IDEAS home Printed from https://ideas.repec.org/a/spr/jglopt/v69y2017i1d10.1007_s10898-017-0497-x.html
   My bibliography  Save this article

Supply chain network capacity competition with outsourcing: a variational equilibrium framework

Author

Listed:
  • Anna Nagurney

    (University of Massachusetts)

  • Min Yu

    (University of Portland)

  • Deniz Besik

    (University of Massachusetts)

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 noncooperatively. 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.

Suggested Citation

  • Anna Nagurney & Min Yu & Deniz Besik, 2017. "Supply chain network capacity competition with outsourcing: a variational equilibrium framework," Journal of Global Optimization, Springer, vol. 69(1), pages 231-254, September.
    • Handle: RePEc:spr:jglopt:v:69:y:2017:i:1:d:10.1007_s10898-017-0497-x
    DOI: 10.1007/s10898-017-0497-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10898-017-0497-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10898-017-0497-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nagurney, Anna & Dupuis, Paul & Zhang, Ding, 1994. "A Dynamical Systems Approach for Network Oligopolies and Variational Inequalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 28(3), pages 263-283, September.
    2. James Ang & Masao Fukushima & Fanwen Meng & Takahiro Noda & Jie Sun, 2013. "Establishing Nash equilibrium of the manufacturer–supplier game in supply chain management," Journal of Global Optimization, Springer, vol. 56(4), pages 1297-1312, August.
    3. Anna Nagurney & Min Yu & Jonas Floden, 2013. "Supply chain network sustainability under competition and frequencies of activities from production to distribution," Computational Management Science, Springer, vol. 10(4), pages 397-422, December.
    4. Nagurney, Anna & Yu, Min, 2012. "Sustainable fashion supply chain management under oligopolistic competition and brand differentiation," International Journal of Production Economics, Elsevier, vol. 135(2), pages 532-540.
    5. Houyuan Jiang & Zhan Pang, 2011. "Network capacity management under competition," Computational Optimization and Applications, Springer, vol. 50(2), pages 287-326, October.
    6. Francisco Facchinei & Christian Kanzow, 2010. "Generalized Nash Equilibrium Problems," Annals of Operations Research, Springer, vol. 175(1), pages 177-211, March.
    7. Anna Nagurney, 2006. "Supply Chain Network Economics," Books, Edward Elgar Publishing, number 4242.
    8. Nagurney, Anna & Flores, Emilio Alvarez & Soylu, Ceren, 2016. "A Generalized Nash Equilibrium network model for post-disaster humanitarian relief," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 1-18.
    9. Anna Nagurney, 2010. "Formulation and analysis of horizontal mergers among oligopolistic firms with insights into the merger paradox: a supply chain network perspective," Computational Management Science, Springer, vol. 7(4), pages 377-406, October.
    10. Qiang, Qiang & Ke, Ke & Anderson, Trisha & Dong, June, 2013. "The closed-loop supply chain network with competition, distribution channel investment, and uncertainties," Omega, Elsevier, vol. 41(2), pages 186-194.
    11. Nagurney, Anna & Dong, June & Zhang, Ding, 2002. "A supply chain network equilibrium model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(5), pages 281-303, September.
    12. Toyasaki, Fuminori & Daniele, Patrizia & Wakolbinger, Tina, 2014. "A variational inequality formulation of equilibrium models for end-of-life products with nonlinear constraints," European Journal of Operational Research, Elsevier, vol. 236(1), pages 340-350.
    13. Krawczyk, Jacek B., 2005. "Coupled constraint Nash equilibria in environmental games," Resource and Energy Economics, Elsevier, vol. 27(2), pages 157-181, June.
    14. Masoumi, Amir H. & Yu, Min & Nagurney, Anna, 2012. "A supply chain generalized network oligopoly model for pharmaceuticals under brand differentiation and perishability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 762-780.
    15. Mauro Passacantando & Danilo Ardagna & Anna Savi, 2016. "Service Provisioning Problem in Cloud and Multi-Cloud Systems," INFORMS Journal on Computing, INFORMS, vol. 28(2), pages 265-277, May.
    16. Dong Li & Anna Nagurney, 2017. "Supply chain performance assessment and supplier and component importance identification in a general competitive multitiered supply chain network model," Journal of Global Optimization, Springer, vol. 67(1), pages 223-250, January.
