Coordination Versus Competition in Supply Chains

This paper considers the problem of coordination in supply networks. The model is based on distribution network, which includes several manufactures, single distributor and multi retailers, operated and competed in consumer markets that are functioning according to the Cournot model with the linear demand. All participants in a chain are trying to maximize their profit. For coordination solution the maximization flow model was developed. We used the the perfect Nash equilibrium in the multi-step hierarchical game in the closed form for competitive model. The comparative analysis of coordination and competition in distribution network was carried out. The obtained results demonstrated advantages and disadvantages of the developed model. Numerical example for the network justified the necessity of applying additional coordination mechanisms to achieve better results for all members of the network.