A Coordination Model of Supply Chain for Deterioration Items

This paper develops a lot-sizing coordination model with one manufacture and multiple retailers, in which. the retailers act as the leader and the manufacture buyer acts as the follower. At first, the retailers' economic order quantity model and the manufacture's economic production quantity model is discussed respectively, taking into account the effects of deteriorating and that the retailers and the manufacture act independently and rationally, each maximizing their own respective profit. Then an integrated production-inventory lot sizing model under cooperation mode is presented, by introducing a price discount policy which considers both quantity increased discount and quantity decreased one. The numerical example illustrates that adopting this coordination mechanism, we can lower down the total cost of supply chain, increase the general profits, and obtain a "win-win" result for both sides.