Journal
TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
Volume 46, Issue 3, Pages 281-294Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tre.2009.11.002
Keywords
Profit-maximizing supply chains; Supply chain design; Network oligopolies; Game theory; Nash equilibria; Variational inequalities; Projected dynamical systems
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Funding
- John F. Smith Memorial Fund at the Isenberg School of Management
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In this paper, we model the supply chain network design problem with oligopolistic firms who are involved in the competitive production, storage, and distribution of a homogeneous product to multiple demand markets. The profit-maximizing firms select both the capacities associated with the various supply chain network activities as well as the product quantities. We formulate the governing Nash-Cournot equilibrium conditions as a variational inequality problem and identify several special cases of the model, notably, a generalization of a spatial oligopoly and a classical oligopoly problem to include design capacity variables. The proposed computational approach, which is based on projected dynamical systems, fully exploits the network structure of the problems and yields closed form solutions at each iteration. In order to illustrate the modeling framework and the algorithm, we also provide solutions to a spectrum of numerical supply chain network oligopoly design examples. This paper makes a contribution to game theoretic modeling of competitive supply chain network design problems in an oligopolistic setting. (C) 2009 Elsevier Ltd. All rights reserved.
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