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.

Pricing contract design of a multi-supplier-multi-retailer supply chain in hybrid electricity market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zhenning Zhu ◽  
Lingcheng Kong ◽  
Gulizhaer Aisaiti ◽  
Mingzhen Song ◽  
Zefeng Mi
Keyword(s):  
Supply Chain ◽  
Renewable Energy ◽  
Power Supply ◽  
Electricity Market ◽  
Power Grid ◽  
Market Demand ◽  
Competition Intensity ◽  
Content Type ◽  
Hybrid Power ◽  
Grid Connection

PurposeIn 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/approachConsidering 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.FindingsRevenue-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/valueOn 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.

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.

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.

Revenue Sharing Contract of Green Supply Chain under Manufacturer Risk-Aversion

2014 ◽  
Vol 697 ◽  
pp. 482-487
Author(s):  
Shi Ying Jiang ◽  
Chun Yan Ma
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Risk Aversion ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Green Supply Chain ◽  
Game Model ◽  
Product Price ◽  
Revenue Sharing Contract

Background on two stages green supply chain consisting of a manufacturer and a retailer, considering the degree of risk aversion and product greenness, consumer preferences and other factors, the centralized decision-making game model and manufacturer-leading Stackelberg game model are established.Then two game models are compared. The interaction of product greenness, wholesale price, product price,and risk aversion utility for manufacturers and retailers are also disscussed. Finally, the revenue sharing contract is applied to coordinate the green supply chain . The results show that:(1) In the centralized decision-making model, there is a critical value of the product green degree; (2)In manufacturer-leading Stackelberg game model, the higher the green degree of the product, the higher the manufacturer's wholesale price,and the wholesale price increases as risk aversion degree of manufacturers improves;(3)The revenue sharing contract can coordinate this type of green supply chain under manufacturers risk-averse.

scholarly journals A Green Supply-Chain Decision Model for Energy-Saving Products That Accounts for Government Subsidies

2019 ◽  
Vol 11 (8) ◽  
pp. 2209 ◽  
Author(s):  
Jian Xue ◽  
Ruifeng Gong ◽  
Laijun Zhao ◽  
Xiaoqing Ji ◽  
Yan Xu
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Supply Chain ◽  
Energy Conservation ◽  
Social Welfare ◽  
Energy Saving ◽  
Revenue Sharing ◽  
Green Supply Chain ◽  
Market Demand ◽  
Government Subsidies

Government subsidies are a common policy adopted to promote energy conservation and emission reduction. The decision-making that occurs within the green supply chain for energy-saving products under government subsidies is an area of great academic interest and game theory is becoming a popular tool in such research. In this paper, we examined centralized and decentralized decision-making models for the green supply chain and a coordinated decision-making model for revenue-sharing contracts based on game theory. We studied the effects of government subsidies on retail prices, energy conservation levels, market demand, supply chain profits, and social welfare for energy-saving products. We then compared the effectiveness of the three models using a numerical example. Our results revealed the range of contract parameters for which manufacturer and retailer profits increase. Our results show that government subsidies can significantly improve social welfare and promote the improvement of energy-saving products. Centralized decision-making generates higher profits than decentralized decisions and government subsidies were positively correlated with the level of energy conservation, product prices, and market demand. Revenue sharing contract coordination decisions can coordinate the supply chain and achieve the same effect as centralized decisions.

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 Coordinating Three-Level Supply Chain under Disruptions Using Revenue-Sharing Contract with Effort Dependent Demand

2016 ◽  
Vol 2016 ◽  
pp. 1-10 ◽  
Author(s):  
Qinghua Pang ◽  
Yanli Hou ◽  
Yifei Lv
Keyword(s):  
Supply Chain ◽  
Revenue Sharing ◽  
Optimal Contract ◽  
Market Demand ◽  
Numerical Examples ◽  
Revenue Sharing Contract ◽  
Special Case ◽  
Additive Form ◽  
Dependent Demand

Considering that the market demand is stochastic and dependent on effort, this essay shows that the benchmark revenue-sharing contract could not coordinate a three-level supply chain consisting of one manufacturer, one distributor, and one retailer. By assuming that the retailer himself bears the effort cost, coordination is achieved by implementing revenue-sharing contract based on rebate and penalty policy in one transaction or two transactions of three-level supply chain, and the former is a special case of the latter. When the disruptions induce the changes of the market demand, the revenue-sharing contract could not coordinate the supply chain. To deal with the problem, this essay introduces two forms of improved revenue-sharing contracts which have antidisruption ability. The model of improved revenue-sharing contract is optimized when the market demand is in the additive form with effort dependent demand. Formulas are given to calculate the optimal contract parameters. Finally, this essay demonstrates the accuracy of the model of improved revenue-sharing contract with the help of numerical examples.

scholarly journals Three-Level Supply Chain Coordination under Disruptions Based on Revenue-Sharing Contract with Price Dependent Demand

2014 ◽  
Vol 2014 ◽  
pp. 1-11 ◽  
Author(s):  
Qinghua Pang ◽  
Yuer Chen ◽  
Yulu Hu
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Optimal Contract ◽  
Market Demand ◽  
Revenue Sharing Contract ◽  
Normal Environment ◽  
Contract Form ◽  
Additive Form ◽  
Dependent Demand

Considering the market demand is stochastic and dependent on price, this paper shows that the revenue-sharing contract could coordinate a three-level supply chain consisting of one manufacturer, one distributor, and one retailer under normal environment. However, the original revenue-sharing contract cannot coordinate the supply chain under disruptions in circumstances of certain incidents leading to significant changes in market demand and causing additional deviation costs. To solve the problem, this essay introduces two improved forms of revenue-sharing contract: a mixed contract form based on a quantity discount policy and a pure form, which are characterized by antidisruption ability. The model of improved revenue-sharing contract is optimized when the market demand is in the additive form or in the multiplicative form with price dependent demand. Formulas are given to calculate the optimal contract parameters. Finally, this essay demonstrates the accuracy of the model of improved revenue-sharing contract with the help of numerical examples.

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.

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