Buyback Price Research Articles

Price optimization in supply chain agreements: a comparative analysis of buyback and put option contracts for inventory risk management

AbstractThis paper aims to provide a model of a supply chain in the integrated system and obtain its optimal decision variables. The paper introduces buyback and put option contracts to reduce inventory risk. These contracts were compared in three different cases via a numerical analysis approach. In the first case, the holding cost (h) of a retailer for surplus orders in the buyback contract is equal to the option price (o) in the put option model. The relationship between exercise price (e) in the put option model and buyback price (b) in the buyback contract was obtained by comparing the optimal values in the models. This study found that the exercise price in the put option contract will be greater than the buyback price. Furthermore, it is more likely that the retailer gave more benefits under the buyback agreement than the time the retailer chooses the put option contract. Therefore, it can be concluded that if the retailer chooses the buyback agreement in this situation, can gain more benefits. The study provides essential managerial insights to compare agreements and presents recommendations to choose a suitable contract.

Full Quantity or Full Credit? Choosing the Right Buyback Policy for a Behavioral Retailer

Problem definition: Despite extensive research on buyback contracts in supply chain management, little attention has been given to a direct comparison between a traditional full-quantity, partial-credit (FQ) buyback contract and an alternative full-credit, partial-quantity (FC) contract, especially when considering the behavioral biases of the retailer. This study aims to fill this research gap by exploring how these biases influence contract performance and offer practical guidelines for suppliers. Methodology/results: Through controlled laboratory experiments and structural model estimation, we show that the ordering decisions made by human retailers are jointly affected by three behavioral biases—loss aversion, prospective accounting, and psychological cost of inventory error—and these biases differ in magnitude between the two contracts. Incorporating these biases into a behavioral retailer’s utility function, we then analytically examine which buyback policy the supplier should choose. When the wholesale price is exogenously given, the supplier should adopt the FC contract for high-margin (low-cost) products. Conversely, when the supplier has the power to set both the wholesale and buyback prices, the FC contract is generally more beneficial for low-margin products. Finally, when the product cost is sufficiently high, a wholesale price contract may be advantageous over buyback policies. Managerial implications: The managerial implication of this paper is significant for suppliers who have to choose between different buyback policies. The paper suggests that the supplier should carefully consider not just the economic, but also the behavioral dimensions when making contract decisions, particularly when dealing with a retailer influenced by behavioral biases. Specifically, the choice between FQ and FC contracts is influenced by two key environmental factors: the production cost of the product and the nature of wholesale pricing. Understanding these elements allows suppliers to be flexible in contract choices and design appropriate return policies for their downstream supply chain partners. Funding: P. Yu was supported by the National Natural Science Foundation of China [Grants 72371038 and 72033003] and the Fundamental Research Funds for the Central Universities [Grant 2024CDJSKPT16]. T. Feng was supported by the National Natural Science Foundation of China [Grant 72131004]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2023.0574 .

Examining supply chain financing: A comparative and coordination analysis under a buyback contract

This paper focuses on financing schemes for a supply chain with high salvage values of unsold products. Combining the buyback contract with a partial credit guarantee (PCG) contract and trade credit (TC) contract, we propose two financing schemes, PCG-Buyback and TC-Buyback, to provide flexible financing services for a capital-constrained retailer and obtain equilibrium strategies of each supply chain member. Furthermore, for PCGBuyback, this paper obtains a Pareto coordination frontier consisting of the credit guarantee coefficient and the buyback price at different initial capital levels, which is more flexible to achieve supply chain coordination. Finally, we analyze the manufacturer’s strategic choices of PCG-Buyback and TC-Buyback in terms of credit guarantee coefficient, buyback price, and financing rate. Our results show that PCG-Buyback is the optimal financing scheme for the manufacturer when both the credit guarantee coefficient and buyback price (or financing rate) are low; otherwise, TC-Buyback is the dominant strategy. This study explores how the risk-sharing mechanism combination of PCG and buyback contracts can provide a more flexible approach to supply chain coordination. Additionally, it highlights the significance of the manufacturer selecting a better financing scheme based on its individual characteristics.

