Supplier's Cost Research Articles

Signaling or not? The pricing strategy under fairness concerns and cost information asymmetry

Supply chain fairness issues have become crucial and prevalent recently, whereas the operational decisions in the fair chain are more and more challenging when involving information asymmetry. Considering the fact that the upstream supplier of a chain generally has private production cost information, this paper investigates how the supplier strategically makes pricing decisions under the own private information and the downstream fairness concerns. Based on inequity aversion theory, we set up a signaling game between the supplier and the retailer with two kinds of inequity aversion, disadvantageous inequity aversion and advantageous inequity aversion, respectively. Compared with the scenario of symmetric information, under asymmetric information, we find that: the high-cost supplier distorts the wholesale price upward to avoid the low-cost supplier's price mimicry when the retailer has disadvantageous inequity aversion and the cost difference between the two types of suppliers is small; the supply chain's expected profit and expected utility may increase due to the reason that the low-cost supplier distorts his wholesale price downward when the retailer has advantageous inequity aversion, which mitigates the double marginalization. Moreover, we extend the base model to the scenario of endogenous prior probability on supplier cost type and we show that when the retailer has disadvantageous inequity aversion, cost information asymmetry may improve the willingness of the high-cost supplier to become the low-cost supplier. Our results can provide some practical insights on managing cost information asymmetry from the perspectives of the supply chain and the industry.

Increase or decrease: Customer digital transformation and supplier cost stickiness

Customer digital transformation plays a crucial role in shaping supply chain management, particularly affecting the cost stickiness of supplier firms. By analyzing textual data from the top five customers of Chinese listed firms, this study investigates the impact of customer digital transformation on supplier cost stickiness. The findings demonstrate that the spillover effects of customer digital transformation substantially decrease supplier cost stickiness. This decrease is due to decreased adjustment costs, alleviated agency problems, and mitigated management optimism. Additionally, cross-sectional analysis reveals that these effects are more pronounced in suppliers with greater geographic distances from their customers, those within less competitive industries, and those audited by Non-Big Eight accounting firms. This research provides valuable insights for digital initiatives, supply chain management, and cost-related decision-making processes.

Alleviating poverty for common prosperity: The role of Fupinguan in an E-tailing supply chain

To alleviate poverty, e-tailers in China have established special web portals or channels, known as Fupinguans (FPGs), to sell products from poor suppliers in rural areas. This paper investigates the underlying mechanism of FPGs in poverty alleviation (PA) and explores their implications for the common prosperity of stakeholders. We consider an e-tailing supply chain where an e-tailer sells substitutes from a poor supplier (characterized by production inefficiency and capital shortage) and a normal supplier to PA-conscious consumers. The benchmark analyses show that the poor supplier faces hurdles in participating due to cost disadvantages in competition. The traditional PA strategy of loan interest subsidies, employed by the e-tailer, can involve the poor supplier in the supply chain by reducing its costs. However, this strategy can mitigate (not eliminate) the poor supplier's cost disadvantage while hurting the normal supplier. Instead, the FPG strategy will provide the poor supplier with a market advantage while indirectly triggering a spillover effect on the normal supplier's product. In this light, the FPG strategy can eliminate or even reverse the poor supplier's competitive disadvantage while benefiting the normal supplier and all stakeholders. Consequently, it can dominate the traditional strategy when the e-tailer has an insufficient financing capability or efficient FPG investment. The e-tailer's FPG investment incentive decreases with the cost disadvantage, whereas competition can strengthen this incentive when the cost disadvantage or competition intensity is sufficiently low. These findings position FPGs as novel business opportunities that align with the ethos of doing well by doing good.

