IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v295y2021i2p534-546.html
   My bibliography  Save this article

Buyer selection and service pricing in an electric fleet supply chain

Author

Listed:
  • Kuppusamy, Saravanan
  • Magazine, Michael J.
  • Rao, Uday

Abstract

Much attention has been focused on supplier selection in operations. There has been less research on the supplier selecting buyers in a two-echelon supplier-buyer chain, which we study for downstream taxicab vehicle fleets. We consider the problem of pricing infrastructure services by an electric vehicles (EVs) service provider (SP), which determines the group of taxicab companies (TCs) that will adopt EVs. We study SP’s pricing decisions in a decentralized supply chain under a general infrastructure cost function, multiple TCs, and symmetric information. We extend the modeling to the case with (i) endogenous demand and EV-taxicab end-consumer pricing and (ii) asymmetric information between SP and TC. We analyze the factors that influence SP’s profits and the set of participating TCs who adopt EVs. We find that when the fleet size of TCs increases, SP prefers to serve more low-mile TCs than the high-mile TCs and even removes some high-mile TCs in exchange for low-mile TCs, where low and high-miles correspond to average miles driven in a time period (shift). When the coefficient of variation of miles driven increases, SP prefers to serve more high-mile TCs than the low-mile TCs. In general, the set of TCs that adopt EVs cannot be simply characterized using inputs such as average miles driven by different TCs. This study provides a modeling framework and managerial implications for TC selection and pricing contracts by an EV infrastructure service provider.

Suggested Citation

  • Kuppusamy, Saravanan & Magazine, Michael J. & Rao, Uday, 2021. "Buyer selection and service pricing in an electric fleet supply chain," European Journal of Operational Research, Elsevier, vol. 295(2), pages 534-546.
    • Handle: RePEc:eee:ejores:v:295:y:2021:i:2:p:534-546
    DOI: 10.1016/j.ejor.2021.03.018
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221721002083
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2021.03.018?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wang, Wenbin, 2010. "A model for maintenance service contract design, negotiation and optimization," European Journal of Operational Research, Elsevier, vol. 201(1), pages 239-246, February.
    2. Ho-Yin Mak & Ying Rong & Zuo-Jun Max Shen, 2013. "Infrastructure Planning for Electric Vehicles with Battery Swapping," Management Science, INFORMS, vol. 59(7), pages 1557-1575, July.
    3. Rajagopal, 2014. "The Human Factors," Palgrave Macmillan Books, in: Architecting Enterprise, chapter 9, pages 225-249, Palgrave Macmillan.
    4. Richardson, David B., 2013. "Electric vehicles and the electric grid: A review of modeling approaches, Impacts, and renewable energy integration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 19(C), pages 247-254.
    5. Hanan Luss, 1982. "Operations Research and Capacity Expansion Problems: A Survey," Operations Research, INFORMS, vol. 30(5), pages 907-947, October.
    6. Eugenio J. Miravete, 2002. "Estimating Demand for Local Telephone Service with Asymmetric Information and Optional Calling Plans," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 943-971.
    7. Long He & Ho-Yin Mak & Ying Rong & Zuo-Jun Max Shen, 2017. "Service Region Design for Urban Electric Vehicle Sharing Systems," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 309-327, May.
    8. Wenbin Wang & Mark E. Ferguson & Shanshan Hu & Gilvan C. Souza, 2013. "Dynamic Capacity Investment with Two Competing Technologies," Manufacturing & Service Operations Management, INFORMS, vol. 15(4), pages 616-629, October.
    9. Paul R. Kleindorfer & Andrei Neboian & Alain Roset & Stefan Spinler, 2012. "Fleet Renewal with Electric Vehicles at La Poste," Interfaces, INFORMS, vol. 42(5), pages 465-477, October.
    10. Amela Ajanovic & Reinhard Haas, 2020. "On the economics and the future prospects of battery electric vehicles," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 10(6), pages 1151-1164, December.
    11. Yimin Yu & Saif Benjaafar & Yigal Gerchak, 2015. "Capacity Sharing and Cost Allocation among Independent Firms with Congestion," Production and Operations Management, Production and Operations Management Society, vol. 24(8), pages 1285-1310, August.
    12. Kuppusamy, Saravanan & Magazine, Michael J. & Rao, Uday, 2017. "Electric vehicle adoption decisions in a fleet environment," European Journal of Operational Research, Elsevier, vol. 262(1), pages 123-135.
    13. Andrew J Mason, 2013. "SolverStudio: A New Tool for Better Optimisation and Simulation Modelling in Excel," INFORMS Transactions on Education, INFORMS, vol. 14(1), pages 45-52, September.
    14. Alper Atamtürk & Dorit S. Hochbaum, 2001. "Capacity Acquisition, Subcontracting, and Lot Sizing," Management Science, INFORMS, vol. 47(8), pages 1081-1100, August.
    15. Luo, Chunlin & Leng, Mingming & Huang, Jian & Liang, Liping, 2014. "Supply chain analysis under a price-discount incentive scheme for electric vehicles," European Journal of Operational Research, Elsevier, vol. 235(1), pages 329-333.
    16. Ramteen Sioshansi, 2012. "OR Forum---Modeling the Impacts of Electricity Tariffs on Plug-In Hybrid Electric Vehicle Charging, Costs, and Emissions," Operations Research, INFORMS, vol. 60(3), pages 506-516, June.
    17. Xuanming Su, 2008. "Bounded Rationality in Newsvendor Models," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 566-589, May.
    18. Ho, William & Xu, Xiaowei & Dey, Prasanta K., 2010. "Multi-criteria decision making approaches for supplier evaluation and selection: A literature review," European Journal of Operational Research, Elsevier, vol. 202(1), pages 16-24, April.
    19. Nie, Yu (Marco) & Ghamami, Mehrnaz, 2013. "A corridor-centric approach to planning electric vehicle charging infrastructure," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 172-190.
    20. Skander Essegaier & Sunil Gupta & Z. John Zhang, 2002. "Pricing Access Services," Marketing Science, INFORMS, vol. 21(2), pages 139-159, June.
    21. Michael K. Lim & Ho-Yin Mak & Ying Rong, 2015. "Toward Mass Adoption of Electric Vehicles: Impact of the Range and Resale Anxieties," Manufacturing & Service Operations Management, INFORMS, vol. 17(1), pages 101-119, February.
    22. Schlereth, Christian & Stepanchuk, Tanja & Skiera, Bernd, 2010. "Optimization and analysis of the profitability of tariff structures with two-part tariffs," European Journal of Operational Research, Elsevier, vol. 206(3), pages 691-701, November.
    23. Nie, Yu (Marco) & Ghamami, Mehrnaz & Zockaie, Ali & Xiao, Feng, 2016. "Optimization of incentive polices for plug-in electric vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 84(C), pages 103-123.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kuppusamy, Saravanan & Magazine, Michael J. & Rao, Uday, 2023. "Impact of downstream emissions cap-and-trade policy on electric vehicle and clean utility adoption," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    2. Lizhen Zhan & Hui Shu & Xideng Zhou & Xiaowei Lin, 2022. "A Quality Decision Model Considering the Delay Effects in a Dual-Channel Supply Chain," Sustainability, MDPI, vol. 14(10), pages 1-25, May.
