Designing a new supply chain for competition against an existing supply chain

•We design network for an entrant SC which is supposed to compete an existing SC.•The rival SCs compete dynamically in markets with price and distance dependent demands.•During the SC strategic network design we also consider operational competition factors.•We design an exact algorithm and a heuristic algorithms to validate and solve large scale problems.•The model is test on random samples, applied to a real-life case and sensitivity analysis are provided.

We develop a bi-level model for designing an entrant supply chain (SC) in the presence of a pre-existing competing SC where demand is elastic with respect to price and distance. The model assumes dynamic competition between the new and pre-existing SCs in retailers’ level and probabilistic customers’ behavior. Strategic facility location and flow decisions are made while considering inventory carrying costs incurred on the operational level. We formulate the problem and propose exact and metaheuristic algorithms to solve it. The model is solved using data from a real-life case and also randomly generated test problems to extract managerial insights.