scholarly journals The Impact of Cost Information Sharing on Procurement Contract Design

2020 ◽  
Vol 4 (2) ◽  
pp. 34
Author(s):  
Dong Chao ◽  
Yankang Chen
Keyword(s):  
Private Information ◽  
Demand Uncertainty ◽  
Original Problem ◽  
Contract Design ◽  
Model Parameters ◽  
Selling Price ◽  
Optimal Contract ◽  
Market Demand ◽  
Cost Information ◽  
The Impact

In this paper, we provides contract design mechanisms and analysis for manufacturers to manage decentralized supply chain. Suppose the manufacturer’s final product consists of components, each produced by a different supplier, and the manufacturer first purchases components from suppliers, then assembles them into final product and meet demands aftermarket realization. While supply chain’s internal cooperation always benefits both, suppliers are often reluctant to proactively share their own production cost structure, otherwise manufacturers may depress purchase prices, which may reduce supplier’s profit. Manufacturers on the other hand, prefers to be informed of true cost information in order to gain greater revenues. We takes manufacturer’s perspective and design the optimal contract menu for suppliers, both to enable suppliers to disclose private cost information and to maximize the benefits. We start by modeling the original problem and find that the original problem is a complex multidimensional optimization problem. We then examine the nature of the original problem solving and devise the solution algorithm to arrive at the optimal contract menu. This algorithm reduces the complexity of the original question from o(2 n ) to o(n). We further investigate the influence mechanism of model parameters on the results and find that when market demand increases or the selling price of the final product increases, value of private information increases significantly. However, if market demand uncertainty increases, the value of information may increase or decrease for both sides.

scholarly journals Dynamic Pricing in a Multi-Period Newsvendor Under Stochastic Price-Dependent Demand

Mathematics ◽  
2019 ◽  
Vol 7 (6) ◽  
pp. 520 ◽  
Author(s):  
Mehran Ullah ◽  
Irfanullah Khan ◽  
Biswajit Sarkar
Keyword(s):  
Dynamic Pricing ◽  
Demand Uncertainty ◽  
New Technologies ◽  
Rapid Development ◽  
Life Cycles ◽  
Selling Price ◽  
Market Demand ◽  
Newsvendor Model ◽  
Pricing Policy ◽  
Dependent Demand

The faster growth of technology stipulates the rapid development of new products; with the spread of new technologies old ones are outdated and their market demand declines sharply. The combined impact of demand uncertainty and short life-cycles complicate ordering and pricing decision of retailers that leads to a decrease in the profit. This study deals with the joint inventory and dynamic pricing policy for such products considering stochastic price-dependent demand. The aim is to develop a discount policy that enables the retailer to order more at the start of the selling season thus increase the profit and market share of the retailer. A multi-period newsvendor model is developed under the distribution-free approach and the optimal stocking quantities, unit selling price, and the discount percentage are obtained. The results show that the proposed discount policy increases the expected profit of the system. Additionally, the stocking quantity and the unit selling price also increases in the proposed discount policy. The robustness of the proposed model is illustrated with numerical examples and sensitivity analysis. Managerial insights are given to extract significant insights for the newsvendor model with discount policy.

scholarly journals Retailer’s Optimal Procurement Strategy under Supply Disruption and Stochastic Demand: Backup Sourcing or Simultaneous Sourcing

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Feng Lin ◽  
Jinzhao Shi ◽  
Peng Wu ◽  
Xingxuan Zhuo
Keyword(s):  
Demand Uncertainty ◽  
Wholesale Price ◽  
Stochastic Demand ◽  
Selling Price ◽  
Market Demand ◽  
Supply Disruption ◽  
Sourcing Strategies ◽  
Sourcing Strategy ◽  
Major Disruption ◽  
Better Than

Practically, supply disruption may lead production process to entirely halt (completely disrupted) or the output to differ in the order size (partially disrupted), which makes it more difficult for the retailer to satisfy stochastic market demand. Under the circumstance, the retailer is likely to procure products from two suppliers to effectively alleviate the demand-supply mismatches. Thus, under supply disruption and stochastic demand, this paper develops both backup sourcing and simultaneous sourcing (SS) strategies to analyze the retailer’s performance, where backup sourcing includes wholesale price priority (WPP) and supply reliability priority (SRP). Specifically, (1) under WPP, when the selling price is relatively lower (higher), the retailer is suggested to activate the reliable backup supplier after the realization of supply disruption (demand uncertainty). (2) Under SRP, two scenarios including minor disruption and major disruption can be identified, where the retailer’s order quantity from the reliable (unreliable) supplier under minor disruption scenario is more (less) than that under major. (3) Finally, this paper systematically compares the retailer’s preferences among WPP, SRP, and SS via theoretical results and numerical examples. That is, when the unreliable supplier is more likely to work normally or shortage cost (selling price) is relatively lower, the retailer prefers SPR regarding the unreliable supplier as backup sourcing due to its lower wholesale price and acceptable supply disruption. Otherwise, the retailer is inclined to WPP regarding the reliable supplier as backup sourcing for ensuring all market demand to be satisfied. In addition, unless the emergency prices of two suppliers are extremely higher, backup sourcing strategies could perform better than simultaneous sourcing strategy.

