Procurement Price Research Articles

Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options

This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on the overall consumer price index. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs.

Integrated optimisation of pricing, manufacturing, and procurement decisions of a make-to-stock system operating in a fluctuating environment

ABSTRACT Manufacturers experience random environmental fluctuations that influence their supply and demand processes directly. To cope with these environmental fluctuations, they typically utilise operational hedging strategies in terms of pricing, manufacturing, and procurement decisions. We focus on this challenging problem by proposing an analytical model. Specifically, we study an integrated problem of procurement, manufacturing, and pricing strategies for a continuous-review make-to-stock system operating in a randomly fluctuating environment with exponentially distributed processing times. The environmental changes are driven by a continuous-time discrete state-space Markov chain, and they directly affect the system's procurement price, raw material flow rate, and price-sensitive demand rate. We formulate the system as an infinite-horizon Markov decision process with a long-run average profit criterion and show that the optimal procurement and manufacturing strategies are of state-dependent threshold policies. Besides that, we provide several analytical results on the optimal pricing strategies. We introduce a linear programming formulation to numerically obtain the system's optimal decisions. We, particularly, investigate how production rate, holding cost, procurement price and demand variabilities, customers' price sensitivity, and interaction between supply and demand processes affect the system's performance measures through an extensive numerical study. Furthermore, our numerical results demonstrate the potential benefits of using dynamic pricing compared to that of static pricing. In particular, the profit enhancement being achieved with dynamic pricing can reach up to 15%, depending on the problem parameters.

How to subsidizing the used apparel recycling supply chains effective? An analysis based on the game framework

Motived to find the optimal subsidy strategies in the used apparel recycling supply chains, this paper establishes a benchmark recycling model including a brand retailer and a remanufacturer, and extends the benchmark model based on different subsidy scenarios: (a) the government subsidizes the remanufacturer, (b) the government subsidizes the retailer’s remanufacturing part, (c) the government subsidizes all recycled apparel from the retailer. The constructed models show some interesting results. (1) Both the strategies (a) & (b) drove the same recycling efforts. The remanufacturer maybe mistakenly believe its profits could increase with the lower procurement price in scenario (b). However, the profits were the same in both scenarios. (2) The strong consumer sensitivity to recycling efforts not only increases the retailer’s profits but also drops the remanufacturer’s profits. Therefore, strong consumer sensitivity is only good for some players. (3) The donation ratio should be within a reasonable range. Otherwise, the remanufacturer’s profit decreases, and even the remanufacturer withdraws from the supply chain. (4) The optimal subsidy strategy for the supply chain members is that the government subsidizes all recycled from the retailer. Based on our findings, some management insights and suggestions are presented.

Feasibility for the introduction of decentralised combined heat and power plants in agricultural processes. A case study for the heating of algae cultivation ponds

The article analyzes the technical and economic feasibility of a biogas-fired Combined heat and power (CHP) plant used in the agricultural sector for the heating of algae cultivation ponds. Specific thresholds are set for typical Key Performance Indicators (KPIs): the cogeneration efficiency, the power-to-heat ratio and the Primary Energy Saving Ratio, which should be satisfied while maximizing the CHP unit’s annual electricity production. A new operation algorithm and a plant’s layout are formulated, with a water heat storage tank and a back-up heat production unit, examined alternatively with and without a biogas production facility, being the article’s main novelties. Alternative sizing scenarios are investigated, optimized versus economic indices. Payback periods close to 5 years are achieved for all investigating scenarios without the biogas production facility, while satisfying all KPIs’ thresholds. The high set-up cost of the biogas production facility affects negatively the investment’s efficiency. The electricity selling price from the CHP unit (higher than 0.12 €/kWh) and the biogas procurement price (lower than 0.046 €/kWhch) constitute critical parameters for the project’s economic viability. The proposed plant exhibits high technical and economic feasibility for similar agricultural applications, fostering the rational use of energy in this sector.

