Contract Price Research Articles

Does the Bike-Sharing Platform Share Its Own Private Information or Not in a Reverse Supply Chain?

Bike sharing facilitates the public’s daily lives and possesses substantial market demand, yet its overwhelming presence has triggered some environmental problems. To enhance resource utilization efficiency, we examine the decision-making strategies within a reverse supply chain considering the private information of the bike-sharing platform. Using Stackelberg games, two models are formulated in order to investigate whether the platform should share its own private information when the used shared bikes are recycled. A supply chain without private information is provided as a benchmark for comparison, and we obtain the optimal equilibrium strategies of the benchmark and the proposed model. Furthermore, how the optimal strategies change with the variation in parameters and the impacts of the private information on the optimal strategies are discussed. The results show that information asymmetry could lead to a reduction in supply chain efficiency. Thus, a two-part pricing contract is introduced to incentivize the platform to share information and coordinate the supply chain, which can effectively improve the performance of the integral supply chain and implement a “win-win” strategy for the third-party remanufacturer and the platform.

Behavior-based pricing and wholesale contracting in competing supply chains with informative advertising

The development of e-commerce has enhanced the ability of firms to identify existing and potential customers and set targeted prices accordingly, which is known as behavior-based pricing (BBP). This study investigates the effect of manufacturers’ informative advertising on the strategic interaction between wholesale price contracts (long-term or short-term) and downstream pricing mechanisms (BBP or not). We consider two horizontal differentiated supply chains in which firms not only compete in prices but also in informative advertising which is used to generate awareness of products. We find that the impact of BBP on channel members’ advertising, pricing and profits is the tradeoff of multiple effects. With BBP, manufacturers will advertise less and both retailers and manufacturers prefer short-term wholesale contracts. Moreover, BBP eases the price competition in the first period but intensifies it in the second period, especially for short-term wholesale contracts. In equilibrium, BBP is adopted by retailers only when the advertising cost is low, and manufacturers choose short-term wholesale contracts. Furthermore, BBP always hurts the consumer surplus and social welfare which means that targeted measures are needed to regulate firms’ price discrimination.

Совершенствование процесса управления государственными закупками в подразделениях системы МВД России

Estimated indicators for three years, the same period is considered when forming a plan of financial and economic activities in autonomous and budgetary institutions. The principle of efficient use of budgetary funds for procurement of goods, works and services is fundamental in the budgetary process when forming expenditures in a public institution. The authors, reflecting the efficiency of using budgetary funds in procurement activities, guided by this principle, investigate the initial maximum contract price, proposed a metho-dology for forming the lowest contract price by introducing a correction factor.

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 .

Coordination of a socially responsible two-stage supply chain under random yield and demand

This study integrates corporate social responsibility (CSR) and channel coordination in a supply chain (SC) under random yield and random demand. In the SC, a supplier with random yield determines wholesale price and production input, and a producer with CSR decides order quantity and CSR investment facing CSR-related random demand. For centralized SCs with and without CSR, we prove the unimodality of the expected profits of the SCs for generic random yield and demand, and show the uniqueness of optimal ratio of order quantity to production input quantity. We disclose that the optimal expected profit of the SC with CSR is larger than that of the SC without CSR, and the profit difference increases with CSR effort and expected yield. We also find that the optimal CSR investment increases with the expected yield. Subsequently, the Nash equilibrium solutions of decentralized SCs under wholesale price and revenue-sharing contracts are analyzed. Next, we present a revenue and CSR sharing contract to realize channel coordination and win-win of SC members and related stakeholders. Lastly, we verify theoretical statements of centralized and decentralized SCs versus three numerical examples, and present managerial insights for the effect of yield uncertainty and CSR effort.

Pricing and collection decisions of a closed-loop supply chain with remanufacturing under reciprocal preferences

This paper examines the effects of reciprocal preferences on the performances of a closed-loop supply chains (CLSC) with remanufacturing. Specifically, we incorporate reciprocal preferences into a two-echelon CLSC in which the manufacturer collects used products and then remanufactures the other parts except for key components as well as producing new products, and must purchase such key components from the supplier. Using a supplier-led Stackelberg game framework, the models are constructed with and without reciprocity, and then the effects of reciprocity on channel efficiency, consumers, environment and society are examined. We show that, (i) if the supplier reciprocates, the collection rate, the CLSC’s total profit, the channel efficiency and the consumer surplus enhance. Additionally, if only the manufacturer reciprocates, the CLSC’s profit remains constant; (ii) under certain conditions, the reciprocal preferences of both channel members aggravate environmental impact, while benefit social welfare; (iii) Pareto improvement can be achieved if the reciprocity parameters of both channel members are relatively high, and a simple procurement price contract can conditionally coordinate the CLSC. Finally, two extensions are studied by considering consumer heterogeneity and solving a two-period game problem, and the results characterize how reciprocal behaviors drive the performances of channel members.