Uncertainty and Learning in International Joint Ventures

2012 ◽  
Vol 13 (1) ◽  
pp. 82-96
Author(s):  
Sangcheol Song
Keyword(s):  
Real Options ◽  
Joint Ventures ◽  
Demand Uncertainty ◽  
Investment Decision ◽  
Market Demand ◽  
Strategic Choices ◽  
Endogenous Uncertainty ◽  
The Real ◽  
The Impact

This study deals with the potential interplays between two uncertainty types (endogenous vs. exogenous uncertainty) and the role of learning in joint ventures (JVs) from the real options perspective. Regarding the role of learning under different types of uncertainty in JVs, one stream of real options research argues that learning has nothing to do with investment decision, while the other stream of research argues that investment decision is endogenous to learning. Considering that investment decisions embedded in JVs are affected by endogenous uncertainty (e.g., partner uncertainty) and exogenous uncertainty (e.g., demand uncertainty), this study suggests a conceptual model which takes into account the impact of endogenous uncertainty and firm’s learning of JV partners and market demand on real options value and exercise. Since almost all real options research focuses on exogenous uncertainty and less study learning under the real options framework, we add to this literature by touching upon possible roles of endogenous uncertainty and learning in driving firm’s strategic choices.

scholarly journals Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

2016 ◽  
Vol 2016 ◽  
pp. 1-13 ◽  
Author(s):  
Jinzhao Shi ◽  
Richard Y. K. Fung ◽  
Ju’e Guo
Keyword(s):  
Demand Uncertainty ◽  
Lower Price ◽  
Market Demand ◽  
High Demand ◽  
Pricing Policies ◽  
Pricing Decision ◽  
Optimal Ordering ◽  
The Impact ◽  
Uncertainty Level ◽  
Seasonal Products

With a stochastic price-dependent market demand, this paper investigates how demand uncertainty and capital constraint affect retailer’s integrated ordering and pricing policies towards seasonal products. The retailer with capital constraint is normalized to be with zero capital endowment while it can be financed by an external bank. The problems are studied under a low and high demand uncertainty scenario, respectively. Results show that when demand uncertainty level is relatively low, the retailer faced with demand uncertainty always sets a lower price than the riskless one, while its order quantity may be smaller or larger than the riskless retailer’s which depends on the level of market size. When adding a capital constraint, the retailer will strictly prefer a higher price but smaller quantity policy. However, in a high demand uncertainty scenario, the impacts are more intricate. The retailer faced with demand uncertainty will always order a larger quantity than the riskless one if demand uncertainty level is high enough (above a critical value), while the capital-constrained retailer is likely to set a lower price than the well-funded one when demand uncertainty level falls within a specific interval. Therefore, it can be further concluded that the impact of capital constraint on the retailer’s pricing decision can be influenced by different demand uncertainty levels.

scholarly journals Joint Dynamic Innovation and Pricing Decisions for the ODM Supply Chain

2021 ◽  
Vol 2021 ◽  
pp. 1-16
Author(s):  
Xin Wang
Keyword(s):  
Supply Chain ◽  
Optimal Strategies ◽  
Nash Bargaining ◽  
Quality Level ◽  
Selling Price ◽  
Market Demand ◽  
Original Design ◽  
Price Relationship ◽  
Design Innovation ◽  
The Impact

More and more companies in the supply chain choose the cooperation mode of original design and manufacturing (ODM). This paper investigates the problems of the joint design innovation and pricing strategies for the ODM supply chain by considering the impact of the dynamic of quality level on market demand. First, applying differential game theory, optimal strategies for design innovation, and pricing under decentralized and centralized scenarios are obtained. At the same time, the optimal strategies under the two decision-making scenarios are compared and analyzed. Second, a two-part tariff contract is introduced to coordinate the decentralized ODM supply chain. Finally, we further establish a Nash bargaining model among members of the supply chain. It is found that, in a centralized system, the design innovation efforts, product quality levels, and supply chain profits in the decentralized decision scenario are lower than that in the centralized decision scenario, but the selling price relationship in both scenarios depends on the parameters of the operating system.

