Competing Supply Chains Research Articles

The Optimal Production Decision of Competing Supply Chains When Considering Green Degree: A Game-Theoretic Approach

Nowadays, the green supply chain has become an exciting concept in academic societies. This paper focuses on the optimal production decisions of two competing supply chains from the perspective of green degree. The manufacturers in each supply chain have two options—producing a green product or a non-green product. Game theory is applied to study four decision scenarios, which are derived from the difference in the products of the two supply chains. This study investigates the influence of inter-supply-chain competition on the wholesale price, green degree, and profits of the supply chain members. The results indicate that the inter-supply-chain competition has a negative correlation with the wholesale price. The inter-supply-chain competition has a significant impact on green degree in the four decision scenarios. In addition, green products are not always the dominant strategy of manufacturers. Both the competitors’ product decisions and the degree of inter-supply-chain competition should be considered. Finally, weak inter-supply-chain competition is beneficial to the leader supply chain, while strong competition is beneficial to the follower supply chain.

Competition among supply chains: the choice of financing strategy

This article aims at studying the incentive for factoring in competing supply chains to examine the influences of the factoring decision in one supply chain on other chains. We consider multiple competing supply chains, each consisting of a manufacturer and a retailer. We firstly examine the issue under the special case of two supply chains, and then extend the model to multiple supply chains. The extended model is actually a bi-level non-cooperative game with multiple leaders and multiple followers, which we formulate as an Equilibrium Problem with Equilibrium Constraints. Numerical examples are presented to illustrate the rationality of the proposed model for the supply chains competition with financing choices.

Managing homogeneous products in two competing supply chains under price and logistics service

Logistics services and product prices are two factors that influence consumers’ buying behavior. In recent years, research on decision and coordination of competing supply chains has attracted growing attention. However, the research of competing supply chains with substitutable products under logistics services and product prices has not been studied in the literature. We consider four decision variables, the manufacturers’ wholesale price, the distributors’ wholesale price, the retailer price and the logistics service level. The competition in product and pricing decisions of the supply chains are discussed based on centralized and decentralized channel structures. And then, effect of product substitutability upon decisions and coordination of the supply chains is analyzed. Finally, A numerical example illustrates the findings of the model are summarized for centralized, decentralized, and coordinated scenarios. The results from the analysis show that gross profit of supply chain under decentralized channel structure increases with the increasing product substitutability, but declines under centralized channel structure. The value region of benefit-sharing proportions under the centralized channel structure also shrinks, that is, the scope of bargaining that companies can make for their profit in the collaborations gets smaller and smaller when product substitutability increases.

Game Theoretical Perspectives on Pricing Decisions in Asymmetric Competing Supply Chains

This paper investigates a dual exclusive channel model in which each manufacturer distributes its goods through a single exclusive retailer, but two goods are substitute. The decision rule between two channels is Nash game in Case 1, while it is Stackelberg game in Case 2. From manufacturer Stackelberg (MS), retailer Stackelberg (RS), and Nash game (VN) theoretic perspectives, nine game models are developed to examine the effect of product substitutability and relative channel status on pricing decisions at both horizontal competition and vertical competition levels. The analysis suggests that the type of price leadership scenarios, the level of product substitutability, and the relative channel status play a significant role in decision making. For instance, in case 1, the symmetric leadership (two manufacturers or two retailers are leaders) is always the dominant strategy and equilibrium for either two manufacturers or two retailers regardless of product substitutability and relative channel status. Nevertheless, the asymmetric leadership may lead channel members to encounter a prisoner’s dilemma if the relative channel status is small. By contrast, in Case 2, the symmetric leadership is not the unique dominant strategy for either two manufacturers or two retailers. In contrast to many earlier results, we also show that whether the first-mover and the late-mover advantages exist, depending on the level of related channel status.

Industry Structure and the Strategic Provision of Trade Credit by Upstream Firms

Abstract Trade credit can serve as a collusion mechanism for competing supply chains to increase producer surplus in medium concentrated industries. We analyze theoretically how this form of financing influences retailers’ behavior in the product market, study incentives to deviate, and show evidence consistent with the model’s predictions. Trade credit use is inversely U shaped in industry concentration, and this pattern is more pronounced in industries more prone to collusion and when incentives to deviate are smaller.

