Salvage Value Research Articles

Decarbonization costs for the Swedish heavy-duty road fleet: Circular economy insights on electric truck batteries

This study analyzes decarbonization costs for the Swedish heavy-duty road fleet under five scenarios, one taken from the EUCalc model as a reference scenario and four others driven by interviews: a high-speed transition with 100% battery electric vehicles (BEVs) across all distances; a high-speed transition with BEVs taking 100% of the market in local and regional distances and 40% in long distances, with the remaining 60% being fuel cell vehicles (FCVs) by 2050; a low-speed transition with BEVs market share increasing by 15% every five years, starting at 10% from 2025 for local and 2030 for regional and long distances; and a low-speed transition similar to the previous scenario, but with 60% of the electrified long-distance fleet to be FCVs. The system's expenses are then calculated through numerical modeling. The study links research on the costs of sustainability transition to a circular economy by analyzing the effect of charging range and temperature on battery degradation for BEVs and their impact on the batteries' valorization. In full electrification scenarios, despite lower operating expenses, the system incurs a higher total cost because of higher investment expenses. Charging–discharging pattern and temperature impact the remaining capacity, and therefore salvage value, of end-of-life batteries.

Implementation Of Life Cycle Cost in The Bus Station Building

With the increase in existing development, of course, there must be consideration of careful cost planning to support planning, use, and the end of the building service period, particularly in the building industry. The use of the LCC method in estimation is one part of estimating the service life. Both qualitative and quantitative methodologies were used in this investigation.. The research refers to the terminal development project, and takes a sample of the building which is the focus of the research. The Budget Plan, containing each of its elements, is also the foundation of the research. The building's service life is then estimated and considered to be 25 years of operation., the resulting life cycle cost is Rp. 20,499,410,364, - The largest cost during the service life of the building is 25 years, which is found in operational costs Rp. 9,302,325,418 (40.86%), the initial cost is Rp. .7,769,441,715 (34.12%), maintenance costs Rp. 2,312,949,413 (10.16%), replacement cost Rp.2,249,032,308 (9.88%) and salvage value Rp.1,134,338,490 (4.98%).

OPTIMAL DECISION-MAKING FOR NEWSPAPER INVENTORY: BALANCING DEMAND UNCERTAINTY AND PROFITABILITY

Estimating cost-benefit analysis, calculating the real value of anything before buying it is essential in order to know if this purchase is fetching or not. In the industry of selling newspapers, since demand is determined by various unpredictable features like news quality and types of reader interest, it may be difficult to estimate how many copies you should buy daily. On the other hand, this study addresses the classic Newsvendor Problem by analyzing a single-period inventory management model to find the optimal order quantity that maximizes profit. Simulating different demand scenarios up to 20 days into the future, using financial-based assumptions (e.g.: selling price, buying cost, and salvage value) on order quantities in order to investigate profits. The results show that we can identify the optimal level of order quantity in the cost-benefit analysis and profit analysis under different demand situations. This method reduces both excess waste and missed sales opportunities, making an optimal answer for inventory alignment in sought-after uncertainty-based industries. The insights of this analysis are not just relevant to newspaper sales but also to all comparable industries where accurate inventory management becomes challenging.

Harnessing the power of module markets for effective product recovery strategies

AbstractThis paper investigates how product modularity affects a manufacturer's recovery strategy by constructing two trade‐in models: one with a module market and another without. Our results reveal that opening a module market is not always profitable for the manufacturer, except when the module production cost is extremely low. When opening it is less profitable, the manufacturer can boost profits by raising the module price, increasing salvage value, and reducing costs through remanufacturing. Regarding collection quantity, our findings reveal that a module market, particularly with high module costs and durability, increases trade‐in quantity, challenging the conventional expectations of market share erosion.

Deterministic Two-Storage Inventory Model for Deteriorating Items with Salvage Value Under Inflation

Deterministic Two-Storage Inventory Model for Deteriorating Items with Salvage Value Under Inflation

Who should pay for the return freight in e-commerce? Platforms, retailers or consumers

