This paper investigates the horizontal Nash game and structure selection strategy in two competing dominant enterprises. Each firm decides whether to outsource the retail or manufacture to the exclusive third-party enterprise and thus forms a decentralized supply chain structure. On the premise that third-party enterprises have no advantage on sales and manufacture cost, the revenue-sharing contract is introduced between the manufacturer and retailer, and the influence of decentralized structure on the game equilibrium structure and supply chain profit is analyzed based on Hotelling model. The results show that, when compared with centralized structure, decentralized supply chain has the structural advantage to improving not only its supply chain profits but also the competing chain. This interesting insight is counterintuitive to the common "double marginalization" effect and explains the outsourcing strategy from the perspective of supply chain competition. In addition, we find the dominant strategy in the evolutionary game is that both two chains are decentralized or integrated.
In today’s complex market competition environment, a high quality and high level of service plays a critical role in obtaining and maintaining long-term sustainable competitive advantage for enterprises and supply chains. Considering the service negative spillover effect, this paper investigates the horizontal Stackelberg competition and optimal service decision in two competing manufacturer-led supply chains. Four competitive structure models are constructed and the corresponding equilibrium solutions are obtained. By comparing the equilibrium results of four different structures, it is found that the service negative spillover effect and competition between supply chains have negative incentive effect on service providers and their supply chains. However, the chain-to-chain competition will benefit the supply chain that does not provide services from free-riding effect, which will be intensified with the intensification of competition. In addition, from the perspective of supply chain network and externality, we find that when the structure of one supply chain remains fixed and the other changes from centralized to decentralized, there will be a “double marginalization” effect. At the same time, the structural change from centralized to decentralized has certain “altruism”, that is, positive network externality, so as to improve the rival’s performance significantly.
Excellent service plays a vital role in the sustainability of enterprise and supply chains development in today's increasingly fierce market competition. However, due to the inevitable spillover effect in the competitive network, enterprises' initiative to improve the service level is reduced. From the perspective of negative spillover effect, optimization and decision-making in the competitive network of retailer-dominated supply chain are examined in this study. Considering four competitive situations in practical operation management, the corresponding double-layer compound nested Stackelberg game models are constructed, and the optimal equilibrium solutions are derived. Employing comprehensive comparison and analysis of the results, it is found that when the negative spillover effect of service increases, the optimal profit and service level of the leading supply chain or its retailers decrease, and the optimal retail price and overall optimal profit also gradually decline. For the leading supply chain, the centralized decision-making can achieve higher profits, and also more willing to improve the level of service. However, for the following supply chain, when the negative spillover effect of service is weak, the optimal service level under decentralized decision is higher, while when the spillover effect of service is strong, the optimal service level under integrated decision is higher. In addition, the supply chain-to-chain competition can bring negative incentives to the retailer that provides services, while for the rival that does not provide services, it can generate a certain free-riding effect that benefits them, and the effect is enhanced with the increase of competition.
The classical location models implicitly assume that the facilities, once built, will always operate as planned. However, some of the facilities may become unavailable from time to time due to disruptions which highlight the urgent need to effectively manage supply chain disruptions in spite of their low probability of occurrence. Therefore, it is critical to take account of disruptions when designing a resilient supply chain network so that it performs well as a whole even after an accidental disruption. In this paper, a stylized facility location problem is considered in a continuous plane which is solved through an improved Voronoi-diagram-based algorithm under disruption risks. The research problem is to minimize the total cost in normal and failure scenarios. Furthermore, the impact of misestimating the disruption probability is also investigated. The results numerically show that although the estimated disruption probability has a significant impact on the facilities configuration, it has a minor impact on the total quantity of facilities and the expected total cost. Therefore, this paper proposes that the decision-maker should moderately overestimate disruption risk based on the “pessimistic principle”. Finally, the conclusion considers managerial insights and proposes potential areas for future research.
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