    17. Yu, Min & Nagurney, Anna, 2013. "Competitive food supply chain networks with application to fresh produce," European Journal of Operational Research, Elsevier, vol. 224(2), pages 273-282.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nagurney, Anna & Salarpour, Mojtaba & Daniele, Patrizia, 2019. "An integrated financial and logistical game theory model for humanitarian organizations with purchasing costs, multiple freight service providers, and budget, capacity, and demand constraints," International Journal of Production Economics, Elsevier, vol. 212(C), pages 212-226.
    2. Anna Nagurney & Pritha Dutta, 2019. "Supply chain network competition among blood service organizations: a Generalized Nash Equilibrium framework," Annals of Operations Research, Springer, vol. 275(2), pages 551-586, April.
    3. Anna Nagurney & Mojtaba Salarpour & June Dong & Ladimer S. Nagurney, 2020. "A Stochastic Disaster Relief Game Theory Network Model," SN Operations Research Forum, Springer, vol. 1(2), pages 1-33, June.
    4. Nagurney, Anna & Besik, Deniz & Li, Dong, 2019. "Strict quotas or tariffs? Implications for product quality and consumer welfare in differentiated product supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 136-161.
    5. Anna Nagurney & Patrizia Daniele & Ladimer S. Nagurney, 2020. "Refugee migration networks and regulations: a multiclass, multipath variational inequality framework," Journal of Global Optimization, Springer, vol. 78(3), pages 627-649, November.
    6. Jichao Li & Bingfeng Ge & Jiang Jiang & Kewei Yang & Yingwu Chen, 2020. "High-end weapon equipment portfolio selection based on a heterogeneous network model," Journal of Global Optimization, Springer, vol. 78(4), pages 743-761, December.
    7. Anna Nagurney, 2022. "Supply chain networks, wages, and labor productivity: insights from Lagrange. analysis and computations," Journal of Global Optimization, Springer, vol. 83(3), pages 615-638, July.
    8. Gossler, Timo & Wakolbinger, Tina & Nagurney, Anna & Daniele, Patrizia, 2019. "How to increase the impact of disaster relief: A study of transportation rates, framework agreements and product distribution," European Journal of Operational Research, Elsevier, vol. 274(1), pages 126-141.
    9. Hu, Xiaowei & Li, Peng, 2022. "Relief and stimulus in a cross-sector multi-product scarce resource supply chain network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 168(C).
    10. Chan, Chi Kin & Zhou, Yan & Wong, Kar Hung, 2018. "A dynamic equilibrium model of the oligopolistic closed-loop supply chain network under uncertain and time-dependent demands," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 325-354.
    11. Anna Nagurney & Deniz Besik & Ladimer S. Nagurney, 2019. "Global supply chain networks and tariff rate quotas: equilibrium analysis with application to agricultural products," Journal of Global Optimization, Springer, vol. 75(2), pages 439-460, October.
    12. Salarpour, Mojtaba & Nagurney, Anna, 2021. "A multicountry, multicommodity stochastic game theory network model of competition for medical supplies inspired by the Covid-19 pandemic," International Journal of Production Economics, Elsevier, vol. 236(C).
    13. Nagurney, Anna, 2021. "Supply chain game theory network modeling under labor constraints: Applications to the Covid-19 pandemic," European Journal of Operational Research, Elsevier, vol. 293(3), pages 880-891.
    14. Flora Kulembayeva & Aruzhan Seitkaziyeva & Rakymzhan Yelshibayev, 2022. "Economic Efficiency of Outsourcing Business Models: A Comparative Assessment," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 23(1), pages 75-88, March.
    15. Rodica Ioana Lung & Noémi Gaskó & Mihai Alexandru Suciu, 2020. "Pareto-based evolutionary multiobjective approaches and the generalized Nash equilibrium problem," Journal of Heuristics, Springer, vol. 26(4), pages 561-584, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Yan & Chan, Chi Kin & Wong, Kar Hung, 2018. "A multi-period supply chain network equilibrium model considering retailers’ uncertain demands and dynamic loss-averse behaviors," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 51-76.
