Global Supply Chain Networks and Risk Management

41 Pages Posted: 27 Oct 2003

See all articles by Anna Nagurney

Anna Nagurney

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

José M. Cruz

University of Massachusetts at Amherst

June Dong

SUNY at Oswego - Management and Marketing

Date Written: August 2003

Abstract

In this paper, we develop a global supply chain network model in which both physical and electronic transactions are allowed and in which supply-side risk as well as demand-side risk are included in the formulation. The model consists of three tiers of decision-makers: the manufacturers, the distributors, and the retailers who may be located in the same or in different countries and may conduct their transactions in distinct currencies. We model the optimizing behavior of the various decision-makers, with the manufacturers and the distributors being multicriteria decision-makers, and concerned with both profit maximization and risk minimization. The retailers, in turn, are faced with random demands for the product. We derive the governing equilibrium conditions and establish the finite-dimensional variational inequality formulation. We provide qualitative properties of the equilibrium product flow and price pattern in terms of existence and uniqueness results and also establish conditions under which the proposed computational procedure is guaranteed to converge. Finally, we illustrate the global supply chain network model and the computational procedure through several numerical examples. This research extends the modelling, analysis, and computation of solutions to decentralized supply chain networks in the presence of electronic commerce and risk management to the global arena.

Keywords: e-commerce, global operations, financial/economic analysis, programming/optimization, supply management

JEL Classification: C61, C72, D43, L21, N11, R41

Suggested Citation

Nagurney, Anna and Cruz, José M. and Dong, June, Global Supply Chain Networks and Risk Management (August 2003). Available at SSRN: https://ssrn.com/abstract=440822 or http://dx.doi.org/10.2139/ssrn.440822

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

José M. Cruz

University of Massachusetts at Amherst ( email )

Department of Operations & Information Management
Amherst, MA 01003
United States

HOME PAGE: http://supernet.som.umass.edu

June Dong

SUNY at Oswego - Management and Marketing ( email )

Oswego, NY 13126
United States

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