Business environment optimization for enterprise profit maximization based on bi-level Stackelberg-Nash game

Purpose This study proposes a method for the government to optimize the business environment and maximize enterprise profit. Design/methodology/approach To achieve this, a bi-level programming model is constructed. In the upper-level model, the government optimizes the business environment of manufacturers by allocating investments with the goal of maximizing enterprise profit. Then, the lower-level model analyzes the resulting equilibrium state of the three-echelon supply chain network. Finally, a hybrid algorithm combining simulated annealing with projection algorithm is employed to solve the model. Findings The validity and feasibility of the proposed model and algorithm are investigated using the experimental results. The results show that the algorithm is a robust tool for optimizing the business environment and maximizing enterprise profit. It is observed that enterprise profit increases significantly with the expansion of government investment. Research limitations/implications The model is based on strong assumptions and does not fully consider the complex factors and uncertainties in the supply chain; the optimization tools are relatively limited, ignoring nonfinancial input factors; and there is insufficient exploration of the multidimensional impacts of business environment optimization. Future research will focuse on expanding the proposed model to incorporate additional variables, allowing for a comprehensive assessment of the multifaceted benefits of business environment optimization. Originality/value This study proposes a novel bi-level programming model and solution method for business environment optimization, which provides a practical modeling framework and analytical tool for governments to develop cost-effective strategies to improve the business environment.