A General Multitiered Supply Chain Network Model of Quality Competition with Suppliers

International Journal of Production Economics (2015), 170, pp 336-356.

44 Pages Posted: 20 Aug 2015 Last revised: 30 Nov 2016

See all articles by Dong Li

Dong Li

Arkansas State University - College of Business - Department of Management and Marketing

Anna Nagurney

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

Date Written: September 1, 2015

Abstract

In this paper, we develop a general multitiered supply chain network equilibrium model consisting of competing suppliers and competing firms who purchase components for the assembly of their final branded products and, if capacity permits, and it enhances profits, produce their own components. The competitive behavior of each tier of decision-makers is described along with their strategic variables, which include quality of the components and, in the case of the firms, the quality of the assembly process itself. The governing equilibrium conditions of the supply chain network are formulated as a variational inequality and qualitative properties are presented. The algorithm, accompanied with convergence results, is then applied to numerical supply chain network examples, along with sensitivity analysis in which the impacts of capacity disruptions and complete supplier elimination are investigated.

Keywords: supply chains, networks, suppliers, quality competition, game theory, variational inequalities

Suggested Citation

Li, Dong and Nagurney, Anna, A General Multitiered Supply Chain Network Model of Quality Competition with Suppliers (September 1, 2015). International Journal of Production Economics (2015), 170, pp 336-356., Available at SSRN: https://ssrn.com/abstract=2646906 or http://dx.doi.org/10.2139/ssrn.2646906

Dong Li

Arkansas State University - College of Business - Department of Management and Marketing ( email )

P.O.Box 59
State University, AR 72467
United States
8709723728 (Phone)
8709723883 (Fax)

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

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