Competition and cooperation between supply chains in multi-objective petroleum green supply chain: A game theoretic approach

Abstract

Petroleum Supply Chain is one of the most important and sophisticated managing missions in both developing and developed countries. Nowadays, environmental pollution is another critical factor in designing the petroleum supply chain. This importance encourages the governments to minimize the amount of environmental pollution and maximize their obtained profit simultaneously, by enacting required legislations on the transportation modes and the refineries. Considering maximizing the job creation and each stakeholder's profit, and minimizing the emission of CO2 and other greenhouse gases at the same time is called Sustainable Petroleum Supply Chain which has been paid little attention despite its significance. Therefore, the modelling of petroleum supply chain considering sustainability and pricing issues is investigated for the first time in this work and a sustainable competitive petroleum supply chain (SCPSC) model is developed to minimize pollution while maximizing the profits and job creation. This problem is a two level model. The first level in SCPSC is the competition between the supply chains of the government and the private sectors, which is modelled by the game theory approach including Nash and Stackelberg equilibria. The optimal price and demand for each supply chain determined in the first level are considered as the second level parameters. In the second level, the optimal values of the decisions in designing the petroleum supply chain will be obtained by solving Mixed Integer Linear Programming (MILP) under the mentioned three objective functions. Finally, the proposed model is applied to a real world case in the national Iranian oil company (NIOC). Based on the results of the Stackelberg equilibrium, the government profits increase by 11.12% while that of the private sector decreases by 25.4 and 28.11%. Increasing in the government profit is due to increased demand provided by government. The results show that the whole profit of the petroleum supply chain in Nash equilibrium is 9.8% more than that in the Stackelberg equilibrium.