Carbon emissions, technology upgradation and financing risk of the green supply chain competition

The major obstacle to reducing carbon emissions is the high cost of adopting clean energy, which reduces the market competitiveness of companies using clean energy. In this paper, we study the asymmetric duopoly models of two competing supply chains with different carbon emission technology. The financing risk of the supply chain's carbon emission technology investment could be available as complete or incomplete information to its competitor. We find that the financing risk of carbon emission technology upgradation does not affect either chain's choices of equilibrium quantities and prices in the complete information case. If this information is incomplete for the traditional supply chain, financing risk plays an important role in determining optimal quantities and optimal prices. To encourage the use of clean energy technology to reduce carbon emissions, government should use the per-product carbon emission tax to encourage the traditional supply chain to upgrade its carbon emission technology, and should encourage financial institutions to provide preferential loans to the supply chain that has carbon emission technology disadvantage in the market.

Channel Structure Strategies of Supply Chains with Varying Green Cost and Governmental Interventions

Environmental concerns make enterprises pay more attention to green manufacturing. The emerging green supply chain inevitably will compete with the traditional supply chain. In order to evaluate the competitiveness of supply chains and the impact on channel structure strategy, we develop four game models for two competing supply chains according to their channel structure strategies. Green marginal manufacturing cost, demand sensitivity of green level, and governmental interventions are considered. We study how retail prices, green levels, and profits are influenced by channel structure choice and governmental interventions. Analytical results indicate that the substitutability of products affects channel structure strategy. When the substitutability of products is relatively low, centralization–centralization is the unique Nash equilibrium. However, when the substitutability of products is relatively high, both centralization–centralization and decentralization–decentralization are the Nash equilibriums. Centralization–centralization is a prisoner dilemma, while decentralization–decentralization can make the green supply chain achieve optimal profit. Then, the green marginal manufacturing cost and demand sensitivities of the green level play important but different roles in channel structure strategy of the competing supply chains. Further, whether Nash equilibriums are the optimal strategy depends on governmental intervention. Relatively severe governmental intervention might realize a relatively higher green level, but may not always achieve the lowest retail price for the green supply chain. However, a relatively moderate governmental intervention might achieve a relatively lower green level.

Partial vertical centralization in competing supply chains

A great amount of research has been done on whether a supply chain should be centralized or decentralized. With a centralized supply chain, a manufacturer can sell directly to the consumers or fully own the downstream retailer. With a decentralized supply chain, the manufacturer and the downstream retailer make decisions to optimize their own interests. However, most existing research assumes a firm must choose between complete centralization (CC) and complete decentralization (CD), which is inconsistent with the common business practice of partial vertical centralization (PVC). That is, a firm may hold an ownership share in another firm in the same supply chain. In this paper, we fill this research gap in the literature by studying PVC in two supply chains each with a manufacturer and a retailer competing with substitutable products. The product substitutability levels of 0 and 1 correspond to independent products and perfect substitutable products, respectively. Our analysis and results prove that PVC is the equilibrium channel structure until the substitutability level is above a threshold , where CD becomes the equilibrium channel structure. Moreover, we re-examine PVC under an alternative demand model and confirm that our analytic results and managerial insights are robust. In short, our research can help explain and justify the commonly adopted but rarely studied business practice of PVC.

