Multiperiod supply chain network equilibrium model with electronic commerce and multicriteria decision‐making

In this paper, we develop a supply chain network equilibrium model in which electronic commerce in the presence of both B2B (business‐to‐business) and B2C (business‐to‐consumer) transactions, multiperiod decision‐making and multicriteria decision‐making are integrated. The model consists of three tiers of decision‐makers (manufacturers, retailers and consumers at demand markets) who compete within a tier but may cooperate between tiers. Both manufacturers and retailers are concerned with maximization of profit as well as minimization of risk, whereas consumers take both the prices charged by manufacturers and retailers, along with the corresponding costs of transacting, in making their consumption decisions. Increasing relationship levels are assumed to decrease costs of transacting as well as risk costs. Establishing and maintaining these relationship levels incur some costs that have to be borne by the various decision‐makers. We study the interaction among different tiers of decision‐makers, describe their multicriteria decision‐making behavior and derive the optimality conditions as well as the equilibrium conditions which are then shown to satisfy a finite‐dimensional variational inequality problem. We then establish qualitative properties of the equilibrium model under some reasonable assumptions and illustrate the model with several numerical examples.