Modelling the cost-effectiveness of pulse oximetry in primary care management of acute respiratory infection in rural northern Thailand.

We aimed to determine the cost-effectiveness of supplementing standard care with pulse oximetry among children <5 years with acute respiratory infection (ARI) presenting to 32 primary care units in a rural district (total population 241,436) of Chiang Rai province, Thailand, and to assess the economic effects of extending pulse oximetry to older patients with ARI in this setting. We performed a model-based cost-effectiveness analysis from a health systems perspective. Decision trees were constructed for three patient categories (children <5 years, children 5-14 years, and adults), with a 1-year time horizon. Model parameters were based on data from 49,958 patients included in a review of acute infection management in the 32 primary care units, published studies, and procurement price lists. Parameters were varied in deterministic sensitivity analyses. Costs were expressed in 2021 US dollars with a willingness-to-pay threshold per DALY averted of $8624. The annual direct cost of pulse oximetry, associated staff, training, and monitoring was $24,243. It reduced deaths from severe lower respiratory tract infections in children <5 years by 0.19 per 100,000 patients annually. In our population of 14,075 children <5 years, this was equivalent to 2.0 DALYs averted per year. When downstream costs such as those related to hospitalisation and inappropriate antibiotic prescription were considered, pulse oximetry dominated standard care, saving $12,757 annually. This intervention yielded smaller mortality gains in older patients but resulted in further cost savings, primarily by reducing inappropriate antibiotic prescriptions in these age groups. The dominance of the intervention was also demonstrated in all sensitivity analyses. Pulse oximetry is a life-saving, cost-effective adjunct in ARI primary care management in rural northern Thailand. This finding is likely to be generalisable to neighbouring countries with similar disease epidemiology and health systems.

Replenishment Policy with Limited Price Information

In this paper, we seek to provide real-time replenishment policy for a capacitated company that faces an exogenous demand and has to procure and store sufficient quantities of certain items with uncertain procurement prices. The objective is to minimize the total cost of the procuring cost and inventory holding cost without stock out. Motivated by the fact that a large variability in the price process often makes forecasting difficult, in contrast to the traditional approaches of the stochastic inventory theory, we study this problem from the perspective of competitive analysis who is free of any price distribution assumption. We propose an online replenishment model, which generalizes several previous online models. We give a real-time replenishment policy whose decisions are made based entirely on the past and present prices and the current inventory level. We prove that our policy achieves superior performance, and outperforms all of the previous theoretical results. Furthermore, we present the numerical studies to show that our replenishment policy achieves an even better empirical performance.

589 Reducing Single-Use Surgical Instruments During Laparoscopic Appendicectomy: Using Sustainable Quality Improvement as a Catalyst to Encourage Wider Behavioural Change in a Surgical Department

Abstract Aim Consumables are responsible for 32% of surgery associated CO2 emissions after excluding anaesthetic gases. We aimed to reduce the carbon footprint of laparoscopic appendicectomies by addressing equipment issues whilst also meeting the triple bottom line of financial, environmental, and social impacts. Method In a single-centre, a questionnaire was distributed to establish the frequency of, and reasons for, single-use instrument use. A separate questionnaire identified areas for improvement within existing appendicectomy sets. An evaluation of 25 appendicectomies was undertaken, documenting single-use instrument usage. New appendicectomy sets were developed, including additional reusable instruments, and procuring new ports, trialling these in subsequent appendicectomies. Financial impact was calculated based on current procurement prices. Environmental impact was calculated by carbon costing the production, transport and disposal of consumables using published emission factors. Social impact was assessed using staff surveys. Results 110 single-use instruments were opened in 25 appendicectomies. Our trust performs ∼500 appendicectomies/year, therefore equating to ∼2180 instruments/year that could be avoided by using reusable alternatives. Based on an estimated 75% reduction in consumables, the new set saves £34,423 and 512kg CO2e per year over the predicted seven-year life span of the instruments. Based on existing practice, the capital investment required for new instruments (£19,731) will pay for itself within six months. Reduced consumable reliance decreases the volume of waste being incinerated, tackling scope one emissions and local air pollution. Conclusions These results demonstrate that sustainable changes can be cost saving and reduce carbon emissions. This approach has translational potential across all surgical specialities using single-use instruments.

