Coordinating supply chains : a bilevel programming approach

In this paper we formulate the coordination and optimization problem of an extended supply chain as a bilevel program. As of today no such approach exists in relevant literature. In our opinion this model better represents the dynamics of today supply chains, comprised of separately owned entities each striving to maximize their own prot and still in need of collaborating and trading to supply the market. Bilevel programs are NP hard even in the linear case. We provide an ecient heuristic to nd good solutions