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Strategic design of competing supply chain networks for inelastic demand

Author

Listed:
  • S Rezapour

    (Amirkabir University of Technology)

  • R Zanjirani Farahani

    (Amirkabir University of Technology)

  • T Drezner

    (California State University-Fullerton)

Abstract

A model for designing the network of a new entrant supply chain under inelastic demand and in the presence of pre-existing competing chains is proposed. These supply chains provide an identical product for a market area. The model considers the location of distribution centres and retail outlets on a discrete set of potential locations. The assumptions of the model are: (1) static competition between the new and pre-existing chains and (2) a probabilistic customer behaviour based on an attraction function depending on both the location and the quality of the retailers. This model also incorporates the impact of the facilities’ location decisions on the operational inventory and shipment decisions. The resulting model is formulated as a mixed integer non-linear programme (MINLP). To solve the MINLP it is transformed to a linear one. We illustrate the model, discuss the results of a real-world case, and investigate the effectiveness of the proposed algorithm using randomly generated examples.

Suggested Citation

  • S Rezapour & R Zanjirani Farahani & T Drezner, 2011. "Strategic design of competing supply chain networks for inelastic demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(10), pages 1784-1795, October.
    • Handle: RePEc:pal:jorsoc:v:62:y:2011:i:10:d:10.1057_jors.2010.146
    DOI: 10.1057/jors.2010.146
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    References listed on IDEAS

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    3. Rezapour, Shabnam & Farahani, Reza Zanjirani & Dullaert, Wout & De Borger, Bruno, 2014. "Designing a new supply chain for competition against an existing supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 67(C), pages 124-140.
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