Analysis of the world experience of economic and mathematical modeling of smart enterprises

The paper shows the inevitability of technological mode shift driven by the Industry 4.0, which implies the ubiquitous implementation of information technology, total automation of various processes and creation of cyber-physical systems with artificial intelligence. This requires a complete restruc...

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Date:2017
Main Authors: Madykh, A.A., Okhten, O.O., Dasiv, A.F.
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Language:English
Published: Інститут економіки промисловості НАН України 2017
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Cite this:Analysis of the world experience of economic and mathematical modeling of smart enterprises / A.A. Madykh, O.O. Okhten, A.F. Dasiv // Економіка промисловості. — 2017. — № 4 (80). — С. 19–46. — Бібліогр.: 50 назв. — англ.

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spelling nasplib_isofts_kiev_ua-123456789-1273752025-02-10T00:40:02Z Analysis of the world experience of economic and mathematical modeling of smart enterprises Аналіз світового досвіду економіко-математичного моделювання смарт-підприємств Анализ мирового опыта экономико-математического моделирования смарт-предприятий Madykh, A.A. Okhten, O.O. Dasiv, A.F. Problems of strategy development, financial and economic regulation in industry The paper shows the inevitability of technological mode shift driven by the Industry 4.0, which implies the ubiquitous implementation of information technology, total automation of various processes and creation of cyber-physical systems with artificial intelligence. This requires a complete restructuring of manufacturing systems and production relations, especially in the economies of those countries that want to take a decent place in the new international division of labour of the digital future. An analysis of the world experience of such changes connected with smart industrialization, digital transformations of the economy, the emergence of the industrial Internet of Things and big data processing made it possible to draw the conclusion that it is necessary to apply economic and mathematical methods to justify the expediency of such transformations: economic validity, as well as physical viability of newly created systems. The use of the apparatus of economic and mathematical modeling allows studying properties of the smart system that is being designed, evaluating its effectiveness and risks, anticipating the emergence of problems and errors - without the risk of incurring significant losses which is inevitable when making direct changes in the object of research.Therefore, the purpose of this paper is to study the world experience in the economic and mathematical modeling of smart enterprises and to substantiate its use in the conditions of Ukraine.The review of publications, reflecting the aspects of economic and mathematical modeling in these areas, allowed to conclude that the methodical and methodological apparatus for modeling these processes is unsystematic and inefficient, as well as to formulate recommendations on the economic and mathematical modeling of smart enterprises in Ukraine. In order to take into account the specific features of Ukraine's technological and institutional development, a number of economic and mathematical modeling tools based on the use of production functions, models of inter-branch balance, network optimization models and simulation models based on stochastic dependencies were offered to support the creation of smart enterprises. Показано неминучість зміни технологічного укладу у зв'язку з промисловою революцією 4.0, що потребує кардинальної перебудови системи виробництва і виробничих відносин. У результаті аналізу зарубіжного досвіду подібних змін, пов'язаних зі смарт-індустріалізацією, цифровими трансформаціями економіки, становленням промислового інтернету речей, обробки великих даних, встановлено необхідність застосування економіко-математичних методів для обґрунтування доцільності подібних трансформацій: як пов'язаної з їх економічною обґрунтованістю, так і з фізичною життєздатністю новостворюваних систем. Огляд публікацій, які відображають аспекти економіко-математичного моделювання в зазначених сферах, дозволив зробити висновок про несистемність і неопрацьованість методичного і методологічного апарату моделювання даних процесів, а також сформулювати рекомендації щодо економіко-математичного моделювання смарт-підприємств в Україні. Для врахування особливостей технологічного та інституційного розвитку України при обґрунтуванні створення смарт-підприємств запропоновано ряд інструментів економіко-математичного моделювання, заснованих на використанні виробничих функцій, моделей міжгалузевого балансу, мережевих оптимізаційних моделей, імітаційних моделей на базі стохастичних залежностей. Показана неизбежность смены технологического уклада в связи с промышленной революцией 4.0, что требует кардинальной перестройки системы производства и производственных отношений. В результате анализа зарубежного опыта подобных изменений, связанных со смарт-индустриализацией, цифровыми трансформациями экономики, становлением промышленного интернета вещей, обработки больших данных установлена необходимость применения экономико-математических методов для обоснования целесообразности подобных трансформаций: как связанной с их экономической обоснованностью, так и с физической жизнеспособностью вновь создаваемых систем. Обзор публикаций, отражающих аспекты экономико-математического моделирования в перечисленных сферах, позволил сделать вывод о несистемности и непроработанности методического и методологического аппарата моделирования данных процессов, а также сформулировать рекомендации по экономико-математическому моделированию смарт-предприятий в Украине. Для учёта особенностей технологического и институционального развития Украины при обосновании создания смарт-предприятий предложен ряд инструментов экономико-математического моделирования, основанных на использовании производственных функций, моделей межотраслевого баланса, сетевых оптимизационных моделей, имитационных моделей на базе стохастических зависимостей. 2017 Article Analysis of the world experience of economic and mathematical modeling of smart enterprises / A.A. Madykh, O.O. Okhten, A.F. Dasiv // Економіка промисловості. — 2017. — № 4 (80). — С. 19–46. — Бібліогр.: 50 назв. — англ. 1562-109Х DOI: doi.org/10.15407/econindustry2017.04.019 JEL codes: С00; С60; С67; С69; О12; О14. https://nasplib.isofts.kiev.ua/handle/123456789/127375 330:47+330:46+330:44 en Економіка промисловості application/pdf Інститут економіки промисловості НАН України
institution Digital Library of Periodicals of National Academy of Sciences of Ukraine
collection DSpace DC
language English
topic Problems of strategy development, financial and economic regulation in industry
Problems of strategy development, financial and economic regulation in industry
spellingShingle Problems of strategy development, financial and economic regulation in industry
Problems of strategy development, financial and economic regulation in industry
Madykh, A.A.
Okhten, O.O.
Dasiv, A.F.
Analysis of the world experience of economic and mathematical modeling of smart enterprises
Економіка промисловості
description The paper shows the inevitability of technological mode shift driven by the Industry 4.0, which implies the ubiquitous implementation of information technology, total automation of various processes and creation of cyber-physical systems with artificial intelligence. This requires a complete restructuring of manufacturing systems and production relations, especially in the economies of those countries that want to take a decent place in the new international division of labour of the digital future. An analysis of the world experience of such changes connected with smart industrialization, digital transformations of the economy, the emergence of the industrial Internet of Things and big data processing made it possible to draw the conclusion that it is necessary to apply economic and mathematical methods to justify the expediency of such transformations: economic validity, as well as physical viability of newly created systems. The use of the apparatus of economic and mathematical modeling allows studying properties of the smart system that is being designed, evaluating its effectiveness and risks, anticipating the emergence of problems and errors - without the risk of incurring significant losses which is inevitable when making direct changes in the object of research.Therefore, the purpose of this paper is to study the world experience in the economic and mathematical modeling of smart enterprises and to substantiate its use in the conditions of Ukraine.The review of publications, reflecting the aspects of economic and mathematical modeling in these areas, allowed to conclude that the methodical and methodological apparatus for modeling these processes is unsystematic and inefficient, as well as to formulate recommendations on the economic and mathematical modeling of smart enterprises in Ukraine. In order to take into account the specific features of Ukraine's technological and institutional development, a number of economic and mathematical modeling tools based on the use of production functions, models of inter-branch balance, network optimization models and simulation models based on stochastic dependencies were offered to support the creation of smart enterprises.
format Article
author Madykh, A.A.
Okhten, O.O.
Dasiv, A.F.
author_facet Madykh, A.A.
Okhten, O.O.