Changing Structure and Composition of Rice Seed Sector: Insights from Seed Villages in Telangana State, India

The purpose of the study was to understand the recent developments in the seed industry as well as farm-level information from seed villages on the structure and composition of the of the rice seed system in the Telangana state. A focussed group discussion approach was adopted to collect the primary data needed for the study with 8 to 10 progressive and experienced seed farmers in 30 selected seed villages of two predominant seed producing districts of the state in two points of periods 2014 and 2021. The results indicated that the sizeable portion of seed business has been shifted to other neighbouring states specially to Chhattisgarh in case hybrid paddy due to special incentive is being given to seed growers. Similarly, cotton seed production area is being shifted to Karnataka due to less cost of production compared to Telangana. As a result, the relative share of Telangana in India’s seed business has declined from about 30 per cent to 18 per cent between 2014 and 2020. The commission paid to intermediators (organisers) by companies has increased by 40 per cent while the procurement price paid to seed growers increased merely 14 per cent in the case of inbred paddy seed and less than 1 per cent in the case of hybrid paddy seed. The MNCs' participation in both inbred and hybrid rice seed production has decreased substantially. The average yield of hybrid rice seed has decreased, and there is no improvement in its procurement price offered by companies between 2014 and 2021. The per cent of farmers who entered into a contract without specifying a price has been increased in last seven years. The companies reduced their services like insurance to farmers, supply of critical inputs like GA3 for free and prolonged payment period after procurement, and limited compensation in the event of crop loss, which influenced the farmers to convert from hybrid rice seed production to other crops.

Uptake of hepatitis B antiviral treatment: A panel data analysis of 31 provinces in China (2013-2020).

China has made substantial efforts aimed to promote the uptake of antiviral treatment of hepatitis B (HB). It is unclear whether these policies achieved the desired impact. This study adopted medicines procurement data from 31 provinces to generate the first evidence about the number of standard antiviral treatment of HB overtime at both national and provincial levels in China. We performed the panel data analyses and quasi-experimental design with the time-varying difference-in-difference method combined with the event study approach to estimate the uptake of HB antiviral treatment before and after national policy changes. The overall trends in HB antiviral treatment at the national level increased incrementally during 2013-2020. There was 2.8862 million 12-month (person-year) antiviral standard treatment in 2020, which was only 8.93% of the eligible people estimated to need treatment. The number of monthly antiviral standard treatment increased by 42.4% (p=.001) overall following the nationwide adoption of the '4 + 7' pilot-pooled procurement prices in 2019, which brought substantial price reduction of core antivirals. A low treatment rate is a critical issue in reaching the elimination of viral hepatitis as a public health threat in China. Affordability is an important but not the only factor that determines the uptake of hepatitis treatment. Further scaling up and acceleration of treatment uptake will need strategies improving public awareness of HB, strengthening diagnosis, linking people who are infected to chronic care, reducing loss to follow-up, and ensuring people who are eligible get timely treatment.

Dual-Source Procurement Strategy of Cross-Border E-Commerce Supply Chain considering Members’ Risk Attitude

