Application of quantity flexibility contract in perishable products supply chain coordination

In this paper, we consider the problem of quantity decision in a supply chain, which is composed of one manufacture and one retailer to meet the random demand of a single product. We model the incentives of both parties and investigate the effect of flexibility eta, inventory cost and transit cost on the performance of two parties. Then we assume that the retail price is the reduction function of time, and a quantity flexibility contract model is established. An example is given to illustrate that the model not only improves the total profit of the supply chain but also coordinates the supply chain system.