The Decentralized Decisions between Manufacturer and Retailer Integrating Original and Discount Price Buy Back Policy

For a supply chain including a manufacturer and retailer, the decentralized decision problem considering buy back policy was researched, and where assumed some residual products can be returned by the original price and others by the discount price. When the demand is stochastic, for maximizing expectation profits, retailer need decide the order quantity, and manufacturer need decide the wholesale price and sale price. The optimal decision models were formulated, and the uniqueness and existence of optimal decisions were proved, the conditions that the optimal decisions should satisfy were obtained. Then, the expressions of the optimal condition under the uniform distribution were given. And moreover, the algorithm for manufacturer's optimal decisions was designed. Final, the influence about system decisions and profits from the original price return proportion were analyzed by the numerical analysis.