In the realm of e-commerce, various return freight modes are available, such as platform-bearing return freight (PP strategy), retailer-bearing return freight (RP strategy), and consumer-bearing return freight (CP strategy). The return freight strategy adopted by platforms plays a crucial role in responding to consumer behaviors. To analyze how platforms determine the optimal return freight strategies, we examine a supply chain comprising a platform, a retailer, and heterogeneous consumers, employing a Stackelberg game model to capture their decision dynamics. Our findings suggest that the platform should opt for the PP strategy only when the product profit margin is relatively low. If the platform refuses to adopt the PP strategy, then the RP strategy is preferable when consumers face extremely high consumer return freight costs; otherwise, the CP strategy is the equilibrium result. We also prove that the selection of the return freight strategies leads to changes in the property of the equilibrium. Under the CP strategy, how the product fit probability affects the optimal price depends on the procurement cost; while under the RP and PP strategies, the optimal price decreases with the fit probability. Moreover, under the PP strategy, an increase in the product fit probability does not always benefit the platform. Further, our analysis reveals that, while the PP strategy can reduce the retailer’s risk, it might negatively impact supply chain performance, which implies that cost sharing in the supply chain does not necessarily lead to a higher channel profit. We also investigate how the platform’s return freight strategies affect consumer surplus and identify regions for Pareto improvement where all parties benefit from the PP strategy. Finally, by exploring extensions like positive salvage values, partial refunds, platform competition, and differentiated return freight costs, we confirm the robustness of our findings and unveil new insights.

Electric tugboat deployment in maritime transportation: detailed analysis of advantages and disadvantages

Purpose This study aims to provide a comprehensive review of electric tugboat deployment in maritime transportation, including an in-depth assessment of its advantages and disadvantages. Along with the identification of advantages and disadvantages of electric tugboat deployment, the present research also aims to provide managerial insights into the economic viability of different tugboat alternatives that can guide future investments in the following years.Design/methodology/approach A detailed literature review was conducted, aiming to gain broad insights into tugboat operations and focusing on different aspects, including tugboat accidents and safety issues, scheduling and berthing of tugboats, life cycle assessment of diesel tugboats and their alternatives, operations of electric and hybrid tugboats, environmental impacts and others. Moreover, a set of interviews was conducted with the leading experts in the electric tugboat industry, including DAMEN Shipyards and the Port of Auckland. Econometric analyses were performed as well to evaluate the financial viability and economic performance of electric tugboats and their alternatives (i.e. conventional tugboats and hybrid tugboats).Findings The advantages of electric tugboats encompass decreased emissions, reduced operating expenses, improved energy efficiency, lower noise levels and potential for digital transformation through automation and data analytics. However, high initial costs, infrastructure limitations, training requirements and restricted range need to be addressed. The electric tugboat alternative seems to be the best option for scenarios with low interest rate values as increasing interest values negatively impact the salvage value of electric tugboats. It is expected that for long-term planning, the electric and hybrid tugboat alternatives will become preferential since they have lower annual costs than conventional diesel tugboats.Practical implications The outcomes of this research provide managerial insights into the practical deployment of electric tugboats and point to future research needs, including battery improvements, cost reduction, infrastructure development, legislative and regulatory changes and alternative energy sources. The advancement of battery technology has the potential to significantly impact the cost dynamics associated with electric tugboats. It is essential to do further research to monitor the advancements in battery technology and analyze their corresponding financial ramifications. It is essential to closely monitor the industry’s shift toward electric tugboats as their prices become more affordable.Originality/value The maritime industry is rapidly transforming and facing pressing challenges related to sustainability and digitization. Electric tugboats represent a promising and innovative solution that could address some of these challenges through zero-emission operations, enhanced energy efficiency and integration of digital technologies. Considering the potential of electric tugboats, the present study provides a comprehensive review of the advantages and disadvantages of electric tugboats in maritime transportation, extensive evaluation of the relevant literature, interviews with industry experts and supporting econometric analyses. The outcomes of this research will benefit governmental agencies, policymakers and other relevant maritime transportation stakeholders.

Bus fleet decarbonization under macroeconomic and technological uncertainties: A real options approach to support decision-making

Fleet owners deal with various and critical uncertainties while planning bus fleet replacement, encompassing macroeconomic and technological factors, such as fuel and electricity prices, energy consumption, purchasing costs of electric batteries and powertrains, and bus salvage value upon resale. This paper proposes a Real Option-based framework to evaluate investment choices in different bus technologies over time (diesel, hybrid electric, compressed natural gas, and full-electric), where the proposed options usually involve replacing existing diesel fleets with alternatively powered buses. In particular, we provide a multi-option least squares Monte Carlo simulation to help fleet owners in making cost-effective investment decisions, resulting in potential cost savings of up to 10% of the annual total cost of ownership. By applying the proposed approach to different bus route types (inner-city, urban, suburban, commuter), the results show how the optimal investment choices for fleet replacement change over time. Initially, diesel buses or, at most, compressed natural gas buses are more cost-effective compared to electric technology. However, as electric technology becomes increasingly competitive, internal combustion buses are phased out. Inner-city and urban routes are better suited for the electric transition, whereas the transition may progress more slowly on other route types.Finally, we show that, under technological and macroeconomic uncertainties, the duration of contracts can strongly affect the investment decisions, in absence of specific guarantees on the new fleet.