The risk attitude of decision-makers will significantly affect the decision-making of enterprise risk management. Specifically, high risk represents the potential premise of high return for risk preference decision-makers, and for risk-averse decision-makers, the increase of risk degree will stimulate decision-makers’ aversion to uncertainty and turn to seek safer business strategies. Although there are many pieces of literature on the risk preference of decision-makers, they usually only assume the risk attitude of one party and rarely consider the risk attitude of suppliers and retailers in the scenario of cross-border e-commerce at the same time. Therefore, under the background of supply disruption, for the cross-border e-commerce supply chain composed of cross-border suppliers, overseas suppliers, overseas retailers, and consumers, combined with the risk attitude preference of enterprise subjects, this paper constructs the mean-variance model dominated by overseas retailers and reversely solves the risk-aversion attitude of a single cross-border supplier. When a single overseas retailer maintains a risk-aversion attitude and both cross-border suppliers and overseas retailers hold a risk-neutral or risk-aversion attitude, the pricing of products in different channels is analyzed. Finally, an example is given to analyze the impact of supply disruption probability, risk-aversion coefficient, channel distribution coefficient, and other parameters on purchase price, market demand, target profit, and utility. It is of great practical significance for improving the stability of cross-border e-commerce supply chain system and reducing revenue loss to study how different degrees of risk-aversion attitudes of cross-border suppliers and overseas retailers affect enterprise procurement pricing strategy, target profit, and utility in case of supply disruption.

Evaluating performance of an untargeted urban food security scheme in India

PurposeThe purpose of this study is to evaluate the efficiency of the relative performances of Mother’s canteen across the regions of Tamil Nadu and find out the determinants of inefficiencies in the scheme.Design/methodology/approachAn untargeted food security scheme called Amma (Mother's) canteen was started in Tamil Nadu, India, with an aim to provide the urban poor with hygienic and healthy food at an affordable price. Along with secondary data, interviews were conducted to understand the operational details of Mother's canteen. Data envelopment analysis (DEA) was used to find the relative efficiency of the scheme operated by nine corporations.FindingsBased on the daily expenditure, number of meals served and revenue, seven of nine corporations were found to be inefficient. Further, sensitivity analyses found that among six procurement variables, procurement (quantity and price) of black gram and cooking oil were determinants of inefficiency.Research limitations/implicationsAs an untargeted scheme, the cost of delivering service-based evaluation was used for performance evaluation. Policymakers could use centralized procurement instead of open market procurement at the corporation level and standardized ingredients' usage (quantity) to further reduce the cost of the food security scheme.Practical implicationsThe proposed DEA model may be used by policymakers to empirically evaluate the food security scheme's delivery effectiveness across various corporations in a region. Inefficient branches are identified here with empirical support for further performance improvement changes.Originality/valueThere are limited number of studies evaluating untargeted schemes. This paper presents the challenges of evaluating an untargeted scheme which allows self-selection of beneficiaries. The outcome of this study will help in identifying inefficient corporations, and further, improve the performance and cost of delivering untargeted food security scheme.

Market formation in China from 1978

This paper studies the formation of market economy in China from 1978 to 1992, a period in which market economy was introduced and developed alongside planned government procurement for agricultural goods. Under the “dual track system” (DTS), rural farmers were obligated to fulfill government procurement before selling to the market, whereas urban consumers enjoyed de facto subsidies to agricultural products. Using a neoclassical general equilibrium model with heterogeneous firms and workers and input-output linkage, this paper exploits historical data and analyzes allocation, prices, and the formation of markets in China during this DTS period. Theoretically, while DTS will distort the resources allocation between rural and urban (misallocation effect), it selects workers and farmers in the rural (selection effect). What is more, comparing to the economy under Soviet-style big bang reform, DTS activates industrialization by providing intermediate goods with lower-than-market price (activation effect). Quantitatively, directly switching to market economy in 1978 would decrease total output by 4.5% as the activation effect dominates. On the intensive margin, reform on DTS (procurement price was getting closer to market price) had contributed to total output by 4.4% from 1978 to 1992.