    2. Nagurney, Anna, 2021. "Supply chain game theory network modeling under labor constraints: Applications to the Covid-19 pandemic," European Journal of Operational Research, Elsevier, vol. 293(3), pages 880-891.
    3. Chan, Chi Kin & Zhou, Yan & Wong, Kar Hung, 2019. "An equilibrium model of the supply chain network under multi-attribute behaviors analysis," European Journal of Operational Research, Elsevier, vol. 275(2), pages 514-535.
    4. Dong Li & Anna Nagurney, 2017. "Supply chain performance assessment and supplier and component importance identification in a general competitive multitiered supply chain network model," Journal of Global Optimization, Springer, vol. 67(1), pages 223-250, January.
    5. Han, Xiaoya & Liu, Xin, 2020. "Equilibrium decisions for multi-firms considering consumer quality preference," International Journal of Production Economics, Elsevier, vol. 227(C).
    6. Nagurney, Anna & Li, Dong & Nagurney, Ladimer S., 2014. "Spatial price equilibrium with information asymmetry in quality and minimum quality standards," International Journal of Production Economics, Elsevier, vol. 158(C), pages 300-313.
    7. Nagurney, Anna & Yu, Min & Floden, Jonas & Nagurney, Ladimer S., 2014. "Supply chain network competition in time-sensitive markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 112-127.
    8. Anna Nagurney & Deniz Besik & Ladimer S. Nagurney, 2019. "Global supply chain networks and tariff rate quotas: equilibrium analysis with application to agricultural products," Journal of Global Optimization, Springer, vol. 75(2), pages 439-460, October.
    9. Hamdouch, Younes & Ghoudi, Kilani, 2020. "A Supply Chain Equilibrium Model with General Price-Dependent Demand," Operations Research Perspectives, Elsevier, vol. 7(C).
    10. Yu, Min & Nagurney, Anna, 2013. "Competitive food supply chain networks with application to fresh produce," European Journal of Operational Research, Elsevier, vol. 224(2), pages 273-282.
    11. Ma, Jun & Nault, Barrie R. & Tu, Yiliu (Paul), 2023. "Customer segmentation, pricing, and lead time decisions: A stochastic-user-equilibrium perspective," International Journal of Production Economics, Elsevier, vol. 264(C).
    12. Anna Nagurney, 2015. "Design of Sustainable Supply Chains for Sustainable Cities," Environment and Planning B, , vol. 42(1), pages 40-57, February.
    13. Nagurney, Anna & Besik, Deniz & Li, Dong, 2019. "Strict quotas or tariffs? Implications for product quality and consumer welfare in differentiated product supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 136-161.
    14. Anna Nagurney & Dong Li, 2014. "Equilibria and dynamics of supply chain network competition with information asymmetry in quality and minimum quality standards," Computational Management Science, Springer, vol. 11(3), pages 285-315, July.
    15. Chan, Chi Kin & Zhou, Yan & Wong, Kar Hung, 2018. "A dynamic equilibrium model of the oligopolistic closed-loop supply chain network under uncertain and time-dependent demands," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 325-354.
    16. Besik, Deniz & Nagurney, Anna, 2017. "Quality in competitive fresh produce supply chains with application to farmers' markets," Socio-Economic Planning Sciences, Elsevier, vol. 60(C), pages 62-76.
    17. Wu, Xin & Nie, Lei & Xu, Meng & Yan, Fei, 2018. "A perishable food supply chain problem considering demand uncertainty and time deadline constraints: Modeling and application to a high-speed railway catering service," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 186-209.
    18. Li, Dong & Nagurney, Anna & Yu, Min, 2018. "Consumer learning of product quality with time delay: Insights from spatial price equilibrium models with differentiated products," Omega, Elsevier, vol. 81(C), pages 150-168.
    19. Yu, Yugang & Han, Xiaoya & Hu, Guiping, 2016. "Optimal production for manufacturers considering consumer environmental awareness and green subsidies," International Journal of Production Economics, Elsevier, vol. 182(C), pages 397-408.
    20. Anna Nagurney & Dong Li, 2014. "A Dynamic Network Oligopoly Model with Transportation Costs, Product Differentiation, and Quality Competition," Computational Economics, Springer;Society for Computational Economics, vol. 44(2), pages 201-229, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jglopt:v:69:y:2017:i:1:d:10.1007_s10898-017-0497-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.