Game Theory Modeling of Supply Chains and Labor Disruptions

The COVID-19 pandemic has brought attention to supply chain networks due to disruptions for many reasons, including that of labor shortages as a consequence of illnesses, death, risk mitigation, as well as travel restrictions. Many sectors of the economy from food to healthcare have been competing for workers, as a consequence. In this chapter, a supply chain game theory network framework is constructed that captures labor constraints under three different scenarios. The appropriate equilibrium constructs are defined, along with their variational inequality formulations. Computed solutions to numerical examples inspired by shortages of migrant labor to harvest fresh produce; specifically, blueberries, in the United States, reveal the impacts of a spectrum of disruptions to labor on the product flows and the profits of the firms in the supply chain network economy. A supply chain network efficiency measure is proposed along with the identification of the importance of supply chain network components. This research adds to the literature in both economics and operations research.