Monday, June 2, 2014

Supply Chain Network Competition in Time-Sensitive Markets

The production and delivery of products in a timely manner are essential not only to the satisfaction of consumer demands in many industries but also to a company's reputation.

During last Christmas season, we saw delays of numerous deliveries in the US and even in Sweden Christmas trees that were ordered online, in some cases, arrived past the holiday! Needless to say, there were very many disappointed (and even furious) individuals and families.
Also, there may exist major events or even features such as the top-grossing animated Disney movie, Frozen, that generate intense demand for associated products, including clothing, under immense time pressures. Some of  these are being driven by children's demands for various paraphernalia. As a consequence, and because of the time pressures, now some of the Frozen  clothing products that are produced in China, such as the garments of Princess Anna (I do like that name - thanks, Disney), are being shipped by air rather than by slow boats.
Markets in which consumers are willing to pay a higher price for lower delivery times are knows as  time-sensitive markets. Below are examples of a few products that fit into this important category of consumer goods.

Fresh produce, many medicines and vaccines, human blood, as well as certain fashion goods are all time-sensitive.

One of the major challenges of supply chains that are globally dispersed is the pressures put in the production and transportation of time-sensitive products. Brands and firms that can deliver the goods in good condition and in a timely manner can reap greater profitss.
In our latest research, Supply Chain Network Competition in Time-Sensitive Markets, Anna Nagurney, Min Yu, Jonas Floden, and Ladimer S. Nagurney,  we develop a game theory model for supply chain network competition in time-sensitive markets in which consumers respond to the average delivery time associated with the various firms' products. The firms' behavior is captured, along with the supply chain network topologies, with the governing equilibrium concept being that of Nash equilibrium. We derive the variational inequality formulation of the equilibrium conditions and provide illustrative examples. We also identify special cases for distinct applications. An algorithm is proposed, and the framework further illustrated through a case study in which we explore varying sensitivities to the average time delivery with interesting results.

We will be presenting this paper at the Mathematics for Industry conference in Taormina, Sicily, Italy, next week, upon the invitation of our colleague, and  Center Associate of the Virtual Center for Supernetworks, Professor Patrizia Daniele. Our paper will be presented in the session: Recent advances on equilibrium problems with applications to networks. One of my former PhD students, Professor Fuminori Toyasaki of York University in Toronto will also be presenting in this session.

We will also present the paper the week after at the festschrift conference in Greece in honor of our dear friend, Professor Panos M. Pardalos.

The full presentation can be downloaded from the Virtual Center for Supernetworks website here.

How appropriate that this collaboration across continents is now being disseminated at various venues.