An evaluation of system modularity and interface standards as a means for continued platform level relevance

This paper will develop a descriptive working definition of modularity regarding ship systems. An effort will be made to expose the underlying motivation and attractiveness of modularity in naval vessels utilizing economic salvage value and continued operational relevancy. A survey of 50 years of modern system development in support of modularity will be supported by a historical case study. The historical analogy will focus on the concurrent development of platforms and weapon systems during the age of sail. Specific focus will be given to platform developments and the advent of marine artillery and their associated technological development. The insight developed will then be applied to two modern naval corollaries.

Effects of Imprecise Cognitive Biases and Free-Riding on the Pricing Decisions of Dual-Channel Supply Chain Members

Nowadays, to cater the increasing green customers, firms have switched to green manufacturing. In a dual-channel green supply chain (DCGSC), customers experience products at offline stores and buy them online (free-riding). Often imprecise cognitive biases (“fairness concern” and “overconfidence”) are observed among the supply chain (SC) members. With these facts, this study introduces the free-riding and above cognitive biases in a DCGSC with a manufacturer selling a green product through own online and offline retail channels and examines their effects. A centralized and four decentralized models (for green and nongreen products) are formulated depending upon channel members’ cognitive biases individually and jointly with and without free-riding. The fuzzy objectives and constraints are made deterministic using expectation and possibility measures, respectively. Models are solved and illustrated numerically. The results indicate that free-riding is harmful and beneficial to retailer and manufacturer, respectively. Manufacturer’s overconfidence enhances the retailer’s profit but decreases or increases own profit depending upon the salvage value. Retailer’s fairness concern is catastrophic for manufacturer but beneficial for her. Product greening increases manufacturer’s profit than the carbon tax regulation for lower emissions. In addition to above observations, for maximum profit, management should not go for greening beyond an optimum level.

Joint impact of service efficiency and salvage value on the manufacturer’s shared vehicle-type strategies

With the rapid development of the sharing economy, many traditional automobile manufacturers have been choosing to provide the car sharing service. Some manufacturers share GVs, while others introduce EVs in the sharing market. We develop a model that a monopoly manufacturer who simultaneously sells GVs and EVs and discuss which type of vehicles should the manufacturer launch in the sharing market considering the service efficiency and the salvage value. Our findings are that no matter which type of vehicles the manufacturer shares, EV sales remain the same, but GV sales are reduced. This means that the manufacturer’s EV-sharing strategy always promotes EVs’ adoption. It is found that when both the service efficiency ratio of EV to GV and the salvage value gap between them are low or high, the manufacturer launches EVs; otherwise, the manufacturer launches GVs. We also find that the equilibrium vehicle-type strategy can maximize the manufacturer’s profit while being the most environmentally friendly only if the valuation of shared product is high. Through numerical analysis, we know that, although the manufacturer’s GV-sharing strategy worsens the environment, it always improves the social welfare. Notably, the manufacturer’s EV-sharing strategy is not always beneficial for the environment, especially if the service efficiency ratio is relatively high. Similarly, the manufacturer’s EV sharing does not always improve the social welfare, especially if the service efficiency ratio is in the middle range. The findings not only contribute to guiding the manufacturer’s vehicle-type strategies for car sharing, but also providing potential policy implications for the government’s effort in promoting EVs’ adoption.

Renewable energy trading: Assessment by blockchain

Renewable energy trading could be considered the next step in power trading's development. It is probable that individuals currently involved in power trading will need to upgrade their data collection, processing, and reporting systems. This article provides a comprehensive evaluation of renewable energy trading utilizing Blockchain technology. Initially, the paper examines country-specific renewable energy trading with a focus on India, China, the US, France, and Germany's renewable energy policies. Moreover, the paper presents potential renewable energy trading markets such as peer-to-peer, over the grid, and partially or fully independent microgrid's. This paper shows the appraisal of bond, commodity, derivative, and algorithm-based renewable energy trading using different Blockchain methods, including Ethereum and R3 Corda. It is find out during the renewable energy trading, proposers of bid, also include capital cost of the renewable energy power plant, salvage value after useful life of different component of renewable energy power plant. It is also find out proper trading is to be done with offering subsidies of up to 70 % of the capital cost, and with a 30 % viability gap finance (VGF) at this cost.

