Service pricing strategy for third party logistics corporations implementing VMI

To let the service pricing strategy of third party logistics corporations satisfy each supply chain partner\´s "participation constraints" and "incentive-compatibility constraints", consequently promote the formation of new alliance and guarantee its stability. Applying Stackelberg game, the transfers of cost structures and the changes of profit functions in two models: manufacturer implementing VMI services model and the third party logistics corporation implementing VMI services model, are analyzed respectively, and the service pricing strategy for third party logistics corporations implementing VMI is obtained. Results of the example show that: after putting related service pricing strategy in practice, the third party logistics corporations implementing VMI can increase total profits of the supply chain; and the changes of the productions\´ price elasticity in final consumption market have little effects on the service pricing decision-making The results are helpful to apply third party logistics and VMI mode widely in practice.