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Strategic Decision of Competing Supply Chain Networks with Random Demands

Qinghong Zhang, Kai Kang, Li Yang


In this paper, we propose an equilibrium model of competing supply chains. These supply chains involving multiple manufactures, distributors and retailers provide a heterogeneous product for the same markets in which the demands associated with the retail outlets are random. First, the optimizing behaviors of the two supply chains are modeled. Its equilibrium conditions and a finite-dimensional variational inequality formulation are derived. Second, the qualitative properties of the equilibrium solution are analyzed, notably, the existence and uniqueness of the equilibrium. Third, numerical example is presented for the illustrative purpose, and the computational results with Euler algorithm are obtained. Strategic of the two competing supply chains and physical structures of the new supply chain network entering the same market are illustrated.


chain-to-chain competition, network design, Nash game, variational inequality.

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