Document Type

Journal article

Source Publication

European Journal of Operational Research

Publication Date

5-16-2014

Volume

235

Issue

1

First Page

329

Last Page

333

Keywords

Electric vehicle; Supply chain; Price discount; Incentive scheme

Abstract

We investigate an automobile supply chain where a manufacturer and a retailer serve heterogeneous consumers with electric vehicles (EVs) under a government’s price-discount incentive scheme that involves a price discount rate and a subsidy ceiling. We show that the subsidy ceiling is more effective in influencing the optimal wholesale pricing decision of the manufacturer with a higher unit production cost. However, the discount rate is more effective for the manufacturer with a lower unit production cost. Moreover, the expected sales are increasing in the discount rate but may be decreasing in the subsidy ceiling. Analytic results indicate that an effective incentive scheme should include both a discount rate and a subsidy ceiling. We also derive the necessary condition for the most effective discount rate and subsidy ceiling that maximize the expected sales of EVs, and obtain a unique discount rate and subsidy ceiling that most effectively improve the manufacturer’s incentive for EV production.

DOI

10.1016/j.ejor.2013.11.021

Print ISSN

03772217

E-ISSN

18726860

Publisher Statement

Copyright © 2014 Elsevier B.V. All rights reserved. Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

Recommended Citation

Luo, C., Leng, M., Huang, J., & Liang, L. (2014). Supply chain analysis under a price-discount incentive scheme for electric vehicles. European Journal of Operational Research, 235(1), 329-333. doi:10.1016/j.ejor.2013.11.021