Supply Chain Supernetworks with Random Demands

The study of supply chain network problems through modeling, analysis, and computation has been an active area of research due to the complexity of the relationships among the various decision makers, such as suppliers, manufacturers, distributors, and retailers, as well as the practical importance of the topic for the efficient movement of products. This chapter on supply chain supernetworks with random demands is from a book of essays published in honor of David Boyce for his contributions to the fields of transportation modeling and regional science. In this chapter, the authors introduce a supernetwork supply chain model with random demands. The term supernetwork refers to a network in which decision making regarding transportation and telecommunications tradeoffs (such as those that arise in e-commerce) are modeled in a unified fashion. The authors develop a three-tiered supply chain network equilibrium model consisting of manufacturers, distributors, and retailers. The model allows for physical transactions between the different tiers of decision makers as well as electronic transactions in the form of business-to-business (B2B) commerce between manufacturers and the retailers. The model generalized previous supply chain network equilibrium models to include e-commerce, multiple tiers of decision makers, and random demands within the same framework. Finite-dimensional variational inequality theory was used to formulate the derived equilibrium conditions, to study the model qualitatively, and also to obtain convergence results for the proposed algorithmic scheme. Finally, numerical examples were presented to illustrate the model and computational procedure