International competition and trade conflict in a dual photovoltaic supply chain system

This study has explored a contemporary trade conflict issue heated up by the trade war between two largest economies in the world. Since the solar industry is a fast developing and critical renewable energy industry sector with many global suppliers competing fiercely in the world market, a dual international competing PV module supply chain system is conceptualized to conduct a game-theoretical modeling study for the exploration. Four modeling scenarios including Free Trade (FT), Trade Protection (TP), Price Discrimination (PD) and Anti-price Discrimination (AD) are investigated. A real world–based dual international competing PV supply chain system is designed for the numerical and sensitivity analyses. Two key findings from the study can be summarized: (1) Price discrimination strategy can create the most total supply chain profits and social welfares for dual international competing supply chains but this strategy will eventually lead to trade protection of the importing country and erode the supply chain profits and social welfares; (2) Trade Protection policy delivers the lowest total social welfares and demands for the dual international competing supply chains. The findings imply that in a dual international competing PV supply chain system, Free Trade policy would be the most appropriate trade policy to take by both governments and supply chains for the development of a sustainable solar energy sector. However, human systems are imperfect. The key finding also echoes the recent turbulence development of the world trade conflict that any unfair trade policy will benefit only the country who exercises the unfair trade policy that eventually leads to escalating trade conflict and brings economic damages to the trading stakeholders. Thus, an even more critical issue to explore is to find ways to resolve trade conflict at the early stage of trade conflict, such as the trade protection stage, before the conflict is worsening to the most serious conflict stage and cause serious economic and political damages to the involved parties and the world. This would be an important and emergent research subject to be explored.

Stackelberg–Nash equilibrium of pricing and inventory decisions in duopoly supply chains using a nested evolutionary algorithm

Pricing and inventory control in a competing environment, as separate entities, have attracted much attention from academics and practitioners. However, integrating these decisions in a competitive setting has not been significantly analyzed by academics, but is of great significance to practitioners. In this study, the joint decision on price and inventory control of a deterioration product is investigated in a duopoly setting. We consider two competing supply chains, each consisting of one manufacturer and one retailer. Each manufacturer, as the leader of their supply chain determines the wholesale price to maximize their profit, while the retailer as the follower should determine the retail price and inventory cycle to maximize his or her profit. Using a game theoretic approach, we formulate in-chain, and chain-to-chain competition as a bi-level programming problem, and analyze Stackelberg–Nash equilibrium of the problem. Furthermore, two versions of a nested algorithm are proposed to obtain the equilibrium. Both versions employ a modified threshold-accepting (TA) algorithm to solve the first level of the problem. However, while the first version utilizes the modified TA algorithm to deal with the second level of the problem, the second version applies a differential evolution (DE) approach. Eventually, a numerical study is carried out not only to compare two developed versions of the algorithm, but also to implement the sensitivity analysis of main parameters. Based on numerical experiments, although the accuracy of both versions of algorithm are alike, using TA is more computationally efficient than using DE. Furthermore, despite the permissibility of partial backlogging, it has never occurred in equilibrium points due to in-chain and chain-to-chain competition.

Negotiations in Competitive Supply Chains: The Kalai-Smorodinsky Bargaining Solution

Supply chain contract negotiation has gained increasing attention in recent years, and the studies involving negotiations in the operations literature almost exclusively apply the concept of the Nash bargaining (NB) solution. The NB solution, however, is derived based on the axiom of independence of irrelevant alternatives (IIA), an unrealistic assumption in many contexts. Indeed, our analysis suggests that the NB solution can lead to unreasonable negotiation outcomes in supply chains with horizontal competition. As an alternative, the Kalai-Smorodinsky (KS) solution has been applied in many fields, but has not been introduced to the supply chain contexts. The KS solution is derived under the axiom of individual monotonicity in replacement of the IIA axiom. We perform a comprehensive comparison of contract negotiations under the KS and NB solutions in horizontally competing supply chains. Although the KS solution does not possess the flexibility of explicitly specifying the relative bargaining power as the NB solution does, the KS solution can appropriately capture the negotiation power shift induced by the decision ownership, the negotiation sequence, the vertical relationship, the competition intensity, the trade contingency, and the contract type. Our study sheds lights on the appropriate selection of solution concepts in studying negotiations in competing supply chains.

A choice of selling format in the online marketplace with cross-sales supply chain: Platform selling or traditional reselling?

