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This paper considers a supply chain system consisting of a single supplier and a single retailer and the market demand is price-sensitive. The optimal retail prices and the profits of the members in the supply chain under central control and decentralized game are studied respectively. Based on that, a mathematical description about the coordination mechanism design is presented. While the quantity discount contract cannot coordinate the supply chain is proved, a joint decision coordination mechanism composed by quantity discount contract and franchise fee is worked out. Finally, the ranges for the parameters in the mechanism are discussed.
Date of Conference: 23-26 June 2009