A closed-loop green supply chain with retailers' competition and product recycling in the green environment under the cap-and-trade policy

<abstract><p>Nowadays, product recycling has become an effective strategy for manufacturing industries to achieve sustainable development due to the scarcity of natural resources, waste management, and greenhouse gas emissions. This study considered an imperfect production-based competitive supply chain model for product recycling in an emission-reduction environment under a cap-and-trade scheme. The manufacturer invests in green technology to restrict carbon emissions during production. The recycler collects used items at a recovery rate depending on the buy-back price and environmental awareness effort. The rival retailers compete against each other for the retail price and promotional effort. The linear type of market demand depends on the retail price, promotional effort, and green level of the product. The proposed model was analyzed analytically and numerically under one centralized system, five decentralized systems, three Stackelberg, and two Nash game structures. Numerical examples and sensitivity analysis of the key parameters were studied to justify the feasibility of the proposed model. The present study revealed that the centralized scenario is mostly preferable for supply chain profit. The manufacturer-Stackelberg 1 scenario is most profitable for the manufacturer, whereas the two retailers collect maximum individual profit in the vertical Nash 2 model, where they jointly play the game. Moreover, retail price plays a crucial role in optimizing individual retailers' profits in the competitive market. In connection with the environmental aspects, the government should offer lower carbon caps to curtail excessive emissions and restrict the selling of excess carbon quotas.</p></abstract>

Impact of prices and collection rivalry in a sustainable closed-loop dual-channel supply chain under different power configurations

Market competitiveness and waste pollution are the two biggest problems facing the modern world. The first one may be handled with appropriate production and marketing tactics, while the last one can be reclaimed by recycling any unused products and employing disposable items that are environmentally friendly. This study employs both integrated and decentralised frameworks to evaluate forward and reverse supply chain rivalry in a closed-loop dual-channel supply chain for sustainable products. Competition on buy-back prices is also studied beyond price competition in forward supply chain. Two collectors collect used goods under buyback competition, then screen them, and ship them back to the manufacturer. When they generate their goods using both recycled and new raw materials, manufacturers impose the proper environmental requirements. The manufacturer and retailer, respectively, use online and conventional distribution channels to market the new sustainable products. The primary goal of the article is to investigate pricing, green innovation level, and buy-back price strategies for players' optimal gains under various scenarios. The article reveals that if the acceptance rate surpasses certain thresholds following the screening of the acquired usable items, then all participants benefit. Manufacturer-collector partnerships reduce environmental pollution more effectively than retailer-collector alliances, however, collectors' profits may suffer.

Harvesting Solar Power Foments Prices in a Vicious Cycle: Breaking the Cycle with Price Mechanisms

Harvesting Solar Power Foments Prices in a Vicious Cycle: Breaking the Cycle with Price Mechanisms An important paper in this issue quantifies and explores how residential solar power adoption affects the price of electricity and the profit of a utility firm. It reveals the mechanism behind what is known as the “utility (death) spiral.” As more residences adopt solar power generation, the price of electricity goes up, whereas the profit of utility firm comes down. The study finds the equilibrium of a game played between consumers deciding to adopt residential solar power and the utility deciding on prices in a regulated market. The equilibrium, involving a potential bankruptcy for the utility firm and a high price for a nonadopter consumer, is desirable for neither. To avoid this, it suggests either decreasing the buyback price that the utility pays for the excess power of an adopter or introducing a subscription for adopters. These suggestions can inform pricing policies in the power market.

Energy Management and Economic Considerations of Intermittent Photovoltaic-Driven Electrochemical Ammonia Production.

As the energy sector shifts from fossil fuels to renewable energy, there is a need for long-duration energy storage solutions to handle the intermittency of renewable electricity. Electrofuels, or fuels synthesized from excess electricity, are an emerging medium poised to meet long-duration energy storage requirements. Ammonia as an electrofuel is potentially ideal because ammonia has a relatively low liquefaction pressure, indicating that ammonia can be easily stored and transported. Here, we develop a framework to optimize the electrochemical production of ammonia powered by intermittent photovoltaic power. We also explore various buyback policies to understand the impact that policy has on the cost of intermittent ammonia and optimal sizing ratios. The optimal ratio of the photovoltaic to the electrolyzer is ∼3.7 MWPV/MWELEC for a system that is completely powered by renewable photovoltaic power and operates intermittently. The optimal ratio of the photovoltaic to the electrolyzer is ∼3.3 MWPV/MWELEC for a system that uses photovoltaics in conjunction with grid electricity and operates continuously. For the purchase price at the avoided cost of electricity, the optimal ratio of the solar panel to the electrolyzer increases to ∼4 MWPV/MWELEC for a system that can only sell to the grid and ∼5 MWPV/MWELEC for a system that can buy and sell electricity to the grid at the avoided cost. Optimizing energy management by setting auxiliary battery size limits is essential to reducing ammonia costs, and the optimal battery size decreases as the buyback price of electricity increases. Finally, we find that systems connected to the grid and operating continuously have emissions comparable to the Haber-Bosch process because of the current emissions tied to the United States electricity generation. Thus, unless the grid is completely decarbonized, it is essential to create electrofuels that rely minimally on grid electricity.