In the online retail market, how to work with upstream suppliers is a key issue for downstream online retailers (e-retailers). Online retailers can choose between functioning either as the “two-sided platforms” (e.g., Taobao.com or eBay.com) allowing suppliers to sell directly to customers by paying a revenue-sharing fee, or as the “resellers” (e.g., Wal-mart.com or JingDong.com) that purchase products from suppliers, and then resell them to customers. Given the rapid growth of e-commerce over past few years, this choice, which is the focus of this article, has become an important practice-based decision. We develop a game-theoretic model for a cross-sales supply chain in which two suppliers deal with two common online retailers. As Stackelberg leaders, online retailers can operate either as a two-sided platform (serving both suppliers and customers) or as a reseller (ordering from suppliers and selling competing products on its own platform). Each supplier adopts either an exclusive-sales strategy, selling products through an exclusive e-retailer, or a cross-sales strategy, selling products through two e-retailers. We analyze the optimal decisions for both e-retailers and suppliers in competing supply chains and describe the system equilibrium for the online marketplace.

Optimization of A Five-Echelon Supply Chain Network using Particle Swarm Intelligence Algorithms

Technology has shrunk the global markets and information is accessible very quickly and effortlessly. Business organizations world over concentrate on their production systems to improve the quality of the end product, well distribute the product and optimize cost of resources. Transportation cost, inventory carrying cost and shortage costs constitute the major costs in cost of distribution. A competent supply chain always strives to manufacture the right quantity of end products and hold a minimum inventory across the entire supply chain. In thecurrent paper, a five echelon supply chain model is developed and it is optimized using particle swarm intelligence algorithm.

Demand information sharing in competing supply chains with manufacturer-provided service

This paper investigates the issue of sharing demand information in two competing supply chains, each consisting of one manufacturer who provides consumers with free after-sales service and one retailer who has private information about uncertain demand. The demand is linearly affected by retail prices and service levels of both supply chains, which captures both price and service competition. By modeling a multistage game framework, we examine the impacts of information sharing on price and service decisions and explore the value of information sharing to each supply chain. Our results show that information sharing enables the manufacturers to adjust their wholesales prices and service levels responsively to demand, which can benefit their supply chains if they are efficient in service investment. Moreover, information sharing in one supply chain can also trigger decision adjustments in the other supply chain, which may be beneficial to the first supply chain. Through analyzing the information-sharing equilibrium, we find that information sharing is more likely to occur when manufacturers are more efficient in service investment, consumers care more about service, or competition is more intense. In particular, when manufacturers' service investment efficiency or consumers' service attention is sufficiently high, retailers will voluntarily share demand information regardless of competition intensity. In addition, we illustrate that there exists a prisoner's dilemma where neither supply chain has information sharing even though they will be better off if both have.

Pricing in Two Competing Supply Chains Based on Market Power and Market Size under Centralized and Decentralized Structures

In this paper, we considered the competition between two multi-echelon supply chains with identical structures on price under two market power structures. For this purpose, we developed two different scenarios. In the first scenario, both supply chains decided simultaneously (the Nash game). In the second scenario, due to the imbalance of power between the two supply chains, we adopted the Stackelberg game in the model. Price equilibrium is obviously obtained through the Game Theory. The paper investigated the effects of different relations between the market sizes of supply chains and the supply chain structures on price and profit along with the analysis of power in the market. Based on these assumptions, it was found that the supply chains did not always involve the second-mover advantage in the price Stackelberg game. Furthermore, having the centralized structure, both of the supply chains benefited from presence of a leader in the market for different combinations of market size. Finally, we presented significant managerial insights for the market with two competitive supply chains when the structures were similar. Moreover, the relationship between price and profit was analyzed given the size of the market in different scenarios rather than through provision of numerical examples.

Managing financing risk in capacity investment under green supply chain competition

In this paper, we study the asymmetric duopoly models of competing supply chains with financing risk. The financing risk of the green supply chain's capacity investment could be available as complete or incomplete information to the traditional supply chain. By analyzing and comparing the optimal quantities, optimal prices, and optimal profits of both cases, we find that the financing risk of capacity investment does not affect either chain's choices of equilibrium quantities and prices in the complete information case. If this information is incomplete for the traditional supply chain, financing risk plays an important role in determining optimal quantities and optimal prices, together with the lending interest rate. To encourage the use of environmentally friendly technologies, government should use per-unit subsidies if the green supply chain suffers the cost disadvantage, and should encourage financial institutions to provide preferential loans to the green supply chain that suffers manufacturing or retailing capacity restrictions.

