Revenue sharing contract coordination of wind turbine order policy and aftermarket service based on joint effort

2017 ◽  
Vol 117 (2) ◽  
pp. 320-345 ◽  
Author(s):  
Ling Liang ◽  
Jiaping Xie ◽  
Luhao Liu ◽  
Yu Xia
Keyword(s):  
Supply Chain ◽  
Wind Turbine ◽  
Wind Power ◽  
Wind Farm ◽  
Revenue Sharing ◽  
Content Type ◽  
Effort Level ◽  
Service Chain ◽  
Revenue Sharing Contract ◽  
Maintenance Service

Purpose The purpose of this paper is to discuss how wind farms attract wind turbine manufacturers to get involved in wind turbines’ maintenance service with revenue sharing contract of bundled service under which the background of operation and maintenance (O&M) aftermarket of wind turbine exists. The authors also try to extend the results to the application of product plus service business mode on large-scale equipment O&M service. At present, Chinese wind power industry is suffering from production capacity redundancy. The profit levels for both wind farm and wind turbine manufacturers are relatively low. It is significant for Chinese wind power industry development to coordinate the supply chain of wind power in order to reduce O&M costs and increase revenues. Design/methodology/approach The present paper discusses product plus aftermarket service contract design on the background of closed-loop product service chain and uncertain equipment demand using revenue sharing contract model. Findings If centralized decision making is assumed, the authors find that the wind turbine order increases as the aftermarket service effort level and aftermarket service profit increase; aftermarket service effort level is positively correlative to the service efficiency. On the other hand, if decentralized decision making is assumed, the wind turbine order increases as share of the aftermarket service chain by manufacturer to wind farm increases and share of product supply chain by wind farm to manufacturer decreases. The optimal effort level of wind farm increases as the share of aftermarket service chain increases while the optimal effort level of the manufacturer is a concave function of share of aftermarket service chain if service quality linear correlates with effort level. Meanwhile, the authors find that the revenues of the product supply chain and aftermarket service chain have a concave relationship. This relationship is not affected by the format of relationship between service quality and effort level (linear or exponential). Practical implications The results could potentially be used to provide the wind turbine manufacturer with a greater profit space and satisfy wind farm’s equipment maintenance demand at the same time. It can also guide the practice of revenue sharing in the aftermarket service and manufacturing servitization. Originality/value In this model, the authors assumed that both the forward revenue sharing of power generation by wind farm to manufacturer and the backward revenue sharing of maintenance service by the manufacturer to wind farm exist in closed-loop product service chain. Then the authors discussed channel coordination of such cross-revenue sharing contract.

The optimization of pricing strategy for the wind power equipment aftermarket service

2019 ◽  
Vol 119 (3) ◽  
pp. 521-546 ◽  
Author(s):  
Lingcheng Kong ◽  
Ling Liang ◽  
Jianhong Xu ◽  
Weisi Zhang ◽  
Weijun Zhu
Keyword(s):  
Power Generation ◽  
Wind Turbine ◽  
Wind Farm ◽  
Wind Farms ◽  
Pricing Policy ◽  
Content Type ◽  
Effort Level ◽  
Service Pricing ◽  
Optimal Service ◽  
Aftermarket Services

Purpose Although the wind power industry has been booming in China during the last decade, the development of wind turbine aftermarket service is still lagging behind, which seriously affects the operational efficiency of wind farms. If wind turbine manufacturers get involved in the aftermarket, the service pricing policy will impact the profits of both the manufacturer and the wind farm. Therefore, it is necessary to discuss an optimal service pricing strategy in the wind turbine aftermarket and design a method to improve electricity generation efficiency through service contract design. The paper aims to discuss these issues. Design/methodology/approach In order to decide the maintenance quantity and channel effort level, the authors design a normal Stackelberg game and an efficiency value-added revenue-sharing contract and discuss two kinds of revenue increment sharing models under situations, in which the supply chain’s leaders are the wind farm and the wind turbine manufacturer, respectively. Findings The results show that in either case, there exist optimal power generation revenue-sharing ratios that can maximize profit. At the same time, the authors outline an optimal service pricing policy, maintenance demand policy and channel service effort-level policy. The results summarize the influences of wind aftermarket services on wind farms’ and wind turbine manufacturers’ profit, which provides managerial insights into the process of manufacturing servitization. Practical implications The manufacturer’s channel effort level will influence the power generation increments very much, so the authors have developed a mechanism to stimulate the manufacturer improving the efficiency of aftermarket services. Originality/value Taking the power generation increment revenue as the profit increment function, the authors discuss the influence of service price on the profit increment of the wind farm and the wind turbine manufacturer and also consider the influence of service price on the wind farms maintenance quantity and wind turbine manufacturers channel effort level.