Dasiv, A.F.
author_sort Madykh, A.A.
title Analysis of the world experience of economic and mathematical modeling of smart enterprises
title_short Analysis of the world experience of economic and mathematical modeling of smart enterprises
title_full Analysis of the world experience of economic and mathematical modeling of smart enterprises
title_fullStr Analysis of the world experience of economic and mathematical modeling of smart enterprises
title_full_unstemmed Analysis of the world experience of economic and mathematical modeling of smart enterprises
title_sort analysis of the world experience of economic and mathematical modeling of smart enterprises
publisher Інститут економіки промисловості НАН України
publishDate 2017
topic_facet Problems of strategy development, financial and economic regulation in industry
url https://nasplib.isofts.kiev.ua/handle/123456789/127375
citation_txt Analysis of the world experience of economic and mathematical modeling of smart enterprises / A.A. Madykh, O.O. Okhten, A.F. Dasiv // Економіка промисловості. — 2017. — № 4 (80). — С. 19–46. — Бібліогр.: 50 назв. — англ.
series Економіка промисловості
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fulltext –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 19 2017, № 4 (80) UDC: 330:47+330:46+330:44 doi: 10.15407/econindustry2017.04.019 Artem A. Madykh, candidate of economic sciences E-mail:artem.madykh@gmail.com; Oleksiy O. Okhten, candidate of economic sciences E-mail:aokhten@gmail.com; Alla F. Dasiv, candidate of economic sciences Institute of Industrial Economics of NAS of Ukraine 03057, Ukraine, Kiev, Zhelyabova str., 2 E-mail: alladasiv@gmail.com ANALYSIS OF THE WORLD EXPERIENCE OF ECONOMIC AND MATHEMATICAL MODELING OF SMART ENTERPRISES The paper shows the inevitability of technological mode shift driven by the Industry 4.0, which implies the ubiquitous implementation of information technology, total automation of various processes and creation of cyber-physical systems with artificial intelligence. This re- quires a complete restructuring of manufacturing systems and production relations, especially in the economies of those countries that want to take a decent place in the new international division of labour of the digital future. An analysis of the world experience of such changes connected with smart industrializa- tion, digital transformations of the economy, the emergence of the industrial Internet of Things and big data processing made it possible to draw the conclusion that it is necessary to apply economic and mathematical methods to justify the expediency of such transformations: economic validity, as well as physical viability of newly created systems. The use of the appa- ratus of economic and mathematical modeling allows studying properties of the smart system that is being designed, evaluating its effectiveness and risks, anticipating the emergence of problems and errors – without the risk of incurring significant losses which is inevitable when making direct changes in the object of research. Therefore, the purpose of this paper is to study the world experience in the economic and mathematical modeling of smart enterprises and to substantiate its use in the conditions of Ukraine. The review of publications, reflecting the aspects of economic and mathematical model- ing in these areas, allowed to conclude that the methodical and methodological apparatus for modeling these processes is unsystematic and inefficient, as well as to formulate recommen- dations on the economic and mathematical modeling of smart enterprises in Ukraine. In order to take into account the specific features of Ukraine's technological and institutional develop- ment, a number of economic and mathematical modeling tools based on the use of production functions, models of inter-branch balance, network optimization models and simulation mod- els based on stochastic dependencies were offered to support the creation of smart enterprises. Keywords: Industry 4.0, digital technologies, smart enterprises, big data, economic and mathematical modeling. JEL codes: С00; С60; С67; С69; О12; О14. In 2011, at the Hanover Fair, a group of German researchers, businessmen and public figures from the Industry-Science Research Alliance for the development of strategic principles of high-tech production, offered the term "Industry 4.0" and its prin- ciples [23].That event marked the compre- hension and the beginning of the transition © A.A. Madykh, O.O. Okhten, A.F. Dasiv, 2017 –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 20 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) to a new industrial revolution, based on the ubiquitous application of "smart" technolo- gies that can completely exclude humans from the process of making routine deci- sions in the area of manufacturing. For sev- eral years, these ideas have spread so much in the scientific and business environment that the Fourth Industrial Revolution be- came the main and dominant topic at the 46 th World Economic Forum in Davos [6]. Fig. 1 shows the evolution of world industry development and its relationship with the change of technological modes. The Third and the Fourth Industrial Revolu- tions are considered by many researchers as two different ones: the Third revolution is the digital revolution associated with the digitization of all processes and the Fourth one is a revolution of cyber-physical sys- tems, associated with the emergence of ma- chines with artificial intelligence. At the same time, there are publications, in which these revolutions are not separated [19], and introduction of technologies of the 5 th and 6 th technological modes is considered to be the Third industrial revolution, and the key factor in that revolution is the significant change in the role of information and in- formatization of production processes. 1770 1790 1830 1850 1880 1900 1930 1950 1970 1990 2010 2030 2060 Pre-industrial society: - manual labor; - trade shops, manufactories; - agrarian society, subsistence economy. The first technological mode: - energy of water; - development of the textile industry; - mechanization of industrial production. The second industrial revolution: - conveyor; - line production; - energy of electricity and hydrocarbons. T h e th ir d in d u st ri al r ev o lu ti o n : - C N C m ac hi ne s, r ob ot ic s; - fle xi bl e au to m at ed p ro du ct io n. T h e f o u rt h i n d u s tr ia l re v o lu ti o n : - cy b e rp h ys ic a l s ys te m s; - in d iv id u a liz e d p ro d u ct io n ; - In te rn e t o f th in g s. The second technological mode: - energy of steam, coal; - development of transport, ferrous metallurgy; - steam engine; - replacement of muscular force by mechanical. The third technological mode: - electricity; - development of heavy engineering, electrical engineering; - the electric motor; - standardization of production. The fourth technological mode - energy of hydrocarbons; - development of automobile industry, oil refining, non- ferrous metallurgy, polymer industry; - internal combustion engine; - mass and serial production. The fifth technological mode: - nuclear power; - development of microelectronics, information technologies; - microelectronic components; - individualization of production; - globalization. The sixth technological mode: - renewable energy sources; - development of nanotechnology, bioengineering; - artificial intelligence, nanomaterials; - complete individualization of production. The first industrial revolution: - machines, machine tools; - factories; - energy of water and steam. Source: compiled from [5, 22]. Fig. 1. Evolution of the world industry development and its relationship with the change of technological modes There’s certain logic behind that as, firstly, the term the "Third industrial revolu- tion" appeared just 5 years before the "Fourth" one and the principles of manufac- turing organization, associated with it, are only beginning to spread across the Western countries (and are still in their infancy in Ukraine). Secondly, it’s obvious that the emergence of cyber-physical systems is an evolutionary development of the digitaliza- tion process. Therefore, we believe that the concepts of the Third and Fourth revolutions most probably will eventually be combined into a single one, "digital revolution". In any case, the spread of information technology, comprehensive automation of a wide variety of processes, the discovery of fundamentally new materials and non-waste ways of using them, success in the creation of cyber-physical systems that have artificial intelligence – all that has revolutionized the opportunities in the organization of industri- al manufacturing. Ukraine, whose industry uses technologies of the 3 rd and 4 th techno- logical modes [3], is far behind the Western –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 21 2017, № 4 (80) countries in its development, and the chanc- es of catching up with them in an evolution- ary manner seem doubtful. Nevertheless, while being on the periphery of the world economic processes, Ukraine has no right to remain aloof from these major transfor- mations. The creation of new enterprises, operating the technology of the 6 th mode, might allow Ukraine to occupy a worthy niche in the new international division of labour of the digital future. However, any project, even a local one, requires careful justification of its suit- ability. First of all, from the point of view of the physical viability of the designed system in the environment in which it will exist. The creation of the most modern smart en- terprise in the conditions of a corrupt sys- tem, undeveloped institutions, contractors working according to old principles, unde- veloped culture of using information tech- nologies, might actually lead to non- viability of such an enterprise. Another as- pect is the economic feasibility: the costs of creating such enterprises should be justified, and the efficiency of their operation has to exceed the efficiency of the current ones. However, in the above mentioned condi- tions, such efficiency is not always achieved. Therefore, the transition to a new smart production system and measures to transform production relations should be carefully justified, and economic and math- ematical modeling is the most effective tool for describing the systems and processes being designed. The use of the apparatus of economic and mathematical modeling makes it possible to conduct any experi- ments with the system being designed, study its properties, evaluate efficiency and antici- pate the occurrence of problems and errors without the risk of incurring colossal losses that are unavoidable in the case of direct ex- periments. The apparatus of economic and math- ematical modeling is currently developed enough to describe any, even the most com- plex processes and systems, however, the novelty of the tasks to be solved when creat- ing smart enterprises does not allow making an unequivocal choice in favor of using cer- tain specific tools. In order to choose the most effective and expedient tools of eco- nomic and mathematical modeling, it makes sense to study the foreign experience of ap- plying these methods in the creation of smart enterprises, since the developed coun- tries are way ahead of Ukrainian reformers and already have certain empirical knowledge in this field. Therefore, the purpose of this article is to study the foreign experience of eco- nomic and mathematical modeling of smart enterprises and the rationale for its use in Ukrainian conditions. The following concepts, associated with the digital revolution can be distin- guished, which have a certain synonymous character: – «the Fourth industrial revolution» [35], practical manifestations of which are the intensification of information exchange in production, the Internet of Things, cyber- physical systems and cloud computing [38]; – «Industry 4.0» (German"Industrie 4.0"), which is used in Germany to describe the Fourth industrial revolution [33]; – «smart factory» or «smart