Share repurchases and managerial reference points

AbstractThis study examines the relationship between managerial reference points and corporate payout policy. We find that share repurchase activity increases as a firm's current stock price declines in relation to the price at which it previously repurchased shares. To facilitate a behavioral interpretation of this relation, we show that it weakens around stock splits, is asymmetric over gains and losses, and strengthens when prior repurchase prices are more salient. Further, the relation is not explained by traditional repurchase motives. The results suggest a behavioral pattern in which managers use prior repurchase prices as reference points for current repurchases.

How Can We Promote Smartphone Leasing via a Buyback Program?

Leasing is an important sustainable PSS model of recycling smartphones, and they have emerged as a crucial component of retailers’ business evolution in recent times. Using hybrid selling–leasing transformations, retailers not only provide selling services but also leasing services, which not only increases revenue sources but also triggers internal competition. Due to this, retailers are reluctant to promote smartphone leasing. How can we enhance retailers’ motivation to promote smartphone leasing? This paper aims to answer this question by exploring the potential of a manufacturer’s buyback program and analyzing three price decision models: pure selling (S), hybrid selling–leasing without a buyback program (SL), and hybrid selling–leasing with a buyback program (HSL). The results show that (1) when consumers’ acceptance of leasing is moderate, retailers can benefit from hybrid selling–leasing transformation. (2) If the manufacturer chooses to buy back used leasing smartphones from the retailer, it is advisable to set a high buyback price that is at least equal to their residual value. (3) The buyback program can increase consumers’ leasing demand and manufacturer’s profits, as well as decrease the environmental impact of the supply chain system. More importantly, it has the potential to drive retailers to conduct hybrid selling–leasing transformation and can establish a positive correlation between retailers’ profits and consumers’ acceptance of leasing. This means that buyback programs can promote smartphone leasing and can be beneficial for smartphone recycling and urban sustainable development.

Return Strategy of E-Commerce Platform Based on Green and Sustainable Development

The secondary packaging and secondary transportation caused by products’ online return lead to a large amount of resource waste and environmental damage, which are not conducive to the green and sustainable development of enterprises. As consumers become more aware of environmental protection, their purchase and return behaviors will also change, prompting e-commerce platforms to adjust their return strategies. In this context, this paper aims to study the optimal return strategy that balances enterprises’ social benefits and environmental impact. The Stackelberg game models are constructed based on two behaviors: environmental protection publicity of e-commerce platforms and consumer return. The impacts of return strategies on the environment and the benefits of supply chain members are investigated. Results show that environmental protection publicity and return compensation can stimulate the expected sales volume. The optimal environmental protection publicity depends on the return rate. When the return rate is high, and the repurchase price is low, the optimal decision of the e-commerce platform is not to introduce return freight insurance so as to maintain its own benefits and reduce the environmental impact.

Optimal order quantities, buyback prices, and government subsidies for cars in a sharing economy environment

To reduce carbon emissions from urban transportation and increase the popularity of electric vehicles (EVs), many governments have provided purchase subsidies to incentivize customers to buy EVs. As the popularity of EVs increases, some governments have begun to provide battery recycling subsidies to car manufacturers. However, in a sharing economy environment, the mechanism under which the purchase subsidy and the battery recycling subsidy promote the popularity of EVs and the maturity of the EV sharing market is unclear. In this study, two commonly applied governmental subsidy policies are introduced: one considers only purchase subsidy (P-policy), and the other considers both purchase subsidy and recycling subsidy (P&R-policy). Under each policy, a stylized Stackelberg game model is constructed considering the forward and reverse supply chains in the car-sharing market. The objective of this study is to obtain the car-sharing platform’s optimal ordering quantities of EVs and fueled vehicles (FVs), the car manufacturer’s optimal buyback prices of used EVs and FVs, and the government’s optimal subsidies under the P-policy and P&R-policy. Through model-solving and analyses, it is found that both policies could increase the popularity of EVs in the car-sharing market, and the P&R-policy has a higher promotion effect on EVs than the P-policy. As for policy implementation, this study suggests that with the popularity of EVs, the subsidies under each policy should be decreased. Particularly, the declining rate of the purchase subsidy for high-performance EVs should be lower than that for low-performance EVs. The recycling subsidy for low-performance EVs should be reduced the most.