A two-period pricing model with hunger marketing strategy

2018 ◽  
Vol 13 (1) ◽  
pp. 81-100 ◽  
Author(s):  
Lili Yu ◽  
Juzhi Zhang
Keyword(s):  
Supply Chain ◽  
Marketing Strategy ◽  
Revenue Sharing ◽  
Retail Price ◽  
Discount Factor ◽  
Pricing Model ◽  
Equilibrium Solutions ◽  
Content Type ◽  
Decentralized System ◽  
Revenue Sharing Contract

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.

scholarly journals Three-level supply chain coordination of fresh agricultural products in the Internet of Things

2017 ◽  
Vol 117 (9) ◽  
pp. 1842-1865 ◽  
Author(s):  
Bo Yan ◽  
Xiao-hua Wu ◽  
Bing Ye ◽  
Yong-wang Zhang
Keyword(s):  
Supply Chain ◽  
Internet Of Things ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Agricultural Product ◽  
The Internet ◽  
Market Demand ◽  
Content Type ◽  
Revenue Sharing Contract ◽  
The Internet Of Things

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.

scholarly journals Supply chain contracting coordination for fresh products with fresh-keeping effort

2017 ◽  
Vol 117 (3) ◽  
pp. 538-559 ◽  
Author(s):  
Qi Zheng ◽  
Petros Ieromonachou ◽  
Tijun Fan ◽  
Li Zhou
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Optimal Decision ◽  
Decision Variable ◽  
Coordination Problem ◽  
Content Type ◽  
Revenue Sharing Contract ◽  
Decentralized Decision Making

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.

Replenishment decision and coordination contract in cluster supply chain

2019 ◽  
Vol 119 (6) ◽  
pp. 1374-1399 ◽  
Author(s):  
Bo Yan ◽  
Xiaoxu Chen ◽  
Yanping Liu ◽  
Chang Xia
Keyword(s):  
Supply Chain ◽  
Transportation Cost ◽  
Revenue Sharing ◽  
Third Party ◽  
Transport Cost ◽  
Content Type ◽  
Cost Factor ◽  
Revenue Sharing Contract ◽  
Coordination Contract ◽  
Milk Run

Purpose The cluster supply chain is widely used in the professional towns in China, and improves the competitiveness of small and medium enterprises through integrating the supply chain with the industrial cluster. The paper aims to discuss this issue. Design/methodology/approach This paper studies a cluster supply chain under vendor managed inventory (VMI) system, which includes vendors, third-party logistics (TPL) enterprises and retail enterprises, and aims to study the replenishment decisions and coordination contracts in the supply chain. The economic order quantity model is applied to analyze the influence of marginal transportation cost factor under two replenishment modes – direct delivery and milk-run delivery, in order to find out the optimal replenishment decisions corresponding to different marginal transportation cost factors. And then, the revenue sharing contract is used to identify the change of profits of enterprises in the supply chain before and after the coordination contract. Findings It is concluded that the marginal transportation cost factor is an important factor influencing the replenishment decision especially in milk-run delivery, and the introduction of the revenue sharing contract can improve the revenue in the supply chain. Originality/value This is the first study that explores the relationship between a single transport cost and a single transport batch of cluster supply chain in centralized VMI & TPL system. The conclusions of the study have certain theoretical significance for the decision making and coordination of cluster supply chain.

