Multi-product supply chain horizontal network integration: models, theory, and computational results

In this paper, we consider multiproduct supply chains of distinct firms and their horizontal integration. In particular, we develop multiproduct supply chain network models prior to and post their horizontal integration with explicit capacities associated with the economic activities of production, storage, and distribution. In addition, we propose a measure, which allows one to quantify and assess, from a supply chain network perspective, the synergy benefits associated with the integration of multiproduct firms through mergers/acquisitions. We utilize a system-optimization perspective for the model development and provide the variational inequality formulations, which are then utilized to propose a computational procedure which fully exploits the underlying network structure. We illustrate the theoretical and computational framework with numerical examples. This paper is a contribution to the literatures of supply chain integration and mergers and acquisitions.