Predicting Extension of Time and Increasing Contract Price in Road Infrastructure Projects Using a Sugeno Fuzzy Logic Model

Road infrastructure plays a crucial role in the development of countries, significantly influencing economic growth, social progress, and environmental sustainability. Major infrastructure projects are frequently challenged by substantial risks and uncertainties, leading to delays, budget overruns, and compromised quality. These issues can undermine the economic viability and efficiency of projects, making effective risk management essential for minimizing negative impacts and ensuring project success. For these reasons, a study was conducted using a Sugeno fuzzy logic system applied to completed projects. The resulting model is based on 10 project characteristics and provides highly accurate predictions for Extension of Time (EoT) and Increasing Contract Price (ICP). By utilizing this model, project management can be significantly improved through more accurate forecasting of potential delays and cost overruns. The high precision of the Sugeno fuzzy logic system enables better risk assessment and proactive decision-making, allowing project managers to implement targeted strategies to mitigate risks and optimize project outcomes.

Probabilistic simulation of electricity price scenarios using Conditional Generative Adversarial Networks

A novel approach for generative time series simulation of electricity price scenarios is presented. A “Time Series Simulation Conditional Generative Adversarial Network” (TSS-CGAN) generates short-term electricity price scenarios. In particular, the network is capable of generating a 24-dimensional output vector that corresponds to the expected behavior of electricity markets. The model can replace typical approaches from financial mathematics like statistical factor models to model the price distribution around a given forecast. The data cover a 3-year period from 2020 to 2023. Our empirical study is conducted on the EPEX SPOT market in Europe. An electricity price scenario includes the prices of the hourly contracts of a day-ahead auction at the EPEX SPOT power exchange. The model uses multivariate time series as input factors, consisting of point forecasts of electricity prices and fundamental data on generation and load profiles. The architecture of a TSS-CGAN is based on the idea of Conditional Generative Adversarial Networks combined with 1D Convolutional Neural Networks and Bidirectional Long Short-Term Memory. The model is evaluated using qualitative and quantitative criteria. For the evaluation, 10,000 simulations of a test period are carried out. Qualitative criteria are whether the model follows certain electricity market-specific regularities and depicts them adequately. The quantitative analysis includes common error metric, compared to benchmark models, like DeepAR, Prophet and Temporal Fusion Transformer, the examination of the quantile ranges, the error distribution and a sensitivity analysis. The results show that the TSS-CGAN outperforms benchmark models such as DeepAR by reducing the continuous ranked probability score by 50% and considers market-specific circumstances such as the production of fluctuating energies and reacts correctly to changes in the corresponding variables.

Should the pricing or advertising decision come first in a supply chain with a network externality?

PurposeThis paper aims to study how the timing of these decisions affects the total profit and the individual profits of the two agents.Design/methodology/approachThis paper study a supply chain for a network good where there is a manufacturer and a retailer. The manufacturer determines its wholesale price and its share in the retailer’s advertising cost while the retailer decides the retail price and the advertising cost.FindingsThis paper finds that a stronger network externality leads to higher prices and higher advertising efforts. This increases the profits of both manufacturer and retailer, but the manufacturer’s share of advertising costs depends on the order in which the supply chain enterprise make their decisions, the strength of network externality and the effect of advertising determines which decision timeline results in a higher price and greater advertising effort. The manufacturer prefers the price decision to be made before the advertising decision, while the retailer prefers these decisions to be made simultaneously.Research limitations/implicationsAlthough this paper studies the price and advertising decision-making order preferences of channel members based on network externalities, this research can also be expanded from the following aspects based on network effects. First, network externality affects advertising cooperation between both parties in the situation such that the pricing power of retail prices is transferred from the retailer to the manufacturer and the retailer relies on revenue sharing (revenue sharing contract, nonwholesale price contract. Second, the manufacturer dominates the issues in the supply chain, but in reality, a retailer can also be the dominator or there are no dominators (Nash equilibrium). Finally, it is possible to consider pricing and advertising decisions in situations where two manufacturers or retailers compete.Practical implicationsWhen the price is reasonable, advertising investment is the main determinant of product sales. The greater the intensity of network externalities the more retailers will be willing to invest in advertising. An increase in the intensity of network externalities may not necessarily enhance manufacturers’ motivation or cooperative advertising, but it depends on the decision-making sequence. The strength of network externalities determines the decision-making sequence preferences of supply chain channel members whose preferences vary leading to conflicts of interest.Originality/valueThe impact of cooperative advertising or decision sequence on corporate decision-making has not been considered. To fill this gap, the paper integrates network externality and supply chain cooperative advertising models, focusing on the impact of network externality on pricing and advertising decisions, as well as on the sequence of decisions.

