Research Of Cost Sharing,Sourcing And Recycling Based On Capacity Management

Capacity building is a long-term continual process that requires substantial capital resources.In organic agriculture and high-tech industries,because of technical limitations,market uncertainty and inaccurate demand forecasts,upstream suppliers are cautious toward capacity building.To stimulate upstream suppliers to offer a higher capacity,downstream buyers usually take measures to help upstream suppliers on capacity building.In addition,in organic cotton industry,considering the limited supply of organic cotton,some buyers mix organic cotton and conventional cotton to produce blended product but others only use the organic cotton to produce organic product.In high-tech industry,buyers’ different market status lead to different priorities on capacity acquiring.Hence,in this scenario,the capacity is not only an important asset but also an important tool of competition.The main work of this dissertation including the following four aspects.This dissertation first compares two capacity cost sharing contracts:the full capacity cost sharing contract(FCCSC)and the partial capacity cost sharing contract(PCCSC).In the FCCSC,a retailer shares a fraction of the total capacity cost,while,in the PCCSC,a retailer shares a fraction of the capacity cost only when his supplier’s capacity exceeds a certain threshold.We find that in the PCCSC,if the threshold of capacity level is sufficiently high,the retailer would choose the PCCSC while the manufacturer would choose the FCCSC.Conversely,if the threshold of the capacity level is small,the retailer would choose the FCCSC,while the manufacturer would choose the PCCSC.There exists an interval in which both players would choose the PCCSC.Given dramatic increased consumer preference for organic products,in fashion industry,even if the retailer help his suppliers to build capacity for organic cotton,organic cotton is still in short supply.In practice,some buyers mix organic cotton and conventional cotton to produce blended product but others only use the organic cotton to produce organic product.This dissertation compares these two product strategies and find that retailers’ capacity help may prevent conventional suppliers to switch to organic suppliers.In high-tech industries,the incumbent faces both new-market entry and limitedmarket capacity,making them crucial considerations when capacity strategy is developed.We consider a two-stage model in which the incumbent introduces a new high-tech product in the first stage and a potential new entrant tries to enter the new product market with a similar product in the second stage.Interestingly,we find that it is not always the best choice for the entrant to develop a differentiated product.We also show that a firm with high consumer preference may raise the product price even if the market becomes more competitive.In addition,we find that the incumbent may set a product price in the monopoly context that is not necessarily higher than under the competition context.Finally,the growth of e-consumption lead to a sharp increase in e-waste,which has negative impact on the environment.We compare three primary forms of product take-back legislation:advance recycling fee(ARF),extended producer responsibility(EPR),and pre-disposal fee(PDF).With ARF policy,the government is responsible for product recycling and charges consumers a recycling fee at purchase.EPR legislation makes manufacturers responsible for product recycling and financial support of the take-back system.A PDF policy also makes manufacturers responsible for product recycling but charges consumers a disposal fee when they return used products for recycling.With these three policies as our focus,we examine the impact of important parameters and compare them from the perspective of the manufacturer,the product’s environmental impact,and social welfare.Though manufacturers have expressed concern over potential harm to sales under an ARF policy,we find this is the best policy in most cases,from the perspective of social welfare or the manufacturer.This finding suggests the government should promote the implementation of ARF policies.