Using a two-price market value framework to value differences in metabolizable energy concentration of pasture across seasons

CONTEXTInternationally, there have been focused efforts to develop methods of ranking pasture cultivars to assist livestock producers make informed decisions about investments in pastures. The Australian Forage Value Index (FVI) currently ranks cultivars for the dairy industry based on the value of differences in seasonal dry matter (DM) yield only. Metabolizable energy (ME) is the most important nutrient supplied by pasture for livestock production; its inclusion in the FVI may provide useful information for decision making. OBJECTIVEThe objective was to apply a two-price market value framework to value differences in both seasonal DM yield and ME concentration for valuing and ranking pasture cultivars. METHODSThe two-price market value framework allocates a replacement cost or salvage value to extra ME supplied by pasture during seasons when pasture is typically in deficit or surplus, respectively, of animal demand. The replacement cost and salvage value were calculated using a single (Method 1) or multiple (Method 2) nutritional components, and compared. The estimated market values for extra ME were combined with corresponding market values for extra DM yield and applied to a data set of 20 perennial ryegrass cultivars. Cultivars were ranked based on their extra annual market value compared to base cultivar Victorian. Rankings were first calculated based on the value of seasonal differences in DM yield, and then re-calculated using differences in both seasonal DM yield and ME concentration. RESULTS AND CONCLUSIONSReplacement costs of a MJ of ME of $0.023 and $0.010 were estimated for seasons of pasture deficit using Methods 1 and 2, with corresponding salvage values of $0.018 and $0.007 for seasons of pasture surplus. Compared with rankings based on the value of differences in DM yield alone, including the value of differences in ME concentrations had little effect on the rankings of individual cultivars. This result is strongly influenced by the fact that those cultivars that lead the ranking based on seasonal yield also have relatively high values for ME. SIGNIFICANCEThe two-price market value framework is one method for estimating the value of nutrients supplied by pasture and offers a simplified alternative to more common approaches for valuing pasture. The approach used here has potential for broader application and could be particularly useful for informing decisions about investments in research and innovation into traits which alter the nutritive concentrations of pastures swards and pasture species.

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.

Enhancing sustainability in mass customisation of consumer electronics with salvage value through supply chain financing

ABSTRACT The consumer electronics industry is crucial in the global shift toward sustainability. To meet customers’ personalised needs efficiently and reduce production costs, electronic product suppliers increasingly focus on Mass Customization (MC) and modular production. Implementing a buyback policy for unsold module products with salvage value is a sustainable practice that reduces waste. This study explores two buyback support financing tools to enhance sustainability in the industry, enabling successful MC production. We also investigate how the salvage value based on modularity level and the buyback policy impact operational and financing decisions in the Mass Customization Supply Chain (MCSC). The research reveals that a higher modularity level positively impacts supplier’s profits and optimal capacity levels under both financing strategies. Consequently, this study offers valuable insights into elevating sustainability practices and optimising operational and financing decisions in the context of MC within the consumer electronics industry.

Integrated inventory replenishment and online demand allocation decisions for an omnichannel retailer with ship-from-store strategy

Retailing has changed dramatically from single-channel brick-and-mortar stores to multi-channel and omnichannel retailers over the last few decades. Omnichannel retailers employ different strategies to integrate online and offline sales channels as well as order fulfillment processes. Among these strategies, the ship-from-store is the most popular and widely accepted among retailers. It enables retailers to use inventory from store locations to fulfill online demand. An omnichannel retailer with a distribution center and a retail store has to make important, interlinked decisions — (1) how much inventory to keep at the retail store, and (2) where to fulfill the online demand from and how much. In this work, we model the integrated inventory replenishment and online demand allocation decisions for an omnichannel retailer employing the ship-from-store strategy. We analyze this problem for both single-period and multi-period settings. We extend the analytical framework of the single-period problem by providing a finite-horizon Markov decision process (MDP) formulation for the multi-period problem. Our findings suggest that for a single-period setting, decentralized inventory replenishment and demand allocation system maximizes the profit of the omnichannel retailer for low values of the incentive for fulfilling the online demand through store inventory, while for sufficiently high values of the incentive, a pooled system provides the optimal profit. An increment in the discount factor has the same effect on the optimal decisions in a multi-period setting as that of salvage value in a single-period setting for a given value of the incentive for the ship-from-store strategy. We also provide several extensions (such as cross selling, endogenous and correlated demand streams) of our analytical framework for the multi-period problem.