enter- prise» – modular, structured factories, in which cyber-physical systems control physi- cal processes, create a virtual copy of the physical world, and make decentralized de- cisions [34]; – «cyber-physical systems» (CPS) – hardware and software systems, being a close interlacing of the physical and virtual world. Such systems are formed by network of embedded systems that are connected to the outside world using sensors and drives, receiving data streams from the physical world and creating and constantly updating the virtual copy of the physical world [29; 44]; – «Internet of Things» [24] (IoT) – in- formation networks of physical objects (ob- jects, goods, machines, cars, buildings and –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 22 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) other objects) that ensure the interaction and cooperation of these objects for achieving common goals; – «Industrial Internet of Things» [36] (IIoT) – an information network that, among other things, connects transport and indus- trial production (digital product views, cyber-physical systems of smart factories, etc.). Before analyzing the economic and mathematical models of smart enterprises, it is necessary to classify all the variety of publications, concentrated on the problems of their implementation and functioning, and to highlight the areas that make sense study- ing within the scope of the scientific re- search on identifying the smart industry de- velopment directions in Ukraine. According to the objects of research, the following directions of such publications can be highlighted: 1) technical and technological direc- tion, associated with the design and imple- mentation of high-tech physical systems; 2) information direction, associated with the accumulation, processing and transmission of information; 3) economic direction, associated with changes in the provision of benefits and economic interests of individuals and social groups. In a closer look, the following objects of study can be identified in these areas (fig. 2). Technical and technological direction Informational direction Socio-economic direction Sensors, meters Additive non-waste 3D technologies Robotics and cyber-physical systems (CPS) Technologies of product identification and traceability Geoinformation systems (GIS) Information and communication equipment, broadband Internet Digital product design and modeling (CAD) Cyber security technologies, etc. Enterprise information systems Technologies for working with big data Standardization in smart enterprise design processes Resource planning (ERP) Management of production processes (MES) Automated control of technological processes (SCADA) Product lifecycle management (PLM) Cloud technologies Data mining and knowledge modeling technologies Grid-technologies for big data processing IoT-platforms, Internet of things, industrial Internet of things (IIoT) Process specification language (PSL) General purpose information modeling languages for engineering systems (SysML, Modelica) General standards of information business modeling (BPMN, BPDM, XPDL, WSDL, SCOR, B2MML, OAGIS, etc.) Standards for presenting programmable logic control (PLC), etc. The connection with increasing the production efficiency (labor productivity, added value, competitiveness, etc.) Substantiation of the processes of smart enterprise formation End-to-end planning and management in the industry based on a single digital industry space Effective routes of зкщвгсе movement in the Internet of things Increase in demand in conditions of introduction of digital business models and expansion of digital interaction with customers Implementation of specific technologies for solving applied problems The impact of smart industrialization on socio-economic processes The connection with unemployment The need for specialists in certain categories The need for changes in the education system, etc. Source: compiled by the authors Fig. 2. The main focus objects in the publications on smart industry Also, all the variety of publications, concerned smart enterprises, depending on the goals that are pursued in a publication, can be divided into following tasks to be solved: –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 23 2017, № 4 (80) 1. Descriptive and introductory – the purpose of which is to familiarize the reader with certain objects or phenomena in the smart industrialization. Such publications are not relevant to economic and mathemat- ical modeling, but their subject enables identifying problems that can be solved us- ing such methodological tools. 2. Engineering – the purpose of which is to describe the processes. Such publica- tions present numerous descriptions of vari- ous models, including mathematical ones, but these models are of engineering nature and solve no economic problems. However, as in the previous case, their analysis ena- bles identifying the occurrence of accompa- nying economic problems. 3. Economically reasoning publica- tions, which confirm the economic feasibil- ity of implementing certain processes, asso- ciated with smart industrialization, or sub- stantiate the emergence of new tasks, repre- senting economic and social problems. Such publications directly relate to the subject of this study, but are scarce in number, often inconsistent and are unable to adequately solve the problems. The publications of the second and third groups usually also include a descrip- tive-introductory part and thus may overlap with the publications of the first group. However, we were unable to find publica- tions that would represent an intersection of the first and the third group, which would have considered the problem of the engineering design of smart enterprises through the prism of solving economic prob- lems. Fig. 3 shows the relationship of the nature of publications according to the tasks they solve with their directions according to the objects of research. Technical and technological direction Informational direction Socio-economic direction Descriptive and introductory publications Engineering publications Economically reasoning publications Source: compiled by the authors Fig. 3. Relationship of the nature of publications according to the tasks they solve with their directions according to the objects of research Let’s begin the overview of publica- tions on smart enterprises with descriptive and introductory studies related to the iden- tification of objects and their functioning, since these publications form a basic repre- sentation of the way such enterprises func- tion. According to [31], 4 principles of "In- dustry 4.0" design are distinguished: – interaction: the ability of machines, devices, sensors and humans to connect and interact with each other via the Internet of Things or the Internet of People; – information transparency: the ability of information systems to create a virtual copy of the physical world by filling digital models of enterprises with sensor data. This requires aggregation of raw sensor data into context information with a higher level of usefulness; – technical assistance: firstly, the abil- ity of support systems to help humans by –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 24 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) aggregating and visualizing information to make informed decisions and quickly solve urgent problems in a short time; secondly, the ability of cyber-physical systems to physically support humans by performing a number of tasks that are unpleasant, physi- cally exhausting or dangerous to humans; – decentralized decision-making: the ability of cyber-physical systems to inde- pendently make decisions and perform their tasks as autonomously as possible. These tasks are transferred to a higher level only in case of abnormal situations, interference or conflicting goals. Authors of [34] mention three areas of "smart enterprises" that distinguish them from traditional ones: 1. Monitoring and control– monitor- ing and control systems implemented at smart enterprises in real time collect and transmit a wide range of data on the status of enterprise facilities, their operation, the use of resources, and the state of their envi- ronment, which allows them to react quickly to changes. 2. Information exchange and interac- tion– the modern information infrastructure allows exchanging large volumes of infor- mation between humans and humans, hu- mans and physical objects, as well as be- tween physical objects without human inter- vention. Often the components of infor- mation exchange and cooperation are com- bined with monitoring and management components, initiating the exchange of in- formation or certain actions in the event of a certain situation detected by sensors. Such capabilities allow production management automation, when human intervention will be necessary only in cases of certain events’ occurrence, and rest of the time the ex- change of information is limited to physical objects. 3. Big data and data analysis– collect- ing large amounts of data on the status of objects, processes and the environment, and increasing the capacity of data processing systems make it possible to expand the use of analytical tools to improve business pro- cesses at all stages, including the develop- ment, production and sales. Given this, the following criteria can be used to classify an enterprise as a smart enterprise: the use of intelligent sensors for monitoring and processes control; automa- tion of information exchange processes and interaction of workers with each other, workers with physical objects (mainly with machines and computer systems), as well as physical objects with each other; use of big data for continuous analysis and process im- provement. Thus, the key factor in the modeling of smart enterprises is the work with big da- ta, the research of which is the topic of a large number of publications, related to smart industrialization. The use of big data, which, along with the software of cyber-physical systems, forms the basis of information support for the smart industry, is associated with signif- icant difficulties in their processing using traditional methods. Such a complexity is explained not only by the large amount of data, but also by their unstructured nature (the collected data is not generated initially in accordance with the rules for database design), the lack of centralization of collec- tion and processing (data from a variety of different sources can be used), and the weak relationship within the data itself (data from different fields of activity). In [40], big data is defined as data sets with sizes beyond the capabilities of typical database management software to collect, store, manage and ana- lyze data. In a review article [32], the lifecycle of big data consisting of four stages (genera- tion, collection, storage and analysis) was analyzed, and the main approaches and tools that can be used at each stage are consid- ered. Similar to other publications on this topic, the main problem of analyzing big data is defined as their initial absence of pat- tern (which not only makes it difficult to collect and store such data, but also makes it –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 25 2017, № 4 (80) impossible to use traditional structured da- tabases), and modeling, visualization, opti- mization and forecasting are mentioned as the main areas of using big data in practice. Analysis of big data to obtain practical conclusions is directly related to data mining technologies. Data mining is a collective name, served to denote a set of methods used for detecting previously unknown, non- trivial, practically useful and accessible in- terpretations of knowledge that is required for decision-making in various areas of hu- man activity [15]. In [48], the following main areas of development of big data and the scope of big data use in the industry are offered: – new and improved methods for ana- lyzing big data and data mining; – cloud solutions, related to the stor- age and transmission of big data; – use of big data in control and moni- toring; – data-driven optimization and fore- casting within manufacturing systems; – data-driven solutions for supply chain development and risk management; – the use of the theory of big data in modern industrial applications; – big data-based solutions for intelli- gent power transmission networks and clean energy systems. As a part of implementing data mining in manufacturing management, the authors of [30] propose a platform for advanced manufacturing analytics to eliminate such shortcomings in existing approaches, as iso- lated consideration of individual data sets, limited tools, insufficiency of reporting and visualization tools, the lack of mechanisms for obtaining specific recommendations, based on results of analysis. Such platform includes three levels: 1. Process optimization – involves the use of analytical findings, obtained at level 2 to improve manufacturing processes. 