Supply Chain Network Capacity Competition with Outsourcing: A Variational Equilibrium Framework

Journal of Global Optimization 69(1): pp 231-254, 2017

33 Pages Posted: 19 Mar 2020

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

Deniz Besik

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

Date Written: January 31, 2017

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 non-cooperatively. 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

Suggested Citation

Nagurney, Anna and Yu, Min and Besik, Deniz, Supply Chain Network Capacity Competition with Outsourcing: A Variational Equilibrium Framework (January 31, 2017). Journal of Global Optimization 69(1): pp 231-254, 2017, Available at SSRN: https://ssrn.com/abstract=3539193 or http://dx.doi.org/10.2139/ssrn.3539193

Anna Nagurney

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

Deniz Besik (Contact Author)

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

Amherst, MA 01003
United States
01003 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
21
Abstract Views
270
PlumX Metrics