Game-theoretic optimisation of supply chain design with customer contracts: The case of industrial gases market

Contemporary process industries are confronted with volatile market conditions that jeopardise their financial sustainability. While mature markets, e.g. industrial gases, transition to oligopoly structures, the supply chain operation should adapt to a more customer-centric focus. Key issues related to the modelling and impact of the related contractual agreements between firms and customers remain largely unexplored. In this work, we examine the problem of fair customer allocation in industrial gases market oligopolies under different contractual agreements within a multi -period setting. We consider an ensemble of contract types that vary in terms of pricing and duration. The role of fairness is examined following the social welfare and Nash bargaining scheme. In the latter case, the overall problem is formulated as an MINLP that is linearised based on special -ordered sets. The impact of the different fairness schemes on the optimal customer allocation is evaluated via two case studies from the industrial gases market.