EVOLUTIONARY GAME OF DIGITAL DECISION-MAKING IN SUPPLY CHAINS BASED ON SYSTEM DYNAMICS

Abstract

This paper primarily focuses on whether supply chains enterprises adopt a digital strategy and the impact of various government measures on supply chain digital decision-making. The study develops a multi-agent decision-making evolutionary game model to examine the stability of decision-making among the government, suppliers, and manufacturers. Additionally, a system dynamics model is established to analyze the governing dynamics within the supply chain’s digital decision-making process, identifying characteristic patterns and trends. The analytical results of this study illustrate the government’s strength thresholds exist regardless of ex-part penalties or the mix of rewards and punishment. Once the government’s strength exceeds these thresholds, the evolutionary game system undergoes abrupt changes. Suppliers and manufacturers who adopt digital strategies are more affected by government penalties than incentives. The stronger the mix of government incentives and penalties, the higher the incentives for the supplier and the manufacturer to adopt a digital strategy, but the lower the incentives for the government to choose a regulatory strategy. Low-intensity mixed rewards and punishments, as well as low-intensity government rewards, are effective mechanisms for promoting government decision-making and supervision. Conversely, high government penalties do not motivate governments to choose regulatory strategies. The unit cost of products to deploy digital strategies directly affects the final digital strategy choice of supply chain enterprises. To choose a digital strategy, supply chain companies must ensure that the unit cost of products remains within a reasonable range.