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Article
Publication date: 28 May 2021

Zhenning Zhu, Lingcheng Kong, Gulizhaer Aisaiti, Mingzhen Song and Zefeng Mi

In the hybrid electricity market consisting of renewable and conventional energy, the generation output of renewable power is uncertain because of its intermittency, and…

Abstract

Purpose

In the hybrid electricity market consisting of renewable and conventional energy, the generation output of renewable power is uncertain because of its intermittency, and the power market demand is also fluctuant. Meanwhile, there is fierce competition among power producers in the power supply market and retailers in the demand market after deregulation, which increases the difficulty of renewable energy power grid-connection. To promote grid-connection of renewable energy power in the hybrid electricity market, the authors construct different contract decision-making models in the “many-to-many” hybrid power supply chain to explore the pricing strategy of renewable energy power grid-connecting.

Design/methodology/approach

Considering the dual-uncertainty of renewable energy power output and electricity market demand, the authors construct different decision-making models of wholesale price contract and revenue-sharing contract to compare and optimize grid-connecting pricing, respectively, to maximize the profits of different participants in the hybrid power supply chain. Besides, the authors set different parameters in the models to explore the influence of competition intensity, government subsidies, etc. on power pricing. Then, a numerical simulation is carried out, they verify the existence of the equilibrium solutions satisfying the supply chain coordination, compare the differences of pricing contracts and further analyze the variation characteristics of optimal contract parameters and their interaction relations.

Findings

Revenue-sharing contract can increase the quantity of green power grid-connection and realize benefits Pareto improvement of all parties in hybrid power supply chain. The competition intensity both of power supply and demand market will have an impact on the sharing ratio, and the increase of competition intensity results in a reduction of power supply chain coordination pressure. The power contract price, spot price and selling price have all been reduced with the increase of the sharing ratio, and the price of renewable power is more sensitive to the ratio change. The sharing ratio shows a downward trend with the increase of government green power subsidies.

Originality/value

On the basis of expanding the definition of hybrid power market and the theory of newsvendor model, considering the dual-uncertainty of green power generation output and electricity market demand, this paper builds and compares different contract decision-making models to study the grid-connection pricing strategy of renewable energy power. And as an extension of supply chain structure types and management, the authors build a “many-to-many” power supply chain structure model and analyze the impact of competition intensity among power enterprises and the government subsidy on the power grid-connecting pricing.

Details

Industrial Management & Data Systems, vol. 121 no. 7
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 30 October 2019

Zhenning Zhu, Lingcheng Kong, Jiaping Xie, Jing Li and Bing Cao

In the hybrid electricity market, renewable energy power generator faces the uncertainty of power market demand and the randomness of the renewable energy generation…

Abstract

Purpose

In the hybrid electricity market, renewable energy power generator faces the uncertainty of power market demand and the randomness of the renewable energy generation output. In order to improve the grid-connected quantity of green power, the purpose of this paper is to design the pricing mechanism for renewable energy power generator with revenue-sharing contract in a two-stage “multi-single” electricity supply chain which contains a single dominant power retailer and two kinds of power suppliers providing different power energy species.

Design/methodology/approach

Considering the dual uncertainties of renewable energy power output and power market demand, the authors design the full-cooperative contract decision-making model, wholesale price contract decision-making model and revenue-sharing contract decision-making model to compare and optimize grid-connected pricing in order to maximize profit of different parties in power supply chain. Then, this paper performs a numerical simulation, discusses the existence of the equilibrium analytical solutions to satisfy the supply chain coordination conditions and analyzes the optimal contract parameters’ variation characteristics and their interaction relationship.

Findings

The authors find that the expected profits of the parties in the hybrid power supply chain are concave about their decision variables in each decision-making mode. The revenue-sharing contract can realize the Pareto improvement for all parties’ interest of the supply chain, and promote the grid-connected quantity of green power effectively. The grid-connected price will reduce with the increase of revenue-sharing ratio, and this impact will be greater on the renewable energy power. The greater the competition intensity in power supply side, the smaller the revenue-sharing ratio from power purchaser. And for the same rangeability of competition intensity, the revenue-sharing ratio reduction of thermal power is less than that of the green power. The more the government subsidizing green power supplier, the smaller the retailer sharing revenue to it.

