The supply chain coordination for non-instantaneous deteriorating items with stock and price sensitive demand

It is assured that it will incur the opportunity cost for the supplier if he provide a price discount to the retailer. Based on this assumption, the supply chain coordination for non-instantaneous deteriorating items with stock and price sensitive demand is investigated. The models are presented in the following three cases: decentralized decision, integrated decision and coordinated decision. The theoretical analysis for the models is conducted and some algorithms are designed to find the optimal solutions. On the basis of the price discount and the supplier's profit growth is proportional to retailer's profit growth, a coordination mechanism is designed to coordinate the supply chain. Mathematical models are developed with numerical example provided and result discussed for the cases of (i) decentralized, (ii) integrated, and (iii) the coordinated. Sensitivity analysis is made to investigate the effects of some important parameters on the optimal ordering decision. Some implications and suggestions are also provided for the supply chain management.