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Title: Analysis of the revenue-sharing contract under different power structures with application in the biodiesel niche market
Keywords: Supply Chain Management, Revenue Sharing, Channel Power, Channel Coordination, Imbalanced Power Structure
Issue Date: 30-Mar-2009
Citation: KHAJEH AFZALI MARYAM (2009-03-30). Analysis of the revenue-sharing contract under different power structures with application in the biodiesel niche market. ScholarBank@NUS Repository.
Abstract: Empirical studies show that many supply chain integration and collaboration efforts are challenged with issues over channel power imbalance and control rather than mutual, win-win intentions (Maloni and Benton, 2000). Channel power here refers to an agent¿s relative ability to control the decision making process in the supply chain. Channel firms have differing amounts of relative power due to size, brand identity or other parameters, and such differences have significant effects on operational decisions and overall efficiency. Channel efficiency is a measure of the performance of the system compared to the centralized system which is subject to improvement by first identifying the intra-chain dynamics which cause inefficiency and then modifying the structure of these relationships by applying suitable contract. Supply chain contracts help to more closely align individual incentives with global optimization targets. They divide profits, and distribute costs and risks arising from various sources of uncertainty, e.g. market demand, selling price, product quality, and delivery time between the entities in the supply chain. However, utilizing contract when there are competing producers in the supply chain, has received less attention in the literature. The current work seeks to study this situation by modeling a two-supplier-single-retailer supply chain while assuming the two suppliers could be imbalanced in power. This model is then applied for analyzing the biodiesel niche market in Singapore by considering the competition between new biodiesel producers and current fossil fuel producers. The agents¿ profits and total channel efficiency are examined under different market conditions to determine how the suppliers¿ optimal decisions differ with respect to the substitution degree of products. Initially, to gain better insight into the biodiesel market, the feasibility of producing biodiesel in Singapore is reviewed. Presently, advanced technologies to utilize biomassas a large scale source of energy have been developed by engineers in National University of Singapore. However, in simple economic terms, biomass-derived fuels are at a disadvantage. Compared to petroleum-based diesel, the high cost of biodiesel is a major barrier to its commercialization as traditional economic analyses rarely take into account the environmental and health benefits associated with the utilization of an environmentally friendly resource. This dissertation explores the potential for new feedstocks to be converted to biodiesel in order to reduce production costs. The results show that collecting waste oil from commercial and industrial grease separators and households for a waste-to-energy program is a reasonable strategy to lower costs. Furthermore, based upon the numerical example developed in the study, it is shown that utilizing revenue sharing contract could help both producers increase their profits while it is also in favor of end customers and leads to higher demand. Conducting more extensive numerical examples is left for the future studies.
Appears in Collections:Master's Theses (Open)

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