2. Process analysis – includes various ways of processing data, collected at level 3, including data mining. The results are stored in the manufacturing analytics repository. 3. Data integration – includes a manu- facturing data warehouse, which reflects all the data, obtained during the manufacturing process (all aspects of the manufacturing process). The authors offer two approaches to improving manufacturing processes using big data: optimization of manufacturing processes based on indicators (involves changing the parameters of processes, taking into account the conclusions derived from the analysis) and the optimization of manu- facturing processes on the basis of templates (represents the development of the approach to the optimization of manufacturing pro- cesses on the basis of indicators by using templates that include sets of indicators for a particular application in the context of time and elements of the manufacturing process). As a tool for data analysis, it is pro- posed to use standard models and methods, such as neural networks, reference vectors, decision trees, Bayesian classifications and the creation of decision making rules. The main advantage of the abovementioned ap- proach is the accentuation of levels of big data use in the improvement of manufactur- ing processes and the emphasis on the need to create repositories of manufacturing ana- lytics. The shortcomings include the absence of specific models or authorial ways of deci- sion-making support. With regard to the processing of big data, the main approach, currently used for the distributed processing of large amounts of data and promoted by such major compa- nies as Google and IBM, is the MapReduce architecture [18]. Within the framework of this architecture, the array of input data is processed using the user-defined "map" function (that assigns a value to each attrib- ute called a "key", for example, the frequen- cy of attribute’s occurrence in a specific document) and "reduce" function (folds the "key-value" pairs by summarizing the key values for each characteristic from an array –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 26 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) of intermediate data). The user has to speci- fy the data sources, specify the required at- tributes (keys), the rules for assigning values to the keys (the map function), and folding rules (the reduce function). In turn, the data processing systems form data packets and distribute the execution of these functions on the data packets among the hardware. This approach allows processing data arrays, which even theoretically cannot fit in the RAM or hard drives of individual comput- ers, creating a basis for distributed pro- cessing and analysis of big data. In [41], the use of big data in manu- facturing is analyzed, and the conclusion is made that data has become an important production factor along with tangible assets and human capital, and big data allows companies to create new and improve exist- ing products and services, and invent com- pletely new business models. This conclusion is backed by empiri- cal studies of the McKinsey Global Institute, which provides the following facts about big data as of 2011 [40]: – the volume of data created increases by 40% each year, while the IT infrastruc- ture spending increases by only 5%; – the additional need for advanced da- ta analytics professionals in the US alone is about 200 thousand people, and the need for senior specialists with data processing skills is about 1.5 million people; – big data allows increasing the profit- ability of retail enterprises by 60%; – the potential economic effect of the comprehensive use of big data in the US healthcare system is USD 300 billion. The same paper distinguishes the fol- lowing mechanisms, by means of which big data creates economic value [40, p. 5]: – ensuring transparency – the very fact of relevant stakeholders being able to access big data in a timely manner makes it possible to obtain a significant economic effect; – the ability to conduct experiments to identify needs, analyze variability and increase productivity – by digitally collect- ing and storing large amounts of data about their activities, organizations can collect more accurate and detailed data in real or near real time about all areas: from invento- ry to staff sick leave days, which creates the conditions for modeling and forecasting the relevant aspects; – customer segmentation and indi- vidual solutions – big data allows organiza- tions to segment and adapt their products and services with high degree of precision to meet the needs of specific customers; – replacement / support of human decision making using automated algorithms – in-depth analytics can significantly im- prove the decision-making process, mini- mize risks and discover valuable ideas that are hidden from the attention of a research- er, who is not armed with big data; – development of new business mod- els, products and services– manufacturers can employ data on the use of existing prod- ucts to improve and develop the next gener- ation of products and create innovative of- fers in the field of after-sale services. The general conclusion is that in the near future the use of big data will be a key factor of competitiveness in all sectors of the economy, including industry. Analysts of the McKinsey consulting company [25] indicate that industries with the maximum potential for the introduction of analytics, based on big data, are pharma- ceutical, chemical and mining. In these in- dustries, in the opinion of the authors, minor changes in the characteristics of the process can significantly affect the result, which creates the conditions for the application of "advanced analytics" – the processing of economic data with the help of statistical and other mathematical tools for evaluating and improving various areas of activity. A number of publications, which will be discussed below, are of engineering na- ture and consider the models of the func- tioning of smart enterprises or certain as- pects of their functioning, the mechanisms –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 27 2017, № 4 (80) of transforming regular enterprises into smart ones, and the methods of economic and mathematical modeling associated with these processes. We will omit the analytical part of the publications, which is devoted to purely technical aspects, associated with the introduction of cyber-physical systems (see the technical and technological block in the Fig. 2), and will review the most informa- tive publications of that group. Traditional approaches to centralized control and rigid management are unable to cope with the vast ecosystem of networked systems that are becoming increasingly widespread in the economy as a whole and in the manufacturing sector in particular, which requires the use of modeling tools to predict the behavior of such systems in cer- tain situations and develop optimal control inputs. However, since simulation and mod- eling tools are usually created for applica- tion in a particular field, it’s difficult to de- velop such models, since both physical and cybernetic aspects of such systems need to be modeled [28]. The modeling of cyber- physical systems uses simulation tools such as hybrid Petri nets, hybrid automata and hybrid processes, aggregated modeling techniques (including such tools as Dymola and gPROMS) [44]. It should be emphasized that in this case we are talking about the modeling of cyber-physical systems, and not about mod- eling the economic aspects of the function- ing of enterprises, which use such cyber- physical systems in their manufacturing processes. One of the main modeling trends in the last few years has been the use of the advantages, provided by the modern pro- gramming languages and development tools [4]: object orientation, class libraries and visual design environments. Modelica, which is one of the most popular tools at the moment, is a visual modeling environment that includes the Modelica universal object- oriented language for modeling complex physical systems and such tools as Dymola or MathModelica. The Dymola (Dynamic Modeling Laboratory) package supporting Modelica modeling language is a complex tool for modeling and research of compli- cated systems in such areas as mechatronics, automatics, aerospace research, etc. [27]. The ability to combine components of a dif- ferent physical nature in one model makes it possible to build models of complex systems that better mirror the reality and to obtain more accurate and transparent results. The critical importance of the devel- opment of cyber-physical systems was noted in [13] from the point of view of national interests and, first of all, for the creation of new digital products with unprecedented economic efficiency. However, calculations of the consequences of the influence of digi- tal technologies on the economy are carried out on the basis of individual, practical ex- perience of functioning of existing digital manufacturing systems, without using the tools of economic and mathematical model- ing. The paper emphasizes that the model, used in the management system, is the key one in cyber-physical systems, the viability and functionality of cyber-physical system depends on how that model relates to reality. The reality of the world is embodied in the form of models and data populated in them, so in order to create systems that can work in the real world, a new discipline is re- quired – model engineering. With the pur- pose to understand the new ideology of product lifecycle management (PLM), it’s necessary to combine the building infor- mation model (BIM) with the manufacturing information model (PLC), which forms a completely new quality. As we can see, the authors of [13] pay considerable attention to the modeling of cyber-physical systems, but mainly to engineering modeling. The Chinese authors in [50] argue that the modeling of digital manufacturing (which in the context of the work in ques- tion is equal to smart manufacturing or manufacturing at smart enterprises) doesn’t require any specific approaches to model- –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 28 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) ing – it uses standard modeling methods. The lifecycle of the digital manufacturing model includes data collection, data pro- cessing, data transmission, monitoring, in- teraction management and decision support. It consists of an ordered series of models, which typically includes a product devel- opment model, a resource model, an infor- mation model, a control and management model, an organizational model, a decision- making model, etc. "Ordered" means that these models are built at different stages of the lifecycle of the digital manufacturing system [50, p. 24]. Objects of modeling are products, resources, information, organiza- tional aspects, decision making, production process and network environment (interac- tion models). Thus, the authors suggest us- ing standard modeling tools and models, including process