Supply chain network capacity competition with outsourcing: a variational equilibrium framework

Anna Nagurney (), Min Yu and Deniz Besik
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Anna Nagurney: University of Massachusetts
Min Yu: University of Portland
Deniz Besik: University of Massachusetts

Journal of Global Optimization, 2017, vol. 69, issue 1, No 10, 254 pages

Abstract: Abstract This paper develops a supply chain network game theory framework with multiple manufacturers/producers, with multiple manufacturing plants, who own distribution centers and distribute their products, which are distinguished by brands, to demand markets, while maximizing profits and competing noncooperatively. The manufacturers also may avail themselves of external distribution centers for storing their products and freight service provision. The manufacturers have capacities associated with their supply chain network links and the external distribution centers also have capacitated storage and distribution capacities for their links, which are shared among the manufacturers and competed for. We utilize a special case of the Generalized Nash Equilibrium problem, known as a variational equilibrium, in order to formulate and solve the problem. A case study on apple farmers in Massachusetts is provided with various scenarios, including a supply chain disruption, to illustrate the modeling and methodological framework as well as the potential benefits of outsourcing in this sector.

Keywords: Generalized Nash Equilibrium; Game theory; Supply chains; Capacity competition; Outsourcing; Variational inequalities; Networks (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (15)

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DOI: 10.1007/s10898-017-0497-x

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