01371057

Component

This paper studies a competitive supply chain design problem, where an emerging new industry makes optimal facility location and procurement pricing decisions to compete for feedstock resources from existing competitors and markets. The complex interactions and the competitive behaviors among the new industry, existing feedstock suppliers, competitors and markets are addressed in an integrated non-cooperative Stackelberg leader-follower game model. The formulation of this problem is in the form of a Discretely Constrained Mathematical Program with Equilibrium Constraints (DC-MPEC), which is computationally very challenging. Most commercial solvers would fail to solve even small-size instances. The authors develop a Lagrangian relaxation (LR) based solution approach to decompose and solve the DC-MPEC model. The proposed methodology is illustrated using an empirical case study for the emerging biofuel industry in the State of Illinois. The computation results and comparison with other solution approaches demonstrate superiority of our LR based approach for solving large-scale problems.

This paper was sponsored by TRB committee ADB30 Transportation Network Modeling

01362476

12-1860

English

25p

2012

Transportation Research Board 91st Annual Meeting

Digital/other

Appendices; Figures; References; Tables

Biomass fuels; Case studies; Game theory; Industries; Lagrangian functions; Programming (Mathematics); Supply chain management

Stackelberg game

Illinois

Energy; Freight Transportation; Planning and Forecasting; I15: Environment; I72: Traffic and Transport Planning

Transportation Research Board Annual Meeting 2012 Paper #12-1860

TRIS, TRB

Feb 8 2012 5:06PM