Coordination of price discount and sales promotion in a two-level supply chain system

Asymmetric information is widespread in supply chain system, So it is difficult to find the optimal solution of Stackelberg game in supply chain. To solve this problem, a simple adaptive-adjusting price-discount rate scheme and a combining procedure of sales promotion and adaptive-adjusting price-discount were developed in this paper. The numerical simulations show that the adaptive-adjusting price-discount rate scheme can overcome the barrier of asymmetric information and get the optimal strategy of Stackelberg game. By using the combining procedure of sales promotion and adaptive-adjusting price-discount rate, we can obtain greater profits than the sharing information situation.