Enhancing bargaining power for energy communities in renewable power purchase agreements using Gaussian learning and fixed price bargaining

Power purchase agreements aim to secure long-term contracts between sellers and buyers, particularly in renewable energy transactions. However, successful negotiations for a fixed long-term price and energy volume while ensuring maximum utility for stakeholders remains a significant challenge. This paper introduces a comprehensive model for negotiating 24/7 power purchase agreements, focusing on hourly pricing to address deficits and surpluses throughout each day of the contract timeline. The model incorporates demand flexibility through battery storage, settling on the strike price using Nash Bargaining theory and optimal management of energy consumption relative to market price fluctuations. A soft margin support vector machine classification model determines the buyer’s maximum acceptable price. Moreover, Gaussian process classification is employed to calculate a probabilistic, risk-adjusted strike price, enabling a data-driven approach to power purchase negotiations. The proposed model’s performance is demonstrated through a detailed case study of Norway, illustrating how demand flexibility can significantly lower long-term power purchase agreement contract prices. The analysis of yearly price trends indicates that incorporating flexibility resources in long-term energy contracts may lead to a reduction in strike prices by around 25%. Moreover, such flexibility enhances demand-generation matching, thereby increasing renewable energy transactions within such agreements.

Machine Cost-Effectiveness in Earthworks: Early Warning System and Status of the Previous Work Period

Estimating earthwork costs is challenging due to the use of high-cost construction machines, the performance of works in dynamic, changing, and uncertain conditions, and the issues of machine actual productivity. In earthworks, there is a constant need to track, control, and analyze the progress to reduce costs. The management of machines’ work on construction sites is complex due to an unknown or insufficiently accurate assessment of their actual productivity, and it relies heavily on the site manager’s (in)experience. The cost-effectiveness of the contracted price for the operation of the machines may be questionable. This paper proposes a model for machine cost-effectiveness in earthworks. The proposed model consists of an Early warning system and Status of the previous work period. The Early warning system can provide timely and reliable detection of cost-effectiveness and profitability thresholds for excavators and tipper trucks during the excavation and material removal. The Status of the previous work period is time-dependent and provides a final assessment of the cost-effectiveness of excavators and tipper trucks for the past month or a more extended time. Applying the proposed model at the construction site of the infrastructure project demonstrated its practicality and purpose.

Financing a push and pull supply chain under revenue sharing: value addition and default risk transmission mechanism

Supply chain finance (SCF) releases participants' capital constraints and facilitates their operations. SCF and transactional contracts can have synchronised effects on participants' performance. This research analyses how credit financing and bank loans with revenue-sharing contracts can help capital-constrained suppliers and retailers improve their financial and risk management performance in the push and pull supply chains. Results suggest that SCF generates greater profits than capital-constrained supply chains without SCF and well-capitalised supply chains, demonstrating a leverage effect. In a push scenario, SCF enhances the wholesale price effect and risk-sharing effect of the revenue-sharing contract, resulting in increased order quantity and profits for participants, albeit with an amplified default risk transmission effect. Conversely, in a pull scenario, SCF boosts participant profitability by strengthening the order quantity effect of the wholesale price contract, although its risk-sharing effect is weakened by the revenue-sharing contract, thereby mitigating the default risk transmission effect. When the revenue-sharing rate is low, the push model performs better in terms of profit enhancement but exhibits higher default risk transmission levels compared to the pull model, and vice versa. The findings guide participants in leveraging SCF and revenue-sharing contracts to enhance their benefits and control the default risk transmission level.