Practical implications

Facing with the dual uncertainties of green power output and market demand and the competition of thermal power in hybrid electricity market, this study can provide a path to solve the problem of renewable energy power grid-connecting. The results can help green power become competitive in hybrid power market under loose regulations. And this paper suggests that the government subsidy policy should be more tactical in order to implement a revenue-sharing contract of the power supply chain.

Originality/value

This paper studies the renewable energy electricity grid-connected pricing under the uncertainty of power supply and market demand, and compares different contract decision-making strategies in order to achieve the power supply chain coordination. The paper also analyzes the competition between thermal power and renewable energy power in hybrid electricity market.

Details

Industrial Management & Data Systems, vol. 119 no. 9
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 23 November 2018

Qiang Wei, Sheng Li, Xinyu Gou and Baofeng Huo

The rapid development of e-commerce has caused not only explosive growth of the express delivery industry, but also ever-greater operational pressures. Models from the…

Abstract

Purpose

The rapid development of e-commerce has caused not only explosive growth of the express delivery industry, but also ever-greater operational pressures. Models from the sharing economy may provide new ideas for operational improvement. The purpose of this paper is to consider an optimization method that reduces costs and increases efficiency. The proposed method enables a shared distribution system based on revenue-sharing and cooperative investment contracts.

Design/methodology/approach

The authors design a two-echelon supply chain (SC) of the shared distribution system with one shared distribution company and N express companies. In this SC, the express companies provide only inter-city transportation, and they outsource internal-city transportation to a shared distribution company. This distribution system differs from that of the traditional express delivery industry. The traditional system of delivery requires large numbers of empty trips (with no load to deliver), because the operating mode of urban distribution has been the franchise. To offer greater efficiency and performance, the authors introduce the sharing economy mode of express delivery. The authors examine the potential of a joint optimal decision-making strategy that involves revenue-sharing and cooperative investment contracts based on an order flow proportion (OFP) and a revenue-sharing factor (RSF). In this shared distribution system, the most important innovation is that all of the express companies jointly invest in and establish a shared distribution company based on OFP or RSF principles.

Findings

The profitability of an SC with revenue-sharing contracts based on an OFP system is much higher than that of a decentralized SC, and it is very close to the profitability of a centralized SC. In SCs with revenue-sharing contracts that are based on RSFs, there are many possible combinations of RSFs that can increase the overall profitability. The analyses indicate that the OFP system offers the best solution in designing revenue-sharing contracts based on RSFs.

Practical implications

This study indicates that revenue-sharing contracts based on both OFP and RSF principles can increase overall SC returns by 0.21 to 0.44 percent. In sum total, this improvement could mean a 0.84 to 1.76bn Yuan increase in revenues for the 400+ bn-Yuan express delivery industry.

Originality/value

The authors find that a combination of equity investment and SC coordination contracts makes the cooperation between SC members much more stable. Through this kind of shared distribution system, the scale of economy can further reduce the costs and increase the efficiency of the express delivery industry.

Details

Industrial Management & Data Systems, vol. 119 no. 3
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 20 June 2008

Zhong Yao, Stephen C.H. Leung and K.K. Lai

The purpose of this paper is to numerically analyze the coordinating mechanism of the revenue‐sharing contract in newsvendor products' supply chain. The contract considers…

2857

Abstract

Purpose

The purpose of this paper is to numerically analyze the coordinating mechanism of the revenue‐sharing contract in newsvendor products' supply chain. The contract considers stochastic and price‐dependent demand.

Design/methodology/approach

The paper presents an analytical model for supply chain contracts and then uses numerical methods with the Stackelberg game to identify the contracts' properties.

