Multi-product supply chain horizontal network integration: models, theory, and computational results

In this paper, we develop multi-product supply chain network models with explicit capacities, before and after their horizontal integration. In addition, we propose a measure, which allows one to quantify and assess, from a supply chain network perspective, the synergy benefits associated with the integration of multi-product firms through mergers/acquisitions. We utilize a system-optimization perspective for the model development and provide the variational inequality formulations, which are then utilized to propose a computational procedure which fully exploits the underlying network structure. We illustrate the theoretical and computational framework with numerical examples. This paper is a contribution to the literatures of supply chain integration and mergers and acquisitions.