Skip to main content
Springer Nature Link
Log in

Emergency material reserve problem with option contract considering low carbon disposal cost

  • Special Issue
  • Published:
Evolutionary Intelligence Aims and scope Submit manuscript

Abstract

In this paper, we study option contracts for emergency material reserves due to unexpected events. Contingencies occur randomly and the amount of realization cannot be known until it breaks out. Therefore, it is important to stockpile some necessary supplies in advance. However, a large advance stockpile on the demand side would incur low-carbon disposal costs, which are not economical. Also, the supplier will have no incentive to stockpile for the demander due to low carbon disposal costs and production costs. Therefore, we propose a contractual approach with option to stimulate supplier to stockpile for his client. Three models are discussed based on the consideration of low-carbon disposal costs: a centralized decision case, a non-option decentralized case, and a decentralized case with option. The outcomes demonstrate that the number of first orders under the decentralized case without option is less than the order quantity under the centralized case. Moreover, the size of the first purchase volume in all three cases depends on the both parties’ practical factors. Meanwhile, the reasonable interval of option fee is obtained by analysis.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Explore related subjects

Discover the latest articles, news and stories from top researchers in related subjects.

References

  1. Zhou Q, Olsen T (2018) Rotating the medical supplies for emergency response: a simulation based approach. Int J Prod Econ 196:1–11

    Article  Google Scholar 

  2. Vellinga A, Cormican S, Driscoll J et al (2014) Public practice regarding disposal of unused medicines in Ireland. Sci Total Environ 478:98–102

    Article  CAS  PubMed  ADS  Google Scholar 

  3. Whybark D (2007) Issues in managing disaster relief inventories. Int J Prod Econ 108(1–2):228–235

    Article  Google Scholar 

  4. Liang L, Wang X, Gao J (2012) An option contract pricing model of relief material supply chain. Omega Int J Manag Sci 40(5):594–600

    Article  Google Scholar 

  5. Hu Z, Tian J, Feng G (2019) A relief supplies purchasing model based on a put option contract. Comput Ind Eng 127:253–262

    Article  Google Scholar 

  6. Liu Y, Tian J, Feng G (2022) Pre-positioning strategies for relief supplies in a relief supply chain. J Oper Res Soc 73(7):1457–1473

    Article  Google Scholar 

  7. Ghavamifar A, Torabi S, Moshtari M (2022) A hybrid relief procurement contract for humanitarian logistics. Transp Res Part E Logist Transp Rev 167:102916

    Article  Google Scholar 

  8. Hu W, Ding J, Liang L (2022a) Joint reserve model of government and enterprise for relief materials based on a delegated reserve contract with option. Chin J Manag Sci. https://doi.org/10.16381/j.cnki.issn1003-207x.2022.0768

  9. Patra T, Devi P, Jha J (2022) Bidirectional option contract for prepositioning of relief supplies under demand uncertainty. Comput Ind Eng 163:107861

    Article  Google Scholar 

  10. Hu Z, Zhou X, Fan H, et al (2022b) A research on emergency material reserve and purchase pricing decision based on enterprises reserving. Syst Eng Theory Pract 1–15[2022-11-06]. http://kns.cnki.net/kcms/detail/11.2267.N.20221026.1710.002.html

  11. Balcik B, Ak D (2014) Supplier selection for framework agreements in humanitarian relief. Prod Oper Manag 23(6):1028–1041

    Article  Google Scholar 

  12. Wang X, Li F, Liang L, Huang Z, Ashley A (2015) Pre-purchasing with option contract and coordination in a relief supply chain. Int J Prod Econ 167:170–176

    Article  Google Scholar 

  13. Saedi S, Kundakcioglu O, Henry A (2016) Mitigating the impact of drug shortages for a healthcare facility: an inventory management approach. Eur J Oper Res 251(1):107–123

    Article  MathSciNet  Google Scholar 

  14. Yao X, Huang R, Song M, Mishra N (2018) Pre-positioning inventory and service outsourcing of relief material supply chain. Int J Prod Res 56(21):6859–6871

    Article  Google Scholar 

  15. Ferreira G, Arruda E, Marujo L (2018) Inventory management of perishable items in long-term humanitarian operations using Markov decision processes. Int J Disaster Risk Reduct 31:460–469

    Article  Google Scholar 

  16. Nikkhoo F, Bozorgi-Amiri A, Heydari J (2018) Coordination of relief items procurement in humanitarian logistic based on quantity flexibility contract. Int J Disaster Risk Reduct 31:331–340