Strategic alignment between supply chain partners and cost stickiness of suppliers

AbstractWe investigate the relationship between strategic alignment between suppliers and their major customers and the asymmetric behavior of costs, specifically cost of goods sold (COGS) and selling, general, and administrative (SG&A) costs. Utilizing mandated disclosures regarding major customers from 1978 to 2018, we construct supplier–customer dyads to examine this connection. Our results indicate a positive association between strategic alignment in supply chain partnerships and the stickiness of COGS and SG&A costs for suppliers. This positive association is more pronounced for suppliers in the early stages of their relationships than those with long-term partnerships. Additionally, strategic alignment increases the stickiness of suppliers’ research and development (R&D) costs. Furthermore, we observe that strategic alignment correlates with an extended duration of supplier–customer relationships and improved supplier performance. Our findings hold across alternative constructs of strategic alignment, various supplier strategy types, and when accounting for characteristics of the supply-chain relationship.

Optimization scheduling of microgrid comprehensive demand response load considering user satisfaction

The original load control model of microgrid based on demand response lacks the factors of incentive demand response, the overall satisfaction of users is low, the degree of demand response is low, the Time Of Use (TOU) price of peak-valley filling capacity is weak, and the peak-valley difference of load curve is large. Regarding the limitations of the current microgrid demand response model, this study further optimizes the flexible load control strategy and proposes a two-objective optimization model based on price and incentive. Meanwhile, the model is solved using an improved chaotic particle group algorithm. Finally, the microgrid load data were selected for simulation analysis. The simulation results showed that the comprehensive demand response of flexible control model proposed increased the overall satisfaction of users by 9.51%, the overall operating cost of microgrid suppliers decreased by 12.975/ten thousand yuan, the peak valley difference decreased by 4.61%, and the user demand response increased by 27.24%. The model effectively improves the overall profit of the supply side of the microgrid, improves the user satisfaction, and maximizes the linkage benefits of the supply and demand of the micro grid. In addition, the model effectively reduces the phenomenon of distributed power supply in the microgrid, and realizes the supply and demand matching of the whole load in the microgrid.

SUPPLIER SELECTION CRITERIA OF RESTAURANT: A CROSS-INDUSTRY LITERATURE REVIEW

Previous studies have extensively explored supplier selection criteria; however, there has been a notable scarcity of in-depth investigations into the specific criteria for selecting suppliers in the restaurant industry. Thus, this research commences with an overview of supplier selection criteria, followed by a comprehensive review of criteria employed across diverse industries. Through this review, this study identify and distill five key criteria uniquely suited for restaurants: Finance, Technology, Product Quality, Cost, and Service of Supplier. These criteria are subsequently subjected to thorough analysis. This study ultimately contributes novel insights into supplier selection within the restaurant sector, providing the industry with robust decision-making support and practical guidance.

Private Equity in Distress and the Incentives of Collateralised Loan Obligations

Abstract This article explores the problem that both modern private equity (PE) firms, and collateralised loan obligation (CLO) lenders to PE portfolio companies, have incentives to avoid a formal restructuring of PE portfolio companies in financial distress. The author is concerned that this may lead to negative social costs for suppliers, employees, customers and even government agencies. She explores how and why the problem arises, and the ways in which corporate and corporate insolvency law might be able to respond to it. Some suggestions are made, but it is accepted that any solution involves a sensitive balance that needs to be approached with considerable care.

Multilevel Value Co-Creation Within Key Accounts

Optimizing complex service partnerships requires an understanding of multilevel value co-creation processes in a customer-supplier ecosystem. Such strategic business-to-business relationships impact supplier costs and revenues, necessitating dedicated personnel across hierarchical levels to co-create value. The authors study the customer-supplier ecosystem intra-organizationally across firm levels to understand value expectations and orientations, and extra-organizationally to identify supplier harmonization strategies for managing multilevel value co-creation. Empirically, the authors conduct a multilevel-multisource qualitative case study within a strategic partnership, with a service contract valued at over $100 million per year, that includes senior- and frontline-level interviews in the key account customer organization (32 participants) and supplier organization (22 participants). The analysis focuses on how institutions, spanning contracts, and behavioral norms within the business-to-business customer-supplier ecosystem, govern actions and aspirations. Findings typify the nature of divergent value expectations between customer hierarchies along with level-specific co-creation orientations. As future prognosis hinges on harmonizing practices and institutions to address discrepancies in value visibility across customer levels, such an assessment also enables actionable strategies to enhance reengagement. The findings collectively offer theoretical implications for key account management (KAM) research, influencing areas such as professionalization of KAM, effectiveness in KAM, and network dynamics within KAM.

