Research On Three-echelon Supply Chain Coordination Model Under Price-Dependent Demand

Market competition is becoming intensively, because of the economic globalization, the diversity of customer's demand and the development of science. The competition is not only among single companies, but also among supply chains. So the members of each chain have to cooperate to enhance the whole chain's competitive ability. However, each member generally belongs to different entities and hence performs strategies to maximize its own profit, which results in low effect of the whole supply chain. Therefore, seeking an effective way to coordinate supply chain becomes an important problem of supply chain management.A lot of researches show that supply chain contract is an available mechanism of supply chain coordination, and they are mainly about two-echelon supply chain. However, in reality many supply chains are three- or multi-echelon. Obviously the simple combination of two two-echelon supply chains'optimal strategies is not the optimal one for the three-echelon supply chain. This paper focuses on three-echelon supply chain model under price-dependent demand. It introduces flexible price function and inventory fact number. The model is individually coordinated by three kinds of contracts: revenue sharing contract, flexible buyback contract and option-buyback contract. And we also give numerical examples to illustrate the model. The paper is an attempt to consummate the theory of supply chain coordination by contract, and provides a path to improve the total profit of the whole supply chain.