Service Investment and Channel Structure Decisions in Competing Supply Chains

Supply chain versus supply chain is an important aspect of business competition as the channel structure of each supply chain affects its own channel profit as well as the rival’s channel profit. Manufacturers have two distribution channel structure strategies: integrated channel and decentralized channel. The channel structure strategy can be influenced by price and service, two key competitive dimensions that affect both customer demand and firm profitability. The authors develop game-theoretic models to explore channel structure strategies for two manufacturers competing on price and service and examine how service provisions affect these strategies. Here, service can be provided by either producers (i.e., manufacturers) or sellers. When manufacturers provide service, this study reveals that symmetric decentralization (i.e., both manufacturers choosing a decentralized channel) is an equilibrium only when price elasticity, service cost, and service competition are low. When service is provided by sellers, symmetric decentralization is an equilibrium only when the retailer’s service cost is high and that of the manufacturer is low; otherwise, an asymmetric equilibrium may exist.

Supply chains competition with vertical and horizontal information sharing

This paper studies the incentive for vertical and horizontal information sharing in two competing supply chains with uncertain demand. Retailers obtain the uncertain demand information from the market, and can exchange the private information with each other. We investigate the equilibrium information sharing arrangement in the competing supply chains and discuss how expected payoffs of the firms and the supply chains is impacted by horizontal information sharing. The results show that no vertical information sharing in both supply chains is the unique equilibrium in one-shot game, and horizontal information sharing won't affect the vertical information sharing strategy for the competing supply chains. However, horizontal information sharing will increase the supply chain profits if the competition between two supply chains is sufficiently less intense. Furthermore, we analyse the conditions of prisoner's dilemma for the equilibrium information sharing arrangement and the perfect Nash equilibrium of the repeated game. [Received: 9 November 2015; Revised: 29 September 2017; Revised: 16 June 2018; Accepted: 21 August 2018]

Big Data Driven Healthcare Supply Chain: Understanding Potentials and Capabilities

Increasing costs and operational inefficiency in healthcare supply chain has drawn the attention of professionals and researchers worldwide. A competent supply chain can provide a tighter control and visibility of greater focus on quality patient care. Today, Big Data Analytics (BDA) is progressively being adopted with the determination of building treasured information from big data. The analytic process, including positioning and use of BDA tools improves operational efficiency and help in reducing human errors that can often be deadly. Recent studies show that better healthcare planning can be done by the usage of Big Data. Suitable methods and practices can be used for healthcare data analytics which can help in better decision making for an increase in the business value and customer interest. However, the usage and applicability of BDA tools in the healthcare supply chain sector is a relatively new phenomenon as compared to other service sectors like e-commerce, finance. This paper is an effort to explore the implementation of BDA tools in the healthcare supply chain settings of hospitals for quality improvements and better patient care. The paper then summaries a number of challenges and opportunities connected with the employment of Big Data in the environment of health care supply chain services.

Sub-Coordination in a Competing Supply Chain With a 3PL Provider

Coordinating contracts are sometimes difficult to be established because of information sharing constraints and additional administrative burdens. Considering the difficulties of coordinating contracts, it is reasonable that coordination between only some of chain members will be easier to achieve than coordination of the whole supply chain. For convenience, coordination between only some of chain members is referred to sub-coordination. This paper discusses three types of sub-coordination in a competing supply chain comprising two manufacturers, a retailer, and a 3PL provider. Using the fully decentralized supply chain as a benchmark, the effects of sub-coordination on the supply chain are investigated. We find out that sub-coordination is not always effective to improve the profit of the supply chain, in some cases sub-coordination even does harm to supply chain members or the whole supply chain. The performance of sub-coordination critically depends on the degree of product substitutability.