A new approach to supply chain network equilibrium models

We establish nonlinear complementarity formulations for the supply chain network equilibrium models. The formulations have simple structures and facilitate us to study qualitative properties of the models. In this setting, we obtain weaker conditions to guarantee the existence and uniqueness of the equilibrium pattern for a supply chain. A smoothing Newton algorithm that exploits the network structure is proposed for solving these models. Not only is the smoothing Newton algorithm proved to be globally convergent without requiring the assumptions of monotonicity and Lipschitz continuity, but also it can overcome the flaw that the performance of the modified projection method heavily depends on the choice of the predetermined step size. Numerical results indicate the advantages of the nonlinear complementarity formulation and the smoothing Newton algorithm.

► In this paper we formulate the supply chain network equilibrium problem as a nonlinear complementary problem.
► We utilize the simple structure of NCP, give weaker conditions to guarantee the existence and uniqueness of equilibrium.
► We establish a smoothing Newton algorithm to solve the equilibrium point.
► Numerical results show the efficiency of the algorithm.