A bilevel game model for ascertaining competitive target prices for a buyer in negotiation with multiple suppliers

In this paper, a decision-support is developed for a strategic problem of identifying target prices for the single buyer to negotiate with multiple suppliers to achieve common goal of maintaining sustained business environment. For this purpose, oligopolistic-competitive equilibrium prices of suppliers are suggested to be considered as target prices. The problem of identifying these prices is modeled as a multi-leader-single-follower bilevel programming problem involving linear constraints and bilinear objective functions. Herein, the multiple suppliers are considered leaders competing in a Nash game to maximize individual profits, and the buyer is a follower responding with demand-order allocations to minimize the total procurement-cost. Profit of each supplier is formulated on assessing respective operational cost to fulfill demand-orders by integrating aggregate-production-distribution-planning mechanism into the problem. A genetic-algorithm-based technique is designed in general for solving large-scale instances of the variant of bilevel programming problems with multiple leaders and single follower, and the same is applied to solve the modeled problem. The developed decision support is appropriately demonstrated on the data of a leading FMCG manufacturing firm, which manufactures goods through multiple sourcing.

Optimization of Multi-Period Rail Procurement Plan

Rail is one of the most expensive assets in railway infrastructure. Therefore, a well-prepared rail procurement plan could benefit the asset management. For the metro system in Taiwan, the rail procurement plan includes two major uncertainties, namely, currency rates and the global steel price. In this study, we propose deterministic and stochastic optimization models using a scenario-generation process to minimize the expected cost of the rail procurement plan. Results from the case studies demonstrate that the proposed models can successfully incorporate the uncertainties and obtain the optimal procurement plan. The sensitivity analysis on budget, storage capacity, and expiration period also provides the metro operator the best strategy to further lower the procurement cost. Adopting these models in rail procurement planning can improve the process and results of rail asset management.

Smart Charging of Electric Vehicles: An Innovative Business Model for Utility Firms

Problem definition: By providing an environmentally friendly alternative to traditional vehicles, electric vehicles will transform urban mobility, particularly in smart cities. In practice, after an electric vehicle is plugged in, the charging station completes charging as soon as possible. Given that the procurement cost of electricity and associated emissions vary significantly during a day, substantial savings can be achieved by smart charging—delaying charging until the cost is lower. In this paper, we study smart charging as an innovative business model for utility firms. Academic/practical relevance: Utility firms are already investing in charging stations, and they can achieve significant cost savings through smart charging. Methodology: We consider a mechanism design problem in which a utility firm first announces pairs of charging price and completion time. Then, each customer selects the pair that maximizes their utility. Given the selected completion times, the utility firm solves the optimal control problem of determining the charging schedule that minimizes the cost of charging under endogenous, time-varying electricity procurement cost. We assume that there are ample parking spots with chargers at the charging station. Results: We devise an intuitive and practically implementable policy for scheduling charging of electric vehicles under given completion times. We prove that this policy is optimal if all customers arrive at the station simultaneously. We also characterize the optimal pairs of charging price and completion time. By using real electricity demand and generation data from the largest electricity market in the United States, we find that cost and emissions savings from smart charging are approximately 20% and 15%, respectively, during a typical summer month. Managerial implications: In contrast to the current practice of charging vehicles without delay, we show that it is economically and environmentally beneficial to delay charging some vehicles and to set charging prices based on customers’ inconvenience cost of delays. We also find that most of the savings from implementing smart charging can be achieved during peak-demand days, highlighting the effectiveness of smart charging.

Coal blending selection for CFPP fuel with slagging fouling prediction and procurement cost calculation

Most coal-fired power plants in Indonesia use medium and low-rank coal due to coal availability in the domestic coal market. Because of technical and economic reasons, single coal as fuel is rarely used in coal-fired power plants. Therefore the coal blending method is used. Here, the most dominant technical requirement of a coal-fired power plant is the calorific value and potential of slagging and fouling. For this reason, a selection method that involves the technical aspect of coal and coal procurement cost is carried out. This study found that from 42 types of alternative coal blend made, 18 types fulfill the potential of slagging and fouling criteria. 12 type coal blends could be prioritized as the main alternative because they fulfilled all technical aspects and coal procurement costs. The conclusion obtained from this study is the completion of the search for alternative coal blends based on technical aspects, especially slagging and fouling and procurement cost, to effectively obtain blending priority. This method can be developed for different coal-fired power plant technology and operation condition.