Findings

Comparing the revenue‐sharing contract with the price‐only contract, the paper finds that a revenue‐sharing contract does improve supply chain performance. However, the benefits earned by the revenue‐sharing contract differ among the supply chain partners under the impact of demand variability and price‐sensitivity factors. Specifically, the manufacturer will earn a greater share in channel profit in the revenue‐sharing contract than in case of a price‐only contract. Also, the incentive by revenue‐sharing contract could not lead to Pareto improvement. In other words, the retailer's profit in revenue‐sharing contract might be lower than that in price‐only contract.

Research limitations/implications

Management should note that there are additional administrative costs needed to monitor the revenue‐sharing contract. Incorporating these costs into models will yield more insight into the problems. Also, the retailer has more accurate market information due to the proximity to the customers that will lead to a different game mode.

Practical implications

Management such as airlines, hotel, video rental, etc. can adopt this kind of contracts to manage their retailers to obtain the higher channel performance. But they should be careful selecting the revenue sharing proportion. The research limitations also give some suggestion for practical reference.

Originality/value

Many studies have shown that the revenue‐sharing contract can obtain a higher channel performance. However, little attention has been noted that the fraction of shared revenue has a significant impact on the channel performance. To apply this form of incentive in practice, managements should consider the impact of the fraction of shared revenue in the revenue‐sharing contract on supply chain performance. This paper considers these issues.

Details

Supply Chain Management: An International Journal, vol. 13 no. 4
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 2 January 2019

Qinqin Li, Yujie Xiao, Yuzhuo Qiu, Xiaoling Xu and Caichun Chai

The purpose of this paper is to examine the impact of carbon permit allocation rules (grandfathering mechanism and benchmarking mechanism) on incentive contracts provided…

Abstract

Purpose

The purpose of this paper is to examine the impact of carbon permit allocation rules (grandfathering mechanism and benchmarking mechanism) on incentive contracts provided by the retailer to encourage the manufacturer to invest more in reducing carbon emissions.

Design/methodology/approach

The authors consider a two-echelon supply chain in which the retailer offers three contracts (wholesale price contract, cost-sharing contract and revenue-sharing contract) to the manufacturer. Based on the two carbon permit allocation rules, i.e. grandfathering mechanism and benchmarking mechanism, six scenarios are examined. The optimal price and carbon emission reduction decisions and members’ equilibrium profits under six scenarios are analyzed and compared.

Findings

The results suggest that the revenue-sharing contract can more effectively stimulate the manufacturer to reduce carbon emissions compared to the cost-sharing contract. The cost-sharing contract can help to achieve the highest environmental performance, whereas the implementation of revenue-sharing contract can attain the highest social welfare. The benchmarking mechanism is more effective for the government to prompt the manufacturer to produce low-carbon products than the grandfathering mechanism. Although a loose carbon policy can expand the total emissions, it can improve the social welfare.

Practical implications

These results can provide operational insights for the retailer in how to use incentive contract to encourage the manufacturer to curb carbon emissions and offer managerial insights for the government to make policy decisions on carbon permit allocation rules.

Originality/value

This paper contributes to the literature regarding to firm’s carbon emissions reduction decisions under cap-and-trade policy and highlights the importance of carbon permit allocation methods in curbing carbon emissions.

Details

Kybernetes, vol. 49 no. 4
Type: Research Article
ISSN: 0368-492X

Keywords

Open Access
Article
Publication date: 16 October 2017

Bo Yan, Xiao-hua Wu, Bing Ye and Yong-wang Zhang

The Internet of Things (IoT) is used in the fresh agricultural product (FAP) supply chain, which can be coordinated through a revenue-sharing contract. The purpose of this…

5761

Abstract

Purpose

The Internet of Things (IoT) is used in the fresh agricultural product (FAP) supply chain, which can be coordinated through a revenue-sharing contract. The purpose of this paper is to make the three-level supply chain coordinate in IoT by considering the influence of FAP on market demand and costs of controlling freshness on the road.

