Supply chain network production and outsourcing decision under competition environment

To study the production and outsourcing decision problem, a supply chain network including multi-manufacturers, multi-contractors served for multi-markets was proposed. Manufacturers could choose in-house production and outsourcing, and Nash-Cournot equilibrium of firms and Bertrand-Nash equilibrium of contractors were analyzed. On this basis, the supply chain network equilibrium model under carbon emission abatement, production and price competition was developed. The awareness of carbon emission abatement for manufacturers, carbon emission tax and disrepute cost of carbon emission were considered in the model. To analyze the disrepute of carbon emission, a quantitative formula of average carbon emission abatement level was given. Meanwhile, a solution algorithm for the model was proposed. Numerical examples were solved by using the proposed model and algorithm, and the effect of awareness of carbon emission abatement, carbon emission tax on the production and outsourcing of manufacturers were illustrated. The result showed that without carbon emission tax, contractors were less active in reducing carbon emissions than manufacturers with the improvement of awareness for carbon emission abatement. Due to the manufacturers' attention to reputation, they would choose to increase the amount of in-house production and decrease the amount of outsourcing. In addition, if the carbon emission taxes were imposed, manufacturers and contractors would pay more attention to carbon emission abatement. To avoid paying high carbon tax, some manufacturers had chosen to decrease the amount of in-house production and increase the amount of outsourcing. © 2019, Editorial Department of CIMS. All right reserved.