Faktor Penyebab Contract Change Order pada Proyek Konstruksi Sumber Daya Air Padang Pariaman

Government infrastructure projects in water resources projects generally apply a unit price contract system. This is because implementing a unit price contract system is not difficult and is balanced in terms of sharing risks from contract changes between providers and users of construction services. In the unit price contract system, it is very possible for contract changes to occur on construction projects. Changes in the implementation of construction projects can occur repeatedly and are difficult to avoid. The aim of the research is to identify the factors that cause Contract Change Orders and the dominant factors that cause them during the implementation phase of construction projects in the water resources sector. The research was carried out by distributing questionnaires to respondents involved in water resources construction project work at the Padang Pariaman PUPR Service for the 2019 to 2021 budget year and then carrying out factor analysis. In research on the factors that cause Contract Change Orders to occur during the implementation phase of water resources construction projects in Padang Pariaman Regency, there are 4 factors that cause Contract Change Orders during the implementation phase of water resources construction projects, namely managerial factors, regulatory factors. from parties who have the authority to make decisions, planning factors, design change factors. The dominant factor that causes the Contract Change Order to occur during the implementation stage of a water resources construction project is the managerial factor.

Economic Model to Determine the Lowest Price Limit of Fixed Price Contracts in Software Engineering

Competition forces software producers to offer their goods and services at the lowest costs in practice (49, p. 3), (4, p. 2). In this case, software errors can lead to additional processing costs which has to be covered by the software producers themselves (20). To compensate this, software manufacturers often have the option to cross-subsidize low-priced offer prices with offers billed hourly, e.g. on the basis of service contracts. However, the relation of possibilities for cross-subsidization with the risk of software errors is not clearly predictable by the process model (52, p. 9). As this relation is defined by the process, the aim to reach cost-control and cost-transparency is strongly related to the aim of (process) improvement (51, p. 39). In order to facilitate software producers within the calculation of minimum prices, required to cover the costs, an economical prediction model will be presented in this paper. This model bases on a simulation experiment, consisting of multiple scenarios. The scenarios were derived by a variation of the risik probability and the possibility of cross-subsidization.

Renewable energy investment under stochastic interest rate with regime-switching volatility

We examine the impact of the interest rate and its characteristics, such as long run mean and instantaneous variance risk (VR), on renewable energy investments in the power sector. The model has stochastic electricity price, stochastic interest rate, and variance regime switches. We show that an increase in the interest rate, while generally increasing the value of a power project, can have a non-monotone effect if the subsidy is sufficiently large. VR increases (reduces) the project value in the high variance regime, if the subsidy is sufficiently large (low). Under a fixed price contract, value declines and it is optimal to delay investment following an increase in the interest rate. The model helps to explain the US offshore industry experience in 2023.

Study Relationship of Under Bid Price, Contract Termination, and Risk of Regional Loss

According to the Audit Reports of BPK Representative in West Sumatera Province with title “LHP on Compliance Audit of Regional Expenditures of West Sumatera Province for Fiscal Year of 2021”, and “LHP on Financial Statements Audit of West Sumatera Province for Fiscal Year of 2021” as well as the auction data from Electronic Procurement Portal (LPSE), it is known that there were 293 construction packages with tender procurement in West Sumatera Province during Fiscal Year of 2021. Of those 293 packages, there were 81 packages has caused public budget losses and potential budget losses with total amount of Rp1.935.987.094,02, lacks of revenue with total amount of Rp9.660.218.603,31, and there were 8 packages experienced contract termination. Of those 8 packages with contract termination, 5 packages were known to be under bid price or using bid price that was too low (less than 80% of the HPS Value). Termination of the contract has resulted in the work not being utilized for the community in a timely manner, the risk of quality degression of the abandoned work until the work is resumed, and the risk of public budget losses. This research was conducted by seeing and analyzing the bid price that is too low (under bid price) which has potential impact on contract termination and the risk of public budget losses as well as the relationship between bid price fixing issues and the causes of contract termination. This needs to be done so that the contract termination can be avoided and the results of construction works can be completed and utilized immediately. This study aims to find a causal relationship between under bid price issues and contract terminations and the risk of public budget losses through the causes that influence the occurrence of contract termination, starting from the determination of HPS and under bid price, the selection process, the preparation and the implementation of the works according to timeline. From this study, it can be concluded that under bid price has a lot of influences and is a trigger for contract termination which resulted in the risk of public budget losses. There needs to be a calculation of the real bid price by considering overhead expenses, potential increases in material and wage prices, other expenses, and unexpected expenses. In addition, the parties involved in the construction works should make a risk map in order to mitigate problems which occur during the contract implementation period. This research takes the study of water resources building construction projects. Thus, further research is still needed on the occurrence of contract termination in road and bridge construction projects.

