Research on the Coordination Mechanism Model of the Three-level Supply Chain

The research of the supply chain coordination mechanism is the hot research area, which is involved to study many independent entities, multistages, and various systems. The system effect of supply chain comes from the enterprises´ sincere cooperation. The key issue of the supply chain coordination mechanism is to design a kind of contract to satisfy the so-called win-win condition between suppliers and demanders. We research the three-level supply chain which composing of a supplier, a manufacturer and a retailer by using game theory, operation research and related systematic optimization theories to build up it´s benefit model. Based on the model, we contrast the optimal decision in the centralized-control system and decentralized-control system. And then, we design a revenue sharing contract and analyze the distribution of profit among the entities, the ranges of profit share parameters and how to determine the optimizing value. Finally, we give a numerical example to confirm coordination mechanism validity.