Game-theoretic modeling and optimization of multi-echelon supply chain design and operation under Stackelberg game and market equilibrium

Yue, Dajun; You, Fengqi

doi:10.1016/j.compchemeng.2014.08.010

Cited by 149 publications

(95 citation statements)

References 52 publications

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“…It is worth noting that the proposed model and solution approaches could be easily extended to consider other uncertainties, such as prices, demands, and property parameters. Moreover, instead of assuming a cooperative model, we may consider addressing the noncooperative case using game theoretical modeling approach, 58 which will be addressed in a future work.…”

Section: Resultsmentioning

confidence: 99%

Deciphering and handling uncertainty in shale gas supply chain design and optimization: Novel modeling framework and computationally efficient solution algorithm

Gao

You

2015

AIChE Journal

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in Wiley Online Library (wileyonlinelibrary.com) The optimal design and operations of shale gas supply chains under uncertainty of estimated ultimate recovery (EUR) is addressed. A two-stage stochastic mixed-integer linear fractional programming (SMILFP) model is developed to optimize the levelized cost of energy generated from shale gas. In this model, both design and planning decisions are considered with respect to shale well drilling, shale gas production, processing, multiple end-uses, and transportation. To reduce the model size and number of scenarios, we apply a sample average approximation method to generate scenarios based on the real-world EUR data. In addition, a novel solution algorithm integrating the parametric approach and the Lshaped method is proposed for solving the resulting SMILFP problem within a reasonable computational time. The proposed model and algorithm are illustrated through a case study based on the Marcellus shale play, and a deterministic model is considered for comparison. V C 2015 American Institute of Chemical Engineers AIChE J, 61: 3739-3755, 2015 Keywords: shale gas, supply chain, estimated ultimate recovery, uncertainty, stochastic program, stochastic mixedinteger linear fractional programming IntroductionIn recent years, the widespread application of horizontal drilling and hydraulic fracturing has led to a "shale revolution," which further results in the U.S. transitioning from an importer to a net exporter of natural gas.1 As reported by the Annual Energy Outlook 2015 released by the U.S. Energy Information Administration (EIA), 2 natural gas production is expected to grow by an average rate of 1.6% per year from 2012 to 2040, more than double the 0.8% expected annual growth rate of total consumption in the U.S. over the same period. The 56% increase in total natural gas production is mainly due to increased shale gas production, which will grow by more than 10 Trillion Standard Cubic Feet (Tscf). The percentage of the U.S. total natural gas production from shale gas is expected to increase from 40% in 2012 to 53% in 2040.Despite the optimistic forecast of shale gas production given by the EIA, a recent report by Post Carbon Institute unveils the fact that the actual future of shale gas may not be as bright as the EIA suggests.3 From a well-by-well-based calculation of shale gas production throughout the U.S., they conclude that the actual profitability of a shale well can be significantly affected by the uncertainty in the estimated ultimate recovery (EUR) and astounding decline rates of production ranging from 60 to 90% in the first 3 years. Considering the significant influence of the shale gas industry on the overall U.S. energy sector, it is essential to design and operate emerging shale gas supply chains with explicit consideration of EUR uncertainty and actual shale gas production profiles.Supply chain design and optimization under uncertainty has long been known as a challenging problem that is vital to the success of industrial concerns. 4,5 Currently, there a...

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Section: Resultsmentioning

confidence: 99%

Deciphering and handling uncertainty in shale gas supply chain design and optimization: Novel modeling framework and computationally efficient solution algorithm

Gao

You

2015

AIChE Journal

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“…They developed one centralized pricing and seven decentralized pricing models. [40] investigated a multi-echelon supply chain where interactions among supply chain members were captured under the generalized Nash equilibrium assumption.…”

Section: 2mentioning

confidence: 99%

A game theoretic approach to coordination of pricing, advertising, and inventory decisions in a competitive supply chain

Sadigh¹,

Chaharsooghi²,

Sheikhmohammady³

2015

JIMO

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Supply chain members coordinate with each other in order to obtain more profit. The major mechanisms for coordination among supply chain echelons are pricing, inventory management, and ordering decisions. Regarding to these mechanisms, supply chain participants have conflicts of interest. This paper concerns coordination of enterprise decisions including pricing, advertising, ordering, and inventory decisions in a multi-echelon supply chain consisting of multiple suppliers, one manufacturer, and multiple retailers. In the current study, a novel inventory model is presented for both the manufacturer, and the retailers who are able to determine the number of orders for each product. Moreover, each supply chain member has equal power and make their decisions simultaneously. The proposed model considers the relationships among three echelon supply chain members based on a non-cooperative Nash game with pricing and inventory decisions. An iterative solution algorithm is proposed to find Nash equilibrium point of the game. Several numerical examples are presented to study the application of the model as well as the effectiveness of the algorithm. Finally, a comprehensive sensitivity analysis is performed and some important managerial insights are highlighted.2010 Mathematics Subject Classification. Primary: 91A10, 90B60, 90B05.

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“…Most of the studies published so far treat this topic very partially. We believe that in the future should be deepened in some aspects related to the Theory of Games and that the equilibrium solutions will be a very interesting field to develop (see Yue and You, 2014). Moreover schemes based on the establishment of a comprehensive planning framework within which the member organizations establish their own plans harmonically must deepen and extend the traditional decompositions of Dantzig-Wolfe and Benders, or similar techniques in context of wider programming.…”

Section: Supply Chainmentioning

confidence: 99%

Some Trends and Applications of Operational Research/Management Science to Operations Management

Pascual

Ribas

2015

Int. J. Prod. Manag. Eng.

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Abstract:The editor suggested us to write about our point of view on the current use of Operations Research techniques applied to the Operations Management and about its future evolution. With some of unconsciousness we accept it, but it is obvious that our vision, even though we try to do our best, will be partial and biased. Hence the title chosen shows signs of prudence. More caution have been applied to the development where, after a glance at the past and reflection on the abundance of new denominations without content, we consider five aspects that, nowadays, acquire increasing importance and that will strongly influence in future developments. Among the five aspects two correspond to trends in the field of operations research techniques, one is a philosophy in the field of operations management, another to an area of the company and the last one to an industrial sector in which operations management, supported by operations research methods, is taking a predominant role.

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Game-theoretic modeling and optimization of multi-echelon supply chain design and operation under Stackelberg game and market equilibrium

Cited by 149 publications

References 52 publications

Deciphering and handling uncertainty in shale gas supply chain design and optimization: Novel modeling framework and computationally efficient solution algorithm

Deciphering and handling uncertainty in shale gas supply chain design and optimization: Novel modeling framework and computationally efficient solution algorithm

A game theoretic approach to coordination of pricing, advertising, and inventory decisions in a competitive supply chain

Some Trends and Applications of Operational Research/Management Science to Operations Management

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