ye, H.C. V-89 Yi, Cui V-82 Yi, Jing-bing III-54 Yi, Ru VI-474 Yifan, Shen III-312 Yihui, Wu IV-335 Yin, Jinghai IV-456 Yin, Qiuju IV-66 Yin, Zhang I-313 Yinfang, Jiang V-133 Ying, Mai I-280 Yingfang, Li IV-1 Yingjun, Feng IV-144, IV-151 Yingying, Ding III-89 Ying-ying, Zhang IV-42 Yixin, Guo VI-282 Yong, Wu I-156 Yong-feng, Li VI-39 Yongqiang, He III-413, III-420 Yongsheng, Huang V-518 Yong-tao, Zhao VI-224 Yongzheng, Kang I-161 You, Mingqing III-200 Youmei, Wang IV-18 Youqu, Lin II-326 Yu, Chen VI-66, VI-474 Yu, Cheng III-377, III-386

567

Yu, Chuanchun IV-120 Yu, Deng I-8 Yu, Jie VI-398 Yu, Liangguo VI-488 Yu, Quangang VI-239, VI-246, VI-253, VI-261 Yu, Shuxiu II-226 Yu, Siqin II-95 Yu, Tao I-244 Yu, Tingting V-281 Yu, Yan IV-48 Yu, Yao II-143 Yu, Zhichao I-52 Yuan, Fang I-76, I-83 Yuan, Feng III-473 Yuan, Qi III-312 Yuan, Xin-wei III-54 Yuanqing, Wang II-530 Yuanquan, Shi IV-204, IV-212 Yuanyuan, Zhang V-374 Yue, Wang VI-328 Yue, Xi VI-204 Yu-han, Zhang VI-319 Yuhong, Li I-465 Yuhua, He I-1 Yujuan, Liang VI-173 Yun, Wang V-133 Yun-an, Hu VI-224 Yunfang, Chen IV-242 YunFeng, Lin VI-350 Yunna, Wu IV-325 Yuxia, Hu VI-364 Yuxiang, Li V-105 Yuxiang, Yang VI-267 zelong, Xu VI-551 Zeng, Jie III-433 Zeng, Zhiyuan VI-152 Zhai, Ju-huai V-143 Zhan, Yulong II-143 Zhan, Yunjun I-421 Zhang, Bo I-437 Zhang, David IV-297 Zhang, Fan IV-32 Zhang, Fulin III-200 Zhang, Haijun I-437 Zhang, Haohan IV-172 Zhang, Hongjing II-10 Zhang, Hongzhi IV-297

568

Author Index

Zhang, Huaping VI-1 Zhang, Huiying V-416 Zhang, Jian VI-131 Zhang, Jianhua V-69 Zhang, Jie IV-93 Zhang, Kai V-404 Zhang, Kuai-Juan II-136 Zhang, Laishun IV-464 Zhang, Liancheng III-166 Zhang, Liang IV-484 Zhang, Liguo IV-508 Zhang, Ling II-466 Zhang, Minghong III-135 Zhang, Minghua I-451 Zhang, Qimin VI-376 Zhang, RuiTao V-18 Zhang, Sen V-529 Zhang, Shu V-43 Zhang, Shuang-Cai II-342 Zhang, Sixiang IV-427 Zhang, Tao VI-179 Zhang, Tingxian IV-360 Zhang, Wei II-350 Zhang, Wuyi III-64, III-74 Zhang, Xianzhi II-194 Zhang, Xiaolin I-500 Zhang, Xiuhong V-404 Zhang, Yi III-268 Zhang, Yingqian II-414 Zhang, Yong I-269 Zhang, Yu IV-189 Zhang, Yuanliang VI-117 Zhang, Yujin IV-441 Zhang, Yun II-66 Zhang, Zaichen IV-382 Zhang, Zhiyuan III-135 Zhangyanpeng I-513 Zhanqing, Ma V-399 Zhao, Hong V-275 Zhao, Huifeng II-244 Zhao, Jiyin I-550 Zhao, Liu V-321 Zhao, Min IV-306 Zhao, Xiaoming III-488 Zhao, Xiuhong III-433 Zhao, Ying III-276 Zhaochun, Wu II-26 Zhaoyang, Zhang II-530 Zhe, Yan VI-273 Zhen, Lu II-187

Zhen, Ran V-69 Zhen, Zhang VI-232 Zhen-fu, Li VI-290 Zheng, Chuiyong II-202 Zheng, Fanglin III-394 Zheng, Jun V-409 Zheng, Lin-tao IV-198 Zheng, Qian V-321 Zheng, Qiusheng III-401 Zheng, Xianyong I-94 Zheng, Yanlin III-192, III-394 Zheng, Yongliang II-181 Zhenying, Xu V-133 Zhi, Kun IV-66 Zhi’an, Wang II-22 Zhiben, Jie II-259 Zhibing, Liu II-172 Zhibo, Li V-193 Zhi-gang, Gan I-295 Zhi-guang, Zhang IV-411 Zhijun, Zhang II-109 Zhiqiang, Duan IV-342 Zhiqiang, Jiang III-453, III-465 Zhiqiang, Wang I-262 Zhisuo, Xu V-346 Zhiwen, Zhang II-101 Zhixiang, Tian II-373 Zhiyuan, Kang I-543 Zhong, Luo III-442 Zhong, Shaochun III-192 Zhong, Yuling II-181 Zhongji, Tan VI-517 Zhongjing, Liu VI-370 Zhonglin, He I-1, I-166 Zhongyan, Wang III-130 Zhou, Defu VI-430 Zhou, De-Qun II-466 Zhou, Fang II-493 Zhou, Fanzhao I-507 Zhou, Feng I-109 Zhou, Gang VI-417 Zhou, Hong IV-120 Zhou, Jing-Jing VI-58 Zhou, Lijuan V-309 Zhou, Wei IV-427 Zhou, Yonghua VI-492 Zhou, Zheng I-507 Zhu, JieBin V-498 Zhu, Jingwei III-508 Zhu, Libin I-335

Author Index Zhu, Lili II-420 Zhu, Linlin III-135 Zhu, Quanyin IV-120, IV-189 Zhu, Xi VI-152 Zhuanghua, Lu V-389

Zhuping, Du V-193 Zou, Qiong IV-129 Zunfeng, Liu V-381 ZuoMing IV-514 Zuxu, Zou II-81

569