Vendor Selection Criteria and Construction Project Performance in Rivers Nigeria.

The study focused on Vendor Selection Criteria and Construction Project Performance in Rivers Nigeria. It adopted a survey approach; utilized structured questionnaire to collect data from 71 on-site construction project managers and engineers; data obtained were ranked according to their priority using Relative Importance Index (RII), and Chi-Square Analysis. Linear regression coefficients were drawn as estimates of construction project performance. The results showed that 22 criteria, grouped into four supplier selection dimensions: capability, quality, costs and sustainability. These indicators showed significant interaction with construction project performance. However, supplier flexibility did not yield significant outcome on construction project performance. The results suggest that supplier capability, supplier quality, supplier costs, and supplier sustainability selection variables are important sources of enhanced performance for construction project management. Keywords: Construction management; Vendor selection; Project performance; Relative importance index; Sustainable supplier selection.

To Transfer or Not? Analysis of the Original Equipment Manufacturer's Strategic Outsourcing Strategy in the Presence of the Supplier's Innovation Effort

Recently, a new trend has arisen in which many original equipment manufacturers (OEMs) outsourced to traditional low-cost manufacturing bases (e.g., China) have started to transfer production to new emerging regions with even lower costs (e.g., Southeast Asia). However, it is still unclear whether and when OEMs should transfer to the new environment, especially when taking the traditional supplier's initial innovation effort into consideration. To address this question, we consider a sourcing game where one OEM sources from a traditional low-cost supplier that can be either competitive (CS) or noncompetitive (NS) initially. Moreover, both of these types of suppliers have the ability to innovate by themselves. Driven by the increasing cost pressure, the OEM may transfer to a new supplier (LS) that has an even lower cost but suffers yield uncertainty. The equilibrium results show that the OEM is less likely to transfer when its brand value is large enough. Interestingly, we find that the competition between the CS and OEM does not always prompt the OEM to transfer. When the brand advantage is large enough and the traditional supplier's unit production cost for the OEM is moderate, the OEM should not transfer under the CS scenario but should transfer under the NS scenario. Finally, we find that when the OEM's brand advantage increases, the effectiveness of innovation in preventing the OEM from transferring decreases under the CS scenario, while it increases under the NS scenario.

Supply Chain Optimization in Industry 5.0: An Experimental Investigation Using Al

This experimental study examines the use of AI-driven supply chain management solutions in the framework of Industry 5.0. An analysis of fictitious data that represented product inventory, supplier details, customer orders, and transportation details showed significant cost savings in transportation logistics (10%), improvements in supplier cost efficiency (20%), and significant reductions in excess inventory (10%). In Industry 5.0, artificial intelligence (AI) emerges as a key technology that can promote effective, customer-focused, and sustainable supply chains.

The pricing and sourcing strategies of competitive retailers under supply disruption in the presence of liquidated damages

Supply disruptions often make retailers face stock-outs and lead to higher selling price, which forcing retailers to adopt optimal sourcing strategies to avoid disruptions and carefully adjust their pricing when disruptions occur to achieve ideal profits in competition with other peers. In this paper, we optimize the combination of pricing levels and sourcing strategy of the competitive retailer having choices of cost or stable supplier when supply disruptions occur with the consideration of liquidated damages. Based on the procurement costs difference between retailers and competitors, we studied the optimal sourcing and pricing strategies under two types of Stackelberg game and one type of Nash game. We find that the Nash Equilibrium leads lower selling prices for retailers and larger purchases from cost suppliers compared to the Stackelberg game, but with the increase of retailer’s market potential, retailers gradually depend on stable suppliers. We also find that liquidated damages can have a significant impact on retailers’ decisions. Specifically, when the probability of disruption is high, retailers will mainly rely on stable suppliers in the presence of no liquidated damages, while in the case of liquidated damages, retailers will instead rely on cost suppliers. Furthermore, as liquidated damages increase, retailers prefer to source from cost suppliers and use very high price adjustments to account for supply disruptions. Especially when the risk of disruption is high, retailers rely mainly on cost suppliers and super high price adjustments. This highlights the critical role of liquidated damages on retailers’ optimal pricing and sourcing strategies.

