Spatio-Temporal Economic Properties of Multi-Product Supply Chains

TL;DR

This paper models multi-product supply chains as coordinated markets, capturing spatio-temporal transport and storage, and analyzes their economic properties through a graph-based approach with a case study on biogas production from waste.

Contribution

It introduces a unified graph representation for spatio-temporal supply chains and establishes fundamental economic properties and price bounds within this framework.

Findings

Market incentives for waste storage depend on electricity demand.

Space-time prices for waste and products are influenced by transport and storage dynamics.

The model demonstrates economic properties like revenue adequacy and cost recovery.

Abstract

In this work, we analyze the spatio-temporal economic properties of multi-product supply chains. Specifically, we interpret the supply chain as a coordinated market in which stakeholders (suppliers, consumers, and providers of transportation, storage, and transformation services) bid into a market that is cleared by an independent entity to obtain allocations and prices. The proposed model provides a general graph representation of spatio-temporal product transport that helps capture geographical transport, time delays, and storage (temporal transport) in a unified and compact manner. This representation allows us to establish fundamental economic properties for the supply chain (revenue adequacy, cost recovery, and competitiveness) and to establish bounds for space-time prices. To illustrate the concepts, we consider a case study in which organic waste is used for producing biogas and electricity. Our market model shows that incentives for waste storage emerge from electricity demand dynamics and illustrates how space-time price dynamics for waste and derived products emerge from geographical transport and storage.