Coordinating Three-Level Supply Chain with Quantity Discount Policies

A two-level supply chain which consisted of a supplier and a retailer can be coordinated by a quantity discount policy. In this paper, the coordination problem of a three-level supply chain under quantity discount policies is investigated. By properly set the parameters of the quantity discount policies, the three-level supply chain can be coordinated, and the profit of the total supply chain can be properly allocated among the participants of the supply chain. The validation of the mechanism is illustrated by numerical examples.