A distributed multi-objective optimization method for scheduling of integrated electricity and hydrogen systems

The growing diversity in energy demand has led to an increasingly intertwined relationship between the electric power system (EPS) and hydrogen energy system (HES). However, these systems are presently managed by entities with distinct interests, resulting in competition and privacy concerns during the scheduling of integrated electricity and hydrogen systems (IEHSs). To address this issue, this paper proposes a multi-objective IEHS scheduling model with the aim of minimizing costs for electricity and hydrogen suppliers, taking into account bi-directional energy transactions between EPS and HES. Furthermore, we present an innovative approach based on alternating direction multiplier method (ADMM) for distributed ξ-constraint optimization. This approach efficiently captures the optimal Pareto frontier while maintaining the privacy of EPS and HES. The proposed methodology is validated on an IEHS composed of an IEEE 33-bus EPS and a 20-node HES. The results demonstrate that no matter how many solution sets, a more uniform pareto front can be obtained than the traditional method. Furthermore, it simplifies the multi-objective optimization problem and effectively protects the privacy of participants at the expense of acceptable solution time.

Long-term emission reduction strategy in a three-echelon supply chain considering government intervention and Consumers’ low-carbon preferences

This paper investigates a three-echelon supply chain that consists of a supplier, a manufacturer, and a retailer. Owing to the government intervention and consumers’ low-carbon preferences, the market share is influenced by the carbon emission reduction technology improvement of the supplier and manufacturer and the low carbon advertisement of the retailer. We then construct the differential game model of three-echelon supply chain from the perspectives of decentralized, governmental intervention, supplier cost sharing and governmental intervention, and retailer cost sharing and governmental intervention. Main results are as follows: (1) the manufacturer and supplier's active investment in emission reduction technologies and retailer's advertisement will consistently increase the profits of supply chain members; (2) given that the government subsidizes the manufacturer's carbon emission reduction technology through tax exemption or tax reduction, the manufacturer will always fall into a prisoner's dilemma once the government's carbon emission limit exceeds a certain threshold range; (3) consumer preferences will have a positive effect on manufacturer and supplier's emission reduction strategies, whereas it has nothing to do with retailer's advertisement, and retailer's investment in advertising only depends on manufacturer's subsidy policy; (4) compared with decentralized scenario, Pareto improvement can always be realized whether the manufacturer chooses to cooperate with the supplier or retailer. Our results can provide theoretical basis for the carbon emission strategy of three-echelon supply chain members in low-carbon environment.

Optimal employment model for an entrant platform in on-demand service market

PurposeFor an entrant platform in the on-demand service market, choosing an appropriate employment model is critical. This study explores how the entrant optimally chooses the employment model to achieve better performance and investigates the optimal pricing strategies and wage schemes for both incumbent and entrant platforms.Design/methodology/approachBased on the Hotelling model, the authors develop a game-theoretic framework to study the incumbent's and entrant's optimal service prices and wage schemes. Moreover, the authors determine the entrant's optimal employment model by comparing the entrant's optimal profits under different market configurations and analytically analyze the impacts of some critical factors on the platforms' decision-making.FindingsThis study reveals that the impacts of the unit misfit cost of suppliers or consumers on the pricing strategies and wage schemes vary with different operational efficiencies of platforms. Only when both the service efficiency of contractors and the basic employee benefits are low, entrants should adopt the employee model. Moreover, a lower unit misfit cost of suppliers or consumers makes entrants more likely to choose the contractor model. However, the service efficiency of contractors has nonmonotonic effects on the entrant's decision.Originality/valueThis study focuses on an entrant's decision on the optimal employment model in an on-demand service market, considering the competition between entrants and incumbents on both the supplier and consumer sides, which has not been investigated in the prior literature.