Order or Collaborate? Manufacturers Utilize 3D-Printed Parts to Sustainably Facilitate Increased Product Variety

3D printing (3DP) has garnered significant attention from industries, prompting traditional manufacturers to adopt 3DP to sustainably facilitate increased product variety. Observing manufacturers’ two adoption strategies, ordering parts and collaboratively printing 3DP parts, in a real-world setting, we utilize a wholesale price contract and a Nash Bargaining contract to describe these two strategies and then develop a supply-chain model including a 3DP supplier (Supplier) and a traditional manufacturer (Manufacturer). Further, we employ backward induction to solve the subgame-perfect Nash equilibrium for the model to reveal differences between these two strategies and the impact of 3DP’s improved resource efficiency. According to equilibrium outcomes, analytical results show that first, as long as the unit cost of each 3DP part is not overly high and 3DP’s resource efficiency is not extremely low, the Manufacturer is willing to implement 3DP to increase product variety. Second, a rise in the resource efficiency can create a “win-win” scenario for the Manufacturer and the Supplier. Third, supply-chain collaboration can be achieved when the Manufacturer’s and the Supplier’s bargaining powers approach equality. Interestingly, a Nash bargaining contract can incentivize the manufacturer to substitute a base product with a variety of products, a change facilitated by an increase in the retail price of this base product. The managerial implication of this research is that enhanced resource efficiency can lead to less environmental pollution in the collaboration model by resulting in the sale of lower quantities of the base product, which would otherwise consume more resources and generate greater environmental pollution.

ANALYSIS OF THE INFLUENCE OF ORDER VARIATION FACTORS ON THE COSTS AND TIME OF IMPLEMENTING CHANNEL DIVERCTION INFRASTRUCTURE CONSTRUCTION PROJECTS IN RESIDENTIAL AREAS

Tangerang is a big city in Indonesia. The housing sector rocketing in this region. Changes in development often occur because problems arise and have an impact on costs and time. Researchers focused on finding the cause of the work diverting residential channels being hampered. For this reason, changes were made to the sheetpile design and changes to the infrastructure mobilization method to meet the contract time. The research uses the SEM PLS method to determine the factors causing order variations. In addition, the data processing application was used to determine the effect of order variations on time and cost performance. The respondents were 60 owners and consultants. Based on the results of the cost performance analysis, additional work arising from order variations reached 10,516,305,346 IDR and reduced work due to order variations reached 6,628,461,533 IDR or around 12.96% of the initial contract price and the results of time performance analysis for time losses that occurred due to order variations on the project showed an additional time of 5 months or 125%.

PRICE RECALCULATION MODEL OF CONSTRUCTION CONTRACTS

In recent years, the world economy has experienced rapid economic change in the construction sector and record inflation. The rapidly rising prices of construction materials and machinery in the construction market are also pushing up the cost of construction services. The main problem is that construction projects have been drawn up and contracts between clients and contractors have been awarded at previous prices, and it is therefore necessary to look for opportunities to index the price of construction contracts. The aim of the study is to propose a mathematical model and a smartphone application for the price recalculation of construction projects. The success of a construction project depends on the correct decisions taken at the stage of preparation and implementation of the procurement documents for construction contracts, a complex process requiring a lot of legal and technological knowledge. The proposed mathematical model would help clients and contractors to carry out the calculation of the price according to the construction price index quickly and without the need for extensive specialist technical expertise. The mathematical model is adapted to smartphones with Android software.

Valuation of forward contract price in energy markets described by a fuzzy-stochastic model and mathematical algorithms: a case study of the PJM Western Hub Real-Time Peak market

Valuation of forward contract price in energy markets described by a fuzzy-stochastic model and mathematical algorithms: a case study of the PJM Western Hub Real-Time Peak market