Medicines regulation, pricing and reimbursement in Brazil

Brazil is an upper-middle-income country with a high human development index (HDI) of 0.765 (2019). The Unique Health System (SUS) is a universal, decentralised system, free at point-of-care, although 27% of Brazilians have voluntary supplementary health insurance. Medicines are provided free-of-charge through the SUS, though there are a few exceptions where co-payment is required. Around 87% of the country’s expenditure with medicines and medical devices corresponds to out-of-pocket, highlighting the importance of price regulation. Marketing authorisation and maximum price approval are mandatory market entry requirements for medicines. Pricing policies include maximum price approval, regulation of mark-ups, tax exemption, annual price adjustment and a mandatory discount for government procurement and enforcement mechanisms. The pricing of new drugs considers the patent status and added therapeutic benefit. It is a combination of health technology assessment and external or internal reference pricing, while drugs with active ingredients in the market follow internal reference pricing. The maximum price of generics must be up to 65% of the reference’s price. The maximum approved prices and public procurement prices are publicly available. Brazil has a value-based decision-making process for incorporating medicines and other technologies at the SUS. Current areas of work include horizon scanning, participation of patients in decision-making and re-assessment of technologies. As a decentralised system, medicines are procured by the Ministry of Health, states and municipalities, according to their level of responsibility. Pricing and reimbursement policies, including a consolidated generics policy, have been important in promoting transparency, predictability, and price stability, in turn contributing to cost-containment and access. Ongoing challenges include high rates of judicialisation, medicines with excessive prices not commensurate with their clinical benefits, no provision for pricing review, problems related to governance and politics. To address these challenges, the authors have three main recommendations. First: improving regulatory governance, second: incentivising the development and promoting access to medicines with stronger evidence, added clinical benefit and fair prices, and third: increasing awareness among stakeholders, avoiding judicialisation and minimising its impact; contributing to closing the gap between innovation and access to medicines.

COMPRESSIVE STRENGTH EXPERIMENT STUDY OF LATERITE SOIL AND LIME (CACO3) MIXTURES FOR ROAD FOUNDATION LAYERS

In remote areas, most roads still use soil pavement which is very susceptible to weather changes, especially those using soil pavement with high plasticity or clay soil. In addition to cost issues, the difficulty of obtaining a good material source becomes another problem that results in soaring material procurement prices. Related to that matter, then conducted research that utilize local material that is limestone rock (limestone) as the material of stabilization. This research is experimental by designing a mixture of lime-laterite cylinders with a diameter of 50 mm and a height of 100 mm. The number of test specimens was 144 by taking samples from two regions, namely Skyland-Jayapura and Mindiptana-Merauke, and for mixtures using 5%, 10%, 15%, 20%, 30%, 40%, 60% % with lime gradation each pass 10, 40, and 200 sieves. Mixed mechanical testing was performed after the test specimen was subjected at 7 days with a compressive strength test. The results showed that the specimens for the Skyland-Jayapura area with a mixture of laterite soil + lime pass filter 200 were in lime variations of 5% valued at 0.46 MPa, while laterite + lime clearance 40 was in a lime variation of 5% 0,64 MPa.

Economic impact of COVID-19 pandemic on dairy farmers of Karnataka

The novel corona virus (COVID-19) which was first identified on November 17, 2019 in Wuhan city of China turned out to be a pandemic. As a preventive measure against the pandemic, the Government of India announced nationwide lockdown on 24 March, 2020 which continued till 31 May, 2020. This not only limited the movement of people across the country but also led to the implementation of the policies like quarantines, containment zones, social distancing, travel restrictions etc. These polices have affected every sector of the Indian economy including the dairy sector. Against this backdrop, the present study was undertaken to assess the economic impact of COVID-19 pandemic on dairy farmers. The study covered pre-lockdown, lockdown and post-lockdown phases up to December 2020. The data was collected from 200 dairy farmers across Bengaluru Rural and Chikkaballapura districts of Karnataka state. A large majority of the farmers from Bengaluru Rural (81%) and Chikkaballapura (87%) districts reported loss in their income from dairying during lockdown and post-lockdown periods. In both the districts the crossbred cattle were dominant (90%). In Bengaluru Rural district, the net return per litre of milk of crossbred was reduced to the extent of 33.06% during lockdown and by 48.64% during post-lockdown as compared to prelockdown period. In Chikkaballapura district, the net return per litre of milk of crossbred was reduced to the extent of 20.90% during lockdown and by 22.77% during post-lockdown as compared to pre-lockdown period. The loss in net return was attributed to reduction in procurement prices of milk, increased feed cost and decline in milk yield in that order respectively.