Design/methodology/approach

A three-level FAP supply chain that comprises a manufacturer, distributor, and retailer in IoT is regarded as the research object. This study improves the revenue-sharing contract, determines the optimal solution when the supply chain achieves maximum profit in three types of decision-making situations, and develops the profit distribution model based on the improved revenue-sharing contract to coordinate the supply chain.

Findings

The improved revenue-sharing contract can coordinate the FAP supply chain that comprises a manufacturer, distributor, and retailer in IoT, as well as benefit all enterprises in the supply chain.

Practical implications

Resource utilization rate can be improved after coordinating the entire supply chain. Moreover, loss in the circulation process is reduced, and the circulation efficiency of FAPs is improved because of the application of IoT. The validity of the model is verified through a case analysis.

Originality/value

This study is different from other research in terms of the combination of supply chain coordination, FAPs, and radio frequency identification application in IoT.

Details

Industrial Management & Data Systems, vol. 117 no. 9
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 11 June 2019

Vinay Ramani, Sanjeev Swami and Debabrata Ghosh

The purpose of this paper is to study the impact of collaboration between supply chain entities in a dyadic setting where the manufacturer invests in greening and…

Abstract

Purpose

The purpose of this paper is to study the impact of collaboration between supply chain entities in a dyadic setting where the manufacturer invests in greening and technology adoption effort leading to a price premium effect for the supply chain players.

Design/methodology/approach

The paper uses game theoretic approach to analyze the model of inter-firm interaction in a vertical channel setting consisting of a retailer and manufacturer. The paper studies strategic decisions of the channel members in a decentralized and centralized structure and extends this to decision making under contractual settings.

Findings

A two-part tariff completely coordinates the green supply chain, while a cost sharing and revenue sharing contract only achieve partial coordination. Nevertheless, a cost sharing, as well as a revenue sharing contract, increases the greening and technological adoption effort by the manufacturer while yielding the supply chain members a strictly larger profit. Furthermore, a revenue sharing contract in comparison to a cost sharing contract, leads to a larger greening and technological adoption effort by the manufacturer, lower wholesale and retail prices and a strictly larger profit for both the manufacturer and the retailer.

Originality/value

This paper contributes to the green supply chain pricing, technology and contract literature considering strategic interactions between a manufacturer and retailer in a supply chain under price premium effects of greening activities and technological advancements.

Details

Benchmarking: An International Journal, vol. 28 no. 5
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 10 April 2017

Qi Zheng, Petros Ieromonachou, Tijun Fan and Li Zhou

Fresh product loss rates in supply chain operations are particularly high due to the nature of perishable products. The purpose of this paper is to maximize profit through…

1597

Abstract

Purpose

Fresh product loss rates in supply chain operations are particularly high due to the nature of perishable products. The purpose of this paper is to maximize profit through the contract between retailer and supplier. The optimized prices for the retailer and the supplier, taking the fresh-keeping effort into consideration, are derived.

Design/methodology/approach

To address this issue, the authors consider a two-echelon supply chain consisting of a retailer and a supplier (i.e. wholesaler) for two scenarios: centralized and decentralized decision making. The authors start from investigating the optimal decision in the centralized supply chain and then comparing the results with those of the decentralized decision. Meanwhile, a fresh-keeping cost-sharing contract and a fresh-keeping cost- and revenue-sharing contract are designed. Numerical examples are provided, and managerial insights are discussed at the end.

Findings

The results show that the centralized decision is more profitable than the decentralized decision; a fresh product supply chain (FPSC) can only be coordinated through a fresh-keeping cost- and revenue-sharing contract; the optimal retail price, wholesale price and fresh-keeping effort can all be achieved; and the profit of a FPSC is positively related to consumers’ sensitivity to freshness and negatively correlated with their sensitivity to price.

Research limitations/implications

This research is based on the assumption that demand is relatively stable. It has not addressed when demand is stochastic.

Practical implications

The findings would be useful for managers in fresh food sector in terms of how to deal with suppliers in order to maximize total profit while also provide freshest food to the customers.

