Production Planning, Oligopoly and Supply Chains

  • Terry L. Friesz
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 135)


In this chapter we develop models that describe how prices, production rates and distribution activities evolve over time and influence one another for three output market structures: 1. perfect competition 2. monopoly, and 3. oligopoly. In particular, we apply the material from previous chapters to the modeling and computation of production, distribution, and supply chain decisions made by firms operating within the three competitive environments mentioned above. Throughout this chapter our perspective is deterministic, and the dynamic games considered are open loop in nature with perfect initial information.We begin with aspatial models and move to models with explicit network path flows. We shall deal exclusively with finite terminal times and see that policies near the terminal time are of great importance to the lifetime profitability of firms. One of our goals will be to study how policies on inventory remaining at the terminal time as will as the value of such residual inventories when liquidated can influence operations throughout a firm’s history.


Supply Chain Variational Inequality Production Planning Terminal Time Adjoint Variable 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

List of References Cited and Additional Reading

  1. Anderson, W. H. L. (1970). Production scheduling, intermediate goods, and labor productivity. American Economic Review 60, 153–162.Google Scholar
  2. Arrow, K. J. and S. Karlin (1958). Production over time with increasing marginal costs. In K. J. Arrow, S. Karlin, and H. Scarf (Eds.), Studies in the Mathematical Theory of Inventory and Production. Palo Alto: Stanford University Press.Google Scholar
  3. Friesz, T. L., M. A. Rigdon, and R. Mookherjee (2006). Differential variational inequalities and shipper dynamic oligopolistic network competition. Transportation Research Part B 40, 480–503.CrossRefGoogle Scholar
  4. Graves, S., D. Kletter, and W. Hetzel (1998). A dynamic model for requirements planning with application to supply chain optimization. Operations Research 46(3), S35–S49.CrossRefGoogle Scholar
  5. Lieber, Z. (1973). An extension to Modigliani and Hohn’s planning horizons results. Management Science 20, 319–330.CrossRefGoogle Scholar
  6. Morin, F. (1955). Note on an inventory problem discussed by Modigliani and Hohn. Econometrica 23, 447–452.Google Scholar
  7. Nagurney, A., J. Dong, and D. Zhang (2002). A supply chain network equilibrium model. Transportation Research Part E 38(5), 281–303.CrossRefGoogle Scholar
  8. Pekelman, D. (1974). Simultaneous price production decisions. Operations Research 22, 788–794.CrossRefGoogle Scholar
  9. Sethi, S. P. and G. L. Thompson (1981). Optimal Control Theory: Applications to Management Science. Boston: Martinus Nijhoff.Google Scholar
  10. Smith, V. L. (1961). Invenstment and Production: A Study in the Theory of the Capital Using Enterprise. Cambridge, MA: Harvard University Press.Google Scholar
  11. Sprzeuzkouski, A. Y. (1967). A problem in optimal stock management. Journal of Optimization Theory and Applications 1, 232–241.CrossRefGoogle Scholar
  12. Swaminathan, J., S. Smith, and N. Sadeh (1998). Modeling supply chain dynamics: a multiagent approach. Decision Sciences 29(3), 607–632.CrossRefGoogle Scholar
  13. Talluri, S. and R. Baker (2002). A multiphase mathematical programming approach for effective supply chain design. European Journal of Operational Research 141(3), 544–558.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Dept. Industrial & Manufacturing EngineeringPennsylvania State UniversityUniversity ParkUSA

Personalised recommendations