**7. References**

644 Mechanical Engineering

European Central Bank (2.00 percent). The univariate statistics on risk-free rates of return

Risk-free rate Mean Std. Dev Nominal rate 4.20 1.25 Real rate 1.91 0.74

The experts' opinion was not so unified considering the risk premium. The experts considered the risk premium for improvements (additions to building etc.) at 4.91 percent (mean). The standard deviation was 3.07. As the risk premium is added to the risk free rate when calculating the discount rate, the discount rate may also vary immensly. Consequently

Research conducted by Pšunder and Ferlan (2007) about knowledge of faults in investment project evaluation methods shows that, regardless of the field of education, non-discounting methods are still more popular than discounting methods. The research also shows that experts who have an education in mechanical engineering and are involved in investment project evaluation are more likely than average to use discounting methods. They also possess above-average knowledge about deficiencies in investment project evaluation methods. In using the internal rate of return method, experts with an education in mechanical engineering are most familiar with multiple internal rate of return. The level of familiarity with the multiple internal rate of return is above average, most probably because big projects in the field of mechanical engineering are, owing to variable cash flow, typically

Discounting methods are far more precise in advice about investment projects than nondiscounting methods; however, the discounting methods have their flaws and drawbacks, as well. In particular, internal rate of return has numerous drawbacks that can lead to incorrect conclusions. The most frequent drawbacks involve multiple internal rates of

These drawbacks of the internal rate of return method are the reason that the net present value method is the better method of the two. It is easy to calculate, but results are harder to understand in comparison to the percentage from the internal rate of return method. It

The discount rate is a key factor in proposed project analysis. The size of the discount rate can greatly influence decisions about an investment, since even small changes in the discount rate can dramatically change a decision about the acceptance or rejection of an investment. This is why its determination needs experience and should not be left to practice-based approximations. The proper application of the net present value method is based on the accuracy of the applied discount rate. Recent research shows that experts'

certainly may be difficult to compare the result with alternative investments.

Table 5. Risk-free rates of return and expected inflation (Pšunder and Cirman, 2011).

the net present value method might give very varying advice when used.

Expected inflation 2.25

are presented in Table 5.

**6. Discussion and conclusion** 

subject to multiple internal rate of return.

return, reinvestment assumptions and non-additive projects.


**Configuration Logic of Standard Business** 

*Institute for Industrial Management (FIR) at RWTH Aachen University,* 

Today's manufacturing companies embedded in non-hierarchical production networks are facing multiple and dynamic customer-supplier-relationships. In the course of increasing complexity of products and growing needs for flexibility and product variation companies focus more on core competencies and thus more production processes are shifted to external suppliers. This complex environment leads to growing coordination-efforts and wasteful turbulences throughout the entire network. The result is a delivery reliability of usually less than 65% within the European machinery and equipment industry generating an estimated loss of efficiency of 1 billion Euros per year. Besides additional costs the missing delivery reliability entails poor customer satisfaction and increased lead times compromising the competitiveness of individual companies as well as the entire machinery and equipment

In order to handle the given complexity, the procurement processes have to be managed according to the needs of the respective situation determined by the ordered product and the involved supplier. That means, the design, standardization and configuration of practically applicable order management processes according to the certain business context becomes a key factor. A context-aligned process configuration would lead to a tailored capacity to act and could improve performance and delivery reliability within the

The issue of poor delivery reliability is addressed within the publicly funded research and development project "inTime" (Funded by the 7th Framework Program of the European Commission, EU FP7-NMP, No. NMP2-SL-2009-229132). Within the project typologies are derived based on practical input from companies which distinguish and characterize certain product / service-types as well as certain business-relationship types, which have a direct influence on the design and handling of the respective order management processes between the involved companies. These types then serve as starting point for the limitation and design of relevant reference process phases of order-handling, respectively procurement-handling. The processes are described in detail and are enriched by the detailed definition of the transferred information within the inter-

**1. Introduction** 

industry (Gunasekaran, 2000; Reinhart, 2006).

machinery and equipment industry.

company interfaces.

**Processes for Inter-Company** 

**Order Management** 

*Germany* 

Carsten Schmidt and Stefan Cuber

Treynor J.L., Black F. (1976). Corporate investment decisions. In: *Modern Developments in Financial Management*, Mayers S.C., Praeger, New York. **28** 