Effectiveness of Deep Feature Extraction Algorithm in Determining the Maturity of Fruits: A Review

Intelligent farming technology helps farmers overcome tough obstacles in the farming process, such as increased sup-plier costs, a lack of labour, customer satisfaction, and more. Artificial Intelligence (AI) is a remarkable technology in smart farming because it deeply understands the issue and can help farmers make decisions. This article's main objective is to identify and examine the concepts and techniques of Convolutional Neural Networks (CNN) technology that could aid in classifying the ripeness stages of fruit in intelligent farming. This paper systematically reviews 18 previous works for classifying the ripeness stages of fruit. This review outlines the most commonly used algorithms, activation functions, optimisation functions, and platforms for algorithm implementation. In addition, found that not all algorithms are suitable for even near-equivalent processes. Therefore, this study suggests the intensity of the CNN algorithms concerning various metrics to find the suitability for the operations/applications. Finally, this paper offers some future research directions in the ripeness classification of fruits.

Complex energy-reserve orders for generators with income and ramping restrictions on European electricity markets

Electricity market integration is an ongoing process in the European power sector. One of its important development areas concerns the integrated, combined trading of different power system products such as energy and control reserves. However, the complicated technical and economic characteristics of generators pose challenges for simple energy-reserve offers. Our solution approach is to unify them with complex orders. The latter have been introduced to represent special generator characteristics on the currently operating European energy-only market. The unified order type is designed to keep all the advantageous properties and functionality of its predecessors. Similarly to simple energy-reserve offers, the decision between energy and control reserve products takes opportunity costs into account. This is a necessary property of optimal capacity allocation. The non-convex fixed costs of suppliers are represented using Minimum Income Conditions and Scheduled Stop Conditions while their ramping limits are handled by Load Gradient Conditions. All three of these components belong to complex orders originally. The resulting new model can be formulated in a single convex Mixed Integer Quadratic Program, and it is fully compatible with European market rules. The viability and adequacy of the proposal are demonstrated using numerical case studies.

An optimal mechanism to fund the development of vaccines against emerging epidemics

We derive the optimal funding mechanism to incentivize development and production of vaccines against diseases with epidemic potential. In the model, suppliers’ costs are private information and investments are noncontractible, precluding cost-reimbursement contracts, requiring fixed-price contracts conditioned on delivery of a successful product. The high failure risk for individual vaccines calls for incentivizing multiple entrants, accomplished by the optimal mechanism, a (w+1)-price reverse Vickrey auction with reserve, where w is the number of selected entrants. Our analysis determines the optimal number of entrants and required funding level. Based on a distribution of supplier costs estimated from survey data, we simulate the optimal mechanism’s performance in scenarios ranging from a small outbreak, causing harm in the millions of dollars, to the Covid-19 pandemic, causing harm in the trillions. We assess which mechanism features contribute most to its optimality.

Early Supplier Involvement, Cost Reduction and Performance of Manufacturing Firms: The Role of Firm Size

Early Supplier Involvement, Cost Reduction and Performance of Manufacturing Firms: The Role of Firm Size

Optimizing order policy and credit term for items with inventory-level-dependent demand under trade credit limit

Under the combined effects of inventory-level-dependent demand (ILDD) and trade credit, the retailer is able to order more quantities to stimulate market demand. However, from the supplier's perspective, two important issues are lacking sufficient attention. First, during the credit period, the retailer's higher order quantities imply increases in both the retailer's account payable and the supplier's opportunity cost of capital. Second, given the supplier's fixed production rate, the increased market demand may drive the capacity utilization to be variable. Thus, by formulating a supplier-dominated system, this paper incorporates trade credit limit (TCL) to address its effects on optimal policies vis-à-vis the item with ILDD. Specifically, three indicators can be proposed to reveal which type of financing policy the retailer should choose. Moreover, based on TCL, the supplier can effectively manage the retailer's order quantity and the corresponding account payable. Additionally, the retailer's maximum allowable order quantity is developed to ensure that the supplier can supply the retailer's order quantity on time. Furthermore, when the effects of ILDD become more significant, the manufacturer will reduce the maximum allowable order quantity to control the retailer's order incentive.