scholarly journals Designing a Revenue Sharing Contract under Information Asymmetry

2020 ◽  
Vol 5 (5) ◽  
pp. 820-834
Author(s):  
Jaimini Bhattacharyya ◽  
Rahul R. Marathe ◽  
G. Srinivasan
Keyword(s):  
Supply Chain ◽  
Laboratory Experiment ◽  
Private Information ◽  
Simulation Experiment ◽  
Revenue Sharing ◽  
Market Demand ◽  
Order Quantity ◽  
Sales Revenue ◽  
Revenue Sharing Contract ◽  
The Impact

In a supply chain coordinated by a revenue sharing contract, under-reporting of sales revenue has been a common practice amongst retailers who always have private information about the market demand. In this article, we aim to design a mechanism to mitigate this problem. One may design a contract to elicit truthful information from the retailer while maximizing supplier’s payoff. However, we find that such contracts fail to coordinate the supply chain, when the market demand is high. Hence, we study an audit-based revenue sharing contract. First, we design a laboratory experiment to investigate the impact of retailer’s decisions on the subsequent choices made by the supplier. We find that the audit probability chosen by the supplier increases with the gap between retailer’s order quantity and the sales reported by the retailer. We follow this up with a simulation experiment which incorporates the findings of our laboratory experiment. Audit cost and the penalty announced by the supplier for not reporting true sales turned out to be important in making decisions for both the players. We also find the threshold auditing cost beyond which auditing is not economically viable for the supplier.

scholarly journals Risk-averse preferences in a dual-channel supply chain with trade credit and demand uncertainty

2020 ◽  
Author(s):  
Chong Zhang ◽  
Yaxian Wang ◽  
Lifan Zhang
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Demand Uncertainty ◽  
Trade Credit ◽  
Channel Structure ◽  
Coordination Mechanism ◽  
Risk Averse ◽  
Market Demand ◽  
Dual Channel ◽  
The Impact

Though it is an important means for enterprises to increase market demand and boost profits, trade credit can carry risks. Besides, risks also result from uncertain market demand. Decision-makers' attitude towards risk will influence the decisions of enterprises, so it is meaningful to study the impact of risk preference on supply chain performance. This paper explores the effect of risk-averse preferences of the manufacturer or retailer on their delayed payment periods decision and utility when the dual-channel structure is adopted. Customer demands are uncertain and depend on the delayed payment periods that the manufacturer and the retailer may offer to them. Mean-variance model is used to describe the risks due to uncertain demand, and establishes supply chain utility models under four decision-making situations (both are risk-neutral; only the retailer is risk-averse; only the manufacturer is risk-averse; both are risk-averse). According to our study, supply chain members with higher risk aversion are more inclined to prolong delayed payment period. The retailer’s risk aversion is adverse for her utility, but beneficial to the manufacturer’s utility, thus a new coordination mechanism is proposed to achieve coordinate when only the retailer is risk averse. We prove that the contract can effectively improve the utility of the whole supply chain. This paper conduces to enrich the emerging literature on relating risk aversion preferences to trade credit period decision and coordination behavior under dual-channel environment.

Estimating OLED Display Device Lifetime from pixel and screen brightness and its application

2019 ◽  
Vol 2019 (1) ◽  
pp. 331-338 ◽  
Author(s):  
Jérémie Gerhardt ◽  
Michael E. Miller ◽  
Hyunjin Yoo ◽  
Tara Akhavan
Keyword(s):  
Image Processing ◽  
Power Consumption ◽  
Model Parameters ◽  
Display Device ◽  
Image Processing Algorithm ◽  
Pixel Value ◽  
Device Lifetime ◽  
The Impact ◽  
Oled Display

In this paper we discuss a model to estimate the power consumption and lifetime (LT) of an OLED display based on its pixel value and the brightness setting of the screen (scbr). This model is used to illustrate the effect of OLED aging on display color characteristics. Model parameters are based on power consumption measurement of a given display for a number of pixel and scbr combinations. OLED LT is often given for the most stressful display operating situation, i.e. white image at maximum scbr, but having the ability to predict the LT for other configurations can be meaningful to estimate the impact and quality of new image processing algorithms. After explaining our model we present a use case to illustrate how we use it to evaluate the impact of an image processing algorithm for brightness adaptation.

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