The effect of contract methods on the lead time of a two-level photovoltaic supply chain: revenue-sharing vs. cost-sharing

Abstract

In the photovoltaic industry, a large number of photovoltaic power plants are not delivered according to construction schedules, resulting in considerable impacts on various stakeholders. Lead time has been identified as one of the key issues that urgently needs to be resolved. In this paper, we study a two-level photovoltaic supply chain consisting of the customer, the assembler, and the module manufacturer. The basic model, revenue-sharing model, and cost-sharing model are established to analyze the lead time of the module manufacturer and the assembler considering the decline of government subsidies. The results indicate that the cost-sharing contract can effectively control the lead time of the module manufacturer, but the revenue-sharing contract cannot exert this control. Furthermore, if the government subsidy drops from 0.0553 USD/kWh to 0.01195 USD/kWh, the production capacity will be reduced by approximately 37% due to the reduction in installed capacity, and the lead time will decrease by about 27%. For the module manufacturer, when the non-production capacity costs drop by 20%, the profit increases by about 58%. However, when the production capacity costs are reduced by 20%, the profit increases by only about 6%.