Hyperthermophilic Composting Accelerates the Removal of Antibiotic Resistance Genes and Mobile Genetic Elements in Sewage Sludge
Summary (4 min read)
1 Introduction
- Cooperative advertising programs are monetary incentives o¤ered by manufacturers to their retailers to boost advertising e¤orts for their products.
- The authors analyze the strategies, the pro t functions and the inventory policy in the two scenarios and contrast the results to check the suitability of a cooperative advertising program within the aforementioned settings.
- Further, the authors extend their model to incorporate four special cases.
2 Model
- Consider a supply chain formed by one manufacturer,M , and one retailer, R. Both rms make their decisions over an in nite time horizon.
- The marginal e¤ect of price on demand is modeled through the positive parameter .
- Is given, meaning that M and R are engaged in a long-term commitment to share their inventory costs and revenues.
- Whenever the cooperative advertising program is implemented, M pays a portion of R s advertising costs at a rate of B (t).
- That is the decisions of the supply chain are functions of the current level of the inventory (the state variable), Y .
3 Equilibrium solutions
- The authors solve the dynamic optimization problems and obtain the equilibrium solutions for both the benchmark and the cooperative advertising games.
- As for all conventional solutions in dynamic games with in nite time horizon, all strategies and value functions will be written exclusively as functions of the state variable.
- 1See Co-opadvertisingprograms.com, the on-line database of NRP for coop advertising programs (http://www.coopsourcebook.com/coop_sample.htm).
3.1 The Benchmark scenario (no cooperative advertising)
- The authors start by solving the benchmark (non-cooperative) game, denoted by N , in which a cooperative advertising program is not implemented.
- The game evolves according to the following moves.
- The solution to the benchmark game yields the equilibrium feedback strategy uN (Y ) for M .
- By using these strategies in Eq. (2) and solving the di¤erential equation, the optimal time-path for the inventory level is given by Y N (t) ; for all t 0: Proposition 1.
3.2 The cooperative advertising scenario
- In the cooperative advertising scenario, denoted by C, M o¤ers a cooperative advertising program to R.
- The manufacturer takes into account the retailer s best-response functions and optimally sets uC(Y ) and BC(Y ).
- Solving the di¤erential equation in (2), the authors get the optimal time-path for the inventory level, Y C(t), for all t 0.
- The equilibrium solution is provided in the next proposition.
- In particular, the cooperative advertising support rate also depends on the inventory level held in the channel.
4 Numerical analysis
- Due to the complexity of their model in each game, the parameter values obtained from solving the Riccati s systems of equations are heavily coupled, which preclude any analytical analysis.
- After xing the benchmark parameter values, the authors characterize the behavior of the di¤erent variables and payo¤s at the steady state (Sections 4.1 and 4.2).
- Between the two real roots, only one satis es all of the model s assumptions, speci cally positive strategies, demand, inventory and pro ts at the steady state.
- This is due to the role played by the inventory, which also determines the market potential and then the sales development.
4.3 Comparison between the cooperative and non-cooperative games
- After the analysis at the steady-state, the authors now x the benchmark parameter values and focus on analyzing the e¤ects of the sharing parameter, .
- In doing that, the authors seek to identify the region in which a cooperative program is an e¢ cient mechanism and investigate how strategies, demand, inventory and pro ts change accordingly.
- The authors.
4.3.1 The e¤ects of the sharing parameter on strategies
- As displayed in Figure 1, a positive relationship exists between M s contribution to R s advertising e¤orts and the sharing parameter, .
- Second, the e¤ect of the sharing parameter on advertising is reversed when a cooperative advertising program is implemented.
- Therefore, the the share, the the advertising e¤orts.
- When the sharing parameter is high, R sets a high price to make M economically worse o¤.
- A cooperative program has a positive e¤ect on M s production decisions.
4.3.2 The e¤ects of the sharing parameter on inventory
- Figure 5 displays the relationship between inventory and the sharing parameter in the two scenarios analyzed.
- When M s share is low, he has less willingness to produce within this business, thus low inventory leads to low production rate and, consequently, to a low market potential.
- In such cases, inventory is always larger than the production rate and the demand.
- In fact, increasing sharing parameter values incentivizes R to advertise more, thus increasing inventory turnover.