models, object models, structural models, Petri net models [49], optimization models, etc. Petri nets are used to model asynchro- nous systems that function as a set of paral- lel interacting processes. Analysis of Petri networks allows obtaining information on the structure and dynamic behaviour of the simulated system. However, the prospects for the practical application of Petri nets in the modeling of smart enterprises belong to the technical rather than the economic field, in particular, in the field of modeling manu- facturing processes, as well as the processes of data collection and processing. Optimization modeling [12] has a sig- nificant potential for practical application both in substantiating general directions of introducing smart technologies, and in se- lecting and planning specific measures. Its application enables designing mathematical models for solving a wide range of both technical and economic problems, involving the allocation of limited resources to alterna- tive uses, choosing from a list of alternative options, scheduling certain measures in time, etc. The optimization model consists of an objective function capable of taking values within an area, limited by the task conditions (areas of admissible solutions), and constraints, characterizing these condi- tions. The objective function consists of three elements: controlled variables, param- eters (that can’t be controlled, for example, those depending on the external environ- ment), and the shape of the relationship be- tween them (the shape of the function). In general, an optimization model is represent- ed as follows: { 𝑈 = 𝑓(𝑥𝑖, 𝑦𝑗) → 𝑚𝑎𝑥 𝑜𝑟 𝑚𝑖𝑛 ; 𝑥𝑖 = 𝐴, 𝑥𝑖 > 𝐴 𝑜𝑟𝑥𝑖 < 𝐴 . where U – the objective function, for which a maximum or a minimum is sought, depend- ing on which indicator is chosen as the crite- rion; xi – controlled variables, for which there are optimal values at which the objec- tive function would reach the desired extre- mum,  іх Х – the set of controlled varia- bles; іy – parameters, used in calculations in the form of fixed values (constants),  іy Y – the set of constants. When modeling smart enterprises, op- timization models can be used to select technologies for implementation, to deter- mine the optimal parameters of technologi- cal processes or investment projects, and to solve other problems related to the choice of available alternatives. In [1], models of digital transfor- mation of the industry at the macro-level are presented in the framework of process, sec- toral and technological approaches. The model of the process approach is based on viewing the industry as an industrial chain – from the development of industrial products to their sale and service. The elements of digital transformation of the industry in- clude: digital R&D center, digital factory, digital storage and transportation, electronic commerce and digital services. It’s noted, that the creation of the Eurasian technology transfer network and the Eurasian network of industrial cooperation and subcontracting –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 29 2017, № 4 (80) can become effective tools for digital trans- formation of industry. The industry-specific approach to digital transformation of industry is based on the industry's connection with other sec- tors of the economy and includes the follow- ing digital industrial markets: food and wa- ter production and delivery systems, intelli- gent resource extraction systems, digital (smart) factories, distributed power systems, unmanned automobile systems, unmanned aerial vehicles, digital railway, telemedicine, personal medicine, smart houses, smart roads, digital financial technologies, safety systems, e-commerce, e-education, digital culture and the media. The model of the technological ap- proach to the digital transformation of the industry includes a set of technologies that form a digital agenda in the industry: IoT and industrial Internet, digital design and modeling, quantum technologies, big data, element base (processors), robotics, sensors, meters, additive 3D technologies, cloud technologies, supercomputer technologies. This set of technologies is open and can be expanded. At the heart of virtually all technologies are software and hardware, the core of which is software and microelectron- ics. Broadband Internet access is of key val- ue for the development of digital transfor- mation of the industry. According to Swe- dish scientists, doubling the average speed of the broadband Internet access in a coun- try increases its GDP by 0.3%. According to the authors of the study [1], an increase in GDP by 0.3% in OECD countries will lead to an increase in the world economy by USD 126 billion. Historically, this is about 1/7 of the average annual growth rate in OECD countries over the past ten years. It should be noted, that in paper [1] the models of digital transformation of industry within the framework of process, sectoral and technological approaches are presented only in an object form. It lacks economic- mathematical models of digital transfor- mation of industry, but is devoted to the ways of supporting such initiatives in the field of modeling: – through the introduction of infor- mation modeling in the field of industrial and civil construction (BIM-systems). In such way authors offer to encourage pro- jects, aimed at creating and implementing automated process control systems (ACS) in the industrial sectors, including supervisory control and data collection systems (SCADA); – through the development of mathe- matical modeling and design of mathemati- cal models for use in industry and engineer- ing. As for micro-level models, the so- called "S-Model" of digital manufacturing is proposed in [43], where "S" symbolizes sta- tistical processing and simulation (model- ing). Within the framework of this model, a closed cycle digital manufacturing system with an autonomous statistical analysis module and an autonomous modeling mod- ule for discrete events is offered to create a flexible and efficient value chain. To inter- act with personnel in this model, it was sug- gested to use the forecast panel and an inter- active production planning interface. That model is not an economic-mathematical model, but rather the author's vision of the use of econometric models in manufacturing control: for example, based on the analysis of statistical information it’s proposed to predict crises (equipment failure), demand, and other factors, and make manufacturing planning interactive and adjust it in real time, using the appropriate interface. Pharaos Navigator [46] is one of ex- amples of practical implementation of the smart enterprise concept, intended for enter- prises of various areas of activity (manufac- turing, services, etc.). It allows visualizing the operation of a smart enterprise, display- ing in a visual form the results of data col- lection from smart sensors on all equipment and thus allowing the management to re- ceive real-time information about the opera- tion of the enterprise. –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 30 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) In the paper [14], the main focus is on standardizing the processes of digital trans- formation of industry, as well as the matters of information modeling of manufacturing systems. And the standards are considered as a link between information models and manufacturing at a factory through design systems. Two sets of international standards, specific for modeling manufacturing sys- tems and data exchange are described: the standards of manufacturing resources and processes and the standards of construc- tion/facility modeling. The paper describes the characteristics of standards and their purpose for information modeling. The analysis of paper [14] showed that the main focus is on standardization of information and engineering modeling of manufacturing systems for the purpose of digital transfor- mation, but the matters of standardizing economic and mathematical modeling of smart enterprises and economic problems solved at the stage of their formation are not sufficiently investigated. The paper [21] investigates the conse- quences of introducing new technologies and creating of smart enterprises, such as technogenic catastrophes, serious manufac- turing problems, caused by stealing of con- fidential data, as well as complete collapse of manufacturing process. The authors of the paper note that new cyber defense tools can’t be tested in real manufacturing condi- tions, since this may entail a slowdown and even stop manufacturing processes, which is completely unacceptable for business. For this reason, this kind of work includes a stage of applied research, at which engineers use special equipment that simulates real manufacturing processes to the best possible extent. Research [21] deals not only with the issues of ensuring information security, but also assessing the impact of cyber defense tools on the productivity of industrial enter- prises, which also needs to be taken into ac- count in the economic and mathematical modeling of smart enterprises. The most interesting from the point of view of economic and mathematical model- ing are the papers, devoted to the economic justification of the efficiency of the intro- duction of the smart industry and its impact on the economy of the country and socio- economic processes. Let’s begin analyzing this direction with paper [45], in which, based on a survey of a number of Dutch companies operating in various areas, it’s concluded that compa- nies are actively engaged in the implementa- tion of elements of the smart industry, and the larger the company, the more actively it works in this area. It focuses on the fact that the introduction of digital technologies af- fects all aspects of a company’s operation: products, manufacturing processes, etc. Nevertheless, the work doesn’t provide any calculations or even assessments made by the interviewed companies regarding the qualitative or quantitative indicators of the introduction of smart technologies or the economic effect of their implementation. This work is indicative, as it illustrates a whole layer of works on this topic, in which it is possible to distinguish several elements: a short or a more extensive listing of smart industry definitions, such as digital technol- ogies, big data, etc.; a set of statements de- claring that it is very important and promis- es various advantages; if a model or system is declared, in most cases, it’s represented by a rather abstract drawing. At the same time, there are no calculations, economic and mathematical models or analysis of sta- tistical data. Thus, the overwhelming num- ber of works on smart industry, in the same manner as the abovementioned paper [45], are devoted to convincing the reader in the importance of this direction, but lack any scientific or practical novelty. The following few works are a rare exception to the indicated trend. For example, in a Korean study on the impact of the smart industry on urban de- velopment and the country's economy in general [37], the following approach was –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 31 2017, № 4 (80) used: the main industries are picked which are suppliers and consumers of smart prod- ucts (primarily computer equipment, micro- circuits, industrial automation, communica- tion equipment, etc.) and on the basis of in- put-output tables, the impact of demand for such products on the production volumes in the city, employment, added value, etc. was analyzed. An unconditional advantage of this work is an attempt to give a numerical assessments of smart manufacturing (as op- posed to the abstract approach seen in many other works), as well as the fact that a spe- cific list of smart products was compiled. On the example of the implementation of the smart cities development program in Ko- rea, the corresponding economic effect is shown – an investment of USD 10 million in such a program allowed increasing output by USD 19 million due to an increase in demand in related industries. The drawback of this work is that there has been no com- parison of investments in the smart industry with investments in other industries, as a result of which there was no answer to the question of whether a USD 1 investment in the smart industry gives a greater or lesser effect than a USD 1 investment in tradition- al industries. Based on the statistical data on the US industrial enterprises, paper [26] analyzes the impact of data-driven decision-making on the value-added created by an enterprise and concludes that the introduction of data- driven decision-making increases the value added by 3% on average. Such an estimation is made using regression analysis on the basis of a production function (similar to the Cobb-Douglas function) with the added val- ue as the dependent variable and labour productivity, capital, labour resources, ener- gy consumption, IT-capital (in the form of cost of hardware and software), measure of structured management (the degree of au- tonomy of mid-level staff in decision- making) and data-driven decision-making as factors. Authors propose the following model: 𝑌𝑖𝑡 = 𝐴𝑖𝑡𝐾𝑖𝑡 ∝𝐿𝑖𝑡 𝛽 𝐸𝑖𝑡 𝛾 𝐼𝑇𝑖𝑡 𝜆𝑒𝜇𝑆𝑀𝑖𝑡𝑒𝜂𝑋𝑖𝑡𝑒𝛿𝐷𝐷𝑇𝑖𝑡, where 𝑌𝑖𝑡 – actual value added (output – ma- terial costs); 𝐴𝑖𝑡 – productivity; 𝐾𝑖𝑡 – capital value at the beginning of the period; 𝐿𝑖𝑡 – labour (number of employees); 𝐸𝑖𝑡 – consumption of energy re- sources; 𝐼𝑇𝑖𝑡 –value of IT assets (hardware and software) at the beginning of the period; 𝑆𝑀𝑖𝑡 – measure of structured man- agement; 𝑋𝑖𝑡 – additional factors, such as the industry and the level of education; 𝐷𝐷𝐷𝑖𝑡 – measure of data-driven deci- sion-making. Among the advantages of the ap- proach is the attempt to analyze the impact on production efficiency, based not just on investments in the IT infrastructure, but spe- cifically on the use of data analysis results in decision-making. Among the shortcomings of the offered approach is the abstractness of the very concept of "data-driven decision- making", as well the fact of using data- driven decision-making as a factor in the model (for each particular enterprise this parameter can be estimated as 0 or 1) that is established according to the results of the survey carried out at enterprises, therefore the question of the intensity and directions of using such an approach remains unan- swered. In addition, one of the disad- vantages is the inclusion in the function of such poorly assessable factors as structured management and data-driven decision- making, as well as the use of the number of employees as the indicator of labour re- sources. From the point of view of the pro- spects for the introduction of smart technol- ogies in specific industries, worthy of inter- est is the vision of such perspectives by management of the metallurgical industry, as reflected in the results of a survey, con- ducted by the PwC consulting agency –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 32 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) among more than 2,000 respondents from the nine main industrial sectors and 26 countries [17]. According to the manage- ment of metallurgical enterprises, the intro- duction of digital technologies increases the maneuverability of supply chains, promotes a deeper understanding of processes and in- creases the level of capacity utilization. Au- tomation combined with data analysis is used to ensure flexibility and manufacturing efficiency. To improve productivity, algo- rithms are used to trace the relationship be- tween the physical properties of raw materi- als, used for manufacturing and manufactur- ing costs, as well as factors that limit the production activity of enterprises. Then, in- tegration of previously specified processes is performed, which allows reducing heat losses, energy consumption, manufacturing time, stock level, and optimizing prices. In general, the management of metallurgical enterprises expects that in 2016-2021 the introduction of digital technologies would be increasing revenue by an average of 2.7% per year and reducing costs by an average of 3.2% per year. All that confirms that the in- troduction of digital technologies is in de- mand in industry in general and in metallur- gy – in particular, and the management of enterprises places high hopes in it. In conclusion, the study proposes the following sequence of steps to turn the en- terprise into a smart one: 1. Development of an individual strat- egy for implementing the concept of "Indus- try 4.0". 2. Development of the first pilot pro- jects. 3. Assessment of the necessary re- sources. 4. Implementation of data analysis. 5. Transformation of the company into a digital enterprise (comprehensive imple- mentation of digital technologies). 6. Active planning of the ecosystem approach (cooperation with the market envi- ronment – suppliers and consumers). In paper [7] attention is paid to the impact of digital transformation (digital technologies, the Internet) on the labour market and labour productivity. It is noted that some of the perceived benefits of digital technology are compromised by the risks that arise. Many economically developed countries are facing increasing polarization of labour markets and growing inequality – in part because new technologies comple- ment more skilled work and, at the same time, replace standard labour operations, requiring many workers to compete with each other for low-paid jobs. In the absence of accountable institutions, public invest- ment in the development of digital technol- ogies strengthens the influence of the elites, which can lead to subordination of policy to the interests of the establishment and to in- creased state control. The digital revolution can generate new, profitable business mod- els for consumers – but not where the estab- lished companies control the entry to the market. Technology can increase the productivity of workers – but not where they do not have the skills and knowledge, neces- sary for its application. Digital technology can help control the presence of tutors in the workplaces and improve academic perfor- mance – but not where education system is not accountable. Despite the fact that a fairly modest number of jobs are created directly in the area of digital technologies, these technolo- gies contribute to the creation of a consider- able number of jobs in other areas. This way, in Kenya, the digital payment system M-Pesa provides additional income for more than 80,000 of its agents. And according to the China State Information Center, the re- cent rapid growth in the e- commerce sector in the country has led to the creation of 10 million jobs in online stores and related ser- vices, which is about 1.3% of total jobs in the country. If digital technologies promote eco- nomic growth, how are these benefits allo- cated on the labour market? Although digital –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 33 2017, № 4 (80) technologies increase productivity and over- all well-being, labour market turmoil can turn out to be unhealthy and lead to in- creased inequality. Thus, another area for the use of economic and mathematical mod- eling of digital and smart enterprises is to assess the impact of digital technology on the labour market, employment structure and labour productivity. In general, the nature of publications on the modeling of the smart industry and the processes of its implementation, is un- systematic, fragmented and incomplete. That is a consequence of the fact that this scientific direction is still on the early stages of its development, there are no established concepts for the introduction of the smart industry and its modeling, and existing ex- amples of practical implementation of smart enterprises are based more on heuristic methods, rather than on accurate mathemati- cal justifications. As can be seen from the above analysis, most of the publications, devoted to the development of the smart in- dustry, are either descriptive and introducto- ry, or view this process from the engineering point of view, which mainly covers tech- nical, technological and informational direc- tions (Fig. 2). A few mathematical models, which are mentioned in them (but are not given explicitly) are strictly of applied na- ture and solve technical problems. Publications, which consider the eco- nomic aspects of Industry 4.0, are generally scarce. At the same time, even if certain mathematical justifications for some conclu- sions are present, most often they’re of em- pirical descriptive nature, based on existing observations, and the methodological varie- ty of economic and mathematical models used at best covers correlation-regression analysis. However, it should also be noted that the conditions for smart industrialization in Ukraine are significantly different from those in the countries of the West. This not only includes technological lagging, but also the weakness of state institutions, insecurity of capital and investment, unpredictability of state policy (in such areas as taxes, fi- nance, trade, international relations, etc.), the virtual lacking of financial support from the government, corruption in all areas of potential stakeholders’ activity. More details about the peculiarities of technological and institutional development of Ukraine can be found in [2; 8-11; 16; 20; 42; 47].Thus, the peculiarities of the functioning of the Ukrainian economy, the specifics and the level of development of its institutions make it senseless to directly use the Western expe- rience of smart industrialization in Ukraine and requires a more thorough scientific jus- tification for the feasibility and cost- effectiveness of implementing measures for the development of the smart industry in Ukraine. As noted in the study of the Com- monwealth of Independent States (CIS) Ex- ecutive Committee on the status, problems and prospects for the development of the information society, it’s necessary to devel- op new methods to ensure the efficiency of informatization processes in the Common- wealth states that will allow a person to cor- rectly understand and explore the new high- ly dynamic information picture of the world that opens before them [20].Undoubtedly, methods of economic and mathematical modeling, which allow obtaining objective and unbiased quantitative justification, should play a prominent role among such methods. Based on the carried above analysis of the current trends in the study of smart in- dustry development in the West and taking into account the peculiarities of the Ukraini- an economy, the following promising areas of economic and mathematical modeling of smart enterprises can be highlighted. 1. First of all, we are interested in the development of the macroeconomic produc- tion function in connection with the transi- tion to the neo-industrial smart economy. The use of methods of economic and math- ematical modeling makes it possible to theo- –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 34 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) retically substantiate the qualitative changes of this function in connection with the emergence of new technological combina- tions of classical factors of production, and the possible emergence of a new production factor in the form of informatization or arti- ficial intelligence. It is possible to propose several speci- fications of the enterprise production func- tion with the account for the effect of this new factor (denoted by I below) using: – multiplicative function (similar to the Cobb-Douglas function): y=0K 1 L 2 I 3 , where production factors are presented in the natural form; – additive-multiplicative shape: y=a1K+a2L+a3I+a4KL+a5KI+a6LI+a7KLI, where the factors of production are presented in a standardized form. The second version might be more in- formative for static models, since it’s able to reflect the various multiplicative effects, ob- tained from different combinations of fac- tors. If we consider the development of the production function in the dynamics, the first variant might be more informative, since there are reasons to believe that the parameter 3 is described by a time- dependent S-shaped curve, for example, the Gompertz curve or the logistic curve: 1 3 1 atbe     . The choice of the S-shaped curve is due to the avalanche-like character of in- formatization processes, and, possibly, the development of artificial intelligence, when increments depend on the level reached, and in the beginning they increase with the ac- celeration of development, and then, upon saturation, they decelerate. Parametrization of models in the first and in the second cases is possible using the standard methods of regression analysis, namely using the method of least squares (in the first case, the equation must be trans- formed by logarithm). Another direction in the use of eco- nomic and mathematical models of smart enterprises has a more practical focus. They make it possible to do the following. 