Lecture 4. Contract theory

Contract theory. Economic actors. Contractual arrangements. Asymmetric information. Agency and incentives. Prominent application. Optimal schemes of managerial compensation. K.Arrow.

Behaviour of a decision maker. Numerical utility structures. Optimization algorithm to identify optimal decisions. Labeled moral hazard, adverse selection and signalling. Insurance contract. Mathematical properties of the utility structure of the principal and the agent, relaxation of assumptions, and variations of the time structure of the contract relationship. Neumann-Morgenstern utility functions. Expected utility theory.

The principal-agent problem (agency dilemma or theory of agency). The "principal". The agent-principal relationship. Corporate management (agent) and shareholders (principal), or politicians (agent) and voters (principal). Dental patient (the principal), dentist (the agent). Household jobs. Asymmetric information. Conflict of interest. Suboptimal outcome. Agency costs. Piece rates/commissions, profit sharing, efficiency wages, performance measurement (including financial statements), the agent posting a bond, or the threat of termination of employment.

Literature: 1-42.

Lecture 5. Production program of firm

Production program of the enterprise. A reasonable plan target on the volume, the nomenclature, the range and quality of products. Specifics of work of the enterprise, demand and real opportunities of the enterprise for satisfaction of demand. Nomenclature of the production program. Product range.

Methods of measurement of the production program. Natural, conditional natural, labor and cost units of measure. Natural measuring instruments (pieces, tons, meters, etc.). Labor measuring instruments (hours and minutes of working hours). Sales volume (the realized production), commodity, gross, net, conditional net and a standard net production, a gross and intra production turn.

Indicators of the production program. Sales volume (the realized production). Products. Work in progress. Gross output. Net production. Conditional net production. Standard net production. Gross turn. Intra factory turn. Portfolio of orders. Grocery portfolio.

Literature: 1-42.

Lecture 6. Production capacity of firm

Concept of capacity of the enterprise. Main technological operations of production. Production scale: single, serial (business lot), line.

Indicators of capacity of firm. Efficiency of use of capacity. Input power. Output power. Average annual capacity. Calendar fund of time. Regime (nominal) fund of time. Effective (planned, valid) fund of time. Capacity efficiency. Coefficient of employment of a floor space. Coefficient of employment of the located area. Assets capacity of the enterprise.

Literature: 1-42.

Lecture 7. Fixed assets of firm

Concept of fixed assets. Productive and non-productive fixed assets. Structure of the fixed productive assets. Active and passive part of fixed assets. Initial, residual and recovery cost of fixed assets.

Indicators of reproduction of fixed assets: the average annual cost of fixed assets, size of fixed assets on the end of the year, coefficient of updating of fixed assets, coefficient of leaving of fixed assets, coefficient of depreciation of fixed assets. Depreciation of fixed assets: types of physical depreciation, types of an obsolescence.

Indicators of use of fixed assets: extensive, intensive, integrated. Capital productivity and capital intensity. Indicators of a capital armament and power armament.

Concept of amortization. Norm of amortization and sum of amortization charges. Indicators of calculation of norm and sum of amortization.

Amortization calculation methods: the linear; way of reduction of the rest; a way of write-off of cost on the sum of numbers of years of useful service; a way of write-off of cost of proportional volume of production (works).

Literature: 1-42.