Competition effects in EU external aid supply tenders funded with the Pre-accession and Neighbourhood instruments

This paper investigates empirically the competition effects on procurement costs for Europe Aid funded supply tenders in countries benefiting from the EU Pre-accession (IPA) and Neighbourhood (ENI) financial instruments. We use a dataset created and curated by us from supply tender dossiers published by Europe Aid. We determine a reference price for each procured lot based on the contracting authority’s requirement to establish a participation tender guarantee. We estimate controlling for potential endogeneity how the entry of new bidders in the tendering procedure affects procurement cost savings regarding this reference price. Finally, we discuss the expected additional savings in the management of these funds that may be obtained by further promoting competition.

The fringe or national brand manufacturer? An analysis of private label sourcing strategy

Purpose Private labels (PLs) have flowed into a wide range of categories and continue to expand especially in the mass channel. This paper aims to investigate the optimal PL sourcing strategy for a retailer and the impact of different sourcing strategies on the interaction between the upstream national brand (NB) manufacturer and the downstream retailer in a dyadic supply chain. Design/methodology/approach The authors develop a game-theoretic model that allows for vertical differentiation, where a retailer may choose between two types of PL sourcing strategies, i.e. fringe and NB manufacturer sourcing (NBMS). Under fringe manufacturer sourcing, the procurement cost is low but the PL recognition is also low. There exists a group of loyal consumers who only choose the NB. Under NBMS, the procurement cost is high but the loyal consumers may switch between two products. The channel members engage in a three-stage sequential game and the authors analyze the subgame perfect equilibrium by comparing the retailer’s best profits in the two subgames, i.e. fringe and NBMS. Findings The model shows that the retailer inclines to source from the NB manufacturer if the size of the loyal consumer group is relatively large, which provides a rationale for the existence of NBMS. It is also shown that the NB quality plays a positive role on NBMS. As the NB quality becomes higher, the retailer is more likely to procure the PL from the NB manufacturer instead of the fringe manufacturer. In addition, both channel members can be better off and more consumer surplus is provided by expanding the market under NBMS. Overall, sourcing from the NB manufacturer may improve channel profit, consumer welfare and social welfare. Originality/value The research contributes to explaining why the practice of sourcing PLs from NB manufacturers is widely adopted by retailers and can help retailers to make appropriate PL sourcing strategies under various circumstances.

National drug utilization trend of analgesics in China: an analysis of procurement data at 793 public hospitals from 2013 to 2018

Background This research aimed to evaluate analgesic utilization in public hospitals from 2013 to 2018 by analyzing the procurement data of 793 hospitals in China. Methods This study applied a retrospective observational study by using a database of the Chinese Pharmaceutical Association. The final dataset covers 30 provinces and municipalities in China, with a total of 793 public hospitals with complete procurement records of analgesics from January 2013 to December 2018. Procurement cost and dosage utilization were analyzed through descriptive trend statistics. Results From the procurement cost data, analgesics mainly consisted of opioids and non-steroidal anti-inflammatory drugs (NSAIDs), and the annual cost of both types of drugs increased yearly. The 6-year total cost of opioids accounts for 57% (17,800 million CNY), followed by the cost of NSAIDs accounts for 37% (11,400 million CNY). From 2013 to 2018, the annual cost of opioids nearly doubled, while the annual cost of NSAIDs doubled. The total 6-year clinical drug dosage of opioids accounts for 45% (675 million total defined daily dose (DDD)), and the NSAIDs account for 50% (747 million total DDD). From 2013 to 2018, the annual clinical drug dosage of NSAIDs increased by about 0.6 times. The annual clinical drug dosage of opioids has more than doubled. The top three opioid drugs were dezocine injection, remifentanil injection, and sufentanil injection solution. the top three NSAIDs were flurbiprofen injection, parecoxib injection, and celecoxib oral solution. Conclusion In China, analgesics utilization increased rapidly at public hospitals from 2013 to 2018. The utilization of analgesics was highly concentrated in NSAIDs and opioids. Within the two types of analgesics, the main analgesics utilization is also highly concentrated, with some highly risky analgesics. The rational guideline for the utilization of analgesics needs to be established with the support of real-world evidence.

SAP SYSTEM DRILLING BLOCK, CLASSIFICATION AND CREATION OF APPROPRIATE PLATFORMS

For companies wishing to monitor inspection and repair processes through the system, the module proposed by SAP as part of the enterprise source planning application is the SAP PM (Plant Maintance) module. The PM module manages all equipment faults and scheduled repairs. The module, which is integrated with procurement, cost accounting, financial and inventory management processes, can automatically order for technical needs, track your current and overhaul costs immediately, and prepare spare parts. Purchase and consumption operations related to the warehouse can be carried out through tracking and system. These are the functions of the SAP PM module: Planning and implementation of repair activities; Repair for backup; Repair for the purpose of correction; Repair of spare parts in case of critical development of material in the warehouse; Capacity and resource planning; Maintenance planning in addition to repairs and etc. Key words: SAP system, management, planning, drilling, repair, control, organization