- Thus, a cooperative program on advertising e¤orts is highly e¢ cient as it decreases the amount of inventory in the supply chain and this e¤ect is quasi sharing parameter independent, meaning that the inventory (and its related costs) will be considerably lowered with the presence of a cooperative program.
4.3.3 The e¤ects of the sharing parameter on pro ts
- Figure 6 shows M s pro ts changes according to the sharing parameter in both scenarios.
- When rms do not implement a cooperative program, M would lead the negotiation to the largest possible sharing parameter value.
- When > ; M will avoid cooperative advertising as it leads to lower sales due to high prices.
- As displayed in Figure 7, the patterns of R s pro ts follow the opposite patterns of M s pro ts in both scenarios.
- The authors general ndings suggest that when the supply chain problem involves operational issues such as production and inventory, beside marketing issues such as pricing and advertising, the region in which a cooperative program by means of a support program turns out to be economically worthwhile is very limited and the adoption of this coordination mechanism very challenging.
4.3.4 Time-trajectories analysis
- The comparisons of the value functions at the steady-state as earlier considered assume that the authors compute the accumulated pro ts along the optimal trajectory of the inventory level when the initial inventory is already at the steady-state value.
- The authors display the full analysis on the trajectories for strategies, demand.
- The authors show that the results established at the steady state can be replicated when the initial inventory level is higher or equal to the steady state.
- The optimal time-paths of the benchmark and the cooperative advertising scenarios never cross.
- From the previous analysis, the authors know that at the steady state all variables take a larger value under the C Scenario than under the N Scenario.
5 Special cases
- The authors develop four special cases, which are variants of their original model.
- In particular, the authors develop three special cases based on the use of a classical wholesale price contract under a VMI policy, the use of di¤erent sharing parameters for costs and revenues, the presence of inventory obsolescence, as well as the relationship between pricing and promotion in the demand function.
5.1 Special case I - Wholesale price with VMI and a cooperative program
- The authors develop a dynamic game that conserves all ingredients of the model developed in Eqs. (5) (6) but in which rms use a classical wholesale price contract to manage the nancial ows.
- R sets the retail price without sharing anything with M .
- Nevertheless, the authors aim at exploring the e¢ ciency of cooperative programs under a WPC and VMI policy.
5.2 Special case II - VMI with a RSC and di¤erent sharing parameters for
- So far, the authors discuss their settings by assuming that the supply chain rms use the same sharing rule, ; for both revenues and inventory costs.
- In Figure 8, the region of r values in which M obtains larger pro ts enlarges comparatively to the ones in Figure 6, as the maximum sharing parameter values moves from 0.2725 to 0.2825.
- In Figure 9, R shows the same preferences as in Figure 7, thus she always opts for the implementation of a cooperative program, independent of using similar or di¤erent sharing rules for pro ts and inventory costs.
- The authors investigate the e¤ect of inventory obsolescence on rms pro ts and on cooperative programs e¤ectiveness.
5.4 Special case IV - VMI with a RSC and R
- In the numerical analysis that the authors developed earlier, they assumed the parameter values to be xed in the demand function such that > ; meaning that demand is more sensitive to price than to promotion.
- The authors relax this assumption and assume that can be higher or lower than :.
- The analysis of pro ts, which is displayed in Figure 13, leads to the following observations: 1. When the price e¤ect is lower than the promotion s e¤ect ( < ), both rms gain higher pro ts in each game.
- Consistently with Figure 13, M is willing to implement a cooperative program only for small regions of ; hence following the same results as in Figure 6.
- Note that the region of interest is larger than in the benchmark case, which shows that there is a higher chance to bene t from coordination through a cooperative program when the interested strategy (promotion in their games) is more important than others in developing sales.
6 Conclusions
- The cooperative advertising literature has mostly studied the e¤ects of these programs considering marketing (demand-side) variables, such as, advertising and prices.
- Nevertheless, when a cooperative program is in place, R invests more in advertising even when the share she retains decreases due to the presence of a support program whose amplitude increases with the sharing parameter.
- Rms are not able to coordinate their chain through a cooperative program when a VMI and a wholesale price contract coexist.
- Even with such a simplistic chain structure, the authors obtained complex results that could not have been analyzed analytically.
- One can relax this assumption by assuming that M works in a make-to-stock context and keeps the inventory, while R sells products under a purchase-to-order setting.
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