    3. Gao, Yongling & Leng, Mingming & Zhang, Yaping & Liang, Liping, 2022. "Incentivizing the adoption of electric vehicles in city logistics: Pricing, driving range, and usage decisions under time window policies," International Journal of Production Economics, Elsevier, vol. 245(C).
    4. Huixin Liu & Xiang Hao, 2024. "Electric Vehicle Supply Chain Risk Assessment Based on Combined Weights and an Improved Matter-Element Extension Model: The Chinese Case," Sustainability, MDPI, vol. 16(10), pages 1-18, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shen, Zuo-Jun Max & Feng, Bo & Mao, Chao & Ran, Lun, 2019. "Optimization models for electric vehicle service operations: A literature review," Transportation Research Part B: Methodological, Elsevier, vol. 128(C), pages 462-477.
    2. Ding, Yanyan & Jian, Sisi, 2022. "Strategic collaboration between land owners and charging station operators: Lease or outsource?," Transportation Research Part B: Methodological, Elsevier, vol. 166(C), pages 183-211.
    3. Winkelmann, Jonas & Spinler, Stefan & Neukirchen, Thomas, 2024. "Green transport fleet renewal using approximate dynamic programming: A case study in German heavy-duty road transportation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 186(C).
    4. Kuppusamy, Saravanan & Magazine, Michael J. & Rao, Uday, 2017. "Electric vehicle adoption decisions in a fleet environment," European Journal of Operational Research, Elsevier, vol. 262(1), pages 123-135.
    5. Gao, Yongling & Leng, Mingming & Zhang, Yaping & Liang, Liping, 2022. "Incentivizing the adoption of electric vehicles in city logistics: Pricing, driving range, and usage decisions under time window policies," International Journal of Production Economics, Elsevier, vol. 245(C).
    6. Alp, Osman & Tan, Tarkan & Udenio, Maximiliano, 2022. "Transitioning to sustainable freight transportation by integrating fleet replacement and charging infrastructure decisions," Omega, Elsevier, vol. 109(C).
    7. Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mandal, Prasenjit, 2021. "Promoting electric vehicle adoption: Who should invest in charging infrastructure?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    8. Srivastava, Abhishek & Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mateen, Arqum & Narayanamurthy, Gopalakrishnan, 2022. "Design and selection of government policies for electric vehicles adoption: A global perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    9. Goeke, Dominik & Schneider, Michael, 2015. "Routing a mixed fleet of electric and conventional vehicles," European Journal of Operational Research, Elsevier, vol. 245(1), pages 81-99.
    10. Gu, Huaying & Liu, Zhixue & Qing, Qiankai, 2017. "Optimal electric vehicle production strategy under subsidy and battery recycling," Energy Policy, Elsevier, vol. 109(C), pages 579-589.
    11. Miao, Hongzhi & Jia, Hongfei & Li, Jiangchen & Qiu, Tony Z., 2019. "Autonomous connected electric vehicle (ACEV)-based car-sharing system modeling and optimal planning: A unified two-stage multi-objective optimization methodology," Energy, Elsevier, vol. 169(C), pages 797-818.
    12. Goeke, D. & Schneider, M., 2015. "Routing a Mixed Fleet of Electric and Conventional Vehicles," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 65939, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    13. Xu, Min & Meng, Qiang & Liu, Kai & Yamamoto, Toshiyuki, 2017. "Joint charging mode and location choice model for battery electric vehicle users," Transportation Research Part B: Methodological, Elsevier, vol. 103(C), pages 68-86.
    14. Konstantina Valogianni & Wolfgang Ketter & John Collins & Dmitry Zhdanov, 2020. "Sustainable Electric Vehicle Charging using Adaptive Pricing," Production and Operations Management, Production and Operations Management Society, vol. 29(6), pages 1550-1572, June.
    15. Cen, Xuekai & Lo, Hong K. & Li, Lu & Lee, Enoch, 2018. "Modeling electric vehicles adoption for urban commute trips," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 431-454.
    16. Guangrui Ma & Michael K. Lim & Ho-Yin Mak & Zhixi Wan, 2019. "Promoting Clean Technology Adoption: To Subsidize Products or Service Infrastructure?Abstract: We study the dynamic adoption process of clean-technology products (e.g., electric vehicles and solar pho," Service Science, INFORMS, vol. 11(2), pages 75-95, June.
    17. Shaohua Cui & Hui Zhao & Cuiping Zhang, 2018. "Multiple Types of Plug-In Charging Facilities’ Location-Routing Problem with Time Windows for Mobile Charging Vehicles," Sustainability, MDPI, vol. 10(8), pages 1-26, August.
    18. Long He & Sheng Liu & Zuo‐Jun Max Shen, 2022. "Smart urban transport and logistics: A business analytics perspective," Production and Operations Management, Production and Operations Management Society, vol. 31(10), pages 3771-3787, October.
    19. Long He & Guangrui Ma & Wei Qi & Xin Wang, 2021. "Charging an Electric Vehicle-Sharing Fleet," Manufacturing & Service Operations Management, INFORMS, vol. 23(2), pages 471-487, March.
    20. Feng, Jian & Yao, Yifan & Liu, Zhenfeng & Liu, Zhenling, 2024. "Electric vehicle charging stations' installing strategies: Considering government subsidies," Applied Energy, Elsevier, vol. 370(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:295:y:2021:i:2:p:534-546. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.