Letter from the editor

This issue of The Engineering Economist demonstrates the wide array of application domains that benefit from engineering economic analysis. I would like to thank the reviewers who contributed to the peer-review process as well as associate editors Jo Min, David Enke, Karen Bursic, and Kyoung-Kuk Kim for their contributions to this issue. The issue begins with an article entitled “A Methodology for Temperature Option Pricing in the Equatorial Regions” by Cabrales, Bautista, Galindo, and Madiedo. The authors develop a methodology for temperature option pricing in equatorial regions. In their approach, temperature is forecasted by combining deterministic and stochastic models. The methodology is calibrated with data gathered in Bogot a, Colombia, using Monte Carlo simulations. They find the use of third-degree Fourier series and mean reversion prove most accurate for pricing temperature options. In “The Influence of Gender-Diverse Boards on Post-Audit Practices: A UK SME Study” by Lefley, Maresova, Hamplov a, and Jane cek, the research shows differences between gender diverse boards and male-only boards in post-audit practices. This article is of relevance and general interest to engineering economists in an investment appraisal, post-audit, project management, and governance environment and can facilitate fostering diversity and equality in regulating corporate activities and assist practitioners and policymakers in understanding the importance of monitoring capital projects. The next article “Case Study: An Assessment of the Economic Service Life of Research Equipment in the Korean Public Research Institutes” by Lee, Lee, Ri, Kim, and Park assesses the economic life of R&D equipment empirically using data gathered from public R&D institutes in Korea. As the effective use of research equipment has been regarded as a prerequisite condition to maximize research and development outcomes, the problem of replacing aging or obsolete research equipment has become important. The authors developed a systematic model to apply traditional engineering economic concepts and estimate the economic service life of research equipment based on size and utilization purpose of the equipment. The study suggests a policy scheme for efficient replacement of research equipment based on our estimation results. In the last article, Babaei and Jassbi coauthor “Technical Note: Modified Simple Average Internal Rate of Return.” Their technical note presents the Modified Simple Average Internal Rate of Return criterion as a profitability index for calculating a unique rate of return for all various types of cash flow streams so that obtained results are consistent with the net present value method in accept/reject decisions. The presented method is simple to compute and is capable of resolving all known IRR defects including when the resulting rate is greater than 1. The Engineering Economist journal publishes articles, case studies, surveys, and book and software reviews that represent original research, current practice, and teaching involving problems of capital investment. For questions or inquiries, please contact me at hln@uark.edu.