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Chinese Journal of Management Science ›› 2024, Vol. 32 ›› Issue (8): 230-240.doi: 10.16381/j.cnki.issn1003-207x.2021.1130

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Water Saving Service Outsourcing for High Water Consumption Enterprises under Demand Uncertainty

Xiaona Li1(),Weimin Ma2   

  1. 1.School of Management, Jiangsu University, Zhenjiang 212013, China
    2.School of Economics and Management, Tongji University, Shanghai 200092, China
  • Received:2021-06-06 Revised:2021-11-04 Online:2024-08-25 Published:2024-08-29
  • Contact: Xiaona Li E-mail:lixiaona@ujs.edu.cn

Abstract:

Water saving service outsourcing has become an important means to construct water-saving enterprises for high water consumption manufacturers which cannot apply required water economizing equipment, technologies and management skills. Manufacturers with water-saving demands often select a specialized water saving service (WSS) provider through procurement bidding to carry out projects for water conservation transformation in production process. Then the industry standard will be reached under the service providers' investment in improving efficiency of water saving and emission reduction. In reality, especially for emerging industries, there broadly exist information asymmetry and market uncertainty. When the actual requirement of customer exceeds the announced outsourcing capabilities, the remaining ones need to be obtained through a second purchase (short-term) contract.In this paper,the reverse auction of client firm’s water-saving service procurement contract and the capacity investment of water-saving service companies in a supply chain composed of a high water consumption enterprise and two competing water-saving service providers is considered. And the optimal outsourcing strategy of water user and the decisions on bidding price and investment in water saving capacity of service providers are studied respectively based on a four-stage dynamic game model, in which the unit operation costs of water saving service companies are their private information. Besides, the costs and the market demands are all regarded as independent uncertain variables. After that, the optimal solutions of game participants are derived by backward recursion method. That is, the announced outsourcing capacity of the client, the quoted prices of service providers in the bidding competition and vendors' capacity investment decisions are calculated.Owing to the complicated forms of the solutions, numerical studies are given to examine the impacts of various parameters, such as the client firm’s demand distribution, the vendors' cost distributions, the third-party service price and the second purchase price on the optimal decisions of the players. Based on the discussions, it is obtained that the announced outsourcing capacity by water client is positively related to the average actual demand, the coefficient of variation of operation cost and the second purchase price, and negatively related to the standard deviation of demand, service price and average cost; The bidding prices of service suppliers are positively related to the average actual demand, service price, average cost and second purchase price, and negatively related to the standard deviation of cost and the coefficient of variation of actual demand; The investment of water saving capacity of the winning vendor is positively related to the average demand and the second purchase price, and negatively related to the standard deviation of the demand. In addition, whether winning the bid or not, the capacity investment of the vendor is positively related to the service price and negatively related to the operation cost.

Key words: water saving service outsourcing, reverse auction, asymmetric information, game model, uncertain variable

CLC Number: