Modeling and Optimization of the Decentralized Supply Network Under Budget Constraints

Abstract

The authors consider a method to optimize a two-tier decentralized supply network under the assumption that manufacturers' behavior satisfies budget constraint. The conditions of market equilibrium are considered taking into account the possibility of additional investments for manufacturers. This problem is generally a multi-criteria optimization problem. The optimization process is reduced to finding the saddle point of the Lagrange function. At each step of the solution, the Lagrange function is modified considering the estimate of the required additional investments. The results of numerical experiments are presented.