Credit coguarantee loan buyback contracts: Equilibrium and coordination strategies

Buyback guarantee financing requires core enterprises to provide both a buyback policy and a credit guarantee. The recent economic downturn has severely weakened the credit guarantee capacities of enterprises. Guarantee companies (GCs) that provide financing credit guarantee services address this issue specifically and have attracted considerable attention. We consider incorporating a GC into the supply chain to fully coguarantee with core enterprises, introduce risk compensation into the model to hedge against default risk, and formulate a multilevel Stackelberg game with the GC as the leader. A credit coguarantee loan buyback (CCLB) contract, integrating a credit coguarantee loan and a buyback contract, is designed to analyze equilibrium strategies. Additionally, we explore the coordination conditions for the CCLB contract and perform numerical analysis to illustrate its effectiveness. The optimal decisions under different financing scenarios are comparatively analyzed to show coguarantee effectiveness. We also investigate the value of CCLB compared to trade credit finance. We find that a higher decentralized optimal order quantity depends on a lower service fee rate, or a higher buyback price and return rate in some cases, while the optimal service fee rate is conditional on the coguarantee share and risk compensation ratio. The results reveal that with appropriate parameters, the proposed contract can achieve coordination. For a supply chain with a higher buyback price and return rate or greater risk compensation, GCs prefer to join; otherwise, they either cover a lower risk or charge a higher service fee rate to achieve a sustainable credit guarantee business.

Channel leadership and performance for a closed-loop supply chain considering competition

This paper investigates channel leadership and performance in a closed-loop supply chain (CLSC) that involves the competition among an electric vehicle manufacturer (EVM), an electric vehicle recycler (EVR), and a third-party recycler (3PR). We develop a game-theoretic model to obtain the CLSC’s equilibrium outcomes for the EVM-led and EVR-led recycling channels and examine the impact of competition on these results. We then compare the equilibrium outcomes and discover that the EVM, EVR, and 3PR have difficulty aligning their preferences for recycling leadership mode, necessitating technological advancements in remanufacturing and governmental intervention. Our research highlights the significance of environmental responsibility awareness in the recycling process and discusses environmental damage and social welfare. Our findings indicate that in situations where the total recycling rate of the CLSC is low, the EVR may offer a higher price to prevent excessive new battery flow into the market. We suggest that the government should encourage more local EVRs to participate in the recycling system to reduce pollution. Finally, we extend our analysis to the cost-savings in remanufacturing and heterogeneous buyback prices.

Coordination of closed loop supply chains through buyback contract

ABSTRACT This paper focuses on the coordination issues in the context of a CLSC system comprising a manufacturer and a retailer. We develop mathematical models under a buyback contract in the forward supply chain (FSC) with and without Stackelberg gaming. Compared to the case with no contracts, the numerical analysis carried out shows that the proposed models consistently provide better total SC profit, enhance the manufacturer’s profit and, in many cases, improve both players’ profits. For the model without gaming, we derive values for the buyback price that coordinate the SC and further derive ranges for the parameters where both partners are better off profitwise as compared to the no-contract case under the Stackelberg game scenario. The numerical analysis indicates that the non-gaming model always outperforms the gaming one in terms of total SC expected profit and suggests that for higher demand uncertainties, the SC members are better off profitwise at lower values of the buyback price.

Determinants of Buy-back Pricing in Indian Context

Determinants of Buy-back Pricing in Indian Context

Study on sustainable development of pharmaceutical health industry under ecological coordination.

Particularly in the post-pandemic period, where public health emergencies offer a greater risk of supply disruptions, the operational hazards of pharmaceutical supply chains are uncertain. One of the main concerns for businesses is how to handle the risk of supply disruption and take the necessary precautions to lower the chance of loss. Pharmaceutical raw material suppliers, pharmaceutical manufacturers and medical institutions constitute a complete three-tiered supply chain. On the basis of this, in Materials and methods part, a share contract based on buyback proceeds is created as a result, and a combination contract based on centralized decision-making and decentralized decision-making is employed to maximize the order volume of pharmaceutical supply chain participants. An out-of-stock cost pharmaceutical supply chain model is created, and a related solution is provided and measurable examples. In Results and discussion part, to confirm the accuracy of the model and algorithm, numerical examples are employed. Buyback prices and order volumes were subjected to sensitivity analysis, and discussion is had over how various parameters affect a model's performance. Due to supply disruptions, the study's findings show that there is "double sourcing" between upstream pharmaceutical raw materials and downstream major suppliers, necessitating the establishment of a supply chain with numerous standby suppliers. At the same time, modifying the contract parameters can improve the supply motivation of backup suppliers and guarantee the profitability of downstream medical institutions.

