Competition and cooperation between supply chains in multi-
objective petroleum green supply chain: A game theoretic approach
N. Moradinasab
a
, M.R. Amin-Naseri
a, *
, Taraneh Jafari Behbahani
b
, Hassan Jafarzadeh
c
a
Industrial Engineering, Tarbiat Modares University, Tehran, Iran
b
Research Institute of Petroleum Industry (RIPI), Exploration and Production Division, Tehran, Iran
c
Department of Systems and Information Engineering, University of Virginia, Charlottesville, VA, USA
article info
Article history:
Received 14 February 2016
Received in revised form
25 January 2017
Accepted 14 August 2017
Keywords:
Game theory
Sustainable competitive petroleum supply
chain (SCPSC)
Multi-objective
Fuzzy
abstract
Petroleum Supply Chain is one of the most important and sophisticated managing missions in both
developing and developed countries. Nowadays, environmental pollution is another critical factor in
designing the petroleum supply chain. This importance encourages the governments to minimize the
amount of environmental pollution and maximize their obtained profit simultaneously, by enacting
required legislations on the transportation modes and the refineries. Considering maximizing the job
creation and each stakeholder's profit, and minimizing the emission of CO
2
and other greenhouse gases
at the same time is called Sustainable Petroleum Supply Chain which has been paid little attention
despite its significance. Therefore, the modelling of petroleum supply chain considering sustainability
and pricing issues is investigated for the first time in this work and a sustainable competitive petroleum
supply chain (SCPSC) model is developed to minimize pollution while maximizing the profits and job
creation. This problem is a two level model. The first level in SCPSC is the competition between the
supply chains of the government and the private sectors, which is modelled by the game theory approach
including Nash and Stackelberg equilibria. The optimal price and demand for each supply chain deter-
mined in the first level are considered as the second level parameters. In the second level, the optimal
values of the decisions in designing the petroleum supply chain will be obtained by solving Mixed Integer
Linear Programming (MILP) under the mentioned three objective functions. Finally, the proposed model
is applied to a real world case in the national Iranian oil company (NIOC). Based on the results of the
Stackelberg equilibrium, the government profits increase by 11.12% while that of the private sector de-
creases by 25.4 and 28.11%. Increasing in the government profit is due to increased demand provided by
government. The results show that the whole profit of the petroleum supply chain in Nash equilibrium is
9.8% more than that in the Stackelberg equilibrium.
© 2017 Published by Elsevier Ltd.
1. Introduction
Although, sustainable supply chain is currently of interest to
many researchers, the sustainability has not been paid much
attention in Petroleum Supply Chain (PSC). According to the Carter
and Rogers' sustainability definition “the strategic, transparent
integration and achievement of an organization's social, environ-
mental, and economic goals is the systematic coordination of key
inter-organizational business processes for improving the long
term economic performance of the individual company and its
supply chain” (Carter and Rogers, 2008). Considering the following
aims at the same time, sustainability is an inalienable part of the
petroleum supply chain:
Many environmental regulations have been enacted by the
governments to reduce the environmental and pollution effects.
Maximizing the profit of whole chain such as the other supply
chains.
Most of the governments enforce the stakeholders by enacting
appropriate regulations to increase the created job in the chain.
Beside of the sustainability, the competition is another impor-
tant factor in the PSC. Because, different parts of a petroleum supply
chain are controlled by different stakeholders and stakeholders'
* Corresponding author. Tarbiat Modares University, Ale Ahmad Highway, Tehran,
14115-143, Iran.
E-mail address: amin_nas@modares.ac.ir (M.R. Amin-Naseri).
Contents lists available at ScienceDirect
Journal of Cleaner Production
journal homepage: www.elsevier.com/locate/jclepro
https://doi.org/10.1016/j.jclepro.2017.08.114
0959-6526/© 2017 Published by Elsevier Ltd.
Journal of Cleaner Production 170 (2018) 818e841