Economic model of TAC SCM game

Abstract

This paper presents an economic model to the problem of Supply Chain Management in Trading Agent Competition (TAC SCM). The TAC SCM marketplace is characterized by the combination of quantity competition and price competition between manufacturers(agents). We specify the quantity competition by a variation of Cournot model and view the price competition as an extension of Bertrand game. An approach of smooth-regression is introduced to copy withthe non-linear fluctuation of product price by using linear price model. The results of the paper provide the solutions to the decision-making problems in TAC SCM trading agent design, including daily production, product pricing and component procuring.