2. Different variations of the Leontief input-output model and the inter-branch bal- ance which can be used to solve at least three problems: - end-to-end planning and manage- ment of the industry, based on a common digital industry environment; - selecting enterprises that require pri- ority digital integration, estimating losses from retaining "unsmartized" participants in the value chains, etc.; - increasing demand in the context of introducing digital business models and ex- panding digital interaction with customers by reducing transaction costs. Both natural and monetary values can be used as the coefficients of the technolog- ical matrix of the input-output model. When using monetary terms of the cost factor, it’s possible to distinguish certain cost compo- nents, for example labour costs (lij), transport costs (trij), transaction costs, asso- ciated with intermediate and final consump- tion of products (zij). In the same way, the time factor (tij) can be considered to be a cost element, associated with the value chain. That opens a whole block of optimiz- ing tasks that allow identifying the intercon- nected industries and consumers that are most in need of integration on the basis of a common digital industry environment. Let’s consider one of the versions of the general mathematical formulation of such problems. We’ll assume that the costs zij in the inter-branch balance model can be lowered by virtue of smartization of the manufactur- ing in branches I and j: zij = zij (1 – SiSj), where Si, Sj – a certain level of enterprise smartization, measured by a value in the range (0; 1). –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 35 2017, № 4 (80) (Moreover, we’ll note that if one of the interacting parties is not a smart enter- prise, the effect of reducing costs will not be observed). The level of enterprise smartiza- tion is presented using an S-curve function of investment spending K, connected with the transformation of a traditional enterprise into a smart one: 1 1 , . 1 1 j ji i i j m Km K i j S S b e b e      There‘s a reason to assume that within one industry the relationship between in- vestment costs and the level of smartization is described by the same function (parameter b is the same), and differs only in the pro- duction scale parameter (mi, mj), since it’s obvious that the larger the enterprise, the more smart equipment has to be installed in order to achieve the same level of produc- tion smartization. Thus, the task of reducing production costs through the introduction of smart in- dustrialization within the framework of lim- ited investment resources can be presented in the following way: mini ij i j X z   X = (E – А) –1 Y, zij = zij (1 – 1 1 i im K ibe    1 1 j jm K jb e   ), limi i K K   . Where A=(aij)nn – a technological ma- trix, the elements of which aij = xij/Xj show how many units of i industry products should be spend for the production of one unit of industry j products, Yn1–column vec- tor of the final product. Work on the creation of digital busi- ness-to-business (B2B) platforms is already being carried out not only in the countries of the West, but also in Eurasian Economic Union (EAEU) countries [1]. The interac- tion of smart enterprises within these digital platforms significantly reduces transaction costs, creates conditions for the develop- ment of an end-to-end planning and man- agement system in industry, frees resources that increase national income (quadrant 2) and, accordingly, the volume of the final consumption, which can also be estimated by balance models. 3. The third direction of economic and mathematical modeling of smart enterprises is represented by variations of network models, transport tasks, assignment tasks, etc. Building a network graph of interactions between consumers, manufacturers and oth- er counterparties, for example, in a particu- lar industry will help finding solutions to the following problems: – substantiation of network effects in the creation of smart enterprises in the in- dustry and assessing the minimum necessary level of digitalization of the network, in which the costs from the further introduction of smart technologies will be compensated for by the increase in the efficiency of the network as a whole; – within the limits of the amount of available investment resources, selecting enterprises that require the digitization of their production the most, so that the path from order placement to order receipt would be associated with minimal possible costs; – optimization of the movement of products (from their design to consumption by end customers) in the conditions of the IoT and smart infrastructure. The standard objective function in such problems is aimed at minimizing the costs of moving from the initial to the final vertex: min,ij ij i j Z c x  where xij – the volume of products, moved from vertex i to vertex j; сij– cost of moving them (for different arcs can be either con- stant or dependent on the volume of the products being moved). –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 36 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) Standard constraints: the demand of all consumers must be satisfied, the total production is equal to the total consumption: , ,ij i j x a i  , ,ij j i x b j  .i j i j a b  An obvious extension of this task is to determine the effective path in the condi- tions of the possibility of smartization of individual enterprises that form part of this network. The following restrictions will be added: сij = сij (1 – 1 1 i im K ibe    1 1 j jm K jb e   ), limi i K K   . Digitalization and the IoT can virtual- ly eliminate the cost of traffic through some intermediate vertexes, associated with trans- actional and organizational costs. In addi- tion, they expand the number of vertices, available for analysis, by increasing the di- mension of the graph, and accordingly, mak- ing the choice more valid and effective. The accessibility of some vertices mathematical- ly in this task can be regulated by the re- striction on the throughput of the vertex. For some vertices that determine the known trunk path, it will be a constant value, for others – a value, proportional to the degree of integration of the enterprise into the IoT, that is, proportional to the value 1 1 i i mK S be     (0;1): , ,ij j j i x P S j  , ,ij i i j x PS i  where Pi – nominal (basic, potential) vertex throughput. 4. Another topical area of economic and mathematical modeling is the evaluation of social effects, associated with the impact of digitalization of the economy on the em- ployment. The replacement of human labour by cyber-physical systems has the potential risk of massive job losses in manufacturing, which is the area of primary income distri- bution. In this case, the effects of lowering transaction costs in the conditions of the IoT may turn out to be lower than the negative effects of a decrease in effective demand, associated with a decrease in the primary incomes of the employed in manufacturing population. This problem becomes especial- ly urgent in the conditions of Ukraine, when the potential superprofits from smart manu- facturing will not be redistributed into the economy and stimulate domestic demand, but will accumulate in the pockets of oli- garchs and then moved to offshore. Stochastic modeling, in particular cor- relation-regression models for estimating stochastic dependencies, as well as simula- tion models for assessing the consequences of various scenarios of smart industrializa- tion consequences for employment, income of the population and the economy as a whole, can be instrumental in assessing such effects. Here are some dependencies that re- quire evaluation, specification and para- metrization within this research area: 1) labour costs (Li) in industry i, de- pending on the smartization of that indus- try(Si) (assessment of job losses); 2) demand for labour (L) in the regi- on, depending on the degree of smartization of various industries in this region (assess- ment of the emergence of new vacancies); 3) production volumes (Q) in the re- gion, depending on the degree of smartiza- tion of various industries in the region (as- sessment of changes); 4) taxable incomes of the population, depending on the possible growth of produc- tion volumes and changes in labour costs (assessment of changes); –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 37 2017, № 4 (80) 5) deductions from income of the population (assessment of changes in rele- vant funds j); 6) volumes of consumption of house- holds depending on the income of the popu- lation (assessment of changes); 7) burden of social security funds, de- pending on the number of population (N) and employment level. These (and, probably, many more) de- pendencies can be combined into a single simulation model, the analysis of which will allow assessing the balance of the develop- ment of the smart economy, at least along two contours: the balance of household in- comes and expenditures for expanded con- sumption; balance of revenues, raised to budgets and social funds, and the need to spend money from them. The use of the apparatus of economic and mathematical modeling in substantiating the programs of smart industrialization of Ukrainian economy will make it possible to obtain scientific explanations for solving problems of the formation of smart enter- prises and to increase the efficiency of these processes. Conclusions 1. The Fourth Industrial Revolution (which, in the opinion of some scientists, is the stage of development of the Third one, the digital revolution) is based on the achievements of the 6 th technological mode, characterized by the massive introduction of additive production technologies, nanotech- nology and bioengineering, full digitaliza- tion of manufacturing, implementation of cyber-physical systems that have artificial intelligence, creation of a global information network of products, transport, buildings and industries, capable of interacting with each other independently without human intervention. Ukraine, whose industry uses technologies of the 3 rd and 4 th technological modes, is lagging far behind in its develop- ment from Western countries, and chances of catching up with them in an evolutionary manner seem doubtful. At the same time, the creation of new enterprises that operate the technologies of the 6 th mode can enable occupying certain niches in the world’s digi- tal production. 