A Supply Chain Network Game Theoretic Framework for Time-Based Competition with Transportation Costs and Product Differentiation

23 Pages Posted: 4 Aug 2012

See all articles by Anna Nagurney

Anna Nagurney

University of Massachusetts Amherst - Isenberg School of Management - Department of Operations and Information Management

Min Yu

University of Portland - Dr. Robert B. Pamplin, Jr. School of Business Administration; University of Massachusetts Amherst - Isenberg School of Management - Department of Finance and Operations Management

Date Written: June 17, 2012

Abstract

In this paper, we developed a supply chain network game theory model with differentiated products and transportation costs in the case of time-based oligopolistic competition. The firms are profit-maximizers and have, as their strategic variables, the product shipments and the delivery times to the consumers at the demand markets with the delivery times including both the production times and the transportation times. The demand price functions are functions of the demands for the products at the different demand markets as well as their delivery times. The governing Nash equilibrium conditions are formulated as alternative variational inequalities. An algorithm is proposed, which yields closed form expressions, at each iteration, for the product shipments, the delivery times, as well as the associated Lagrange multipliers. Supply chain network numerical examples are given to illustrate the modeling and the computational approach.

Keywords: supply chains, oligopolies, networks, game theory, Nash equilibrium, product differentiation, transportation costs, time-based competition, build-to-order, made-on-demand, variational inequalities

Suggested Citation

Nagurney, Anna and Yu, Min, A Supply Chain Network Game Theoretic Framework for Time-Based Competition with Transportation Costs and Product Differentiation (June 17, 2012). Available at SSRN: https://ssrn.com/abstract=2123695 or http://dx.doi.org/10.2139/ssrn.2123695

Anna Nagurney (Contact Author)

University of Massachusetts Amherst - Isenberg School of Management - Department of Operations and Information Management ( email )

Amherst, MA 01003-4910
United States

Min Yu

University of Portland - Dr. Robert B. Pamplin, Jr. School of Business Administration

Portland, OR 97203
United States

University of Massachusetts Amherst - Isenberg School of Management - Department of Finance and Operations Management

Department of Operations and Information Managemen

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