Availability of essential diagnostics in the Philippines

Availability of essential diagnostics in the Philippines

Paddy farmers in Kerala are willing to pay more for a modified crop insurance product

We study paddy farmers in Kerala and analyse the factors affecting their willingness to pay for crop insurance and for a hypothetical crop insurance product. The farmers are willing to pay higher premium rates if claims are settled based on the procurement price, instead of cultivation cost, and promptly; and individual losses are accounted for. A farmer's willingness to pay more is influenced positively by their landholding size and negatively by age. Infrastructural support, and efficient implementation, will help to resolve the design--reality gaps in insurance schemes. Designing popular schemes will reduce the subsidy burden on the public exchequer.

Mapping the selection, availability, price and affordability of essential medicines for mental health conditions at a global level.

To provide a cross-country analysis of selection, availability, prices and affordability of essential medicines for mental health conditions, aiming to identify areas for improvement. We used the World Health Organization (WHO) online repository of national essential medicines lists (EMLs) to extract information on the inclusion of essential psychotropic medicines within each country's EML. Data on psychotropic medicine availability, price and affordability were obtained from the Health Action International global database. Additional information on country availability, prices and affordability of essential medicines for mental disorders was identified by searching, up to January 2021, PubMed/Medline, CINAHIL, Scopus and the WHO Regional Databases. We summarised and compared the indicators across lowest-price generic and originator brand medicines in the public and private sectors, and by country income groups. A total of 112 national EMLs were analysed, and data on psychotropic medicine availability, price and affordability were obtained from 87 surveys. While some WHO essential psychotropic medicines, such as chlorpromazine, haloperidol, amitriptyline, carbamazepine and diazepam, were selected by most national lists, irrespective of the country income level, other essential medicines, such as risperidone or clozapine, were included by most national lists in high-income countries, but only by a minority of lists in low-income countries. Up to 40% of low-income countries did not include medicines that have been in the WHO list for decades, such as long-acting fluphenazine, lithium carbonate and clomipramine. The availability of generic and originator psychotropic medicines in the public sector was below 50% for all medicines, with low-income countries showing rates lower than the overall average. Analysis of price data revealed that procurement prices were lower than patient prices in the public sector, and medicines in the private sector were associated with the highest prices. In low-income countries, the average patient price for amitriptyline and fluoxetine was three times the international unit reference price, while the average patient price for diazepam was ten times the international unit reference price. Affordability was higher in the public than the private sector, and in high-income than low-income countries. Access to medicines for mental health conditions is an ongoing challenge for health systems worldwide, and no countries can claim to be fully aligned with the general principle of providing full access to essential psychotropic medicines. Low availability and high costs are major barriers to the use of and adherence to essential psychotropic medicines, particularly in low-and middle-income countries.

Optimal Procurement Management by Reverse Auctions for a Price-Setting Newsvendor

In this paper, we study the optimal procurement management by reverse auctions for a price-setting newsvendor (retailer) in a single period setting. The retailer facing price-dependent stochastic demand first designs a procurement contract and then invites the suppliers to bid for this contract in the reverse auction. The winning supplier produces and delivers the demanded quantity. The retailer obtains the procurement quantity and simultaneously determines the retail price. By using the price elasticity of the lost-sales rate, we show that the retailer’s expected profit (excluding the procurement cost) is a concave function of the purchased quantity, which can be used to obtain the optimal procurement and retail pricing decisions for the retailer. Further, when the underlying random term of demand function is normally distributed under left-truncation (at 0), we get the analytical expressions of the purchased quantity and expected profit function for the retailer. Moreover, some numerical examples are given.

Energy procurement and retail pricing of electricity retailers via deep reinforcement learning with long short-term memory

Energy procurement and retail pricing of electricity retailers via deep reinforcement learning with long short-term memory