Wholesaler multi-retailer coordination policy with quantity discount, price dependent demand and deteriorating items

In order to support the collaboration policy, the mutually beneficial relationships have been replacing the traditionally adversarial relationships between wholesaler and retailers. The joint decisions characterized by the ordering price, order quantity and replenishment schedule is collaborated through inventory and pricing policy. This study intends to derive the greatest benefits for both of the wholesalers and the retailers within cooperative environment. The right quantity discounts and the best ordering policy can be achieved by maximizing the joint profit of the deteriorating items under different profit-sharing ratios. We develop a wholesaler-retailers inventory model with an exponentially deteriorating inventory and price dependent demand. A numerical example is used to illustrate theory of the model. The results demonstrate the extra profit accrued mainly to the down-stream site. Thus, profit sharing to derive the greatest benefits for the whole system should be in-cooperated.