Optimization of Multi-period Bilevel Supply Chains under Demand Uncertainty

Due to advance of global manufacturing, the decentralized optimization of multi-tier supply chains for multiple retailers and manufacturers becomes more and more important. Conventional works on game theoretical model for supply chain planning problems concentrates on single period models. However, the situations for decision making in decentralized supply chains are subject to change with respect to time periods. In this paper, we address the optimization of multi-period bilevel supply chains under demand uncertainty. The decentralized supply chain planning problem is modelled as a multi-period non-cooperative game. The problem is formulated as a stochastic multi-period bilevel optimization problem under demand uncertainty. The optimization algorithm to derive a Stackelberg equilibrium for multi-period bilevel supply chain planning problem is developed. The effectiveness of the proposed method is validated by comparing it with the single period models.