Journal article
Effect of price reduction on renewable energy technology supply chain performance and contract design
The Journal of the Operational Research Society, v 73(4), pp 822-839
24 Mar 2022
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Over the past ten years, fossil fuel sources, particularly coal, dominate global electricity generation. With increasing concerns of large pollution emissions from coal-fired power plants and world-wide commitment to environmental change, clean and renewable energy has begun to surge. However, while the installation of renewable energy technology such as solar photovoltaic (PV) panels has risen globally, there has been a sharp reduction in the price of solar PV panels, which has created a challenge for manufacturers and retailers due to a rapidly changing market. This unique characteristic of renewable energy technology supply chains creates inefficiencies by incentivizing manufacturers and retailers to maintain stock levels that are too low prior to a price reduction. To address this challenge, this research models a renewable energy technology supply chain with one manufacturer and one retailer (who acts as an installer) that faces stochastic consumer demand. Applying inventory models with stochastic demand, this research aims to (1) demonstrate the negative impact of a price reduction on the supply chain by comparing to a model without a price reduction; (2) characterize the renewable energy technology manufacturer's and retailer's optimal stock and production policies with and without a compensation fee contract when a price reduction is present; (3) conduct sensitivity analysis by simulating supply chain performance with different parameter settings; and, (4) provide guidance on supply chain contract design to enhance the efficiency of a renewable energy technology supply chain.
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Details
- Title
- Effect of price reduction on renewable energy technology supply chain performance and contract design
- Creators
- Chuanhui Xiong - University of North Carolina at PembrokeAnna G. Devlin - Drexel UniversityJatinder N. D. Gupta - University of Alabama in HuntsvilleXiangrong Liu - Bridgewater State University
- Publication Details
- The Journal of the Operational Research Society, v 73(4), pp 822-839
- Publisher
- Taylor & Francis
- Number of pages
- 18
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Decision Sciences (and Management Information Systems)
- Web of Science ID
- WOS:000620544200001
- Scopus ID
- 2-s2.0-85101264074
- Other Identifier
- 991019168373804721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Management
- Operations Research & Management Science