The Optimal Structure and Competitiveness of Network Supply Chain Under Deterministic Demands

Purpose/Significance Most supply chains consist of multiple tiers, with multiple companies at each tier, and companies at an upper stream tier supply parts or products to the downstream tier. At present, the research in this area is still rare. Design/Methodology In this paper, we investigate a multitier network supply chain model with a linear price dependent function by inductive analysis and optimization methods. Conclusions/Findings The optimal structure of the network supply chain tends to have more companies at the downstream tier; the total supply of the network is a decreasing function of the total tier number of the network, and the competitiveness index increases upwards along the chain. However, it is found that the optimal structure has only one company at the downstream tier when the demand is fixed for some business scenario, with the same model configuration. In addition, the result of the increasing competitiveness index upwards along the chain does not hold for this scenario. The findings demonstrate the importance of the downstream tier supply chain network, and imply some insights in business.