Sustainable Manufacturing and Service Economics (Jan 2024)
Pivoting and pandemics: A game-theoretic framework for agile personal protective equipment supply chains
Abstract
Supply chain models frequently tackle manufacturing issues but must also account for the distinctive nature of the disease. Conversely, most epidemiological models solely concentrate on the disease’s spread but must address logistical challenges. The medical supply chain encounters numerous problems during a pandemic, requiring adaptation through pivoting strategies. For instance, when the COVID-19 outbreak began, several nations prohibited the export of medical supplies, including personal protective equipment (PPE). Consequently, in times of crisis, many countries adopt a localization strategy that encourages domestic companies to adapt their operations and produce medical items. Nevertheless, an interconnected system is essential to align suppliers with the actual demand for medical supplies. This study focuses on the design of a game model for the supply chain that considers manufacturers’ equilibrium behaviors in response to the real demand for medical items. We propose a game model that incorporates both the medical supply chain and the unique characteristics of pandemics. Various decisions are taken into account, such as production volume, actual demand for medical products, price, distribution of medical supplies, and investment costs in manufacturing technologies. To determine the Nash Equilibrium solutions for the proposed game model, the Variational Inequality (VI) theory is implemented.
