A non-smooth optimization model for a two-tiered supply chain network

A non-smooth optimization model is established for a two-tiered supply chain network where manufacturers are at the upper level and consumers are at the lower level. A supply chain equilibrium model is considered at the lower level while policy interventions are taken into account at the upper level. A mathematical program with equilibrium constraints (MPEC) is established for the two-tiered supply chain network. Numerical illustrations are carried out using a 9-node network and preliminary results are reported.