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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
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    References listed on IDEAS

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    10. 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.
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    12. 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.
    13. 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.
    14. Anna Nagurney, 2006. "Supply Chain Network Economics," Books, Edward Elgar Publishing, number 4242.
    15. 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.
    16. 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.
    17. 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.
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    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.

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