Originality/value

Few studies have considered fresh-keeping effort as a decision variable in the modelling of supply chain. In this paper, a mathematical model for the fresh-keeping effort and for price decisions in a supply chain is developed. In particular, fresh-keeping cost-sharing contract and revenue-sharing contract are examined simultaneously in the study of the supply chain coordination problem.

Details

Industrial Management & Data Systems, vol. 117 no. 3
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 2 October 2017

Honglin Yang, Erbao Cao, Kevin Jiang Lu and Guoqing Zhang

The aim of this paper is to investigate the effect of information asymmetry on revenue sharing contracts and performance in a dual-channel supply chain. First, the authors…

Abstract

Purpose

The aim of this paper is to investigate the effect of information asymmetry on revenue sharing contracts and performance in a dual-channel supply chain. First, the authors model the optimum revenue sharing contract in a dual-channel supply chain under both the full information case and the asymmetric information case. Second, they contrast the optimal decisions of a dual-channel supply chain between the full information case and the asymmetric information case. Third, they explore the impact of asymmetric cost information on the performance of a dual-channel supply chain and investigate the information value.

Design/methodology/approach

The authors present two main issues associated with revenue sharing contracts to alleviate manufacturer–retailer conflicts in a dual-channel supply chain. In the first issue, a revenue sharing contract is designed in a dual-channel supply chain under asymmetric cost information conditions, based on the principal-agent model. In the second issue, an optimal revenue sharing contract under full information conditions, based on the Stackelberg game is discussed. They explore the impact of asymmetric cost information on the performance of a dual-channel supply chain and investigate the information value based on comparative static analysis.

Findings

First, the direct sale price is unchanged and independent of the retailer’s cost construct, but the wholesale price increases and the retail sale price does not decrease under asymmetric cost information. The information asymmetry leads to higher direct sale demand and lower retail sale demand. Second, information asymmetry is beneficial for the retailer, but imposes inefficiency on the manufacturer and the whole supply chain. Third, the performance of the dual-channel supply chain is improved if the retailer’s cost information is shared and the dual-channel supply chain reaches coordination. The retailer is willing to share its cost information if the lump sum side payment that the manufacturer offers can make up the retailer’s reduced profit due to sharing this information.

Originality/value

The authors proposed a contract menus design model in a dual-channel supply chain. They examine how information asymmetry affects optimal policies and performance. They compared the optimal policies under symmetric information and asymmetric information. Conditions under which the partners prefer sharing information are identified. They quantified the information value from the points of partners and the whole system.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 8
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 12 February 2018

Lili Yu and Juzhi Zhang

This paper aims to investigate the effect of hunger marketing strategy on supply chain pricing and coordinate the supply chain through a two-period pricing model.

1202

Abstract

Purpose

This paper aims to investigate the effect of hunger marketing strategy on supply chain pricing and coordinate the supply chain through a two-period pricing model.

Design/methodology/approach

According to a two-period pricing model with hunger marketing strategy, the authors investigate two different scenarios: the centralized system and the decentralized system. The optimal or equilibrium solutions are calculated and compared in two different scenarios.

Findings

First, the hunger marketing strategy can improve the total profit of the supply chain by increasing the retail price and the total sales volume. Second, the hunger marketing strategy aggravates the double marginalization effect. Third, the authors introduce the revenue-sharing contract and characterize the conditions under which the revenue-sharing contract can coordinate the supply chain and be accepted by both the members.

Research limitations/implications

First, the authors suppose the same retail price in two periods for mathematic simplicity; second, they do not consider the discount factor for the revenue during the two periods.

Practical implications

This paper provides a guide to policymakers in terms of product pricing and supply rate.

Originality/value

First, the authors suppose the same retail price in two periods for mathematic simplicity; second, they do not consider the discount factor for the revenue during the two periods.

Details

Journal of Modelling in Management, vol. 13 no. 1
Type: Research Article
ISSN: 1746-5664

Keywords

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