2. The most effective way of justifying the economic feasibility of creating smart enterprises and their viability in Ukraine is the use of tools of economic and mathemati- cal modeling that allow conducting experi- ments with the system being designed, stud- ying its properties, evaluating efficiency and anticipating the occurrence of problems and errors. Despite the rather good development of the modern economic and mathematical modeling apparatus, the novelty of the tasks to be solved when creating smart enterprises prevents from making an unequivocal choice in favor of the use of certain specific tools. To justify such a choice, it seems use- ful to study the foreign experience of apply- ing economic and mathematical methods in the creation of smart enterprises, since cer- tain empirical knowledge has already been accumulated in that area. 3. The objects of research, which are given attention in the publications devoted to the Fourth industrial revolution and the functioning of smart enterprises, can be classified in three directions. The first one, technical and technological direction de- scribes the operation of sensors, meters, ro- botics and cyber-physical systems, technol- ogy of product identification, cyber defense, data transmission, etc. The second direction is the informational one, describing the op- eration of information systems of various levels at enterprises, technologies for work- ing with big data, and approaches to stand- ardizing the development processes of smart enterprises and their elements. Finally, the third one– the economic direction–is con- nected with the rationale for the economic expediency of digitization of certain seg- ments of the economy, or with its impact on socio-economic processes. –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 38 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) 4. Most of the publications devoted to the development of the smart industry are either descriptive or introductory, or view this process from the engineering point of view, which mainly covers technical, tech- nological and information directions. A few mathematical models mentioned in them (but not shown in explicit form) are of strict- ly applied nature and solve technical prob- lems. Publications, which affect the eco- nomic aspects of Industry 4.0, are generally scarce. At the same time, even if certain mathematical justifications for some conclu- sions are present, they are, in most cases, empirically descriptive, based on existing observations, and the methodological varie- ty of economic and mathematical models used at best covers correlation-regression analysis. 5. A separate large segment of publi- cations, devoted to smart enterprises, is con- nected with the big data, which along with the software of cyber-physical systems form the basis of information support for the smart industry. 6. The analysts of the McKinsey con- sulting company indicate that the industries with the maximum potential for the intro- duction of analytics, based on big data, are pharmaceutical, chemical and mining. In those industries, in the opinion of the au- thors, minor changes in the characteristics of the process can significantly affect the re- sult, which creates the conditions for the ap- plication of "advanced analytics" – pro- cessing of economic and technical data us- ing statistical and other mathematical tools for assessing and improving various fields of activity. PwC consulting agency empha- sizes the positive prospects for the introduc- tion of smart technologies in the metallurgi- cal industry: the introduction of digital tech- nologies increases the maneuverability of supply chains, promotes a deeper under- standing of processes and increases the level of capacity utilization. All these industries are well developed in Ukraine, and these conclusions would be useful to take into ac- count, when forming smart industry here. 7. A large number of analyzed publi- cations are of engineering nature, and reflect the design features of certain objects of the smart industry and cyber-physical systems. Modeling objects include products, re- sources, information, organizational aspects, decision making, manufacturing process and network environment (interaction models). In general, they use standard modeling tools including process models, object models, structural models, Petri net models, optimi- zation models, hybrid automata, queuing systems, balance input-output models, ag- gregated modeling techniques, including tools such as Dymola and gPROMS, etc. Nevertheless, the actual models, pre- sented in these publications, are usually lim- ited to object representation in the form of diagrams and graphs, which makes it impos- sible for them to be directly used in practice, which gives a wide range of possible inter- pretations about how these models can be specified for solving specific problems. 8. The few publications that reason the economic consequences of the introduction of smart enterprises are devoted to the eco- nomic feasibility of such measures. In par- ticular, in a Korean example of investing in the development of the smart industry, it has significantly increased output due to in- creased demand in related industries. At the US enterprises, the use of big data in deci- sion making was accompanied by a 3% av- erage growth in value added. Despite the fact that a fairly modest number of jobs are created in the area of digital technologies, many publications confirm that these tech- nologies help create jobs in related areas, which helps alleviate the reduction of jobs, caused by the automation of manufacturing processes. 9. In general, the nature of publica- tions on the modeling of the smart industry and the processes of its implementation is unsystematic, fragmented and incomplete. –––––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 39 2017, № 4 (80) That is a consequence of the fact that this scientific direction is still quite new, there are no established concepts for the introduc- tion of the smart industry and its modeling, and existing examples of practical imple- mentation of smart enterprises are based more on heuristic methods, rather than on accurate mathematical justifications. The overwhelming number of papers on the top- ic of the smart industry focuses on convinc- ing the reader of the importance of this di- rection, but lacks any scientific or practical novelty. 10. The peculiarities of the function- ing of the Ukrainian economy, the specifics and level of development of its institutions make it senseless to directly apply the West- ern experience of conducting smart industri- alization to Ukraine and require a more thorough scientific justification for the fea- sibility and cost-effectiveness of implement- ing measures to develop the smart industry in Ukraine. However, based on a review of foreign experience, the economic and math- ematical modeling of smart enterprises in Ukraine does not require creating any fun- damentally new types of models. It can be performed through the evolution of well- known models, with additional parametriza- tion of specific conditions, specific to Ukraine's institutional features, the level of development of its industry and the infor- mation technologies used. In particular, among the promising ar- eas of economic and mathematical modeling of smart enterprises in Ukraine are the fol- lowing: – the use of modifications of produc- tion functions– to justify the qualitative changes in the factors of production, the emergence of new factors of production, their new technological combinations; – the use of modifications of Leontief input-output models and optimization mod- els for end-to-end planning and management of the industry, justification of enterprises requiring priority digital integration, reduc- tion of transaction costs in the context of introducing digital business models and ex- pansion of digital interaction with custom- ers; – the use of modifications of network models and optimization models– to opti- mize the movement of goods (from their design to consumption by end customers) in the conditions of the IoT and smart infra- structure, and also to justify the primary candidates for digitalization in conditions of restrictions on the amount of available in- vestment resources; – the design of correlation-regres- sion models– for assessing economic sto- chastic dependencies, as well as simulation models for assessing the consequences of certain scenarios of smart industrialization, that allows assessing the consequences of these scenarios for employment, incomes of the population and the economy as a whole. 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Желябова, 2 E-mail: alladasiv@gmail.com АНАЛІЗ СВІТОВОГО ДОСВІДУ ЕКОНОМІКО-МАТЕМАТИЧНОГО МОДЕЛЮВАННЯ СМАРТ-ПІДПРИЄМСТВ Показано неминучість зміни технологічного укладу у зв'язку з промисловою ре- волюцією 4.0, що потребує кардинальної перебудови системи виробництва і виробни- чих відносин. У результаті аналізу зарубіжного досвіду подібних змін, пов'язаних зі смарт-індустріалізацією, цифровими трансформаціями економіки, становленням про- мислового інтернету речей, обробки великих даних, встановлено необхідність застосу- вання економіко-математичних методів для обґрунтування доцільності подібних тран- сформацій: як пов'язаної з їх економічною обґрунтованістю, так і з фізичною життєзда- тністю новостворюваних систем. Огляд публікацій, які відображають аспекти економі- ко-математичного моделювання в зазначених сферах, дозволив зробити висновок про несистемність і неопрацьованість методичного і методологічного апарату моделювання даних процесів, а також сформулювати рекомендації щодо економіко-математичного моделювання смарт-підприємств в Україні. Для врахування особливостей технологіч- ного та інституційного розвитку України при обґрунтуванні створення смарт- підприємств запропоновано ряд інструментів економіко-математичного моделювання, заснованих на використанні виробничих функцій, моделей міжгалузевого балансу, ме- режевих оптимізаційних моделей, імітаційних моделей на базі стохастичних залежнос- тей. Ключові слова: промисловість 4.0, цифрові технології, смарт-підприємства, великі дані, економіко-математичне моделювання. JEL codes: С00; С60; С67; С69; О12; О14. –––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––––––– 46 ISSN 1562-109X Econ. promisl. 2017, № 4 (80) Артем Анатольевич Мадых, канд. экон. наук E-mail: artem.madykh@gmail.com; Алексей Александрович Охтень, канд. экон. наук E-mail: aokhten@gmail.com; Алла Федоровна Дасив, канд. экон. наук Институт экономики промышленности НАН Украины 03057, Украина, Киев, ул. Желябова, 2 E-mail: alladasiv@gmail.com АНАЛИЗ МИРОВОГО ОПЫТА ЭКОНОМИКО-МАТЕМАТИЧЕСКОГО МОДЕЛИРОВАНИЯ СМАРТ-ПРЕДПРИЯТИЙ Показана неизбежность смены технологического уклада в связи с промышленной революцией 4.0, что требует кардинальной перестройки системы производства и про- изводственных отношений. В результате анализа зарубежного опыта подобных изме- нений, связанных со смарт-индустриализацией, цифровыми трансформациями эконо- мики, становлением промышленного интернета вещей, обработки больших данных установлена необходимость применения экономико-математических методов для обос- нования целесообразности подобных трансформаций: как связанной с их экономиче- ской обоснованностью, так и с физической жизнеспособностью вновь создаваемых си- стем. Обзор публикаций, отражающих аспекты экономико-математического моделиро- вания в перечисленных сферах, позволил сделать вывод о несистемности и непрорабо- танности методического и методологического аппарата моделирования данных процес- сов, а также сформулировать рекомендации по экономико-математическому моделиро- ванию смарт-предприятий в Украине. Для учёта особенностей технологического и ин- ституционального развития Украины при обосновании создания смарт-предприятий предложен ряд инструментов экономико-математического моделирования, основанных на использовании производственных функций, моделей межотраслевого баланса, сете- вых оптимизационных моделей, имитационных моделей на базе стохастических зави- симостей. Ключевые слова: промышленность 4.0, цифровые технологии, смарт-предприятия, большие данные, экономико-математическое моделирование. JEL codes: С00; С60; С67; С69; О12; О14. Cite this publication: Madykh A.A., Okhten O.O., Dasiv A.F. Analysis of the world experience of economic and mathematical modeling of smart enterprises. Economy of Industry. 2017. № 4 (80). pp. 19-46. doi: 10.15407/econindustry2017.04.019 Madykh, A.A., Okhten, O.O., Dasiv, A.F. (2017). Analysis of the world experience of economic and mathematical modeling of smart enterprises. Econ. promisl., 4 (80), pp. 19-46. doi: 10.15407/econindustry2017.04.019 Recieved 30.09.2017