An Inventory Model with Fluctuate Ordering and Holding Cost with Salvage Value for Time Sensitive Demand and Partial Backlogging

Inventory models are essential in evaluating a wide range of genuine situations that occur in locations, including grocery and vegetable markets, market yards, petroleum exploration businesses, etc. This article introduces an economic order quantity (EOQ) profit optimization for degrading products. It analyzes how variable ordering prices and holding charges affect profit margins within restricted planning horizons. Here demand rate is projected to be time sensitive, and the worsening price is proportional to time. Models of inventories for decaying objects are established. The dilemma is solved when shortages are considered acceptable and partially backordered. The holding and ordering expenses tend to fluctuate. The salvage value is allocated to items in the system that have deteriorated. A numerical example is used to discuss the sensitivity of the models. Further, We exemplify that the significantly reduced cost coefficient is convex if evaluated simultaneously and finds the most efficient solution. The statistical analysis reveals that a suitable policy can benefit the retailer, especially for worsening products.

Redesigning product line for integrated manufacturer-supplier ecosystem in a centralized supply chain: Case of an industrial consumer product

To produce quality products rapidly to derive competitive advantage, the original equipment manufacturer (OEM) must work closely with its suppliers in product redesign processes. Previous literature has emphasized that quality products can be produced effectively and will provide better customer service if product redesign is performed considering the broad OEM-supplier(s) ecosystem. To this end, we seek to develop a mathematical model focused on maximizing the objectives of the OEM-supplier(s) ecosystem considering a centralized supply chain in such a manner that operational-level financial objectives are mapped in terms of product line design decisions and attribute-level assignments. By including operational-level supply chain considerations such as service levels and consumers' preferences, we seek to capture key aspects related to customers’ requirements. This research links product-level technical decisions with enterprise-level business objectives, thus bridging engineering and enterprise-level financial nuances. The problem for the manufacturer pertains to the minimization of the manufacturing cost and maximization of the product premium. The problem for the suppliers pertains to maximization of salvage value, minimization of shortage cost, and maximization of sales revenue. These two problems are then sewed together, and a chemical reaction optimization (CRO) based solution methodology has been deployed. To solve and analyze the devised problem, a case study based on an industrial consumer product is conducted. We evolve a comprehensive mathematical framework that mimics the facets related to product line redesign encapsulating considerations pertaining to functional level design, supply chain dimensions, and manufacturer-supplier profitability. Several novel findings are reported based on the study. For instance, we demonstrate that product configurations for respective segments after the redesign process are contingent upon the service level. Further, we demonstrate that in the industrial consumer product market, higher profit for the OEM-supplier(s) ecosystem is achieved at a slightly lower service level as opposed to a higher theoretical service level. The study has important implications for design and product management.

Sharing or reselling? How does manufacturer handle used products?

AbstractTo encourage consumers to reuse their used products, some manufacturers launch second‐hand platforms while others adopt sharing platforms. Which platform benefits them more is an interesting problem for such manufacturers. To address this problem, we propose a two‐period model in which heterogeneous consumers decide whether to buy new products in Period 1 or to rent (buy) used products on the platform in Period 2. Under a proportional transaction fee, we show that the two platforms can benefit the manufacturer if the unit production cost is high, and the valuation difference is low or the number of high‐value consumers in Period 1 is fewer than in Period 2. Moreover, the two platforms are equivalent when the salvage value is 0. When the salvage value is positive, the second‐hand platform benefits the manufacturer more than the sharing platform. The sharing platform induces the manufacturer to set a higher sale price than the second‐hand platform when the unit production cost is high and there are fewer high‐value consumers in Period 1. Otherwise, the sale and reselling prices are higher under the second‐hand platform. We also consider the cases with a general consumer valuation distribution, multiple product life cycles, and a fixed transaction fee. Our findings can help manufacturers make the decision on platform choice to handle used products.

Economic order quantity model for Pareto distributed decaying products with quadratic demand, shortage and salvage value

Economic order quantity model for Pareto distributed decaying products with quadratic demand, shortage and salvage value