Effect of the consumers purchasing behavior on policies in two-tier durables supply Chain

Based on the optimization theory and utility theory respectively, the model of the pricing and quality decision for the manufacturer and that of pricing and ordering for the retailer are built, the consumers' utility model as well. The complex relationship is given between policies of the supply chain members and consumers' price/quality sensitivity. Conclusions are as follows. In any purchasing period, the optimal order quantity exists, and there is fixed relation among the retailer's optimal pricing, product quality level and consumers' price/quality sensitivity under a given order quantity. Finally, a numerical example is focused, which shows that the retailer could use price discrimination policy for consumers in every purchasing period, and the price for one generation of the product is decreasing with consumers' price/quality sensitivity. The product quality level and order quantity are all increasing with consumers' price/quality sensitivity under a given retail price.