    Article  Google Scholar 

  17. Aghajani M, Torabi S (2020) A mixed procurement model for humanitarian relief chains. J Humanit Logist Supply Chain Manag 10(1):45–74

    Article  Google Scholar 

  18. Akbarpour M, Torabi S, Ghavamifar A (2020) Designing an integrated pharmaceutical relief chain network under demand uncertainty. Transp Res Part E Logist Transp Rev 136

  19. John L, Gurumurthy A, Mateen A, Narayanamurthy G (2020) Improving the coordination in the humanitarian supply chain: exploring the role of options contract. Ann Oper Res. https://doi.org/10.1007/s10479-020-03778-3

    Article  Google Scholar 

  20. Umar M, Wilson M (2021) Supply chain resilience: unleashing the power of collaboration in disaster management. Sustainability 13(19)

  21. Negi S, Negi G (2021) Framework to manage humanitarian logistics in disaster relief supply chain management in India. Int J Emerg Serv 10(1):40–76

    Article  Google Scholar 

  22. Zhou Q, Olsen T (2017) Inventory rotation of medical supplies for emergency response. Eur J Oper Res 257(3):810–821

    Article  MathSciNet  Google Scholar 

  23. Zhang F, Cao C, Li C, Liu Y, Huisingh D (2019) A systematic review of recent developments in disaster waste management. J Clean Prod 235:822–840

    Article  Google Scholar 

  24. Xia J, Niu W (2021) Carbon-reducing contract design for a supply chain with environmental responsibility under asymmetric information. Omega Int J Manag Sci 102(1):102390

    Article  Google Scholar 

  25. Peng X, Tao Y, Wang C, Zhong Z (2022) Research on low-carbon supply chain decision-making under carbon cap-and-trade and subsidy policy. Int J Low-Carbon Technol 17:1061–1074

    Article  CAS  Google Scholar 

  26. Zhang Y, Shang Q, Gong B, Wang Y (2022) Pricing and carbon emission reduction decisions in three-echelon supply chain under carbon labelling system. J Syst Eng 37(2), 242–262.https://doi.org/10.13383/j.cnki.jse.2022.02.008

  27. Wu H, Sun Y, Su Y, Chen M, Zhao H, Li Q (2022) Which is the best supply chain policy: Carbon tax, or a low-carbon subsidy? Sustainability 14(10):6312

    Article  CAS  Google Scholar 

  28. Yu X, Lan Y, Zhao R (2021) Strategic green technology innovation in a two-stage alliance: Vertical collaboration or co-development? Omega Int J Manag Sci 98:102116

    Article  Google Scholar 

  29. Chen Z, Lan Y, Li X et al (2022a) Quality management by warranty contract under dual asymmetric information. IEEE Trans Eng Manag 69(4):1022–1036

  30. Chen Y, Zhao Q, Huang K, Xi X (2022b) A Bi-objective optimization model for contract design of humanitarian relief goods procurement considering extreme disasters. Socioecon Plann Sci 81:101214

Download references

Funding

This work was supported by Philosophy and Social Science Foundation of Tianjin (No. TJGL16-009Q).

Author information

Authors and Affiliations

  1. College of Economics and Management, Tianjin University of Science and Technology, Tianjin, 300222, China

    Guoli Wang, Jingyi Wang, Jiawei Pang & Junyan Wang

  2. State Grid Jibei Electric Power CO. LTD. Material Branch, Beijing, 100075, China

    Jingyi Wang

  3. Beijing BoWang China Science and Technology CO. LTD Engineering Consulting Branch, Beijing, 100070, China

    Wei Wang

Authors
  1. Guoli Wang
    View author publications

    You can also search for this author inPubMed Google Scholar

  2. Jingyi Wang
    View author publications

    You can also search for this author inPubMed Google Scholar

  3. Jiawei Pang
    View author publications

    You can also search for this author inPubMed Google Scholar

  4. Wei Wang
    View author publications

    You can also search for this author inPubMed Google Scholar

  5. Junyan Wang
    View author publications

    You can also search for this author inPubMed Google Scholar

Corresponding author

Correspondence to Guoli Wang.

Ethics declarations

Conflict of interest

There is no potential conflict of interest among the authors.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Wang, G., Wang, J., Pang, J. et al. Emergency material reserve problem with option contract considering low carbon disposal cost. Evol. Intel. 17, 361–369 (2024). https://doi.org/10.1007/s12065-023-00867-7

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12065-023-00867-7

Keywords