Price premium effect, supply contracts and strategic decision making under environmental considerations

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vinay Ramani ◽  
Sanjeev Swami ◽  
Debabrata Ghosh
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Cost Sharing ◽  
Revenue Sharing ◽  
Green Supply Chain ◽  
Price Premium ◽  
Theoretic Approach ◽  
Content Type ◽  
Technological Adoption ◽  
Revenue Sharing Contract

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.

scholarly journals Contracting Fashion Products Supply Chains When Demand Is Dependent on Price and Sales Effort

2015 ◽  
Vol 2015 ◽  
pp. 1-7 ◽  
Author(s):  
Ying Wei ◽  
Liyang Xiong
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Two Stage ◽  
Effort Level ◽  
Optimal Decisions ◽  
Fashion Products ◽  
Revenue Sharing Contract ◽  
Investment Level

This paper investigates optimal decisions in a two-stage fashion product supply chain under two specified contracts: revenue-sharing contract and wholesale price contract, where demand is dependent on retailing price and sales effort level. Optimal decisions and related profits are analyzed and further compared among the cases where the effort investment fee is determined and undertaken either by the retailer or the manufacturer. Results reveal that if the retailer determines the effort investment level, she would be better off under the wholesale price contract and would invest more effort. However, if the manufacturer determines the effort level, he prefers to the revenue-sharing contract most likely if both parties agree on consignment.

Contract coordination optimization of a multi-power supplier-single dominant grid supply chain in hybrid electricity market

2019 ◽  
Vol 119 (9) ◽  
pp. 1861-1887
Author(s):  
Zhenning Zhu ◽  
Lingcheng Kong ◽  
Jiaping Xie ◽  
Jing Li ◽  
Bing Cao
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Renewable Energy ◽  
Power Supply ◽  
Electricity Market ◽  
Revenue Sharing ◽  
Market Demand ◽  
Content Type ◽  
Revenue Sharing Contract ◽  
Green Power

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.

Implications for pure profit, environmental impact and social welfare in a socially responsible supply chain

Kybernetes ◽  
2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zhichao Zhang ◽  
Haiyan Xu ◽  
Zhi Liu ◽  
Yinhai Fang
Keyword(s):  
Supply Chain ◽  
Environmental Impact ◽  
Social Welfare ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Socially Responsible ◽  
Content Type ◽  
Csr Strategies ◽  
Revenue Sharing Contract ◽  
The Social

Purpose Members in a supply chain account for corporate social responsibility (CSR) in different ways. This paper considers a socially responsible supply chain in which the manufacturer innovates in a sustainable product while the retailer exhibits CSR concerns. This paper aims to investigate how socially responsible behavior, namely, sustainable innovations or CSR concerns, affects the pure profit, environmental impact and social welfare, in such a socially responsible supply chain. Design/methodology/approach This paper first constructs an integrated case as a benchmark and then develops a Manufacturer-Stackelberg game in a decentralized scenario. The pure profit, environmental impact and social welfare are confirmed and analyzed in centralized and decentralized cases. Moreover, two unique coordinating contracts, i.e. wholesale price discount contract and revenue-sharing contract, are used in this socially responsible supply chain. Findings Analytical analysis shows that, under certain conditions, the optimal CSR strategies hold for maximizing pure channel profit, minimizing environmental impact and maximizing social welfare. Whether the performance in a centralized case outnumbers that in a decentralized case depends on the CSR concerns level and environment-friendly degree of the product. In addition, it is found that a wholesale price discount contract is better for the retailer whereas a revenue-sharing contract is better for the manufacturer in pure profit to improve coordinating efficiency. Practical implications These results can offer managerial implications to the socially responsible supply chain in terms of pricing decisions, CSR strategies and sustainability innovations. Specifically, under certain conditions, placing more CSR concerns level increases pure channel profit and the social welfare. A balance between the pure profit and the social welfare is hereby achieved for the two socially responsible individuals by designing a proper contract. Originality/value To the best of the authors’ knowledge, this paper is among the first studies so far to combine the CSR concerns strategy and sustainability innovation into a socially responsible supply chain.

Sign in / Sign up

Export Citation Format

Share Document