Newsvendor model with voucher sales: a distributionally robust approach

AbstractVouchers as a popular short‐term marketing tool are widely used by many firms, through which retailers can lock in customers and obtain working capital in advance. Consumers can use the voucher to reduce the product purchase price to an equal face value or purchase the product at a discount. We apply the classical newsvendor model to study the merits of vouchers for the retailer's ordering decision in the face of uncertainties in both the market demand and voucher redemption rate. We propose a distributionally robust approach to solve this newsvendor problem. The approach only requires the first and second moments of the demand and redemption rate distributions and yields a lower bound on the expected profit. Specifically, we derive the optimal ordering decision in closed form and obtain the optimal expected profit based on the limited distribution information. We find that a higher redemption rate does not necessarily increase the retailer's profit and the voucher quantity, but always increases the retailer's order quantity. Interestingly, we show that when the buyback price of the voucher is relatively high, increasing the voucher redemption rate is more profitable for the retailer. In addition, the retailer's profit, and the quantities of the product and the voucher decrease with the buyback price of the voucher.

Investigating dual-channel green supply chain considering refurbishing process and product recycling with environmental awareness effort

The internet makes online purchasing convenient for consumers. Furthermore, low resources, greenhouse gas emissions, higher production costs, and various environmental issues compel firms to recycle products. This study proposes a dual-channel closed-loop supply chain comprising three members with the refurbishment of recovered products. The manufacturer has two production units (manufacturing and refurbishing) marketed online and traditional channels for fresh green products and only online for refurbished and returned products. The manufacturer uses green innovation technology to ensure that the product remains green. The recycler retrieves customers’ old products through an attractive buy-back price and environmental awareness. The study considers green level, promotion level, and selling price sensitive linear demand. This model is analyzed by comparing one centralized and eight decentralized scenarios (Stackelberg and Nash game approaches). Validation of the model is provided through a numerical example, and sensitivity analysis is performed to understand how critical parameters affect performance. This study found that the chain performance (i.e., the highest green level, the highest promotional effort level, and the highest chain profit) is optimal in the centralized system, proving that the system is highly efficient regarding environmental and economic benefits. The supply chain performance in the Nash game case where manufacturer and retailer play as a single-player is impressive and closer to the centralized model. Again, in another Nash game case where the retailer and recycler participate as a single member, a maximum number of products are recovered, which helps the recycler to achieve the highest profit.

Analysis Customer Satisfaction of Repurchase Intention in Gold Purchase Field for Investment During Pandemic COVID-19

The whole world is hit by the respiratory and airborne disease, or COVID-19 outbreak. The beginning of the COVID-19 pandemic began in Wuhan, China in December 2019. This study aims to analyze a person's satisfaction in repurchasing eman which can be used as an investment during the pandemic. By analyzing buyer satisfaction, products, services, and repurchase prices in purchasing gold for investment during the pandemic. The research technique used is a quantitative technique, carried out by distributing questionnaires to 110 gold buying and selling actors who have made gold buying and selling transactions from one time during the pandemic. The research was conducted using the Structural Equation Modeling (SEM) method with the Partial Least Square (PLS) alternative with the Smart-PLS 3.3.3 program. The results obtained indicate that there are: (1) There is a significant relationship and influence on consumer satisfaction with repurchase (Repurchase Intention) (2) While Product, Service, and Price Interest on Repurchase Intention is not significant

Analysis Customer Satisfaction of Repurchase Intention in Gold Purchase Field for Investment During Pandemic COVID-19

The whole world is hit by the respiratory and airborne disease, or COVID-19 outbreak. The beginning of the COVID-19 pandemic began in Wuhan, China in December 2019. This study aims to analyze a person's satisfaction in repurchasing eman which can be used as an investment during the pandemic. By analyzing buyer satisfaction, products, services, and repurchase prices in purchasing gold for investment during the pandemic. The research technique used is a quantitative technique, carried out by distributing questionnaires to 110 gold buying and selling actors who have made gold buying and selling transactions from one time during the pandemic. The research was conducted using the Structural Equation Modeling (SEM) method with the Partial Least Square (PLS) alternative with the Smart-PLS 3.3.3 program. The results obtained indicate that there are: (1) There is a significant relationship and influence on consumer satisfaction with repurchase (Repurchase Intention) (2) While Product, Service, and Price Interest on Repurchase Intention is not significant